-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VA8w+pcGdxSzZ2O6leZzakqUJoOgi5FFVQzQVzyMlTK7aIoGXpRwWvI+Xwm8ikT+ m3w/+BonSs/I5ilDvfxLcg== 0000912057-96-024980.txt : 19961108 0000912057-96-024980.hdr.sgml : 19961108 ACCESSION NUMBER: 0000912057-96-024980 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960927 FILED AS OF DATE: 19961107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEYSTONE AUTOMOTIVE INDUSTRIES INC CENTRAL INDEX KEY: 0001012393 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLE SUPPLIES & NEW PARTS [5013] IRS NUMBER: 952920557 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28568 FILM NUMBER: 96655954 BUSINESS ADDRESS: STREET 1: 700 E BONITA AVE CITY: POMONA STATE: CA ZIP: 91767 BUSINESS PHONE: 9096248041 MAIL ADDRESS: STREET 1: 700 EAST BONITA AVE CITY: POMONA STATE: CA ZIP: 91767 10-Q 1 10-Q 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 SEPTEMBER 27, 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 INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 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 X NO ----- ----- THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK, NO PAR VALUE, AT SEPTEMBER 27, 1996 WAS 7,300,000 SHARES. THIS FORM 10-Q CONTAINS 12 PAGES. (1) KEYSTONE AUTOMOTIVE INDUSTRIES, INC. INDEX PART I. FINANCIAL INFORMATION PAGE NUMBER ITEM 1. FINANCIAL STATEMENTS BALANCE SHEETS 3 SEPTEMBER 27, 1996 (UNAUDITED) AND MARCH 29, 1996 STATEMENTS OF INCOME 4 THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 27, 1996 (UNAUDITED) AND THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 29,1995 (UNAUDITED) STATEMENTS OF CASH FLOWS 5 SIX MONTHS ENDED SEPTEMBER 27, 1996 (UNAUDITED) AND SIX MONTHS ENDED SEPTEMBER 29,1995 (UNAUDITED) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 6-7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 8-10 RESULTS OF OPERATIONS 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) PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS KEYSTONE AUTOMOTIVE INDUSTRIES, INC. BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS) ASSETS SEPTEMBER 27, MARCH 29, 1996 1996 ---- ---- (UNAUDITED) (NOTE) CURRENT ASSETS: CASH . . . . . . . . . . . . . . . . . . . . . . . . $ 2,384 $ 2,677 ACCOUNTS RECEIVABLE, LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS OF $354 AT SEPTEMBER 1996 AND $280 AT MARCH 1996 . . . . . . . . . . . . . . 10,565 10,799 INVENTORIES, PRIMARILY FINISHED GOODS. . . . . . . . 23,046 22,226 OTHER CURRENT ASSETS . . . . . . . . . . . . . . . . 1,489 1,328 ------- ------- TOTAL CURRENT ASSETS . . . . . . . . . . . . . . 37,484 37,030 PROPERTY, PLANT AND EQUIPMENT, NET:. . . . . . . . . . 5,448 4,331 OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . 3,561 1,674 ------- ------- TOTAL ASSETS. . . . . . . . . . . . . . . . . . . $46,493 $43,035 ------- ------- ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: LINE OF CREDIT . . . . . . . . . . . . . . . . . . . $ 6,650 $12,250 BANKERS ACCEPTANCES AND OTHER SHORT TERM DEBT. . . . 3,011 3,520 ACCOUNTS PAYABLE . . . . . . . . . . . . . . . . . . 4,653 8,597 NOTE PAYABLE TO RELATED PARTY. . . . . . . . . . . . 150 150 ACCRUED LIABILITIES. . . . . . . . . . . . . . . . . 2,282 1,794 LONG TERM DEBT, DUE WITHIN ONE YEAR. . . . . . . . . 