<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-28568
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 95-2920557
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
700 EAST BONITA AVENUE, POMONA, CA 91767
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
909-624-8041
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECKMARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS; AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENT FOR THE PAST 90 DAYS.
YES NO X*
----- -----
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK, NO PAR VALUE,
AT JUNE 29, 1996 WAS 7,300,000 SHARES.
THIS FORM 10-Q CONTAINS 12 PAGES.
---
*THE REGISTRANT HAS NOT BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90
DAYS.
(1)
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KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS 3
JUNE 29, 1996 (UNAUDITED) AND MARCH 29, 1996
STATEMENTS OF INCOME 4
THREE MONTHS ENDED JUNE 29, 1996 (UNAUDITED) AND
JUNE 30, 1995 (UNAUDITED)
STATEMENTS OF CASH FLOWS 5
THREE MONTHS ENDED JUNE 29, 1996 (UNAUDITED) AND
JUNE 30, 1995 (UNAUDITED)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8-10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 5. OTHER INFORMATION 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
(2)
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
JUNE 29, MARCH 29,
1996 1996
------- -------
(UNAUDITED) (NOTE)
CURRENT ASSETS:
CASH ............................................. $ 9,055 $ 2,677
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF $318 AT JUNE 1996
AND $280 AT MARCH 1996 ........................ 9,835 10,799
INVENTORIES, PRIMARILY FINISHED GOODS ............ 22,406 22,226
OTHER CURRENT ASSETS ............................. 1,228 1,328
------- -------
TOTAL CURRENT ASSETS ....................... 42,524 37,030
PROPERTY, PLANT AND EQUIPMENT, NET: .............. 4,650 4,331
OTHER ASSETS ..................................... 1,694 1,674
------- -------
TOTAL ASSETS ................................ $48,868 $43,035
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
LINE OF CREDIT ................................... $ 7,250 $12,250
BANKERS ACCEPTANCES AND OTHER SHORT TERM DEBT .... 3,907 3,520
ACCOUNTS PAYABLE. ................................ 5,239 8,597
NOTE PAYABLE TO RELATED PARTY .................... 150 150
ACCRUED LIABILITIES .............................. 2,949 1,794
LONG TERM DEBT, DUE WITHIN ONE YEAR ................ 297 400
------- -------
TOTAL CURRENT LIABILITIES .................... 19,792 26,711
LONG-TERM DEBT, LESS CURRENT PORTION ............... 730 813
ACCRUED PENSION COST ............................... 36 36
SHAREHOLDERS' EQUITY:
PREFERRED STOCK, NO PAR VALUE:
AUTHORIZED SHARES -- 3,000,000
NONE ISSUED AND OUTSTANDING
COMMON STOCK, NO PAR VALUE:
AUTHORIZED SHARES - 20,000,000
ISSUED AND OUTSTANDING SHARES -- 7,300,000
AT JUNE 1996 AND 5,800,00 AT MARCH 1996
AT STATED VALUE ............................. 16,054 4,299
ADDITIONAL PAID-IN CAPITAL ....................... 436 436
RETAINED EARNINGS ................................ 11,820 10,740
------- -------
TOTAL SHAREHOLDERS' EQUITY ................... 28,310 15,475
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ... $48,868 $43,035
------- -------
------- -------
SEE ACCOMPANYING NOTES
NOTE: THE BALANCE SHEET AT MARCH 29, 1996 HAS BEEN DERIVED FROM THE
AUDITED FINANCIAL STATEMENTS AT THAT DATE BUT DOES NOT INCLUDE ALL OF THE
INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS.
