UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
September 10, 1998
(Date of Report (Date of Earliest Event Reported))
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
California 0-28568 95-2920557
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
700 East Bonita Avenue
Pomona, California 91767
(Address of principal executive offices) (Zip Code)
(909) 624-8041
(Registrant's telephone number, including area code)
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information
Keystone Automotive Industries, Inc. and Republic Automotive Parts,
Inc.
Pro forma Combined Condensed Balance Sheet at June 26, 1998
Pro forma Combined Condensed Statements of Income for year ended
March 27, 1998 and the three months ended June 26, 1998
Notes to Pro forma Combined Condensed Financial Statements
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: September 10, 1998
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
By /s/ John M. Palumbo
-----------------------------------
John M. Palumbo
Chief Financial Officer
Item 7.(b) Pro Forma Financial Information
Unaudited Pro Forma Combined Condensed Financial Statements
Effective June 27, 1998, Keystone Automotive Industries, Inc. ("Keystone")
consummated the acquisition of 100% of the outstanding stock of Republic
Automotive Parts, Inc. ("Republic"). The former shareholders of Republic
received 0.80 of a share of the Common Stock of Keystone for each share of the
Common Stock of Republic. The total purchase price amounted to $63.1 million.
The transaction will be accounted for as a purchase.
Republic distributes new replacement parts to repair vehicles damaged in
collisions through 23 body parts and accessories distribution centers serving 14
states primarily in the Southeast and Texas. These centers sell to automotive
collision repair shops and smaller parts distributors. In addition, Republic
purchases mechanical replacement parts from over 100 principal suppliers and
distributes them through its automotive parts distribution centers (hard parts
operations). These centers sell to Republic's jobber stores as well as to
approximately 3,000 independent jobber stores. These stores in turn sell to
service stations, repair shops, individuals and others, including automobile and
truck dealers, fleet operators, leasing companies and mass merchandisers.
Effective August 31, 1998, Keystone sold the majority of net operating assets of
the hard parts operations for an estimated sales price of approximately $50
million. The total sales price was based upon the market value of the net assets
related to the operating division. The transaction will be accounted for as a
sale of assets held for disposal.
The following Keystone unaudited pro forma combined condensed financial
statements and related notes give effect to the acquisition of Republic as a
purchase. Additionally, such pro forma combined condensed financial statements
reflect the reclassification of the net assets of the hard parts operations as
"Assets held for sale", and the disposition of a significant portion of the hard
parts operations. The unaudited pro forma combined condensed statements of
income combine Keystone's fiscal year ended March 27, 1998 with Republic's year
ended December 31, 1997 and Keystone's three months ended June 26, 1998 with
Republic's three months ended March 31, 1998. The unaudited pro forma combined
condensed balance sheet combines Keystone's balance sheet as of June 26, 1998
with Republic's balance sheet as of March 31, 1998. Keystone's unaudited pro
forma combined condensed balance sheet assumes that the acquisition and the
disposition were completed as of June 26, 1998 Keystone's unaudited pro forma
combined condensed statements of income for the three month period ended June
26, 1998 and the year ended March 27, 1998 assumes that the acquisition and the
disposition were consummated at the beginning of the fiscal periods presented.
The Keystone unaudited pro forma combined condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the consolidated financial position or consolidated results of operations of
Keystone that would have been reported had the acquisition or disposition
occurred on the date indicated, nor do they represent a forecast of the
consolidated financial position of Keystone at any future date or the
consolidated results of operations of Keystone for any future period.
