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
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
|
(Address of principal executive offices)
|
|
Zip Code
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Large accelerated filer ☐
|
|
|
Non-accelerated filer ☐
|
|
Smaller reporting company
|
|
|
Emerging growth company
|
5
|
|
12
|
|
21
|
|
21
|
|
21
|
|
21
|
|
PART II
|
|
22
|
|
24
|
|
25
|
|
40
|
|
41
|
|
41
|
|
41
|
|
42
|
|
42
|
|
PART III
|
|
43
|
|
43
|
|
43
|
|
43
|
|
43
|
|
PART IV
|
|
44
|
|
48
|
|
49
|
Item 1. |
Business
|
• |
Grow our current 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 supporting our customers’ businesses. We remain dedicated to managing growth and continuing to focus on enhancements to our
infrastructure and making investments in resources to support our customers. We have globally positioned manufacturing and distribution centers to support our continuous growth.
|
• |
Introduction of new product lines. We continue to strive
to expand our business by exploring new product lines, including working with our customers to identify potential new product opportunities.
|
• |
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, inventory management services, online training guides, and market share and retail store layout information to our customers.
|
• |
Technological innovation. We continue to expand our
research and development teams as we further develop in-house technologies and advanced testing methods. This elevated level of technology aims to deliver our customers high quality products and support services.
|
• |
We provide industry-leading test solutions and diagnostic equipment to both original equipment manufacturers
and the aftermarket. We are continuously upgrading our equipment to accommodate testing for the latest alternator and starter technology for both existing and new customers. These
software and hardware upgrades are also available for existing products that the customer is using. In addition, we provide industry leading maintenance and service support for our test solutions and diagnostic equipment to provide a
better end-user experience and value to our customers.
|
• |
Market and grow our new product lines on a global basis. We offer products and services that cater to automotive test solutions and diagnostic equipment for inverter and electric motors for both development and production. In addition, we provide power supply hardware and
emulation software diagnostic products. Our strategy is to market these products on a global basis to original equipment manufacturers as well as suppliers to the original equipment manufacturers for development and production of electric
vehicles and electric vehicle charging systems. We believe this is a rapidly emerging business, and see the opportunity for accelerating growth rates. In addition, we are well-positioned to supply test solutions and diagnostic equipment
to the aerospace industry to support its shift to electric power driven control systems in airplanes.
|
• |
sorting the Used Cores returned by customers utilizing an innovative and efficient core-sorting process;
|
• |
reconditioning and re-utilizing durable components after passing rigorous testing processes;
|
• |
savings of raw materials due to a reduction in the required materials used in the remanufacturing production process, compared with new product processes; and
|
• |
recycling of water, cardboard, and metal.
|
Item 1A. |
Risk Factors
|
• |
supply chain delays or stoppages due to shipping delays (cargo ship, train and truck shortages as well as staffing shortages) resulting in increased freight costs, closed supplier facilities or distribution centers, reduced workforces,
scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;
|
• |
reduced and/or deferred consumer demand for our products as a result of the economic downturn;
|
• |
change in demand for or availability of our products as a result of our customers modifying their restocking, fulfillment, or shipping practices;
|
• |
increased raw material, and other input costs resulting from market volatility;
|
• |
increased working capital needs and/or an increase in trade accounts receivable write-offs as a result of increased financial pressures on our suppliers or customers; and
|
• |
fluctuations in foreign currency exchange rates or interest rates resulting from market uncertainties.
|
• |
respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive aftermarket products;
|
• |
engage in more extensive research and development; and
|
• |
spend more money and resources on marketing and promotion.
|
• |
significant delays in the delivery of cargo due to port security and over-crowding considerations;
|
• |
imposition of duties, taxes, tariffs or other charges on imports;
|
• |
financial or political instability in any of the countries in which our product is manufactured;
|
• |
potential recalls or cancellations of orders for any product that does not meet our quality standards;
|
• |
disruption of imports by labor disputes or strikes and local business practices;
|
• |
inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and
|
• |
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.
|
• |
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;
|
• |
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; and
|
• |
our ability to enforce any agreements with our foreign suppliers.
|
• |
raw material shortages;
|
• |
problems with oceanic shipping, including shipping container shortages;
|
• |
increased customs inspections of import shipments or other factors causing delays in shipments; and
|
• |
increases in shipping rates, all of which we experienced.
|
• |
work stoppages;
|
• |
strikes and political unrest;
|
• |
economic crises;
|
• |
international disputes and wars;
|
• |
loss of “most favored nation” trading status by the U. S. in relations to a particular foreign country;
|
• |
import duties; and
|
• |
import quotas and other trade sanctions.
|
• |
exchange controls and currency restrictions;
|
• |
currency fluctuations and devaluations;
|
• |
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;
|
• |
increased required employment related costs; and
|
• |
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.
|
Item 1B. |
Unresolved Staff Comments
|
Item 2. |
Properties
|
Location
|
Type of Facility
|
Approx.
Square
Feet
|
Leased
or
Owned
|
Expiration
|
||||
Torrance, CA
|
Remanufacturing, Warehouse, Administrative, and Office
|
231,000
|
Leased
|
March 2032
|
||||
Tijuana, Mexico
|
Remanufacturing, Warehouse, and Office
|
312,000
|
Leased
|
August 2033
|
||||
Tijuana, Mexico
|
Distribution Center and Office
|
410,000
|
Leased
|
December 2032
|
||||
Tijuana, Mexico
|
Remanufacturing, Warehouse, and Office
|
199,000
|
Leased
|
December 2032
|
||||
Tijuana, Mexico
|
Core Induction, Warehouse, and Office
|
173,000
|
Leased
|
December 2032
|
||||
Ontario, Canada
|
Remanufacturing, Warehouse, and Office
|
157,000
|
Leased
|
May 2023
|
||||
Ontario, Canada
|
Manufacturing, Warehouse, and Office
|
35,000
|
Leased
|
December 2022
|
||||
Singapore & Malaysia
|
Remanufacturing, Warehouse, and Office
|
114,000
|
Leased
|
Various through July 2024
|
||||
Shanghai, China
|
Warehouse and Office
|
27,000
|
Leased
|
March 2023
|
Item 3. |
Legal Proceedings
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
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, 2022: | ||||||||||||||||
Open market and privately negotiated purchases
|
-
|
$
|
-
|
-
|
$
|
18,255,000
|
||||||||||
February 1 - February 28, 2022: | ||||||||||||||||
Open market and privately negotiated purchases
|
-
|
$
|
-
|
-
|
18,255,000
|
|||||||||||
March 1 - March 31, 2022: | ||||||||||||||||
Open market and privately negotiated purchases
|
-
|
$
|
-
|
-
|
18,255,000
|
|||||||||||
Total
|
0
|
0
|
$
|
18,255,000
|
(1) |
As of March 31, 2022, $18,745,000 of the $37,000,000 was utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in our Credit Facility. We retired the 837,007
shares repurchased under this program through March 31, 2022. 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 security holders
|
2,179,155
|
(1)
|
$
|
17.53
|
(2)
|
682,788
|
(3)
|
|
|||||
Equity compensation plans not approved by security holders
|
N/A
|
N/A
|
N/A
|
||||||||||
Total
|
2,179,155
|
$
|
17.53
|
682,788
|
(1) |
Consists of (i) stock options issued under the 2004 Non-Employee Director Stock Option Plan, (ii) restricted stock units and restricted stock (collectively “RSUs”), performance stock units (PSU’s), and stock options issued under the
Fourth Amended and Restated 2010 Incentive Award Plan (the “2010 Plan”), and (iii) RSUs issued under our 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 and PSUs, since RSUs and PSUs have no exercise price.