(3)
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KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
THREE MONTHS ENDED
------------------
JUNE 29, JUNE 30,
1996 1995
------- -------
NET SALES . . . . . . . . . . . . . . . . . . . . . $ 32,163 $ 26,523
COST OF SALES. . . . . . . . . . . . . . . . . . . . 19,479 16,057
------- -------
GROSS PROFIT . . . . . . . . . . . . . . . . . . . . 12,684 10,466
OPERATING EXPENSES:
SELLING AND DISTRIBUTION EXPENSES. . . . . . . . . 8,727 7,518
GENERAL AND ADMINISTRATIVE . . . . . . . . . . . . 1,889 1,809
------- -------
OPERATING INCOME . . . . . . . . . . . . . . . . . . 2,068 1,139
INTEREST EXPENSE . . . . . . . . . . . . . . . . . . 268 277
------- -------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . 1,800 862
INCOME TAXES . . . . . . . . . . . . . . . . . . . . 720 345
------- -------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 1,080 $ 517
------- -------
------- -------
NET INCOME PER SHARE . . . . . . . . . . . . . . . . $ 0.18 $ 0.09
------- -------
------- -------
WEIGHTED AVERAGES SHARES OUTSTANDING . . . . . . . . 5,950,000 5,800,000
--------- ---------
--------- ---------
SEE ACCOMPANYING NOTES
(4)
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KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
THREE MONTHS ENDED
------------------
JUNE 29, JUNE 30,
1996 1995
------- -------
OPERATING ACTIVITIES
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 1,080 $ 517
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
USED IN OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION. . . . . . . . . . . . 226 217
DEFERRED TAXES . . . . . . . . . . . . . . . . . . . (120) --
PROVISION FOR LOSSES ON UNCOLLECTIBLE ACCOUNTS . . . 38 30
PROVISION FOR LOSSES ON INVENTORY. . . . . . . . . . 355 161
CHANGES IN OPERATING ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . 927 143
INVENTORIES. . . . . . . . . . . . . . . . . . . . (536) (1,250)
PREPAID EXPENSES, OTHER RECEIVABLES AND
OTHER ASSETS . . . . . . . . . . . . . . . . . . 200 1,023
ACCOUNTS PAYABLE . . . . . . . . . . . . . . . . . (3,358) (1,412)
ACCRUED SALARIES, AND OTHER ACCRUED LIABILITIES. . 1,155 (817)
------- -------
NET CASH USED IN OPERATING ACTIVITIES. . . . . . . . (33) (1,388)
INVESTING ACTIVITIES
PURCHASES OF PROPERTY, PLANT AND EQUIPMENT . . . . . (545) (222)
------- -------
NET CASH USED IN INVESTING ACTIVITIES. . . . . . . . (545) (222)
FINANCING ACTIVITIES
PAYMENTS UNDER BANK CREDIT FACILITY. . . . . . . . . (5,000) --
BANKERS ACCEPTANCES AND OTHER SHORT-TERM DEBT, NET . 387 1,531
PAYMENTS ON NOTES PAYABLE TO OFFICERS,
SHAREHOLDERS AND OTHER RELATED PARTIES . . . . . . -- (344)
PRINCIPAL PAYMENTS ON LONG-TERM DEBT . . . . . . . . (186) (181)
NET PROCEEDS OF INITIAL PUBLIC OFFERING. . . . . . . 11,755 --
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . 6,956 1,006
------- -------
NET INCREASE (DECREASE) IN CASH. . . . . . . . . . . 6,378 (604)
CASH AT BEGINNING OF PERIOD. . . . . . . . . . . . . 2,677 3,916
------- -------
CASH AT END OF PERIOD. . . . . . . . . . . . . . . . $ 9,055 $ 3,312
------- -------
------- -------
SUPPLEMENTAL DISCLOSURES
INTEREST PAID DURING THE PERIOD. . . . . . . . . . $ 274 $ 285
INCOME TAXES PAID DURING THE PERIOD. . . . . . . . $ 83 $ 24
SEE ACCOMPANYING NOTES
(5)
<PAGE>
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(UNAUDITED)
JUNE 29, 1996
1. BASIS OF PRESENTATION
THE ACCOMPANYING UNAUDITED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR INTERIM FINANCIAL
INFORMATION AND WITH THE INSTRUCTIONS OF FORM 10-Q AND ARTICLE 10 OF REGULATION
S-X. ACCORDINGLY, THEY DO NOT INCLUDE ALL OF THE INFORMATION AND FOOTNOTES
REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL
STATEMENTS. IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS, CONSISTING ONLY OF
NORMAL RECURRING ACCRUALS, CONSIDERED NECESSARY FOR FAIR PRESENTATION, WITH
RESPECT TO THE INTERIM FINANCIAL STATEMENTS HAVE BEEN INCLUDED. THE RESULTS OF
OPERATIONS FOR THE THREE MONTH PERIOD ENDED JUNE 29, 1996 ARE NOT NECESSARILY
INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED FOR THE FULL YEAR ENDED MARCH 28,
1997. FOR FURTHER INFORMATION, REFER TO THE FINANCIAL STATEMENTS AND FOOTNOTES
THERETO FOR THE YEAR ENDED MARCH 29, 1996, INCLUDED IN THE KEYSTONE AUTOMOTIVE
INDUSTRIES, INC. REGISTRATION STATEMENT ON FORM S-1 (FILE NO. 333-3994) FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 18, 1996 AND DECLARED
EFFECTIVE ON JUNE 20, 1996.