137 400 ------- ------- TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . 16,883 26,711 LONG-TERM DEBT, LESS CURRENT PORTION . . . . . . . . . 35 813 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 SEPTEMBER 1996 AND 5,800,000 AT MARCH 1996 AT STATED VALUE . . . . . . . . . . . . . . . . . . 16,054 4,299 ADDITIONAL PAID-IN CAPITAL . . . . . . . . . . . . . 436 436 RETAINED EARNINGS. . . . . . . . . . . . . . . . . . 13,049 10,740 ------- ------- TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . 29,539 15,475 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . $46,493 $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) KEYSTONE AUTOMOTIVE INDUSTRIES, INC. STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED -------------------- ---------------- SEPTEMBER 27, SEPTEMBER 29, SEPTEMBER 27, SEPTEMBER 29, 1996 1995 1996 1995 ---- ---- ---- ---- NET SALES. . . . . . . . . . . . . . . $ 31,373 $ 26,970 $ 63,536 $ 53,493 COST OF SALES. . . . . . . . . . . . . 18,875 16,514 38,354 32,572 -------- -------- -------- -------- GROSS PROFIT . . . . . . . . . . . . . 12,498 10,456 25,182 20,921 OPERATING EXPENSES: SELLING AND DISTRIBUTION EXPENSES. . 8,346 7,256 17,073 14,773 GENERAL AND ADMINISTRATIVE . . . . . 1,961 1,770 3,850 3,579 -------- -------- -------- -------- OPERATING INCOME . . . . . . . . . . . 2,191 1,430 4,259 2,569 INTEREST EXPENSE . . . . . . . . . . . 143 287 411 563 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES . . . . . . 2,048 1,143 3,848 2,006 INCOME TAXES . . . . . . . . . . . . . 819 457 1,539 802 -------- -------- -------- -------- NET INCOME . . . . . . . . . . . . . . $ 1,229 $ 686 $ 2,309 $ 1,204 -------- -------- -------- -------- -------- -------- -------- -------- NET INCOME PER SHARE . . . . . . . . . $ 0.17 $ 0.12 $ 0.35 $ 0.21 -------- -------- -------- -------- -------- -------- -------- -------- WEIGHTED AVERAGES SHARES OUTSTANDING . 7,300,000 5,800,000 6,616,000 5,800,000 -------- -------- -------- -------- -------- -------- -------- --------
SEE ACCOMPANYING NOTES (4) KEYSTONE AUTOMOTIVE INDUSTRIES, INC. STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) SIX MONTHS ENDED ---------------- SEPTEMBER SEPTEMBER 27, 1996 29, 1995 -------- -------- OPERATING ACTIVITIES NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 2,309 $ 1,204 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH USED IN OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION. . . . . . . . . . . . . 471 440 DEFERRED TAXES . . . . . . . . . . . . . . . . . . . . (120) -- PROVISION FOR LOSSES ON UNCOLLECTIBLE ACCOUNTS . . . . 96 59 PROVISION FOR LOSSES ON INVENTORY. . . . . . . . . . . 440 285 CHANGES IN OPERATING ASSETS AND LIABILITIES: ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . 894 (423) INVENTORIES. . . . . . . . . . . . . . . . . . . . . 764 (2,442) PREPAID EXPENSES, OTHER RECEIVABLES AND OTHER ASSETS. . . . . . . . . . . . . . . . . . . . . . . (304) 539 ACCOUNTS PAYABLE . . . . . . . . . . . . . . . . . . (3,944) (1,571) ACCRUED SALARIES, AND OTHER ACCRUED LIABILITIES. . . 488 (685) -------- -------- NET CASH USED IN OPERATING ACTIVITIES . . . . . . . . 