UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(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 25, 1998
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 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 September 25, 1998 was 17,587,000 shares.
This Form 10-Q/A contains 8 pages.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
INDEX
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PART I. FINANCIAL INFORMATION Page Number
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets 3
September 25, 1998 (unaudited) and March 27, 1998
Condensed Consolidated Statements of Income (unaudited) 4
Three months and six months ended September 25, 1998 and
Three months and six months ended September 26, 1997
Condensed Consolidated Statements of Cash Flows (unaudited) 5
Six months ended September 25, 1998 and September 26, 1997
Notes to Condensed Consolidated Financial Statements
(unaudited) 6
Signatures 8
PART I - FINANCIAL INFORMATION
This Form 10Q/A amends and corrects the Condensed Consolidated Statement
of Cash Flows for the six month period ended September 25, 1998, note 3 to the
Notes and corrects other typographical errors in Item 1, as presented in the
original Form 10-Q filing dated November 9, 1998.
Item 1. Consolidated Financial Statements
---------------------------------
Keystone Automotive Industries, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
September 25, March 27,
1998 1998
(Unaudited) (Note)
------------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $ 44,544 $ 10,859
Accounts receivable, net of allowance of $1,417
at September 1998 and $593 at March 1998 25,976 23,476
Inventories, primarily finished goods 63,676 54,870
Other current assets 12,632 4,788
--------- ---------
Total current assets 146,828 93,993
Plant, property and equipment, net 17,228 14,873
Goodwill, net of accumulated amortization of $699
at September 1998 and $437 at March 1998 22,155 6,295
Intangibles, net of accumulated amortization of
$1,738 at September 1998 and $1,302 at March 1998 3,397 1,980
Other assets 9,287 2,555
--------- ---------
Total assets $ 198,895 $ 119,696
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bankers acceptance $ 1,929 $ 1,852
Accounts payable 14,225 13,428
Accrued liabilities 8,958 5,480
Current portion of long-term debt 1,384 779
--------- ---------
Total current liabilities 26,496 21,539
Long-term debt, less current portion 422 503
Deferred taxes 1,934 426
Other long-term liabilities 1,390 --
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--17,587,000 at
September 1998 and 14,642,000 at March 1998 120,680 57,196
Additional paid-in capital 724 724
Retained Earnings 47,249 39,308
--------- ---------
Total shareholders' equity 168,653 97,228
--------- ---------
Total liabilities and shareholders' equity $ 198,895 $ 119,696
========= =========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
NOTE: The balance sheet at March 27, 1998 has been derived from the audited
consolidated 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.
Condensed Consolidated Statements of Income
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
----------------------------- -----------------------------
September 25, September 26, September 25, September 26,
1998 1997 1998 1997
------------- ------------- ------------- -------------
Net sales $ 81,438 $ 63,396 $ 151,310 $ 126,141
Cost of sales 46,404 35,973 85,938 72,214
---------- ---------- ---------- ----------
Gross profit 35,034 27,423 65,372 53,927
Operating expenses:
Selling and distribution expenses 22,264 17,864 41,812 34,504
General and administrative 6,341 4,204 11,127 8,684
Service Center consolidation costs 402 -- 402 --
Severance costs -- -- -- 705
---------- ---------- ---------- ----------
Operating income 6,027 5,355 12,031 10,034
Other income 742 348 1,182 436
Interest expense (12) (96) (23) (403)
---------- ---------- ---------- ----------
Income before income taxes 6,757 5,607 13,190 10,067
Income tax provision 2,675 1,683 5,248 2,890
---------- ---------- ---------- ----------
Net income $ 4,082 $ 3,924 $ 7,942 $ 7,177
========== ========== ========== ==========
Earnings Per Share
Basic $ 0.23 $ 0.27 $ 0.49 $ 0.54
========== ========== ========== ==========
Diluted $ 0.23 $ 0.27 $ 0.49 $ 0.54
========== ========== ========== ==========
Weighted average shares outstanding
Basic 17,587,000 14,624,000 16,113,000 13,259,000
========== ========== ========== ==========
Diluted 17,797,000 14,800,000 16,363,000 13,390,000
========== ========== ========== ==========
(unaudited pro forma information) (Note 4)
Net income, as previously reported $ 4,082 $ 3,924 $ 7,942 $ 7,177
Pro forma tax adjustment $ -- $ (518) $ -- $ (1,050)
---------- ---------- ---------- ----------
Pro forma net income $ 4,082 $ 3,406 $ 7,942 $ 6,127
========== ========== ========== ==========
Pro forma net income per share - basic $ 0.23 $ 0.23 $ 0.49 $ 0.46
========== ========== ========== ==========
Pro forma net income per share - diluted $ 0.23 $ 0.23 $ 0.49 $ 0.46
========== ========== ========== ==========
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
4
Keystone Automotive Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six months Ended
----------------------------
September 25, September 26,
1998 1997
------------- -------------
OPERATING ACTIVITIES
Net income $ 7,942 $ 7,177
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,217 1,666
Deferred taxes (230) --