|
(3) |
Consists of shares available for future issuance under our 2010 Plan and 2014 Plan.
|
Item 6. |
Selected Financial Data
|
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
• |
We achieved organic sales growth of more than 20 percent;
|
• |
We developed a comprehensive line of brake pads, utilizing an
industry-leading formulation, and brake rotors, serving the professional installer market under our Quality Built® brand;
|
• |
We secured multi-year new business commitments and opportunities of more than $100 million, primarily across multiple brake-related products;
|
• |
We successfully expanded sales through additional product line offerings in Mexico;
|
• |
We completed a multi-year expansion program of our facilities in Mexico, including completion of a new brake caliper remanufacturing facility;
|
• |
We added capacity to support anticipated future growth with limited additional capital investment;
|
• |
We extended the maturity date of our Credit Facility from June 2023 to May 2026 to enhance our liquidity and capital resources;
|
• |
We secured inventory which enabled us to support our customers, meet demand and obtain new business -- despite worldwide supply chain and logistics challenges;
|
• |
We secured purchase orders from all major automotive retailers for rotating electric bench-top testing equipment;
|
• |
We opened an electric vehicle (“EV”) contract testing center in Detroit, Michigan;
|
• |
We continued a series of prestigious Tier-1 wins for our EV technology with orders from major global automotive, aerospace and research institutions;
|
• |
Equally important, we continued our social responsibility initiatives with plans to launch an Agri-farm organic food and community program in Mexico and continued our focus on opportunities to enhance our Environmental, Social and Governance practices on a global basis.
|
• |
Net realizable value for finished goods by customer, by product line are determined based on the agreed upon selling price with the customer for a product in the trailing 12 months. We compare the average selling price, including any
discounts and allowances, to the finished goods cost of on-hand inventory, less any reserve for excess and obsolete inventory. Any reduction of value is recorded as cost of goods sold in the period in which the revaluation is identified.
|
• |
Net realizable value for Used Cores are determined based on current core purchase prices from core brokers to the extent that core purchases in the trailing 12 months are significant. Remanufacturing consumes, on average, more than one
Used Core for each remanufactured unit produced since not all Used Cores are reusable. The yield rates depend upon both the product and customer specifications. We purchase Used Cores from core brokers to supplement our yield rates and Used
Cores not returned under the core exchange programs. We also consider the net selling price our customers have agreed to pay for Used Cores that are not returned under our core exchange programs to assess whether Used Core cost exceeds Used
Core net realizable value on a by customer, by product line basis. Any reduction of core cost is recorded as cost of goods sold in the period in which the revaluation is identified.
|
• |
We record an allowance for potentially excess and obsolete inventory based upon recent sales history, the quantity of inventory on-hand, and a forecast of potential use of the inventory. We periodically review inventory to identify
excess quantities and part numbers that are experiencing a reduction in demand. Any part numbers with quantities identified during this process are reserved for at rates based upon our judgment, historical rates, and consideration of
possible scrap and liquidation values which may be as high as 100% of cost if no liquidation market exists for the part. As a result of this process, we recorded reserves for excess and obsolete inventory of $13,520,000 and $13,246,000 at
March 31, 2022 and 2021, respectively.
|
Fiscal Years Ended March 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Cash flows (used in) provided by operations
|
$
|
(44,862,000
|
)
|
$
|
56,089,000
|
$
|
18,795,000
|
|||||
Finished goods turnover (1)
|
3.8
|
4.1
|
4.1
|
(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. The decrease in finished goods turnover for fiscal 2022 reflects our continued investment in inventory to address disruptions related to the worldwide supply chain and logistics
challenges to meet higher anticipated future sales.
