UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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: December 26, 2003
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 incorporation or organization) |
(I.R.S. Employer 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 check mark 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 requirements for the past 90 days. Yes x No ¨.
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨.
The number of shares outstanding of the registrant’s Common Stock, no par value, at January 31, 2004 was 15,190,645 shares.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
INDEX
| Page Number | ||||
| PART I. FINANCIAL INFORMATION |
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| Item 1. | Financial Statements | |||
| 3 | ||||
| December 26, 2003 (unaudited) and March 28, 2003 |
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| 4 | ||||
| Thirteen weeks (unaudited) and thirty-nine weeks (unaudited) ended December 26, 2003 |
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| Thirteen weeks (unaudited) and thirty-nine weeks (unaudited) ended December 27, 2002 |
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| 5 | ||||
| Thirty-nine weeks (unaudited) ended December 26, 2003 and |
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| Thirty-nine weeks (unaudited) ended December 27, 2002 |
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| Notes to Condensed Consolidated Financial Statements (unaudited) |
6 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
8 | ||
| Item 3. | 13 | |||
| Item 4. | 13 | |||
| PART II. OTHER INFORMATION |
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| Item 1. | 13 | |||
| Item 2. | 13 | |||
| Item 3. | 13 | |||
| Item 4. | 13 | |||
| Item 5. | 13 | |||
| Item 6. | 16 | |||
| 17 | ||||
Keystone Automotive Industries, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
| December 26, 2003 |
March 28, 2003 |
|||||||
| (Unaudited) | (Note) | |||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 2,853 | $ | 3,658 | ||||
| Accounts receivable, net of allowance of $1,463 at December 2003 and $1,291 at March 2003 |
42,583 | 39,753 | ||||||
| Inventories, primarily finished goods |
104,001 | 101,594 | ||||||
| Other current assets |
7,919 | 10,017 | ||||||
| Total current assets |
157,356 | 155,022 | ||||||
| Plant, property and equipment, net |
30,495 | 23,658 | ||||||
| Goodwill |
8,364 | 3,040 | ||||||
| Other intangibles, net of accumulated amortization of $3,429 at December 2003 and $3,099 at March 2003 |
1,398 | 1,046 | ||||||
| Other assets |
9,438 | 9,043 | ||||||
| Total assets |
$ | 207,051 | $ | 191,809 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Credit facility |
$ | 18,893 | $ | 16,606 | ||||
| Accounts payable |
16,747 | 18,330 | ||||||
| Accrued liabilities |
11,177 | 12,992 | ||||||
| Current portion of long-term debt |
6 | 15 | ||||||
| Total current liabilities |
46,823 | 47,943 | ||||||
| Other long-term liabilities |
1,890 | 2,224 | ||||||
| Shareholders’ Equity: |
||||||||
| Preferred stock, no par value: |
||||||||
| Authorized shares—3,000,000 |
||||||||
| None issued and outstanding |
— | — | ||||||
| Common stock, no par value: |
||||||||
| Authorized shares—50,000,000 |
||||||||
| Issued and outstanding shares 15,134,000 at December 2003 and 14,692,000 at March 2003 |
86,241 | 81,221 | ||||||
| Warrant |
236 | 236 | ||||||
| Restricted Stock |
180 | — | ||||||
| Additional paid-in capital |
2,271 | 2,269 | ||||||
| Retained earnings |
70,493 | 59,119 | ||||||
| Accumulated other comprehensive loss |
(1,083 | ) | (1,203 | ) | ||||
| Total shareholders’ equity |
158,338 | 141,642 | ||||||
| Total liabilities and shareholders’ equity |
$ | 207,051 | $ | 191,809 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| NOTE: | The balance sheet at March 28, 2003 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. |
3
Keystone Automotive Industries, Inc.