2. SHAREHOLDERS EQUITY
ON APRIL 16, 1996, THE COMPANY AMENDED ITS ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK TO 20,000,000 AND TO AUTHORIZE
3,000,000 SHARES OF PREFERRED STOCK AND TO EFFECT A COMMON STOCK SPLIT OF 3.8467
TO 1. NO PREFERRED STOCK HAS BEEN ISSUED. ALL SHARE AND PER SHARE AMOUNTS IN
THESE FINANCIAL STATEMENTS HAVE BEEN ADJUSTED FOR THE COMMON STOCK SPLIT.
ON JUNE 20, 1996, THE COMPANY COMPLETED ITS INITIAL PUBLIC OFFERING OF
2,700,000 SHARES OF COMMON STOCK AT $9.00 PER SHARE; 1,500,000 SHARES WERE SOLD
BY THE COMPANY AND 1,200,000 SHARES WERE SOLD BY SELLING SHAREHOLDERS. THE
EXPENSES OF THE OFFERING INCLUDING UNDERWRITER'S DISCOUNTS AND COMMISSIONS,
LEGAL, AUDITING, PRINTING AND OTHER COSTS ARE ESTIMATED TO BE $1,745,000 AS OF
JUNE 29, 1996. BASED ON THESE ESTIMATES, THE NET PROCEEDS TO THE COMPANY ARE
$11,755,000. ACTUAL RESULTS COULD DIFFER FROM THESE ESTIMATES.
ON JUNE 20, 1996, THE COMPANY GRANTED INCENTIVE STOCK OPTIONS TO PURCHASE
AN AGGREGATE OF 200,000 SHARES OF THE COMPANY'S COMMON STOCK AT AN EXERCISE
PRICE OF $9.00 PER SHARE TO CERTAIN EMPLOYEES OF THE COMPANY. THE OPTIONS
BECOME EXERCISABLE ON A CUMULATIVE BASIS AT A RATE OF 25% PER YEAR, COMMENCING
ONE YEAR FROM THE DATE OF GRANT AND EXPIRE TEN YEARS FROM THE DATE OF GRANT. IN
ADDITION, THE COMPANY GRANTED NON-QUALIFIED STOCK OPTIONS TO PURCHASE AN
AGGREGATE OF 20,000 SHARES OF COMMON STOCK TO TWO NON-EMPLOYEE DIRECTORS OF THE
COMPANY. THE OPTIONS VEST IMMEDIATELY AT AN EXERCISE PRICE OF $9.00 PER SHARE.
3. EARNINGS PER SHARE
EARNINGS PER SHARE ARE COMPUTED USING THE WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK AND COMMON STOCK EQUIVALENTS ATTRIBUTABLE TO STOCK OPTIONS.
COMMON STOCK EQUIVALENTS WERE CALCULATED USING THE TREASURY STOCK METHOD.
4. INCOME TAXES
INCOME TAX PROVISIONS FOR INTERIM PERIODS ARE BASED ON ESTIMATED EFFECTIVE
ANNUAL INCOME TAX RATES.
(6)
<PAGE>
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(CONTINUED)
5. NEW ACCOUNTING STANDARDS
IN MARCH 1995, THE FINANCIAL ACCOUNTING STANDARDS BOARD ISSUED STATEMENT
NO. 121(FAS 121), ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF, WHICH REQUIRES IMPAIRMENT LOSSES TO BE
RECORDED ON LONG-LIVED ASSETS USED IN OPERATIONS WHEN INDICATORS OF IMPAIRMENT
ARE PRESENT AND THE UNDISCOUNTED CASH FLOWS ESTIMATED TO BE GENERATED BY THOSE
ASSETS ARE LESS THAN THE ASSETS' CARRYING AMOUNT. STATEMENT 121 ALSO ADDRESSES
THE ACCOUNTING FOR LONG-LIVED ASSETS THAT ARE EXPECTED TO BE DISPOSED OF. THE
COMPANY WILL ADOPT STATEMENT 121 IN 1997 AND, BASED ON CURRENT CIRCUMSTANCES,
DOES NOT BELIEVE THE EFFECT OF ADOPTION WILL BE MATERIAL.
