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: October 1, 2004
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 November 5, 2004 was 15,614,000 shares.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
INDEX
| Page Number | ||||
| PART I. FINANCIAL INFORMATION |
||||
| Item 1. |
Financial Statements | |||
|
Condensed Consolidated Balance Sheets |
3 | |||
| 4 | ||||
| 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 | 13 | ||
| Item 4. |
Controls and Procedures | 14 | ||
| PART II OTHER INFORMATION |
||||
| Item 1. |
Legal Proceedings | 14 | ||
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 14 | ||
| Item 3. |
Defaults upon Senior Securities | 14 | ||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 14 | ||
| Item 5. |
Other Information | 15 | ||
| Item 6. |
Exhibits and Reports on Form 8-K | 17 | ||
| 18 | ||||
| Certifications |
19 | |||
Keystone Automotive Industries, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
| October 1, 2004 |
March 26, 2004 |
|||||||
| (Unaudited) | (Note) | |||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 4,231 | $ | 3,176 | ||||
| Accounts receivable, net of allowance of $906 at October 2004 and $887 at March 2004 |
42,696 | 44,005 | ||||||
| Inventories, primarily finished goods |
111,791 | 107,221 | ||||||
| Other current assets |
9,452 | 11,532 | ||||||
| Total current assets |
168,170 | 165,934 | ||||||
| Plant, property and equipment, net |
32,593 | 30,652 | ||||||
| Goodwill |
10,109 | 9,662 | ||||||
| Other intangibles, net of accumulated amortization of $3,661 at October 2004 and $3,565 at March 2004 |
1,113 | 1,323 | ||||||
| Other assets |
8,559 | 8,342 | ||||||
| Total assets |
$ | 220,544 | $ | 215,913 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Credit facility |
$ | 1,494 | $ | 10,000 | ||||
| Accounts payable |
25,844 | 18,598 | ||||||
| Accrued liabilities |
12,008 | 14,477 | ||||||
| Total current liabilities |
39,346 | 43,075 | ||||||
| Other long-term liabilities |
857 | 1,311 | ||||||
| Commitments and contingencies |
||||||||
| 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 15,607,000 at October 2004 and 15,443,000 at March 2004 |
91,485 | 89,492 | ||||||
| Restricted Stock |
256 | 180 | ||||||
| Additional paid-in capital |
5,967 | 5,967 | ||||||
| Retained earnings |
83,285 | 76,841 | ||||||
| Accumulated other comprehensive loss |
(652 | ) | (953 | ) | ||||
| Total shareholders’ equity |
180,341 | 171,527 | ||||||
| Total liabilities and shareholders’ equity |
$ | 220,544 | $ | 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. |
3
Keystone Automotive Industries, Inc.
Condensed Consolidated Statements of Income
(In thousands, except share and per share amounts)
(Unaudited)
| Thirteen Weeks Ended October 1, 2004 |
Thirteen Weeks Ended September 26, 2003 |
Twenty-seven Weeks Ended October 1, |
Twenty-six Weeks Ended September 26, 2003 |
|||||||||||||
| Net sales |
$ | 127,408 | $ | 116,663 | $ | 268,525 | $ | 234,763 | ||||||||
| Cost of sales |
72,397 | 66,393 | 152,309 | 132,962 | ||||||||||||
| Gross profit |
55,011 | 50,270 | 116,216 | 101,801 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling and distribution |
39,409 | 36,028 | 81,100 | 70,700 | ||||||||||||
| General and administrative |
12,369 | 10,311 | 26,003 | 20,660 | ||||||||||||
| Operating income |
3,233 | 3,931 | 9,113 | 10,441 | ||||||||||||
| Other income |
804 | 649 | 1,700 | 1,193 | ||||||||||||
| Interest expense |
(63 | ) | (166 | ) | (158 | ) | (340 | ) | ||||||||
| Income before income taxes |
3,974 | 4,414 | 10,655 | 11,294 | ||||||||||||
| Income taxes |
1,582 | 1,727 | 4,211 | 4,427 | ||||||||||||
| Net income |
$ | 2,392 | $ | 2,687 | $ | 6,444 | $ | 6,867 | ||||||||
| Per Common Share: |
||||||||||||||||
| Net income per share: |
||||||||||||||||
| Basic |
$ | 0.15 | $ | 0.18 | $ | 0.41 | $ | 0.46 | ||||||||
| Diluted |
$ | 0.15 | $ | 0.18 | $ | 0.41 | $ | 0.45 | ||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
15,570,000 | 14,892,000 | 15,518,000 | 14,825,000 | ||||||||||||
| Diluted |
15,789,000 | 15,233,000 | 15,752,000 | 15,137,000 | ||||||||||||
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)
| Twenty-seven Weeks Ended October 1, 2004 |
Twenty-six Weeks Ended September 26, 2003 |
|||||||
| Operating activities: |
||||||||
| Net income |
$ | 6,444 | $ | 6,867 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
3,781 | 3,149 | ||||||
| Provision for losses on uncollectible accounts |