1,094 (2,594) INVESTING ACTIVITIES PURCHASES OF PROPERTY, PLANT AND EQUIPMENT . . . . . . (1,167) (343) CASH PAID FOR ACQUISITIONS . . . . . . . . . . . . . . (4,825) -- -------- -------- NET CASH USED IN INVESTING ACTIVITIES. . . . . . . . . (5,992) (343) FINANCING ACTIVITIES PAYMENTS UNDER BANK CREDIT FACILITY. . . . . . . . . . (5,600) -- BANKERS ACCEPTANCES AND OTHER SHORT-TERM DEBT, NET . . (509) 1,387 PAYMENTS ON NOTES PAYABLE TO OFFICERS, SHAREHOLDERS AND OTHER RELATED PARTIES . . . . . . . . . . . . . . -- (344) PRINCIPAL PAYMENTS ON LONG-TERM DEBT . . . . . . . . . (1,041) (366) NET PROCEEDS OF INITIAL PUBLIC OFFERING. . . . . . . . 11,755 -- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . 4,605 677 NET INCREASE (DECREASE) IN CASH. . . . . . . . . . . . (293) (2,260) CASH AT BEGINNING OF PERIOD. . . . . . . . . . . . . . 2,677 3,916 CASH AT END OF PERIOD. . . . . . . . . . . . . . . . . $2,384 $1,656 -------- -------- SUPPLEMENTAL DISCLOSURES INTEREST PAID DURING THE PERIOD. . . . . . . . . . . $ 338 $ 550 INCOME TAXES PAID DURING THE PERIOD. . . . . . . . . $1,158 $ 642 SEE ACCOMPANYING NOTES (5) KEYSTONE AUTOMOTIVE INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 27, 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 SIX MONTH PERIOD ENDED SEPTEMBER 27, 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 3,105,000 SHARES OF COMMON STOCK AT $9.00 PER SHARE; 1,500,000 SHARES WERE SOLD BY THE COMPANY AND 1,605,000 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 SEPTEMBER 27,1996. 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 AND EXPIRE FIVE YEARS FROM THE DATE OF GRANT. 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) KEYSTONE AUTOMOTIVE INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 5. NEW ACCOUNTING STANDARDS IN MARCH 1995, THE FINANCIAL ACCOUNTING STANDARDS BOARD ISSUED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS 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 ADOPTED 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 ELECTED 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. ACQUISITIONS THE COMPANY COMPLETED THREE ACQUISITIONS OF DISTRIBUTORS OF AFTERMARKET COLLISION REPLACEMENT PARTS DURING THE PERIOD. THE AGGREGATE PURCHASE PRICE OF THE ACQUISITIONS WAS APPROXIMATELY $4,800,000 AND THEY WERE ACCOUNTED FOR USING THE PURCHASE ACCOUNTING METHOD. 7. SUBSEQUENT EVENT ON OCTOBER 31, 1996, THE COMPANY COMPLETED THE ACQUISITION OF STOCKTON PLATING CO. STOCKTON PLATING IS ENGAGED IN THE DISTRIBUTION OF NEW AND RECYCLED BUMPERS IN NORTHERN AND CENTRAL CALIFORNIA WITH HISTORICAL REVENUES OF APPROXIMATELY $5,000,000. (7) 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. GENERAL ON AUGUST 27, 1996, THE COMPANY COMPLETED THE ACQUISITION OF FIVE SERVICE CENTERS LOCATED IN MOBILE, MONTGOMERY, BIRMINGHAM, DOTHAN AND HUNTSVILLE, ALABAMA, BRINGING TO 46 THE NUMBER OF SERVICE CENTERS THE COMPANY OPERATES NATIONWIDE. FOR THE PERIOD ENDED ON SEPTEMBER 27, 1996, THESE SERVICE CENTERS CONTRIBUTED REVENUES OF APPROXIMATELY $941,000. ON SEPTEMBER 16, 1996, THE COMPANY ACQUIRED THE ASSETS OF AUGUSTA BUMPER AND GLASS (AUGUSTA) LOCATED IN AUGUSTA, GEORGIA. AUGUSTA HAD HISTORICAL ANNUAL REVENUES OF APPROXIMATELY $1,800,000 AND WILL BE OPERATED AS A DEPOT OF THE COMPANY'S ATLANTA SERVICE CENTER. ON SEPTEMBER 23, 1996, THE COMPANY ACQUIRED THE ASSETS RELATED TO THE AFTERMARKET