Keystone Automotive Industries Reports Fiscal Second Quarter 2002 Results

Company Cites Benefits from Platinum Plus Line and Strength of Insurance Business


POMONA, Calif., Nov. 8, 2001 (PRIMEZONE) -- Keystone Automotive Industries, Inc. (Nasdaq:KEYS) today reported results for its second quarter ended September 28, 2001, which reflect increased net sales and operating income, before a non-recurring charge, in large part as a result of the continued strength of insurance related aftermarket collision repair business.

As previously announced, Keystone recorded a special non-recurring, pre-tax charge in the second quarter of $6.8 million related to its investment in an enterprise-wide software conversion. Excluding the charge, net income for the second quarter was $ 1.7 million, or $0.12 per diluted share, compared with net income of $359,000, or $0.02 per diluted share, for the second quarter of fiscal 2001. Including the charge, the company reported a net loss of $2.4 million, or $0.16 per share, including the one-time special charge. Net sales for the quarter were $88.7 million, a 7% increase over the $82.8 million reported a year earlier.

Excluding the charge, net income for the first half of fiscal 2002 was $3.8 million, or $0.26 per diluted share, compared with net income of $1.8 million, or $0.13 per diluted share, for the same period in fiscal 2001. Including the charge, Keystone reported a net loss of $264,000, or $0.02 per share, including the one-time special charge. Net sales for the first half climbed 6.4% to $180.3 million from $169.4 million in fiscal 2001.

In June 2001, Keystone elected to early-adopt SFAS No. 142, effective as of the beginning of fiscal 2002. If Keystone had adopted SFAS No. 142 at the beginning of fiscal 2001, net income per diluted share for the three months and the six months ended September 29, 2000, would have been $0.09 and $0.16, respectively. Applying a fair-value-based test under SFAS No. 142, Keystone has completed its transitional assessment of impairment of goodwill and intangibles and has determined that there may be an impairment. Prior to December 28, 2001, Keystone will determine the amount of impairment loss, if any, and reflect any impairment loss on Keystone's financials effective March 31, 2001.

Charles J. Hogarty, president and chief executive officer, said, "Results for the second quarter and first half of fiscal 2002 reflect encouraging market dynamics in the aftermarket collision repair business, including increased insurance company participation and growing market acceptance of Keystone's Platinum Plus private label aftermarket parts product offerings."

Hogarty noted that same store sales for the second quarter and the six-month period increased 6.5% and 6.2%, respectively, compared with a year ago. Gross margins for the second quarter and the six months improved to approximately 42.5%, as a result of better product mix and pricing.

As announced last month, Keystone decided to record a special charge in the second quarter based upon a thorough evaluation of options following notification from its enterprise software provider that it was ceasing further development of its software. After careful internal technical analysis, Keystone determined that it was impractical to proceed with a company-wide installation of a system that required Keystone to develop the software and manage the system itself. Keystone decided to terminate the current project and is exploring other alternatives, as well as considering options to recover its prior investment. This termination is not affecting day-to-day operations.

Keystone Automotive Industries, Inc. distributes its products in the United States primarily to collision repair shops through its 113 distribution facilities, of which 21 serve as regional hubs. Its product lines consist of automotive body parts, bumpers, auto glass and remanufactured alloy wheels, as well as paint and other materials used in repairing a damaged vehicle. These products comprise more than 19,000 stock keeping units that are sold to more than 25,000 repair shops throughout the nation.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by the company. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors, including but not limited to the impact on the company (i) as a result of the termination of the installation of a new comprehensive enterprise software package, the special charge related thereto and the cost and time involved, in implementing a new management information system; (ii) from the continuing impact of the verdict in the State Farm Mutual Automobile Insurance Company class action, which is on appeal, and (iii) from the application of SFAS No. 142. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, see the Company's Form 10-K for the year ended March 30, 2001 on file with the Securities and Exchange Commission.