|
Fiscal Years Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Net sales
|
$
|
650,308,000
|
$
|
540,782,000
|
||||
Cost of goods sold
|
532,443,000
|
431,321,000
|
||||||
Gross profit
|
117,865,000
|
109,461,000
|
||||||
Gross profit percentage
|
18.1
|
%
|
20.2
|
%
|
Fiscal Years Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Rotating electrical products
|
69.2
|
%
|
72.8
|
%
|
||||
Wheel hub products
|
13.0
|
%
|
15.6
|
%
|
||||
Brake-related products
|
14.5
|
%
|
9.7
|
%
|
||||
Other products
|
3.3
|
%
|
1.9
|
%
|
||||
100.0
|
%
|
100.0
|
%
|
Fiscal Years Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
General and administrative
|
$
|
57,499,000
|
$
|
53,847,000
|
||||
Sales and marketing
|
22,833,000
|
18,024,000
|
||||||
Research and development
|
10,502,000
|
8,563,000
|
||||||
Foreign exchange impact of lease liabilities and forward contracts
|
(1,673,000
|
)
|
(17,606,000
|
)
|
||||
Percent of net sales
|
||||||||
General and administrative
|
8.8
|
%
|
10.0
|
%
|
||||
Sales and marketing
|
3.5
|
%
|
3.3
|
%
|
||||
Research and development
|
1.6
|
%
|
1.6
|
%
|
||||
Foreign exchange impact of lease liabilities and forward contracts
|
(0.3
|
)%
|
(3.3
|
)%
|
Fiscal Years Ended March 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Cash (used in) provided by:
|
||||||||||||
Operating activities
|
$
|
(44,862,000
|
)
|
$
|
56,089,000
|
$
|
18,795,000
|
|||||
Investing activities
|
(7,938,000
|
)
|
(14,214,000
|
)
|
(11,594,000
|
)
|
||||||
Financing activities
|
60,215,000
|
(76,567,000
|
)
|
32,153,000
|
||||||||
Effect of exchange rates on cash and cash equivalents
|
78,000
|
599,000
|
351,000
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
$
|
7,493,000
|
$
|
(34,093,000
|
)
|
$
|
39,705,000
|
|||||
Additional selected cash flow data:
|
||||||||||||
Depreciation and amortization
|
$
|
12,886,000
|
$
|
11,144,000
|
$
|
9,561,000
|
||||||
Capital expenditures
|
7,550,000
|
13,942,000
|
14,156,000
|
Financial covenants
required per the Credit
Facility
|
Calculation as of
March 31, 2022 |
|||||||
Maximum senior leverage ratio
|
3.00
|
2.74
|
||||||
Minimum fixed charge coverage ratio
|
1.10
|
1.27
|
Fiscal Years Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Receivables discounted
|
$
|
525,441,000
|
$
|
491,285,000
|
||||
Weighted average days
|
336
|
334
|
||||||
Weighted average discount rate
|
1.9
|
%
|
2.1
|
%
|
||||
Amount of discount as interest expense
|
$
|
9,197,000
|
$
|
9,513,000
|
Payments Due by Period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less than
1 year |
1 to 3
years |
3 to 5
years |
More than 5
years |
|||||||||||||||
Finance lease obligations (1)
|
$
|
6,184,000
|
$
|
2,549,000
|
$
|
2,993,000
|
$
|
642,000
|
$
|
-
|
||||||||||
Operating lease obligations (2)
|
117,090,000
|
11,497,000
|
20,126,000
|
20,847,000
|
64,620,000
|
|||||||||||||||
Revolving facility (3)
|
155,000,000
|
-
|
-
|
155,000,000
|
-
|
|||||||||||||||
Term loan (4)
|
18,204,000
|
4,272,000
|
8,165,000
|
5,767,000
|
-
|
|||||||||||||||
Accrued core payment (5)
|
2,713,000
|
1,758,000
|
853,000
|
102,000
|
-
|
|||||||||||||||
Core bank liability (6)
|
18,165,000
|
2,018,000
|
4,036,000
|
4,036,000
|
8,075,000
|
|||||||||||||||
Finished goods liabilities (7)
|
3,189,000
|
1,581,000
|
1,463,000
|
145,000
|
-
|
|||||||||||||||
Unrecognized tax benefits (8)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Other long-term obligations (9)
|
70,633,000
|
23,672,000
|
19,267,000
|
16,557,000
|
11,137,000
|
|||||||||||||||
Total
|
$
|
391,178,000
|
$
|
47,347,000
|
$
|
56,903,000
|
$
|
203,096,000
|
$
|
83,832,000
|
(1) |
Finance lease obligations represent amounts due under finance 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.
|
(3) |
Obligations under our Revolving Facility mature on May 28, 2026. This debt is classified as a short term liability on our balance sheet as we expect to use our working capital to repay the amounts outstanding under our revolving loan.
|
(4) |
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, 2022,
which was 2.99%.
|
(5) |
Accrued core payment represents the amounts due for principal of $2,607,000 and interest payments of $106,000 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.
|
(6) |
The core bank liability represents the amounts due for principal of $16,901,000 and interest payments of $1,264,000 to be made in connection with the return of Used Cores from our customers.
|
(7) |
Finished goods liabilities represents the amounts due for principal of $3,125,000 and interest payments of $64,000 to be made in connection with the purchase of finished goods from our customers.
|
(8) |
We are unable to reliably estimate the timing of future payments related to uncertain tax position liabilities at March 31, 2022; therefore, future tax payment accruals related to uncertain tax positions in the amount of $1,975,000 have
been excluded from the table above.
|
(9) |
Other long-term obligations represent commitments we have with certain customers to provide marketing allowances in consideration for multi-year customer 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.
|
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8. |
Financial Statements and Supplementary Data
|
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A. |
Controls and Procedures
|
Item 9B. |
Other Information
|
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
|
Item 10. |
Directors, Executive Officers and Corporate Governance
|
Item 11. |
Executive Compensation
|
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13. |
Certain Relationships and Related Transactions, and Director Independence
|
Item 14. |
Principal Accountant Fees and Services
|
Item 15. |
Exhibits, Financial Statement Schedules
|
a. |
Documents filed as part of this report:
|
(1) |
Index to Consolidated Financial Statements:
|
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 42)
|
54
|
Consolidated Balance Sheets
|
F-1
|
Consolidated Statements of Operations
|
F-2
|
Consolidated Statements of Comprehensive Income (Loss)
|
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
|
|||
3.4
|
Amendment to Certificate of Incorporation of the Company
|
|||
3.5
|
Amendment to Certificate of Incorporation of the Company
|
|||
3.6
|
Amended and Restated By-Laws of the Company
|
|||
3.7
|
Certificate of Amendment of the Certificate of Incorporation of the Company
|
|||
3.8
|
Amendment to the Amended and Restated By-Laws of the Company
|
Number
|
Description of Exhibit
|
Method of Filing | ||
3.9
|
Amendment to the Amended and Restated By-Laws of the Company
|
|||
3.10
|
Third Amendment to the Amended and Restated By-Laws of the Company
|
|||
4.1
|
2004 Non-Employee Director Stock Option Plan
|
|||
4.2
|
2010 Incentive Award Plan
|
|||
4.3
|
Amended and Restated 2010 Incentive Award Plan
|
|||
4.4
|
Second Amended and Restated 2010 Incentive Award Plan
|
|||
4.5
|
2014 Non-Employee Director Incentive Award Plan
|
|||
4.6
|
Third Amended and Restated 2010 Incentive Award Plan
|
|||
4.7
|
Fourth Amended and Restated 2010 Incentive Award Plan
|
|||
10.1
|
Form of Indemnification Agreement for officers and directors
|
|||
10.2
|
Amended and Restated Employment Agreement, dated as of December 31, 2008, by and between the Company and Selwyn Joffe
|
|||
10.3
|