COLLISION REPLACEMENT PARTS BUSINESS OF GLENN AUTOMOTIVE (GLENN.) GLENN HAD HISTORICAL ANNUAL REVENUES OF APPROXIMATELY $1,800,000 AND OPERATED TWO LOCATIONS, ATLANTA, GEORGIA AND CHATTANOOGA, TENNESSEE. THE OPERATIONS OF GLENN HAVE BEEN MERGED INTO THE COMPANY'S EXISTING SERVICE CENTERS IN ATLANTA AND CHATTANOOGA. DUE TO THE INTEGRATION OF THE AUGUSTA AND GLENN OPERATIONS INTO EXISTING KEYSTONE SERVICE CENTERS, THE COMPANY IS UNABLE TO DETERMINE THE AMOUNT OF REVENUES OR INCOME THESE OPERATIONS HAVE CONTRIBUTED FOR THE PERIOD. 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 SIX MONTHS ENDED ------------------ ---------------- SEPTEMBER 27, SEPTEMBER 29, SEPTEMBER 27, SEPTEMBER 29, 1996 1995 1996 1995 ---- ---- ---- ---- NET SALES. . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0% COST OF SALES. . . . . . . . . . . . . . 60.2 61.2 60.4 60.9 GROSS PROFIT . . . . . . . . . . . . . 39.8 38.8 39.6 39.1 SELLING AND DISTRIBUTION EXPENSES. . . . 26.6 26.9 26.9 27.6 GENERAL AND ADMINISTRATIVE EXPENSES. . . 6.3 6.6 6.1 6.7 INCOME FROM OPERATIONS . . . . . . . . 6.9 5.3 6.7 4.8 INTEREST EXPENSE . . . . . . . . . . . 0.1 0.8 0.1 0.2 NET INCOME . . . . . . . . . . . . . . 3.9% 2.5% 3.6% 2.2% ---- ---- ---- ---- ---- ---- ---- ----
(8) KEYSTONE AUTOMOTIVE INDUSTRIES, INC. NET SALES WERE $31,373,000 FOR THE THREE MONTHS ENDED SEPTEMBER 27, 1996 COMPARED TO $26,970,000 FOR THE THREE MONTHS ENDED SEPTEMBER 29, 1995, AN INCREASE OF $4,403,000 OR 16%. THIS INCREASE WAS DUE PRIMARILY TO AN INCREASE OF $2,246,000 IN SALES OF AUTOMOTIVE BODY PARTS (INCLUDING FENDERS, HOODS, HEADLIGHTS, RADIATORS, GRILLES AND OTHER CRASH PARTS), AN INCREASE OF $929,000 IN SALES OF NEW AND RECYCLED BUMPERS AND AN INCREASE OF $552,000 IN THE SALE OF PAINT AND RELATED MATERIALS WHICH INCREASES REPRESENT INCREASES OF APPROXIMATELY 20%, 10% AND 13%, RESPECTIVELY, OVER THE COMPARABLE PERIOD IN FISCAL 1995. IN ADDITION, THE COMPANY SOLD APPROXIMATELY $511,000 OF REMANUFACTURED ALLOY WHEELS IN THE SECOND QUARTER OF FISCAL 1997. THERE WERE NO SALES OF REMANUFACTURED ALLOY WHEELS DURING THE PRIOR YEAR PERIOD. FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 27, 1996, NET SALES WERE $63,536,000 COMPARED TO $53,493,000 FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 29, 1995, AN INCREASE OF $10,043,000 OR APPROXIMATELY 19%. THE COMPANY RECORDED SALES GAINS OF $5,630,000 IN AUTOMOTIVE BODY PARTS, $2,523,000 IN NEW AND RECYCLED BUMPERS, $769,000 IN PAINT AND RELATED MATERIALS AND $785,000 IN THE SALE OF REMANUFACTURED ALLOY WHEELS. THESE SALES GAINS REPRESENT INCREASES OF 25%, 14% AND 9% FOR AUTOMOTIVE BODY PARTS, BUMPERS AND PAINT RESPECTIVELY. THERE WERE NO SALES OF REMANUFACTURED ALLOY WHEELS IN THE PRIOR YEAR PERIOD. MANAGEMENT ATTRIBUTES THE INCREASED SALES TO THE INCREASED USE OF AFTERMARKET COLLISION REPLACEMENT PARTS, INCREASED PENETRATION OF EXISTING PRODUCT LINES AND FOR THE YEAR TO DATE SALES RESULTS, THE CARRYOVER OF THE SEVERE WINTER WEATHER EXPERIENCED IN MANY PARTS OF THE NORTHEAST AND MIDWEST UNITED STATES. GROSS PROFIT INCREASED TO $12,498,000 (39.8% OF NET SALES) FOR THE THREE MONTHS ENDED SEPTEMBER 27, 1996 FROM $10,456,000 (38.8% OF NET SALES) FOR THE THREE MONTHS ENDED SEPTEMBER 29, 1995, AN INCREASE OF 20%, PRIMARILY AS A RESULT