Provision for losses on uncollectible accounts 233 55
Provision for losses on inventory -- 184
Changes in operating assets and liabilities:
Accounts receivable 1,028 (129)
Inventories 2,217 33
Prepaid expenses, other receivables and other
assets (9,579) (509)
Accounts payable, and other accrued liabilities (2,552) (8,047)
-------- --------
Net cash provided by operating activities 1,276 430
INVESTING ACTIVITIES
Proceeds from sale of assets 50,001 10
Purchases of property, plant and equipment (1,327) (1,758)
Cash paid for acquisitions (2,650) (5,647)
-------- --------
Net cash provided by (used in) investing 46,024 (7,395)
activities
FINANCING ACTIVITIES
Borrowings under bank credit facility -- 187
Payments under bank credit facility (19,477) (13,037)
Bankers acceptances and other short-term debt, net 77 (245)
S corp distributions -- (934)
Principal payments on long-term debt (205)
Net proceeds on option exercise 421 507
Net proceeds on secondary offering -- 37,836
-------- --------
Net cash (used in) provided by financing activities (18,979) 24,109
-------- --------
Net increase in cash and cash equivalents 28,321 17,144
Cash and cash equivalents at beginning of period $ 10,858 $ 1,804
Cash from Republic stock acquisition $ 5,365 --
-------- --------
Cash and cash equivalents at end of period $ 44,544 $ 1,804
======== ========
Supplemental disclosures
Interest paid during the period $ 184 $ 424
Income taxes paid during the period $ 3,208 $ 2,176
======== ========
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
5
Keystone Automotive Industries, Inc.
Notes to Condensed Consolidated Financial Statements
----------------------------------------------------
(Unaudited)
September 25, 1998
1. Basis of Presentation
The accompanying unaudited condensed consolidated 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 three month and six month periods ended September 25, 1998
are not necessarily indicative of the results that may be expected for the full
year ending April 2, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended March 27, 1998,
included in the Company's Form 10-K filed with the Securities and Exchange
Commission on June 25, 1998.
2. New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133. "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in years
beginning after June 15, 1998. Because of the Company's minimal use of
derivatives, management does not anticipate that the adoption of the new
Statement will have a significant effect on earnings or the financial position
of the Company.
3. Severance/Service Center Consolidation Costs
In May 1997, the Company incurred approximately $705,000 of costs related
to the severance of its former Chairman and Chief Executive Officer.
During the September 1998 quarter, the Company consolidated service centers
in strategic locations where more than one operation existed. The cost of the
consolidation was approximately $402,000.
4. Unaudited Pro Forma Information
Pro forma net income and pro forma net income per share information for the
three month and six month periods ended September 26, 1997 gives effect to an
income tax adjustment to reflect taxation of the income of two corporations
acquired by the Company in January 1998 (accounted for as poolings of interest)
as "C" corporations, rather than "S" corporations, at an estimated rate of
approximately 39%.
5. Acquisitions
On June 27, 1998, the Company completed its acquisition of Republic
Automotive Parts, Inc. ("Republic"). The Company issued approximately 2,907,456
shares of its common stock in exchange for the outstanding common stock of
Republic for a total purchase price of approximately $63.1 million using an
average share price of $21.69. The fair value of the assets acquired
approximated $48,000,000, net of approximately $29,000,000 of liabilities
assumed. The excess of the purchase price over assets acquired (Goodwill)
approximated $15,000,000 and is being amortized over 30 years. The acquisition
of Republic is being accounted for under the purchase method of accounting.
The net assets related to the mechanical hard parts operations were
recorded as assets held for sale in the allocation of the opening balance sheet
at June 27, 1998, which included adjustments to reflect the mechanical hard
parts results of operations from the opening balance dates to the date of sale,
as well as the difference between net value of the assets disposal of the
purchase price. The operating results of the Company from June 27, 1998,
excluded any effects from the mechanical hard parts business.
6
At September 25, 1998, other long-term assets includes $3,698,000,
consisting of assets at the one Republic mechanical hard parts operating
location yet to be sold, net of various reserves. The amounts reflected on the
balance sheet represents the Company's estimate of the assets held for fair
value.
Pro Forma results of the operations for the six months ended September 25,1998
and September 27, 1997, as through Republic had been combined with the Company
at the beginning of each period is as follows:
September 25, September 26,
1998 1997
---------------- ----------------
Net sales $ 166,609 $ 153,795
Net income $ 7,502 $ 8,081
Weighted average shares - diluted $ 16,363,000 $ 16,297,000
Net income per share $ 0.47 $ 0.50
7
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/ John M. Palumbo
-----------------------------------
John M. Palumbo
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
Date: November 20, 1998
8