Employment Agreement, dated as of May 18, 2012, between Motorcar Parts of America, Inc., and Selwyn Joffe
|
|||
10.4
|
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
|
|||
10.5
|
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
|
Number
|
Description of Exhibit |
Method of Filing | ||
10.6*
|
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
|
|||
10.7
|
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
|
|||
10.8
|
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
|
|||
10.9
|
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
|
|||
10.10
|
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
|
|||
10.11
|
Fifth Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of July 18, 2017, among Motorcar Parts of America, Inc., each lender from time to time party thereto and PNC Bank, National
Association, as administrative agent
|
|||
10.12*
|
Amended and Restated Credit Facility, dated as of June 5, 2018, among Motorcar Parts of America, Inc., each lender from time to time party thereto and PNC Bank, National Association, as administrative agent
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
10.13
|
First Amendment to Amended and Restated Loan Agreement, dated as of November 14, 2018, among Motorcar Parts of America, Inc., D & V Electronics Ltd., each lender from time to time party thereto, and PNC
Bank, National Association, as administrative agent
|
|||
10.14
|
Amendment No. 2 to Employment Agreement, dated as of February 5, 2019, between Motorcar Parts of America, Inc., and Selwyn Joffe
|
|||
10.15
|
Second Amendment to Amended and Restated Loan Agreement, dated as of June 4, 2019, among Motorcar Parts of America, Inc., D&V Electronics Ltd., Dixie Electric Ltd., Dixie Electric Inc., each lender from
time to time party thereto, and PNC Bank, National Association, as administrative agent
|
|||
10.16
|
Amendment No. 3 to Employment Agreement, dated as of March 30, 2020, between Motorcar Parts of America, Inc., and Selwyn Joffe
|
|||
10.17
|
Amendment No. 4 to Employment Agreement, dated as of May 21, 2020, between Motorcar Parts of America, Inc., and Selwyn Joffe
|
|||
10.18
|
Third Amendment to Amended and Restated Loan Agreement, dated as of May 28, 2021, among Motorcar Parts of America, Inc., D&V Electronics Ltd., Dixie Electric Ltd., Dixie Electric Inc., each lender from
time to time party thereto, and PNC Bank, National Association, as administrative agent
|
|||
10.19
|
Amendment No. 5 to Employment Agreement, dated as of June 18, 2021, between Motorcar Parts of America, Inc., and Selwyn Joffe
|
|||
List of Subsidiaries
|
Filed herewith.
|
|||
Consent of Independent Registered Public Accounting Firm Ernst & Young LLP
|
Filed herewith.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
|
|
|||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
|||
|
|
|
||
31.2 |
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.
|
|||
|
|
|
||
32.1 |
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.
|
||
|
|
|
||
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the XBRL document)
|
Filed herewith.
|
||
101.SCM
|
Inline XBRL Taxonomy Extension Schema Document
|
Filed herewith.
|
||
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
Filed herewith.
|
||
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
Filed herewith.
|
||
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
Filed herewith.
|
||
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
Filed herewith.
|
||
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
Filed herewith.
|
*
|
Portions of this exhibit have been granted confidential treatment by the SEC.
|
Item 16. |
Form 10-K Summary
|
MOTORCAR PARTS OF AMERICA, INC.
|
||
Dated: June 14, 2022
|
By:
|
/s/ David Lee
|
David Lee
|
||
Chief Financial Officer
|
||
Dated: June 14, 2022
|
By:
|
/s/ Kamlesh Shah
|
Kamlesh Shah
|
||
Chief Accounting Officer
|
/s/ Selwyn Joffe
|
Chief Executive Officer and Director
|
June 14, 2022
|
Selwyn Joffe
|
(Principal Executive Officer)
|
|
/s/ David Lee
|
Chief Financial Officer
|
June 14, 2022
|
David Lee
|
(Principal Financial Officer)
|
|
/s/ Kamlesh Shah
|
Chief Accounting Officer
|
June 14, 2022
|
Kamlesh Shah
|
(Principal Accounting Officer)
|
|
/s/ Scott Adelson
|
Director
|
June 14, 2022
|
Scott Adelson
|
||
/s/ Rudolph Borneo
|
Director
|
June 14, 2022
|
Rudolph Borneo
|
||
/s/ Philip Gay
|
Director
|
June 14, 2022
|
Philip Gay
|
||
/s/ Duane Miller
|
Director
|
June 14, 2022
|
Duane Miller
|
||
/s/ Jeffrey Mirvis
|
Director
|
June 14, 2022
|
Jeffrey Mirvis
|
||
/s/ David Bryan
|
Director
|
June 14, 2022
|
David Bryan
|
||
/s/ Joseph Ferguson
|
Director
|
June 14, 2022
|
Joseph Ferguson
|
||
/s/ Barbara Whittaker
|
Director
|
June 14, 2022
|
Barbara Whittaker
|
||
/s/ Jamy Rankin
|
Director
|
June 14, 2022
|
Jamy Rankin
|
||
/s/ Patricia Warfield
|
Director
|
June 14, 2022
|
Patricia Warfield
|
Page
|
|
51
|
|
F-1
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
S-1
|
/s/
|
|
|
|
June 14, 2022
|
Contractual Agreements with Core Exchange Programs
|
|
Description of the matter
|
As more fully described in Note 2 to the consolidated financial statements, the Company enters into contractual arrangements with customers (core exchange programs) which represent the majority of the Company’s sales for products that
contain remanufactured cores. At March 31, 2022, contract assets and contract liabilities related to core exchange programs recorded on the consolidated balance sheet were $337,755,000 and $215,260,000, respectively.
Auditing contract assets and contract liabilities related to the core exchange programs involved complex auditor judgment due to the unique terms of each customer arrangement which impact the completeness, existence, valuation and
classification of contract assets and liabilities.
|
How we addressed the
matter in our audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of contracts with customers, management’s assessment of the accounting for core exchange programs, including
unique contractual terms, and management’s review of the related contract assets and liabilities including controls over the completeness and accuracy of data.
Our audit procedures to test the contract assets and contract liabilities related to core exchange programs included, among others, (i) reviewing agreements and amendments for significant customers, (ii) testing the completeness of
management’s identification of contractual terms, (iii) evaluating the consistency of the accounting treatment with the Company’s policies; and (v) testing the completeness and accuracy of the underlying data used in management’s analyses.
|
|
Marketing Allowances
|
||
Description of the matter
|
As more fully described in Note 2 and Note 14 to the consolidated financial statements, revenue is recognized net of applicable marketing allowances. These marketing allowances vary by contract and can include (i) the issuance of a
specified amount of credits against receivables, (ii) support for research or marketing efforts, (iii) discounts granted in connection with shipments of product, and (iv) other marketing, research, store expansion or product development
support. At March 31, 2022, marketing allowances recorded on the Company’s consolidated balance sheet was $22,059,000, which is presented within contract liabilities.