IN OCTOBER 1995, THE FINANCIAL ACCOUNTING STANDARDS BOARD ISSUED STATEMENT
OF FINANCIAL ACCOUNTING STANDARDS NO. 123 "FAS 123", ACCOUNTING FOR STOCK-BASED
COMPENSATION. THE COMPANY IS REQUIRED TO ADOPT FAS 123 BY FISCAL 1997, AND UPON
ADOPTION WILL ELECT TO CONTINUE TO MEASURE COMPENSATION COST FOR ITS EMPLOYEE
STOCK COMPENSATION PLANS USING THE INTRINSIC VALUE-BASED METHOD OF ACCOUNTING
PRESCRIBED BY ACCOUNTING PRINCIPLES BOARD OPINION NO. 25, ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES. PRO FORMA DISCLOSURE OF NET EARNINGS AND NET EARNINGS PER
SHARE WILL REFLECT THE DIFFERENCE BETWEEN COMPENSATION COST INCLUDED IN NET
EARNINGS AND THE RELATED COST MEASURED BY THE FAIR-VALUE BASED METHOD DEFINED IN
FAS 123, INCLUDING TAX EFFECTS, THAT WOULD HAVE BEEN RECOGNIZED IN THE
CONSOLIDATED STATEMENT OF EARNINGS IF THE FAIR VALUE-BASED METHOD HAD BEEN USED.
6. ACQUISITION
THE COMPANY IS CURRENTLY NEGOTIATING THE PURCHASE OF SUBSTANTIALLY ALL OF
THE ASSETS, PRIMARILY INVENTORY AND RECEIVABLES, FOR APPROXIMATELY $4,000,000 IN
CASH AND NOTES OF A DISTRIBUTOR OF AFTERMARKET COLLISION PARTS CURRENTLY
OPERATING SEVEN SERVICE CENTERS IN THE SOUTHEAST.
(7)
<PAGE>
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
ADDRESSED IN THIS ITEM 2 CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO A VARIETY OF RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED BY THE COMPANY'S
MANAGEMENT. THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (THE "ACT")
PROVIDES CERTAIN "SAFE HARBOR" PROVISIONS FOR FORWARD-LOOKING STATEMENTS. ALL
FORWARD-LOOKING STATEMENTS MADE IN THIS QUARTERLY REPORT ON FORM 10-Q ARE MADE
PURSUANT TO THE ACT.
RESULTS OF OPERATIONS
THE FOLLOWING TABLE SETS FORTH FOR THE PERIODS INDICATED, CERTAIN SELECTED
INCOME STATEMENT ITEMS AS A PERCENTAGE OF NET SALES.
THREE MONTHS ENDED
------------------
JUNE 29, JUNE 30,
1996 1995
------ ------
NET SALES . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0%
COST OF SALES . . . . . . . . . . . . . . . . . . . . . 60.6 60.5
GROSS PROFIT. . . . . . . . . . . . . . . . . . . . . . 39.4 39.5
SELLING AND DISTRIBUTION EXPENSES . . . . . . . . . . . 27.1 28.3
GENERAL AND ADMINISTRATIVE EXPENSES . . . . . . . . . . 5.9 6.8
INCOME FROM OPERATIONS. . . . . . . . . . . . . . . . . 6.4 4.4
INTEREST EXPENSE. . . . . . . . . . . . . . . . . . . . .8 1.0
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . 3.4% 2.0%
------ ------
------ ------
THE THREE MONTHS ENDED JUNE 29, 1996 COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1995.
NET SALES WERE $32,163,000 FOR THE THREE MONTHS ENDED JUNE 29, 1996
COMPARED TO $26,523,000 FOR THE THREE MONTHS ENDED JUNE 30, 1995, AN INCREASE OF
$5,640,000 OR 21.3%. THIS INCREASE WAS DUE PRIMARILY TO AN INCREASE OF
$3,384,000 IN SALES OF AUTOMOTIVE BODY PARTS (INCLUDING FENDERS, HOODS,
HEADLIGHTS, RADIATORS, GRILLES AND OTHER CRASH PARTS) AND AN INCREASE OF
$1,594,000 IN SALES OF NEW AND RECYCLED BUMPERS WHICH INCREASES REPRESENT
INCREASES OF APPROXIMATELY 31% AND 18%, RESPECTIVELY, OVER THE COMPARABLE PERIOD
IN FISCAL 1995.
