Keystone Automotive draws $28.3 million on revolving credit facility

By Jennifer Lanning Drey

Portland, Ore., Nov. 13 - Keystone Automotive Operations, Inc. drew $28.3 million on its revolving credit facility in October to finance the purchase of assets from Arrow Speed Warehouse Inc. and to help fund general corporate purposes, Stuart Gleichenhaus, interim chief financial officer of Keystone, said Thursday during the company's third-quarter earnings conference call.

The company had $84.4 million available under the facility at the Sept. 27 close of the third quarter.

Gleichenhaus said the drawing on the revolver above the about $8 million purchase price for the Arrow Speed assets was done as a precautionary measure to ensure Keystone could cover its obligations through the fourth quarter.

The interim CFO also noted that the company originally thought the purchase price would be closer to $11 million.

Keystone had cash of $1.8 million at Sept. 27, down from $9.9 million at Dec. 29, 2007.

Net sales drop 11.7%

For the third quarter, Keystone reported net sales of $136.3 million, representing an 11.7% decrease from the prior-year third quarter. The third-quarter net loss was $5.5 million, compared to a net loss of $3.0 million in the third quarter of 2007.

Chief executive officer Ed Orzetti said the sales decline was driven by lower consumer spending on discretionary items, general economic uncertainty, a year-over-year drop in SUV sales and the lessened availability of credit.

"There's no question that we're operating under very difficult market conditions, and there are few signs circumstances will change through 2009," Orzetti said.

During challenging times, Keystone's strategy is to manage its costs while seizing opportunities to grow and expand its business, he said.

"Despite the current macroeconomic environment, we remain focused on realizing the long-term potential of this business," Orzetti said.

Keystone is an Exeter, Penn., distributor and marketer of specialty automotive accessories.

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