Furthermore, no effect has been given in the Keystone unaudited pro forma
combined condensed statements of income for operating benefits that may be
realized through the combination of the entities. Amounts allocated to the
assets and liabilities of Republic are based on their estimated fair market
values as of the acquisition closing date. The Keystone unaudited pro forma
combined condensed financial statements, including the notes thereto, should be
read in conjunction with the historical financial statements and related notes
of Republic and Keystone, on file with the Securities and Exchange Commission.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(in thousands, except share amounts)
KEYSTONE REPUBLIC
JUNE 26, MARCH 31,
1998 1998 PRO FORMA ADJUSTMENTS PRO FORMA
---------------------------- ---------------------------------------------------
Note (1)
ASSETS
Current assets:
Cash and cash equivalents $ 17,328 $ 4,836 $ (1,106) $ - $ 25,534/(3)/ $ 46,592
Accounts receivable 22,578 14,016 (10,613) - - 25,981
Inventories, primarily finished goods 57,427 47,687 (36,424) - - 68,690
Other current assets 3,849 6,679 (2,612) - - 7,916
-----------------------------------------------------------------------------
Total current assets 101,182 73,218 (50,755) - 25,534 149,179
Net fixed assets 14,942 7,075 (4,277) - - 17,740
Assets held for sale - - 52,892 - (50,000)/(3)/ 2,892
Other assets 2,586 3,153 (251) - - 5,488
Intangibles 8,105 10,217 (7,331) 12,406/(2)/ - 23,397
-----------------------------------------------------------------------------
Total assets $126,815 $93,663 $ (9,722) $12,406 $ (24,466) $198,696
=============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bankers acceptances $ 1,874 $ - $ - $ - $ - $ 1,874
Accounts payable 13,999 7,239 (6,283) - - 14,955
Accrued expenses 7,928 5,805 (1,500) 1,714/(7)/ - 13,947
Current portion of long-term debt 643 672 (667) - - 648
-----------------------------------------------------------------------------
Total current liabilities 24,444 13,716 (8,450) 1,714 - 31,424
Long-term debt 466 24,500 (500) - (24,466)/(3)/ -
Other long-term liabilities 426 3,082 (772) - - 2,736
-----------------------------------------------------------------------------
Total long-term liabilities 892 27,582 (1,272) - (24,466) 2,736
Shareholders' equity:
Keystone common stock, no par value:
Authorized shares - 50,000,000
Issued and outstanding - 14,663,000
historical, 17,563,000 pro forma 57,587 - - 63,057/(8)/ - 120,644
Republic common stock, $0.50 par value:
Authorized shares - 5,000,000
Issued and outstanding shares - 3,491,483 - 1,746 - (1,746)/(8)/ - -
Additional paid-in capital 724 25,342 - (25,342)/(8)/ - 724
Retained earnings 43,168 26,182 - (26,182)/(8)/ - 43,168
Treasury stock - 79,252 shares, at cost - (905) - 905/(8)/ - -
-----------------------------------------------------------------------------
Total shareholders' equity 101,479 52,365 - 10,692 - 164,536
-----------------------------------------------------------------------------
Total liabilities and shareholders'
equity $126,815 $93,663 $ (9,722) $12,406 $ (24,466) $198,696
=============================================================================
See accompanying notes to unaudited pro forma combined condensed
financial statements.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share and share amounts)
KEYSTONE REPUBLIC
YEAR ENDED
---------------------------------
MARCH 27, DECEMBER 31,
1998 1997 PRO FORMA ADJUSTMENTS PRO FORMA
---------------------------------------------------------------------------------------
Note (1)
Net sales $ 263,802 $ 188,953 $ (133,053) $ $ - $ 319,702
Cost of sales 149,855 112,466 (80,949) - 181,372
---------------------------------------------------------------------------------------
Gross profit 113,947 76,487 (52,104) - 138,330
Operating expenses:
Selling, distribution and
administrative expenses 91,652 68,873 (46,202) 206/(4)/ - 114,529
Severance costs 705 - - - - 705
Merger costs 442 - - - - 442
---------------------------------------------------------------------------------------
92,799 68,873 (46,202) 206 - 115,676
---------------------------------------------------------------------------------------
Operating income 21,148 7,614 (5,902) (206) - 22,654
Other income 1,086 233 (233) - - 1,086
Interest expense (504) (2,346) 1,822 - 1,028/(3)/ -
---------------------------------------------------------------------------------------
Income before income taxes 21,730 5,501 (4,313) (206) 1,028 23,740
Tax provision 7,497 2,243 (1,682)/(5)/ (80)/(5)/ 401/(5)/ 8,379
---------------------------------------------------------------------------------------
Net income $ 14,233 $ 3,258 $ (2,631) $ (126) $ 627 $ 15,361
=======================================================================================
Net income per share - basic $1.02 $0.96 $0.92
===== ===== =====
Net income per share - diluted $1.01 $0.91 $0.90
===== ===== =====
Weighted average common shares
outstanding - basic 13,915,000 3,402,000 - (680,000)/(8)/ - 16,637,000
=======================================================================================
Weighted average common shares
outstanding - diluted 14,105,000 3,593,000 - (719,000)/(8)/ - 16,979,000
=======================================================================================
Net income, as previously reported $ 14,233 $ 3,258 $ (2,631) $ (126) $ 627 $ 15,361
Pro forma tax adjustment (1,345)/(6)/ - - - - (1,345)/(6)/
---------------------------------------------------------------------------------------
Pro forma net income $ 12,888 $3,258 $ (2,631) $ (126) $ 627 $ 14,016
=======================================================================================
Pro forma earnings per share-basic $ 0.93 $ 0.96 $ 0.84
========================== ===========
Pro forma earnings per share-diluted $ 0.91 $ 0.91 $ 0.83