THE COMPANY RECORDED AN INCREASE IN THE SALES OF PAINT AND RELATED
MATERIALS OF $216,000 OR APPROXIMATELY 5% OVER THE PRIOR YEAR PERIOD. IN
ADDITION, THE COMPANY SOLD APPROXIMATELY $274,000 OF REMANUFACTURED ALLOY
WHEELS. THERE WERE NO SALES OF REMANUFACTURED ALLOY WHEELS DURING THE THREE
MONTHS ENDED JUNE 1995.
MANAGEMENT ATTRIBUTES THE INCREASED SALES TO THE INCREASED USE OF
AFTERMARKET COLLISION REPLACEMENT PARTS, INCREASED PENETRATION OF EXISTING
PRODUCT LINES AND A CARRYOVER OF THE SEVERE WINTER WEATHER EXPERIENCED IN MANY
PARTS OF THE NORTHEAST AND MIDWEST UNITED STATES. MANY COLLISION REPAIR SHOPS
HAD LARGE BACKLOGS OF COLLISION REPAIR JOBS THAT WERE COMPLETED DURING THE THREE
MONTHS ENDED JUNE 1996.
GROSS PROFIT INCREASED TO $12,684,000 (39.4% OF NET SALES) FOR THE THREE
MONTHS ENDED JUNE 29, 1996 FROM $10,465,000 (39.5% OF NET SALES) FOR THE THREE
MONTHS ENDED JUNE 30, 1995, AN INCREASE OF 21.2%, A RESULT OF THE INCREASE IN
NET SALES.
(8)
<PAGE>
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
SELLING AND DISTRIBUTION EXPENSES INCREASED TO $8,727,000 (27.1% OF NET
SALES) FOR THE THREE MONTHS ENDED JUNE 29, 1996 FROM $7,517,000 (28.3% OF NET
SALES) FOR THE THREE MONTHS ENDED JUNE 30,1995. SELLING AND DISTRIBUTION
EXPENSES AS A PERCENTAGE OF NET SALES WERE POSITIVELY AFFECTED BY OPERATING
EFFICIENCIES DUE TO INCREASED SALES.
GENERAL AND ADMINISTRATIVE EXPENSES INCREASED TO $1,889,000 (5.9% OF NET
SALES) FOR THE THREE MONTHS ENDED JUNE 29, 1996 COMPARED TO $1,809,000 (6.8% OF
NET SALES) FOR THE THREE MONTHS ENDED JUNE 30,1995. THE DECREASE IN GENERAL AND
ADMINISTRATIVE EXPENSES AS A PERCENTAGE OF NET SALES IS THE RESULT OF
EFFICIENCIES ACHIEVED BY ALLOCATING THE COMPANY'S FIXED EXPENSES OVER AN
INCREASED REVENUE BASE.
LIQUIDITY AND CAPITAL RESOURCES
ON JUNE 20, 1996 THE COMPANY COMPLETED AN INITIAL PUBLIC OFFERING OF
2,700,000 SHARES OF ITS COMMON STOCK. IN THE OFFERING, THE COMPANY SOLD
1,500,000 SHARES OF COMMON STOCK AND SELLING SHAREHOLDERS SOLD 1,200,000 SHARES
OF COMMON STOCK AT A PRICE OF $9.00 PER SHARE. THE NET PROCEEDS TO THE COMPANY
AFTER DISCOUNTS, COMMISSIONS AND EXPENSES ARE ESTIMATED TO BE $11,755,000.
APPROXIMATELY $11,000,000 OF THE PROCEEDS WERE USED TO PAY DOWN THE
COMPANY'S REVOLVING CREDIT FACILITY WITH A COMMERCIAL BANK AND APPROXIMATELY
$738,000 OF THE PROCEEDS WERE USED TO RETIRE TWO OUTSTANDING MORTGAGES ON
COMPANY FACILITIES LOCATED IN BETHLEHEM, PENNSYLVANIA AND LOUISVILLE, KENTUCKY.