Auditing the completeness of marketing allowances was complex because marketing allowances vary by contract and could be impacted by unrecorded marketing allowances provided to customers.
|
|
How we addressed the
matter in our audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the marketing allowances processes. For example, we tested controls over management’s review of contracts with customers
containing marketing allowances, management’s review of the completeness and accuracy of data used in the marketing accrual analysis at period end and management’s review of credits issued to customers subsequent to the balance sheet date.
Our audit procedures to test marketing allowances included, among others, reviewing significant contracts with customers, obtaining confirmations of contractual terms and conditions from a sample of the Company’s customers, and testing
credits issued or payments made to customers throughout the year. We tested the completeness and accuracy of data used in the calculation of the marketing allowance by agreeing contractual terms to the underlying agreements. In addition, we
evaluated the relationship between revenue and marketing allowances and assessed subsequent events to determine whether there was any new information that would require adjustments to the amounts recorded.
|
/s/ Ernst & Young LLP
|
|
We have served as the Company’s auditor since 2007.
|
|
Los Angeles, California
|
|
June 14, 2022
|
|
March 31, 2022
|
March 31, 2021
|
||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Short-term investments
|
|
|
||||||
Accounts receivable — net
|
|
|
||||||
Inventory — net
|
|
|
||||||
Inventory unreturned
|
|
|
||||||
Contract assets
|
|
|
||||||
Income tax receivable
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Plant and equipment — net
|
|
|
||||||
Operating lease assets
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Long-term contract assets
|
|
|
||||||
Goodwill
|
|
|
||||||
Intangible assets — net
|
|
|
||||||
Other assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accrued liabilities
|
|
|
||||||
Customer finished goods returns accrual
|
|
|
||||||
Contract liabilities
|
|
|
||||||
Revolving loan
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Current portion of term loan
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Term loan, less current portion
|
|
|
||||||
Contract liabilities, less current portion
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Operating lease liabilities, less current portion
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies
|
|
|
||||||
Shareholders’ equity:
|
||||||||
Preferred stock; par value $
|
|
|
||||||
Series A junior participating preferred stock; par value $
|
|
|
||||||
Common stock; par value $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Total shareholders’ equity
|
|
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
|
$
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
||||||
Cost of goods sold
|
|
|
|
|||||||||
Gross profit
|
|
|
|
|||||||||
Operating expenses:
|
||||||||||||
General and administrative
|
|
|
|
|||||||||
Sales and marketing
|
|
|
|
|||||||||
Research and development
|
|
|
|
|||||||||
Foreign exchange impact of lease liabilities and forward contracts
|
(
|
)
|
(
|
)
|
|
|||||||
Total operating expenses
|
|
|
|
|||||||||
Operating income
|
|
|
|
|||||||||
Interest expense, net
|
|
|
|
|||||||||
Income (loss) before income tax expense (benefit)
|
|
|
(
|
)
|
||||||||
Income tax expense(benefit)
|
|
|
(
|
)
|
||||||||
|
||||||||||||
Net income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Basic net income (loss) per share
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Diluted net income (loss) per share
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Weighted average number of shares outstanding:
|
||||||||||||
Basic
|
|
|
|
|||||||||
Diluted
|
|
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Net income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Foreign currency translation income (loss)
|
|
(
|
)
|
(
|
)
|
|||||||
Total other comprehensive income (loss), net of tax
|
|
(
|
)
|
(
|
)
|
|||||||
|
||||||||||||
Comprehensive income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|
Common Stock
|
|||||||||||||||||||||||
|
Shares
|
Amount
|
Additional Paid-in
Capital Common
Stock
|
Retained Earnings
|
Other
Comprehensive
Loss
|
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance at March 31, 2019
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
|
||||||||||||||||||||||||
Compensation recognized under employee stock plans
|
-
|
|
|
|
|
|
||||||||||||||||||
Exercise of stock options, net of shares withheld for employee taxes
|
|
|
|
|
|
|
||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Foreign currency translation
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
|
||||||||||||||||||||||||
Balance at March 31, 2020
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
|
||||||||||||||||||||||||
Compensation recognized under employee stock plans
|
-
|
|
|
|
|
|
||||||||||||||||||
Exercise of stock options, net of shares withheld for employee taxes
|
|
|
|
|
|
|
||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Repurchase and cancellation of treasury stock, including fees
|
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Foreign currency translation
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Net income
|
-
|
|
|
|
|
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance at March 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Compensation recognized under employee stock plans
|
-
|
|
|
|
|
|
||||||||||||||||||
Exercise of stock options, net of shares withheld for employee taxes
|
|
|
|
|
|
|
||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Repurchase and cancellation of treasury stock, including fees
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||
Foreign currency translation
|
-
|
|
|
|
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
||||||||||||||||||
Balance at March 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Amortization of intangible assets
|
|
|
|
|||||||||
Amortization and write-off of debt issuance costs
|
|
|
|
|||||||||
Amortization of interest on contract liabilities, net
|
|
|
|
|||||||||
Amortization of core premiums paid to customers
|
|
|
|
|||||||||
Amortization of finished goods premiums paid to customers
|
|
|
|
|||||||||
Non-cash lease expense
|
|
|
|
|||||||||
Foreign exchange impact of lease liabilities and forward contracts