Condensed Consolidated Statements of Income
(In thousands, except share and per share amounts)
(Unaudited)
| Thirteen Weeks Ended December 26, 2003 |
Thirteen Weeks Ended December 27, 2002 |
Thirty-nine Weeks Ended December 26, 2003 |
Thirty-nine Weeks Ended December 27, 2002 |
|||||||||||||
| Net sales |
$ | 126,277 | $ | 108,548 | $ | 361,040 | $ | 316,409 | ||||||||
| Cost of sales |
70,717 | 61,032 | 203,679 | 178,541 | ||||||||||||
| Gross profit |
55,560 | 47,516 | 157,361 | 137,868 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling and distribution |
37,101 | 32,117 | 107,801 | 94,285 | ||||||||||||
| General and administrative |
11,360 | 9,744 | 32,020 | 28,141 | ||||||||||||
| Operating income |
7,099 | 5,655 | 17,540 | 15,442 | ||||||||||||
| Other income |
485 | 454 | 1,678 | 1,280 | ||||||||||||
| Interest expense |
(188 | ) | (117 | ) | (528 | ) | (381 | ) | ||||||||
| Income before income taxes |
7,396 | 5,992 | 18,690 | 16,341 | ||||||||||||
| Income taxes |
2,889 | 2,397 | 7,316 | 6,536 | ||||||||||||
| Net income |
$ | 4,507 | $ | 3,595 | $ | 11,374 | $ | 9,805 | ||||||||
| Per Common Share: |
||||||||||||||||
| Net income per share: |
||||||||||||||||
| Basic |
$ | 0.30 | $ | 0.25 | $ | 0.76 | $ | 0.67 | ||||||||
| Diluted |
$ | 0.29 | $ | 0.24 | $ | 0.75 | $ | 0.65 | ||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
15,064,000 | 14,649,000 | 14,901,000 | 14,623,000 | ||||||||||||
| Diluted |
15,464,000 | 14,960,000 | 15,214,000 | 14,986,000 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Keystone Automotive Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Thirty-nine Weeks Ended December 26, 2003 |
Thirty-nine Weeks Ended December 27, 2002 |
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| Operating activities: |
||||||||
| Net income |
$ | 11,374 | $ | 9,805 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
4,642 | 4,925 | ||||||
| Deferred compensation |
60 | — | ||||||
| Provision for losses on uncollectible accounts |
766 | 965 | ||||||
| Provision for write-down of inventories |
1,084 | 2,383 | ||||||
| (Gain) loss on sale of assets |
(53 | ) | 5 | |||||
| Other comprehensive loss |
120 | — | ||||||
| Changes in operating assets and liabilities, net of effect of business acquisitions: |
||||||||
| Accounts receivable, net |
(1,781 | ) | (3,002 | ) | ||||
| Inventories |
939 | (15,868 | ) | |||||
| Other assets |
1,948 | 1,167 | ||||||
| Accounts payable and accrued liabilities |
(5,028 | ) | 4,643 | |||||
| Net cash provided by operating activities |
14,071 | 5,023 | ||||||
| Investing activities: |
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| Proceeds from sale of assets |
135 | 170 | ||||||
| Purchases of property, plant and equipment |
(9,668 | ) | (7,965 | ) | ||||
| Acquisitions of certain service centers, net of cash received |
(12,641 | ) | (5,532 | ) | ||||
| Net cash used in investing activities |
(22,174 | ) | (13,327 | ) | ||||
| Financing activities: |
||||||||
| Borrowings on credit facility |
2,287 | 6,618 | ||||||
| Other debt, net |
(9 | ) | (67 | ) | ||||
| Net proceeds on option exercise |
5,020 | 630 | ||||||
| Net cash provided by financing activities |
7,298 | 7,181 | ||||||
| Net decrease in cash and cash equivalents |
(805 | ) | (1,123 | ) | ||||
| Cash and cash equivalents at beginning of period |
3,658 | 3,652 | ||||||
| Cash and cash equivalents at end of period |
$ | 2,853 | $ | 2,529 | ||||
| Supplemental disclosures |
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| Interest paid during the period |
$ | 514 | $ | 373 | ||||
| Income taxes paid during the period |
$ | 5,759 | $ | 5,022 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Notes to Condensed Consolidated Financial Statements
(Unaudited)
December 26, 2003
| 1. | Basis of Presentation |
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States 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 thirty-nine week period ended December 26, 2003 are not necessarily indicative of the results that may be expected for the full year ending March 26, 2004. For further information, refer to the financial statements and footnotes thereto for the year ended March 28, 2003, included in Keystone Automotive Industries, Inc.’s (the “Company”) Form 10-K filed with the Securities and Exchange Commission on June 26, 2003.
| 2. | Fiscal Year |
The Company uses a 52/53 week fiscal year. The Company’s fiscal year ends on the last Friday of March.
| 3. | Income Taxes |
The income tax provision for interim periods is based on an estimated effective annual income tax rate.
| 4. | New Accounting Standards |
In May 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 150, “Accounting For Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires that an issurer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. However, for limited life subsidiaries; that are considered liabilities for consolidated purposes, SFAS No. 150 will not be required to go into effect until December 15, 2004. Adoption of SFAS No. 150 did not have a material impact on the Company’s consolidated results of operations or financial position.
In April 2003, t