THE COMPANY'S PRIMARY NEED FOR FUNDS HAS BEEN TO FINANCE THE GROWTH OF
INVENTORY, THE RESULT OF AN EXPANDING PRODUCT LINE, AND THE GROWTH OF ACCOUNTS
RECEIVABLE, THE RESULT OF INCREASED SALES AND, TO A LESSER EXTENT, THE
ACQUISITION AND OPENING OF NEW SERVICE CENTERS. AT JUNE 29, 1996, WORKING
CAPITAL WAS $22,696,000 COMPARED TO $10,319,000 AT MARCH 29, 1996.
HISTORICALLY, THE COMPANY HAS FINANCED ITS WORKING CAPITAL REQUIREMENTS FROM ITS
CASH FLOW FROM OPERATIONS, ADVANCES DRAWN UNDER ITS LINE OF CREDIT AND, TO A
LIMITED EXTENT, INDEBTEDNESS TO CERTAIN OF THE SELLERS OF ITS ACQUIRED SERVICE
CENTERS.
SUBJECT TO THE SIZE OF THE ACQUISITIONS WHICH THE COMPANY MAY COMPLETE IN
THE FUTURE, THE COMPANY BELIEVES THAT ITS CASH FLOW FROM OPERATIONS AND THE
CREDIT AVAILABLE UNDER ITS LINE OF CREDIT WILL ENABLE IT TO FINANCE ITS
ANTICIPATED GROWTH IN SALES FOR AT LEAST THE NEXT TWELVE MONTHS.
THE COMPANY HAS A SECURED LINE OF CREDIT WITH A COMMERCIAL BANK PURSUANT TO
WHICH THE COMPANY MAY BORROW FROM TIME TO TIME UP TO 80% OF THE NET AMOUNT OF
ELIGIBLE ACCOUNTS RECEIVABLE (AS DEFINED) AND 50% OF THE VALUE OF ELIGIBLE
INVENTORY (AS DEFINED), UP TO $17.0 MILLION AT ANY TIME OUTSTANDING, WITH A
SUBLIMIT OF $6.0 MILLION FOR LETTERS OF CREDIT FOR THE IMPORTATION OF AUTOMOTIVE
PARTS. REVOLVING CREDIT ADVANCES UP TO $17.0 MILLION BEAR INTEREST AT THE
LENDER'S REFERENCE RATE (8.25% AT JUNE 29, 1996) PLUS 0.25%; PROVIDED, HOWEVER,
THAT AT THE COMPANY'S OPTION UP TO $6.0 MILLION OF REVOLVING CREDIT ADVANCES, IN
INCREMENTS OF $500,000, MAY BEAR INTEREST AT LIBOR (5.63% AT JUNE 29, 1996) PLUS
1.5%. BANKERS' ACCEPTANCES BEAR A COMMISSION RATE OF 1% PER ANNUM OVER THE
LENDER'S DISCOUNT RATE FOR ACCEPTANCE AND MATURE 90 DAYS FROM THE DATE OF
ISSUANCE. THE COMPANY CURRENTLY REQUIRES ITS SUPPLIERS TO BEAR SUCH COMMISSION.
BORROWINGS ARE SECURED BY THE COMPANY'S ACCOUNTS RECEIVABLE, INVENTORY, GENERAL
INTANGIBLES AND CASH DEPOSITS. THE COMPANY IS SUBJECT TO CERTAIN RESTRICTIVE
CONVENANTS, INCLUDING, BUT NOT LIMITED TO, A PROHIBITION ON THE PAYMENT OF
DIVIDENDS, A MINIMUM TANGIBLE NET WORTH REQUIREMENT, A MINIMUM RATIO OF NET
PROFIT TO CURRENT DEBT, A MAXIMUM INVENTORY TURNOVER, A PROHIBITION ON THE SALE
OF ASSETS OR MERGERS, RESTRICTIONS ON EXECUTIVE COMPENSATION AND RESTRICTIONS ON
THE INCURRING OF OTHER INDEBTEDNESS. THE LINE OF CREDIT EXPIRES ON AUGUST 1,
1997.
