KEYSTONE AUTOMOTIVE INDUSTRIES INC - 10-Q Quarterly Report

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: July 2, 2004

¨	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 ¨.

The number of shares outstanding of the registrant’s Common Stock, no par value, at August 9, 2004 was 15,559,430 shares.

This Form 10-Q contains 20 pages.

KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

INDEX


		Page Number
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets July 2, 2004 (unaudited) and March 26, 2004	3

	Condensed Consolidated Statements of Income Fourteen weeks ended July 2, 2004 (unaudited) and thirteen weeks ended June 27, 2003 (unaudited)	4

	Condensed Consolidated Statements of Cash Flows Fourteen weeks ended July 2, 2004 (unaudited) and thirteen weeks ended June 27, 2003 (unaudited)	5

	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.	Quantitative and Qualitative Disclosure About Market Risks	11

Item 4.	Controls and Procedures	12

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	12

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	12

Item 3.	Defaults upon Senior Securities	12

Item 4.	Submission of Matters to a Vote of Security Holders	12

Item 5.	Other Information	12

Item 6.	Exhibits and Reports on Form 8-K	15

Signatures		16

Certifications

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Keystone Automotive Industries, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)


	July 2, 2004			March 26, 2004
	(Unaudited)			(Note)
ASSETS
Current Assets:
Cash and cash equivalents	$	5,685		$	3,176
Accounts receivable, net of allowance of $832 at July 2004 and $887 at March 2004		45,256			44,005
Inventories, primarily finished goods		109,706			107,221
Other current assets		8,636			11,532

		169,283			165,934
Plant, property and equipment, net		32,244			30,652
Goodwill		10,053			9,662
Other intangibles, net of accumulated amortization of $3,682 at July 2004 and $3,565 at March 2004		1,208			1,323
Other assets		9,114			8,342

Total assets	$	221,902		$	215,913

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Credit facility	$	5,849		$	10,000
Accounts payable		22,982			18,598
Accrued liabilities		14,281			14,477

		43,112			43,075

Other long-term liabilities		1,197			1,311

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 15,545,000 at July 2004 and 15,443,000 at March 2004		90,883			89,492
Restricted Stock		1,004			180
Additional paid-in capital		5,967			5,967
Retained earnings		80,893			76,841
Accumulated other comprehensive loss		(1,154	)		(953	)

		177,593			171,527

	$	221,902		$	215,913

The accompanying notes are an integral part of these condensed consolidated financial statements.


NOTE:		The balance sheet at March 26, 2004 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.

Keystone Automotive Industries, Inc.

Condensed Consolidated Statements of Income

(In thousands, except share and per share amounts)

(Unaudited)


	Fourteen Weeks Ended July 2, 2004			Thirteen Weeks Ended June 27, 2003
Net sales	$	141,117		$	118,100
Cost of sales		79,912			66,569

Gross profit		61,205			51,531
Operating expenses:
Selling and distribution		41,691			34,672
General and administrative		13,634			10,349

Operating income		5,880			6,510
Other income		896			544
Interest expense		(95	)		(174	)

Income before income taxes		6,681			6,880
Income taxes		2,629			2,700

Net income	$	4,052		$	4,180

Per Common Share:
Net income per share:
Basic	$	0.26		$	0.28

Diluted	$	0.26		$	0.28

Weighted average common shares outstanding:
Basic		15,469,000			14,760,000

Diluted		15,766,000			15,118,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

Keystone Automotive Industries, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Fourteen Weeks Ended July 2, 2004			Thirteen Weeks Ended June 27, 2003
Operating activities:
Net income	$	4,052		$	4,180
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,864			1,540
Provision for losses on uncollectible accounts		45			268
Provision for write-down of inventories		385			597
Gain on sale of assets, net		(44	)		(30	)
Changes in operating assets and liabilities:
Accounts receivable		(1,244	)		1,596
Inventories		(2,827	)		(3,209	)
Other assets		2,851			1,550
Accounts payable		4,384			(492	)
Accrued liabilities		(511	)		(1,640	)