|
(
|
)
|
(
|
)
|
|
|||||||
Foreign currency remeasurement loss (gain)
|
|
(
|
)
|
|
||||||||
Loss (gain) due to the change in the fair value of the contingent consideration
|
|
|
(
|
)
|
||||||||
Gain on short-term investments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net provision for inventory reserves
|
|
|
|
|||||||||
Net provision for customer payment discrepancies
|
|
|
|
|||||||||
Net provision for doubtful accounts
|
|
(
|
)
|
|
||||||||
Deferred income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Share-based compensation expense
|
|
|
|
|||||||||
Loss on disposal of plant and equipment
|
|
|
|
|||||||||
Change in operating assets and liabilities, net of effects of acquisitions:
|
||||||||||||
Accounts receivable
|
(
|
)
|
|
(
|
)
|
|||||||
Inventory
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Inventory unreturned
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Income tax receivable
|
|
|
|
|||||||||
Prepaid expenses and other current assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other assets
|
|
|
(
|
)
|
||||||||
Accounts payable and accrued liabilities
|
|
|
(
|
)
|
||||||||
Customer finished goods returns accrual
|
|
|
|
|||||||||
Contract assets, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Contract liabilities, net
|
|
|
|
|||||||||
Operating lease liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other liabilities
|
|
|
|
|||||||||
Net cash (used in) provided by operating activities
|
(
|
)
|
|
|
||||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of plant and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from sale of plant and equipment
|
|
|
|
|||||||||
(Payments for) redemptions of short term investments
|
(
|
)
|
(
|
)
|
|
|||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Borrowings under revolving loan
|
|
|
|
|||||||||
Repayments under revolving loan
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Repayments of term loan
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Payments for debt issuance costs
|
(
|
)
|
|
(
|
)
|
|||||||
Payments on finance lease obligations
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Payment of contingent consideration
|
|
(
|
)
|
(
|
)
|
|||||||
Exercise of stock options
|
|
|
|
|||||||||
Cash used to net share settle equity awards
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Repurchase of common stock, including fees
|
(
|
)
|
(
|
)
|
|
|||||||
Net cash provided by (used in) financing activities
|
|
(
|
)
|
|
||||||||
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
|
(
|
)
|
|
||||||||
Cash and cash equivalents — Beginning of year
|
|
|
|
|||||||||
Cash and cash equivalents — End of year
|
$
|
|
$
|
|
$
|
|
||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Cash paid for interest, net
|
$
|
|
$
|
|
$
|
|
||||||
Cash paid for income taxes, net of refunds
|
|
|
|
|||||||||
Cash paid for operating leases
|
|
|
|
|||||||||
Cash paid for finance leases
|
|
|
|
|||||||||
Plant and equipment acquired under finance lease
|
|
|
|
|||||||||
Assets acquired under operating leases
|
|
|
|
|||||||||
Non-cash capital expenditures
|
|
|
|
• |
Net realizable value for finished goods by customer, by product line are determined based on the agreed upon selling price with the customer for a product in the
trailing 12 months. The Company compares the average selling price, including any discounts and allowances, to the finished goods cost of on-hand inventory, less any reserve for excess and obsolete inventory. Any reduction of value is
recorded as cost of goods sold in the period in which the revaluation is identified.
|
• |
Net realizable value for Used Cores are determined based on current core purchase prices from core brokers to the extent that core purchases in the trailing 12
months are significant. Remanufacturing consumes, on average, more than one Used Core for each remanufactured unit produced since not all Used Cores are reusable. The yield rates depend upon both the product and consumer specifications. The
Company purchases Used Cores from core brokers to supplement its yield rates and Used Cores not returned under the core exchange programs. The Company also considers the net selling price its customers have agreed to pay for Used Cores that
are not returned under its core exchange programs to assess whether Used Core cost exceeds Used Core net realizable value on a by customer, by product line basis. Any reduction of core cost is recorded as cost of goods sold in the period in
which the revaluation is identified.
|
• |
The Company records an allowance for potentially excess and obsolete inventory based upon recent sales history, the quantity of inventory on-hand, and a forecast
of potential use of the inventory. The Company periodically reviews inventory to identify excess quantities and part numbers that are experiencing a reduction in demand. Any part numbers with quantities identified during this process are
reserved for at rates based upon management’s judgment, historical rates, and consideration of possible scrap and liquidation values which may be as high as
|
Years Ended March 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Net income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Basic shares
|
|
|
|
|||||||||
Effect of dilutive stock options and warrants
|
|
|
|
|||||||||
Diluted shares
|
|
|
|
|||||||||
Net income (loss) per share:
|
||||||||||||
Basic net income (loss) per share
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
Diluted net income (loss) per share
|
$
|
|
$
|
|
$
|
(
|
)
|
Years Ended March 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Net gain recognized on equity securities
|
$
|
|
$
|
|
$
|
|
||||||
Less: net gain recognized on equity securities sold
|
|
|
|
|||||||||
Unrealized gain (loss) recognized on equity securities still held
|
$
|
|
$
|
|
$
|
(
|
)
|
|
March 31, 2022
|
March 31, 2021
|
||||||||||||||||||
Weighted
Average
Amortization
Period
|
Gross Carrying
Value
|
Accumulated
Amortization
|
Gross Carrying
Value
|
Accumulated
Amortization
|
||||||||||||||||
Intangible assets subject to amortization
|
0
|
|||||||||||||||||||
Trademarks
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Customer relationships
|
|
|
|
|
|
|||||||||||||||
Developed technology
|
|
|
|
|
|
|||||||||||||||
Total
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Amortization expense
|
$
|
|
$
|
|
$
|
|
Year Ending March 31,
|
||||
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Total
|
$
|
|
|
