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Letter to the Editor

Keystone Automotive Industries, Inc. Reports Record 14% Increase in Q2 Net Sales

Net income for the second quarter of fiscal 2003 ended September 27, 2002 was $2.7 million, or $0.18 per diluted share, compared with a net loss of $2.4 million, or $0.16 per diluted share for the second quarter of fiscal 2002. The loss was the result of a special charge of $6.8 million related to the company's write-off of its investment in an enterprise software system. Excluding the special charge, net income for the second quarter of fiscal 2002 would have been $1.8 million, or $0.12 per diluted share. Net sales for the second quarter of fiscal 2003 increased 14.0 percent to a record $101.1 million from $88.7 million a year earlier.

Net income for the twenty-six week period ended September 27, 2002 was $6.2 million, or $0.41 per diluted share, compared with a net loss of $29.0 million, or $2.01 per diluted share, a year earlier. Net sales for the same period increased 15.3 percent to $207.9 million from $180.3 million a year ago. For the twenty-six week period, same store sales increased nine percent over the prior year.

The net loss for the first six months of fiscal 2002 was due to a $28.7 million charge (net of tax) related to the cumulative effect of a change in accounting principle, made retroactive to the first quarter of fiscal 2002, as a result of the early adoption of Statement of Financial Accounting Standards (SFAS No. 142) "Goodwill and Other Intangible Assets," as well as the charge relating to the investment in an enterprise software system.

"Operating results for the quarter represent the seventh consecutive year-over-year increase in quarterly operating performance for Keystone," said Charles J. Hogarty, president and chief executive officer.

He cited several factors that continue to positively impact Keystone's sales, including more frequent specification of aftermarket parts by certain insurance companies and a growing acceptance of Keystone's private label Platinum Plus brand of products.

Subsequent to the end of the quarter Keystone received its ISO 9001 registration by NSF International Strategic Registrations, Ltd.

"Achieving ISO 9001 certification highlights Keystone's ongoing commitment to quality and has the additional benefit of further distinguishing Keystone as the industry leader for aftermarket collision replacements parts. As the aftermarket collision replacement parts industry continues to gain momentum, we remain optimistic about Keystone's prospects and the outlook for the balance of fiscal 2003,'' Hogarty added.

Separately, the company said that while it was not adversely impacted by the initial dock-workers strike at West Coast ports, if the strike resumes in late December and were to continue for a prolonged period of time, it could have a material adverse impact on the company.

Keystone Automotive Industries, Inc. distributes its products in the United States primarily to collision repair shops through its 114 distribution facilities, of which 21 serve as regional hubs, located in 37 states, Vancouver, Canada and Tijuana, Mexico.

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