Net cash provided by operating activities		8,955			4,360

Investing activities:
Proceeds from sale of assets		77			47
Acquisitions of certain distribution centers, net of cash received		(670	)		(3,833	)
Purchases of property, plant and equipment		(3,093	)		(2,603	)

Net cash used in investing activities		(3,686	)		(6,389	)

Financing activities:
Other debt, net		—			(7	)
(Payment) borrowings under the bank credit facility, net		(4,151	)		979
Net proceeds on option exercises		1,391			1,627

Net cash (used in) provided by financing activities		(2,760	)		2,599

Net increase in cash and cash equivalents		2,509			570

Cash and cash equivalents at beginning of period		3,176			3,658

Cash and cash equivalents at end of period	$	5,685		$	4,228

Supplemental disclosures:
Interest paid during the period	$	113		$	182

Income taxes paid during the period	$	78		$	203

The accompanying notes are an integral part of these condensed consolidated financial statements.

Keystone Automotive Industries, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

July 2, 2004

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 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 14-week period ended July 2, 2004 are not necessarily indicative of the results that may be expected for the full year ending April 1, 2005. The comparable quarter in the prior fiscal year comprised a 13-week period. For further information, refer to the financial statements and footnotes thereto for the year ended March 26, 2004, included in the Keystone Automotive Industries, Inc. Form 10-K filed with the Securities and Exchange Commission on June 9, 2004.

2. Fiscal Year

The Company uses a 52/53 week fiscal year. The Company’s current fiscal year, which is a 53-week year, ends on the last Friday of the first week in April.

3. Income Taxes

The income tax provision for interim periods is based on an estimated effective annual income tax rate.

4. Acquisitions

The results of operations for the quarter ended July 2, 2004 reflect the operations from certain businesses acquired in August, September and December 2003 and January, April and June 2004, as of the date of each acquisition. No results relating to these acquisitions were included with respect to the first quarter of fiscal 2004. The unaudited pro forma results for the first quarter of fiscal 2005, assuming these acquisitions had been made at the beginning of fiscal 2005, would not be materially different from the results presented.

5. Stock Compensation Plans

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure,” which amends SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirement of SFAS No. 123 to require more prominent and more frequent disclosures in financial statements of the effects of stock-based compensation. If the Company had elected to recognize compensation cost based on the fair value of the options granted at the grant rate as prescribed by SFAS No. 148, net income and earnings per share would have been reduced to the pro forma amounts shown below:


	Fourteen Weeks Ended July 2, 2004			Thirteen Weeks Ended June 27, 2003
	(thousands, except per share amount)
Pro forma:
Net income – as reported	$	4,052		$	4,180
Add: Stock-based compensation as reported in net income		27			—
Less: Fair value stock-based compensation		(140	)		(148	)

Net income – pro forma	$	3,939		$	4,032
Net income per share – as reported:
Basic	$	0.26		$	0.28
Diluted	$	0.26		$	0.28
Net income per share – pro forma:
Basic	$	0.25		$	0.27
Diluted	$	0.25		$	0.27

6. Sales By Product


	Fourteen Weeks Ended July 2, 2004		Thirteen Weeks Ended June 27, 2003
	(in thousands)
Automotive body parts	$	71.2	$	58.9
Bumpers		41.7		33.8
Paint and related materials		17.3		15.0
Wheels and related products		10.9		9.9
Other		—		.5

Net Sales	$	141.1	$	118.1

7. Employee Benefit Plans

The Company has suspended its defined benefit pension plan (the “Plan”) to provide pension benefits to all non-union employees. Plan benefits are based on an employee’s years of service and the compensation during the five years of employment which would yield the highest average compensation. Effective in April 1997, the Company suspended the accrual of future benefits.

The net periodic pension cost for the Company’s benefit plan was as follows:


		Fourteen Weeks Ended July 2, 2004				Thirteen Weeks Ended June 27, 2003
		(in thousands)

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