March 31, 2022
|
March 31, 2021
|
||||||
|
||||||||
Accounts receivable — trade
|
$
|
|
$
|
|
||||
Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Customer payment discrepancies
|
(
|
)
|
(
|
)
|
||||
Customer returns RGA issued
|
(
|
)
|
(
|
)
|
||||
Less: total accounts receivable offset accounts
|
(
|
)
|
(
|
)
|
||||
Total accounts receivable — net
|
$
|
|
$
|
|
Years Ended March 31,
|
||||||||
2022 |
2021 |
|||||||
Balance at beginning of period
|
$
|
|
$ |
|||||
Provision for expected credit losses
|
|
|||||||
Recoveries
|
|
( |
) | |||||
Amounts written off charged against the allowance
|
(
|
)
|
( |
) | ||||
Balance at end of period
|
$
|
|
$ |
|
March 31, 2022
|
March 31, 2021
|
||||||
|
||||||||
Raw materials
|
$
|
|
$
|
|
||||
Work in process
|
|
|
||||||
Finished goods
|
|
|
||||||
|
|
|
||||||
Less allowance for excess and obsolete inventory
|
(
|
)
|
(
|
)
|
||||
|
||||||||
Total
|
$
|
|
$
|
|
||||
|
||||||||
Inventory unreturned
|
$
|
|
$
|
|
|
March 31, 2022
|
March 31, 2021
|
||||||
Short-term contract assets
|
||||||||
Cores expected to be returned by customers
|
$
|
|
$
|
|
||||
Upfront payments to customers
|
|
|
||||||
Finished goods premiums paid to customers
|
|
|
||||||
Core premiums paid to customers
|
|
|
||||||
Total short-term contract assets
|
$
|
|
$
|
|
||||
|
||||||||
Remanufactured cores held at customers’ locations
|
$
|
|
$
|
|
||||
Upfront payments to customers
|
|
|
||||||
Finished goods premiums paid to customers
|
|
|
||||||
Core premiums paid to customers
|
|
|
||||||
Long-term core inventory deposits
|
|
|
||||||
Total long-term contract assets
|
$
|
|
$
|
|
|
March 31, 2022
|
March 31, 2021
|
||||||
|
||||||||
Machinery and equipment
|
$
|
|
$
|
|
||||
Office equipment and fixtures
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
|
|
|||||||
Less accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Total
|
$
|
|
$
|
|
|
March 31, 2022
|
March 31, 2021
|
||||||
|
||||||||
Principal amount of Term Loans
|
$
|
|
$
|
|
||||
Unamortized financing fees
|
(
|
)
|
(
|
)
|
||||
Net carrying amount of Term Loans
|
|
|
||||||
Less current portion of Term Loans
|
(
|
)
|
(
|
)
|
||||
Long-term portion of Term Loans
|
$
|
|
$
|
|
Year Ending March 31,
|
||||
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026 | ||||
2027
|
||||
Total payments
|
$
|
|
|
March 31, 2022
|
March 31, 2021
|
||||||
Short-term contract liabilities
|
||||||||
Customer core returns accruals
|
$
|
|
$
|
|
||||
Customer allowances earned
|
|
|
||||||
Customer deposits
|
|
|
||||||
Finished goods liabilities
|
|
|
||||||
Core bank liability
|
|
|
||||||
Accrued core payment
|
|
|
||||||
Total short-term contract liabilities
|
$
|
|
$
|
|
||||
Long-term contract liabilities
|
||||||||
Customer core returns accruals
|
$
|
|
$
|
|
||||
Customer allowances earned
|
|
|
||||||
Finished goods liabilities
|
|
|
||||||
Core bank liability
|
|
|
||||||
Accrued core payment
|
|
|
||||||
Total long-term contract liabilities
|
$
|
|
$
|
|
|
March 31, 2022
|
March 31, 2021
|
|||||||
Leases
|
Classification
|
||||||||
Assets:
|
|
||||||||
Operating
|
|
$
|
|
$
|
|
||||
Finance
|
|
|
|
||||||
Total leased assets
|
|
$
|
|
$
|
|
||||
|
|||||||||
Liabilities:
|
|
||||||||
Current
|
|
||||||||
Operating
|
|
$
|
|
$
|
|
||||
Finance
|
|
|
|
||||||
Long-term
|
|
||||||||
Operating
|
|
|
|
||||||
Finance
|
|
|
|
||||||
Total lease liabilities
|
|
$
|
|
$
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020 | |||||||||
Lease cost
|
||||||||||||
Operating lease cost
|
$
|
|
$
|
|
$ | |||||||
Short-term lease cost
|
|
|
||||||||||
Variable lease cost
|
|
|
||||||||||
Finance lease cost:
|
||||||||||||
Amortization of finance lease assets
|
|
|
||||||||||
Interest on finance lease liabilities
|
|
|
||||||||||
Total lease cost
|
$
|
|
$
|
|
$ |
Maturity of lease liabilities by fiscal year
|
Operating Leases
|
Finance Leases
|
Total
|
|||||||||
2023
|
$
|
|
$
|
|
$
|
|
||||||
2024
|
|
|
|
|||||||||
2025
|
|
|
|
|||||||||
2026
|
|
|
|
|||||||||
2027
|
|
|
|
|||||||||
Thereafter
|
|
|
|
|||||||||
Total lease payments
|
|
|
|
|||||||||
Less amount representing interest
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Present value of lease liabilities
|
$
|
|
$
|
|
$
|
|
|
March 31, 2022
|
March 31, 2021
|
||||||
Lease term and discount rate
|
||||||||
Weighted-average remaining lease term (years):
|
||||||||
Finance leases
|
|
|
||||||
Operating leases
|
|
|
||||||
Weighted-average discount rate:
|
||||||||
Finance leases
|
|
%
|
|
%
|
||||
Operating leases
|
|
%
|
|
%
|
|
Fiscal Years Ended March 31,
|
|||||||
|
2022
|
2021
|
||||||
|
||||||||
Receivables discounted
|
$
|
|
$
|
|
||||
Weighted average days
|
|
|
||||||
Weighted average discount rate
|
|
%
|
|
%
|
||||
Amount of discount as interest expense
|
$
|
|
$
|
|
|
(Loss) Gain Recognized as Foreign Exchange Impact of Lease Liabilities and Forward Contracts
|
|||||||||||
Derivatives Not Designated as
|
Years Ended March 31,
|
|||||||||||
Hedging Instruments
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Forward foreign currency exchange contracts
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
• |
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, 2022
|
March 31, 2021
|
|||||||||||||||||||||||||||||||
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Prepaid expenses and other current assets
|
||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||||||||||
Accrued liabilities
|
||||||||||||||||||||||||||||||||
Short-term contingent consideration
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other current liabilities
|
||||||||||||||||||||||||||||||||
Deferred compensation
|
|
|
|
|
|
|
|
|
|
Years Ended March 31,
|
|||||||
|
2022
|
2021
|
||||||
|
Contingent
Consideration
|
Contingent
Consideration
|
||||||
Beginning balance
|
$
|
|
$
|
|
||||
Newly issued
|
|
|
||||||
Changes in revaluation of
|
|
|
||||||
Exercises/settlements
|
(
|
)
|
(
|
)
|
||||
Ending balance
|
$
|
|
$
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Balance at beginning of year
|
$
|
|
$
|
|
$
|
|
||||||
Charged to expense
|
|
|
|
|||||||||
Amounts processed
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Balance at end of year
|
$
|
|
$
|
|
$
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Allowances incurred under long-term customer contracts
|
$
|
|
$
|
|
$
|
|
||||||
Allowances related to a single exchange of product
|
|
|
|
|||||||||
Amortization of core premiums paid to customers
|
|
|
|
|||||||||