OF THE INCREASE IN NET SALES. FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 27, 1996, GROSS PROFIT INCREASED TO $25,182,000 (39.6% OF NET SALES) COMPARED TO $20,921,000 (39.1% OF NET SALES) FOR THE SIX MONTHS ENDED SEPTEMBER 29, 1995, PRIMARILY AS A RESULT OF THE INCREASE IN NET SALES. THE COMPANY'S TARGET GROSS PROFIT MARGIN HAS, AND IS EXPECTED TO CONTINUE TO FLUCTUATE DEPENDING ON A NUMBER OF FACTORS, INCLUDING BUT NOT LIMITED TO, PRODUCT MIX, ACQUISITIONS, COMPETITION AND NEW PRODUCT INTRODUCTIONS. SELLING AND DISTRIBUTION EXPENSES INCREASED TO $8,346,000 (26.6% OF NET SALES) FOR THE THREE MONTHS ENDED SEPTEMBER 27, 1996 FROM $7,256,000 (26.9% OF NET SALES) FOR THE THREE MONTHS ENDED SEPTEMBER 29, 1995, AN INCREASE OF 15%. FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 27, 1996, SELLING AND DISTRIBUTION EXPENSES INCREASED TO $17,073,000 (26.9% OF NET SALES) COMPARED TO $14,773,000 (27.6% OF NET SALES FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 29, 1995, AN INCREASE OF 15.6%. GENERAL AND ADMINISTRATIVE EXPENSES INCREASED TO $1,961,000 (6.3% OF NET SALES) FOR THE THREE MONTHS ENDED SEPTEMBER 27, 1996 FROM $1,770,000 (6.6% OF NET SALES) FOR THE THREE MONTHS ENDED SEPTEMBER 29, 1995, AN INCREASE OF 10.8%. FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 27, 1996, GENERAL AND ADMINISTRATIVE EXPENSES INCREASED TO $3,850,000 (6.1% OF NET SALES) COMPARED TO $3,579,000 (6.7% OF NET SALES) FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 29, 1995, AN INCREASE OF 7.6%. THE COMPANY'S IMPROVEMENT IN SELLING AND DISTRIBUTION AND GENERAL AND ADMINISTRATIVE EXPENSES, AS A PERCENTAGE OF SALES, IS GENERALLY THE RESULT OF CERTAIN FIXED COSTS BEING ABSORBED OVER A LARGER REVENUE BASE. LIQUIDITY AND CAPITAL RESOURCES ON JUNE 20, 1996 THE COMPANY COMPLETED AN INITIAL PUBLIC OFFERING OF 3,105,000 SHARES OF ITS COMMON STOCK. IN THE OFFERING, THE COMPANY SOLD 1,500,000 SHARES OF COMMON STOCK AND SELLING SHAREHOLDERS SOLD 1,605,000 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. (9) KEYSTONE AUTOMOTIVE INDUSTRIES, INC. 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 SEPTEMBER 27, 1996, WORKING CAPITAL WAS $20,601,000 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 SEPTEMBER 27,1996) 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 SEPTEMBER 27,1996) 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 COMMISSIONS. 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 ISSUANCE OF EQUITY SECURITIES, IF ANY, WOULD DILUTE THE EXISTING OWNERSHIP OF ALL SHAREHOLDERS OF THE COMPANY. THE THREE ACQUISITIONS COMPLETED DURING THE QUARTER ENDED SEPTEMBER 27, 1996 WERE CASH TRANSACTIONS TOTALING APPROXIMATELY $4,800,000. 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) 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) 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: NOVEMBER 4, 1996 (12) EX-27 2 EXHIBIT 27 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SIX MONTHS ENDED SEPTEMBER 27, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS MAR-28-1997 MAR-30-1996 SEP-27-1996 2384 0 10919 354 23046 37484 12282 6834 46493 16883 0 0 0 16054 13485 46493 63536 63536 38354 38354 20923 0 411 3848 1539 2309 0 0 0 2309 .35 .35
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