165 | 584 | ||||||
| Provision for write-down of inventories |
805 | 713 | ||||||
| Gain on sale of assets |
(27 | ) | (23 | ) | ||||
| Changes in operating assets and liabilities, net of effect of business acquisitions: |
||||||||
| Accounts receivable, net |
1,196 | 1,872 | ||||||
| Inventories |
(5,332 | ) | 1,361 | |||||
| Other assets |
1,697 | 1,032 | ||||||
| Accounts payable and accrued liabilities |
4,624 | (6,896 | ) | |||||
| Net cash provided by operating activities |
13,353 | 8,659 | ||||||
| Investing activities: |
||||||||
| Proceeds from sale of assets |
140 | 69 | ||||||
| Purchases of property, plant and equipment |
(5,255 | ) | (6,198 | ) | ||||
| Acquisitions of certain service centers, net of cash received |
(670 | ) | (11,106 | ) | ||||
| Net cash used in investing activities |
(5,785 | ) | (17,235 | ) | ||||
| Financing activities: |
||||||||
| (Payments) borrowings on credit facility |
(8,506 | ) | 5,027 | |||||
| Other debt, net |
— | (9 | ) | |||||
| Net proceeds on option exercise |
1,993 | 2,996 | ||||||
| Net cash (used in) provided by financing activities |
(6,513 | ) | 8,014 | |||||
| Net increase(decrease) in cash and cash equivalents |
1,055 | (562 | ) | |||||
| Cash and cash equivalents at beginning of period |
3,176 | 3,658 | ||||||
| Cash and cash equivalents at end of period |
$ | 4,231 | $ | 3,096 | ||||
| Supplemental disclosures |
||||||||
| Interest paid during the period |
$ | 157 | $ | 346 | ||||
| Income taxes paid during the period |
$ | 2,088 | $ | 3,895 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Keystone Automotive Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
October 1, 2004
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 for 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 27-week period ended October 1, 2004 are not necessarily indicative of the results that may be expected for the full year ending April 1, 2005. For further information, refer to the financial statements and footnotes thereto for the year ended March 26, 2004, included in Keystone Automotive Industries, Inc.’s (the “Company”) report on 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 ends on April 1, 2005. The operating results for the six-month period ended October 1, 2004 contained twenty-seven weeks as compared to the same period in the prior fiscal year which contained twenty-six weeks.
3. Income Taxes
The income tax provision for interim periods is based on an estimated effective annual income tax rate.
4. Recently Issued Accounting Pronouncements
On October 13, 2004, the Financial Accounting Standards Board (“FASB”) concluded that the Proposed Statement of Financial Accounting Standards, Share-Based Payment, which would require all companies to measure compensation cost for all share-based payments (including employee stock options) at fair value, would be effective for public companies for interim or annual periods beginning after June 15, 2005. The Company could adopt the new standard in one of two ways — the modified prospective transition method or the modified retrospective transition method. Assuming this new standard is implemented as scheduled, the Company will adopt this new standard in the third quarter of 2005 and is currently evaluating the effect that the adoption of this standard will have on our financial position and results of operations.
6
5. Acquisitions
The results of operations for the three and six months ended October 1, 2004 reflect the operations from certain businesses acquired in 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 second quarter and first six months of fiscal 2004. The unaudited pro forma results for the second quarter and the first six months of fiscal 2005, assuming these acquisitions had been made at the beginning of fiscal 2005, would not be materially different from the results presented.
6. Shareholders’ Equity
Statement of Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” which amended SFAS No. 123, “Accounting for Stock-Based Compensation,” provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. If the Company had elected to recognize compensation cost based on fair value, the pro forma net income amounts are shown below:
| Thirteen Weeks Ended |
Twenty-seven Weeks Ended |
Twenty-six Weeks Ended |
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| October 1, 2004 |
September 26, 2003 |
October 1, 2004 |
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