THE COMPANY BELIEVES THAT CONSOLIDATION AMONG DISTRIBUTORS OF AFTERMARKET
COLLISION PARTS IS CREATING OPPORTUNITIES FOR THE COMPANY TO ACQUIRE AND OPEN
SERVICE CENTERS IN NEW AND EXISTING MARKETS. THE COMPANY INTENDS TO EXPLORE
ACQUISITION OPPORTUNITIES THAT MAY ARISE FROM TIME TO TIME. TO DATE, THE
COMPANY'S ACQUISITIONS HAVE BEEN FINANCED BY CASH FLOW FROM OPERATIONS, ADVANCES
DRAWN UNDER ITS CREDIT FACILITY AND INDEBTEDNESS TO CERTAIN OF THE SELLERS OF
ITS ACQUIRED CENTERS. TO IMPLEMENT ITS ACQUISITION STRATEGY, THE COMPANY MAY
INCUR INDEBTEDNESS OR ISSUE ADDITIONAL EQUITY OR DEBT SECURITIES TO THIRD
PARTIES OR THE SELLERS OF THE ACQUIRED BUSINESSES. THERE CAN BE NO ASSURANCE
THAT ADDITIONAL CAPITALS, IF AND WHEN REQUIRED, WILL BE AVAILABLE ON TERMS
ACCEPTABLE TO THE COMPANY, OR AT ALL. IN ADDITION, FUTURE ISSUANCES OF EQUITY
SECURITIES, IF ANY, WOULD DILUTE THE EXISTING OWNERSHIP OF ALL SHAREHOLDERS OF
THE COMPANY.
(9)
<PAGE>
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
THE COMPANY HAS A SIGNED LETTER OF INTENT TO ACQUIRE THE ASSETS OF A
DISTRIBUTOR OF AFTERMARKET COLLISION PARTS CURRENTLY OPERATING SEVEN SERVICE
CENTERS IN THE SOUTHEASTERN UNITED STATES. THE AGGREGATE PURCHASE PRICE IS
ESTIMATED TO BE APPROXIMATELY $4,000,000, PAYABLE IN CASH AND NOTES. THE
COMPANY EXPECTS THIS TRANSACTION TO BE COMPLETED IN AUGUST 1996.
IN APRIL 1996, THE COMPANY OPENED ITS SECOND WHEEL REMANUFACTURING FACILITY
IN BETHLEHEM, PENNSYLVANIA. THE COMPANY'S THIRD FACILITY, LOCATED IN ONTARIO,
CALIFORNIA, OPENED IN JULY 1996 WITH ADDITIONAL FACILITIES TO BE OPENED IN
CHICAGO, ILLINOIS; BOSTON, MASSACHUSETTS; AND A SITE TO BE DETERMINED DURING
FISCAL 1997. THE COMPANY ANTICIPATES THE COST PER FACILITY TO BE APPROXIMATELY
$250,000.
INFLATION
THE COMPANY DOES NOT BELIEVE THAT THE RELATIVELY MODERATE RATES OF
INFLATION OVER THE PAST THREE YEARS HAVE HAD A SIGNIFICANT EFFECT ON ITS NET
SALES OR ITS PROFITABILITY.
(10)
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. NONE
ITEM 2. CHANGES IN SECURITIES. NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE
ITEM 5. OTHER INFORMATION. NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. EXHIBITS - NONE
B. REPORTS ON FORM 8-K - NONE
(11)
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
BY: /S/ ROBERT L. BLANTON
------------------------------------
ROBERT L. BLANTON
VICE PRESIDENT - FINANCE
(DULY AUTHORIZED OFFICER AND PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
DATE: AUGUST 7, 1996
(12)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THREE MONTHS
ENDED JUNE 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-START> MAR-30-1996
<PERIOD-END> JUN-29-1996
<CASH> 9055
<SECURITIES> 0
<RECEIVABLES> 10153
<ALLOWANCES> 318
<INVENTORY> 22406
<CURRENT-ASSETS> 42524
<PP&E> 11287
<DEPRECIATION> 6637
<TOTAL-ASSETS> 48868
<CURRENT-LIABILITIES> 19742
<BONDS> 0
0
0
<COMMON> 16054
<OTHER-SE> 12256
<TOTAL-LIABILITY-AND-EQUITY> 28310
<SALES> 32163
<TOTAL-REVENUES> 32163
<CGS> 19479
<TOTAL-COSTS> 19479
<OTHER-EXPENSES> 10616
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 268
<INCOME-PRETAX> 1800
<INCOME-TAX> 720
<INCOME-CONTINUING> 1080
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1080
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