Total customer allowances recorded as a reduction of revenues
|
$
|
|
$
|
|
$
|
|
Year Ending March 31,
|
||||
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total marketing allowances
|
$
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Customer A
|
|
%
|
|
%
|
|
%
|
||||||
Customer B
|
|
%
|
|
%
|
|
%
|
||||||
Customer C
|
|
%
|
|
%
|
|
%
|
|
March 31, 2022
|
March 31, 2021
|
||||||
|
||||||||
Customer A
|
|
%
|
|
%
|
||||
Customer B
|
|
%
|
|
%
|
||||
Customer C
|
|
%
|
|
% |
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Rotating electrical products
|
|
%
|
|
%
|
|
%
|
||||||
Wheel hub products
|
|
%
|
|
%
|
|
%
|
||||||
Brake-related products
|
|
%
|
|
%
|
|
%
|
||||||
Other products
|
|
%
|
|
%
|
|
%
|
||||||
|
|
%
|
|
%
|
|
%
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
Current tax expense
|
||||||||||||
Federal
|
$
|
|
$
|
|
$
|
|
||||||
State
|
|
|
|
|||||||||
Foreign
|
|
|
|
|||||||||
Total current tax expense
|
|
|
|
|||||||||
Deferred tax (benefit) expense
|
||||||||||||
Federal
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
State
|
(
|
)
|
|
(
|
)
|
|||||||
Foreign
|
(
|
)
|
|
(
|
)
|
|||||||
Total deferred tax benefit
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Total income tax expense (benefit)
|
$
|
|
$
|
|
$
|
(
|
)
|
|
March 31, 2022
|
March 31, 2021
|
||||||
Assets
|
||||||||
Allowance for bad debts
|
$
|
|
$
|
|
||||
Customer allowances earned
|
|
|
||||||
Allowance for stock adjustment returns
|
|
|
||||||
Inventory adjustments
|
|
|
||||||
Stock options
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Estimate for returns
|
|
|
||||||
Accrued compensation
|
|
|
||||||
Net operating losses
|
|
|
||||||
Tax credits
|
|
|
||||||
Other
|
|
|
||||||
Total deferred tax assets
|
$
|
|
$
|
|
||||
Liabilities
|
||||||||
Plant and equipment, net
|
(
|
)
|
(
|
)
|
||||
Intangibles, net
|
(
|
)
|
(
|
)
|
||||
Operating lease
|
(
|
)
|
(
|
)
|
||||
Other
|
(
|
)
|
(
|
)
|
||||
Total deferred tax liabilities
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Less valuation allowance
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Total
|
$
|
|
$
|
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Statutory federal income tax rate
|
|
%
|
|
%
|
|
%
|
||||||
State income tax rate, net of federal benefit
|
|
%
|
|
%
|
(
|
)%
|
||||||
Excess tax benefit from stock compensation
|
(
|
)%
|
|
%
|
(
|
)%
|
||||||
Foreign income taxed at different rates
|
|
%
|
|
%
|
|
%
|
||||||
Return to provision adjustments
|
(
|
)%
|
|
%
|
(
|
)%
|
||||||
Non-deductible executive compensation
|
|
%
|
|
%
|
(
|
)%
|
||||||
Change in valuation allowance
|
|
%
|
|
%
|
(
|
)%
|
||||||
Net operating loss carryback
|
(
|
)%
|
|
% |
|
%
|
||||||
Uncertain tax positions
|
|
%
|
|
%
|
|
%
|
||||||
Research and development credit
|
(
|
)%
|
(
|
)%
|
|
%
|
||||||
Other income tax
|
(
|
)%
|
|
%
|
(
|
)%
|
||||||
|
|
%
|
|
%
|
|
%
|
|
Years Ended March 31,
|
|||||||||||
|
2022
|
2021
|
2020
|
|||||||||
|
||||||||||||
Balance at beginning of period
|
$
|
|
$
|
|
$
|
|
||||||
Additions based on tax positions related to the current year
|
|
|
|
|||||||||
Additions for tax positions of prior year
|
|
|
|
|||||||||
Reductions for tax positions of prior year
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Balance at end of period
|
$
|
|
$
|
|
$
|
|
Years Ended March 31,
|
||||||||
2021
|
2020
|
|||||||
Weighted average risk free interest rate
|
|
%
|
|
%
|
||||
Weighted average expected holding period (years)
|
|
|
||||||
Weighted average expected volatility
|
|
%
|
|
%
|
||||
Weighted average expected dividend yield
|
|
|
||||||
Weighted average fair value of options granted
|
$
|
|
$
|
|
|
Number of
Shares
|
Weighted Average
Exercise Price
|
||||||
|
||||||||
Outstanding at March 31, 2021
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Exercised
|
(
|
)
|
$
|
|
||||
Forfeited
|
(
|
)
|
$
|
|
||||
Outstanding at March 31, 2022
|
|
$
|
|
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
|
Weighted
Average
Remaining
Life
In Years
|
Aggregate
Intrinsic
Value
|
||||||||||||||||||||
$
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|||||||||||||||||
$
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
$
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
$
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
$
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
Number of
Shares
|
Weighted Average
Grant Date Fair
Value
|
||||||
|
||||||||
Outstanding at March 31, 2021
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
(
|
)
|
$
|
|
||||
Forfeited
|
(
|
)
|
$
|
|
||||
Outstanding at March 31, 2022
|
|
$
|
|
Year Ended March 31,
|
||||
2022
|
||||
Risk free interest rate
|
|
%
|
||
Expected life in years
|
|
|||
Expected volatility of MPA common stock
|
|
%
|
||
Expected average volatility of peer companies
|
|
%
|
||
Average correlation coefficient of peer companies
|
|
%
|
||
Expected dividend yield
|
|
|||
Grant date fair value
|
$
|
|
Number of Shares
|
Weighted Average
Grant Date Fair
Value
|
|||||||
Outstanding at March 31, 2021
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
|
$
|
|
|||||
Forfeited
|
|
$
|
|
|||||
Outstanding at March 31, 2022
|
|
$
|
|
Years Ended
March 31,
|
Description
|
Balance at
beginning of
year
|
Charge to
(recovery of)
bad debts
expense
|
Amounts
written off
|
Balance at
end of
year
|
||||||||||||
2022
|
Allowance for credit losses
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
2021
|
Allowance for credit losses
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||
2020
|
Allowance for credit losses
|
$
|
|
$
|
|
$
|
|
$
|
|
Years Ended
March 31,
|
Description
|
Balance at
beginning of
year
|
Charge to
discrepancies
expense
|
Amounts
Processed
|
Balance at
end of
year
|
||||||||||||
2022
|
Allowance for customer-payment discrepancies
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
2021
|
Allowance for customer-payment discrepancies
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
2020
|
Allowance for customer-payment discrepancies
|
$
|
|
$
|
|
$
|
|
$
|
|
Years Ended
March 31,
|
Description
|
Balance at
beginning of
year
|
Provision for
excess and
obsolete
inventory
|
Amounts
written off
|
Balance at
end of
year
|
||||||||||||
2022
|
0Allowance for excess and obsolete inventory
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
2021
|
Allowance for excess and obsolete inventory
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
2020
|
Allowance for excess and obsolete inventory
|
$
|
|
$
|
|
$
|
|
$
|
|