========================== ===========
See accompanying notes to unaudited pro forma combined condensed
financial statements.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share and share amounts)
KEYSTONE REPUBLIC
THREE MONTHS ENDED
-------------------------------
JUNE 26, MARCH 31,
1998 1998 PRO FORMA ADJUSTMENTS PRO FORMA
----------------------------------------------------------------------------------------
Note (1)
Sales $ 69,872 $ 41,140 $ (25,492) $ - $ - $ 85,520
Cost of sales sold 39,534 23,332 (14,775) - - 48,091
------------------------------------------------------------------------------------
Gross profit 30,338 17,808 (10,717) - - 37,429
Operating expenses:
Selling, distribution and
administrative expenses 24,334 16,410 (10,011) 52/(4)/ 30,785
------------------------------------------------------------------------------------
Operating income 6,004 1,398 (706) (52) - 6,644
Other income 440 160 (160) - - 440
Interest expense (11) (453) 349 - 115/(3)/ -
------------------------------------------------------------------------------------
Income before income taxes 6,433 1,105 (517) (52) 115 7,084
Tax provision 2,573 436 (201)/(5)/ (20)/(5)/ 45/(5)/ 2,833
------------------------------------------------------------------------------------
Net income $ 3,860 $ 669 $ (316) $ (32) $ 70 $ 4,251
====================================================================================
Net income per share - basic $ 0.26 $ 0.20 $ 0.24
================================ =============
Net income per share - diluted $ 0.26 $ 0.19 $ 0.24
================================ =============
Weighted averages common shares
outstanding - basic 14,655,000 3,412,000 - (682,000)/(8)/ - 17,385,000
====================================================================================
Weighted averages common shares
outstanding - diluted 14,917,000 3,597,000 - (719,000)/(8)/ - 17,795,000
====================================================================================
See accompanying notes to unaudited pro forma combined condensed
financial statements.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(1) On August 31, 1998, Keystone sold Republic's automotive aftermarket
mechanical parts (hard parts) operations. These adjustments reflect the
application of Emerging Issues Task Force (EITF) 87-11, "Allocation of
Purchase Price Assets to be Sold", which reclassifies the assets and
liabilities of the hard parts operation as "Assets held for sale". The
amount on the balance sheet reflects Keystone's estimate of the estimated
net sales price of the hard parts operations.
(2) This adjustment reflects the assets and liabilities of Republic at their
estimated fair values (such estimated fair values are subject to possible
adjustment based on future analyses) as follows (in thousands):
Net assets of Republic at March 31, 1998 $52,365
Estimated fair value adjustment:
Cost in excess of net assets acquired 12,406
-------
$64,771
=======
The computation of the purchase price is as follows (in thousands):
Exchange of common shares (3.6 million shares of Republic Common Stock
at the conversion ratio of 0.80 of a share of Keystone Common Stock at
an assumed fair value of $21.69 per share) $63,057
Liabilities resulting from change of control provisions 1,994
Estimated transaction costs 500
Tax benefit of Exercised stock options (780)
-------
Total purchase price $64,771
=======
(3) This adjustment reflects the sale of the net assets of the hard parts
operation for approximately $50 million in cash and the effect of the use of
the proceeds from the sale of the hard parts operation. The proceeds of the
sale will be used to pay down debt of the Company and therefore, outstanding
debt and the related interest expense has been reduced for each period
presented. A portion of the operation has not yet been sold, and therefore,
the amount in the pro forma combined condensed balance sheet reflects the
Company's estimate of the remaining assets to be disposed of.
(4) To eliminate historical amortization expense and to record the amortization
expense resulting from the purchase price allocation (in thousands):
FOR THE FOR THE THREE
YEAR ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
-----------------------------------
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS (CONTINUED)
1997 1998
-------- --------
Elimination of Republic historical amounts:
Amortization of cost in excess of net assets acquired $(274) $ (68)
Record amounts resulting from purchase price allocation:
Amortization of cost in excess of net assets acquired 480 120
-----------------------
$ 206 $ 52
=======================
(5) To record the federal income tax effect, using the 39% statutory rate,
related to the net pro forma adjustments.
(6) This adjustment reflects the tax expense effect of one of two acquisitions
that occurred on January 1, 1998, which were accounted for as poolings of
interest. One of the acquired companies had elected to be taxed under
subchapter "S" of the Internal Revenue Code, and therefore, the net income
does not reflect the corporate tax liability that is passed through to its
shareholders. The pro forma net income and earnings per share reflect income
tax expense of the combining companies at an estimated statutory rate of
40%.
(7) To record estimated costs of consummating the acquisition of Republic and
liabilities resulting from change in control provisions and the tax benefits
of stock options exercised.
(8) This adjustment eliminates Republic's historical equity balances, and
records the issuance of 2.9 million shares of Keystone Common Stock in
exchange for the outstanding stock of Republic, at an assumed fair value of
$21.69 per share. The fair value was calculated using the average sales
price of Keystone Common Stock for the five days prior to the announcement
of the acquisition of Republic.