                 Keystone Automotive Industries, Inc.
            Condensed Consolidated Statements of Operations
          (In thousands, except share and per share amounts)
                              (Unaudited)
 
                    Thirteen      Thirteen     Twenty-Six   Twenty-Six
                     Weeks         Weeks         Weeks        Weeks
                     Ended         Ended         Ended        Ended
                   Sept. 28,     Sept. 29,     Sept. 28,     Sept. 29,
                      2001         2000          2001          2000
                    --------     --------      --------      --------
 
 Net sales          $ 88,734     $ 82,834      $180,261     $ 169,445
 Cost of sales        50,927       48,312       103,580        97,986
                    --------     --------      --------      --------
 Gross profit         37,807       34,522        76,681        71,459
 
 Operating expenses:
  Selling and
   distribution       27,414       26,594        55,544        53,530
  General and
   administrative      7,747        7,457        15,210        15,115
  Non-recurring        6,796           --         6,796            --
                    --------     --------      --------      --------
 Operating (loss)
  income              (4,150)         471          (869)        2,814
 Other income            485          535         1,008           973
 Interest expense,
  net                   (204)        (396)         (433)         (692)
                    --------     --------      --------      --------
 (Loss) Income
   before income
    taxes             (3,869)         610          (294)        3,095
 Income taxes
  (benefit)
   expense            (1,488)         251           (30)        1,269
                    --------     --------      --------      --------
 Net (loss)
  income              (2,381)       $ 359          (264)      $ 1,826
                    ========     ========      ========      ========
 
 (Loss) Earnings
   per share:
  Basic             ($  0.16)      $ 0.02        ($0.02)       $ 0.13
                    ========     ========      ========      ========
  Diluted           ($  0.16)      $ 0.02        ($0.02)       $ 0.13
                    ========     ========      ========      ========
 
 Weighted average
  shares
   outstanding:
  Basic            14,442,000  14,399,000    14,405,000    14,478,000
                   ==========  ==========    ==========    ==========
 
  Diluted          14,442,000  14,408,000    14,405,000    14,486,000
                   ==========  ==========    ==========    ==========
 
 
                 Keystone Automotive Industries, Inc.
                 Condensed Consolidated Balance Sheets
                 (In thousands, except share amounts)
 
 
                                         Sept. 28,      March 30, 2001
                                           2001             (Note)
                                        ----------        -----------
                                       (Unaudited)
 ASSETS
 
 Current Assets:
   Cash and
    cash equivalents                      $ 3,710             $ 3,005
   Accounts receivable,
    net of allowance of
     $1,360 at September
       2001 and $1,029 at
        March 2001                         28,882              29,702
   Inventories, primarily
    finished goods                         80,804              82,499
   Other current assets                    10,182               8,470
                                          -------             -------
      Total current assets                123,578             123,676
 
 Plant, property and
  equipment, net                           17,033              21,270
 Goodwill, net of
  accumulated amortization
   of $4,773 at September 2001
    and March 2001                         33,776              33,531
 Other intangibles, net of
  accumulated amortization of
   $2,514 at September 2001 and
    $2,275 at March 2001                    1,190               1,168
 
 Other assets                               4,145               4,111
                                          -------             -------
     Total Assets                        $179,722            $183,756
                                         ========            ========
 
 
 LIABILITIES AND
  SHAREHOLDERS' EQUITY
 
 Current Liabilities:
   Credit facility                        $13,253             $14,880
   Accounts payable                         8,896              12,070
   Accrued liabilities                      8,537               8,293
   Current portion 
    of long-term debt                          38                  40
                                           ------             -------
     Total current liabilities             30,724              35,283
 
   Long-term debt,
    less current portion                       30                  49
   Other long-term liabilities              2,149               2,483
 
 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
      14,505,000 at September 2001
       and 14,359,000 at March 2001        79,725              78,581
     Warrant                                  236                 236
   Additional paid-in capital               1,260               1,260
   Retained earnings                       66,139              66,405
   Accumulated other
    comprehensive loss                       (541)               (541)
                                           ------              ------
     Total shareholders'
      equity                              146,819             145,941
                                           ------              ------
     Total liabilities and
      shareholders' equity               $179,722            $183,756
                                         ========            ========
 
 
 NOTE: The balance sheet at March 30, 2001 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.


            

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