EXETER, Pennsylvania -- Keystone Automotive Operations, Inc., the leading distributor and marketer of specialty automotive equipment and accessories in North America, today announced financial results for the second quarter ended June 30, 2007. Highlights include:

• Net sales for the quarter ended June 30, 2007 were a record $172.6 million, an increase of $3.4 million, or 2.0%, compared to $169.2 million for the same period in the prior year. The sales increase was driven by increased focus on customer service and greater inventory availability, and was achieved in spite of conservative consumer spending on discretionary items driven by high gasoline prices and general economic uncertainty. We believe the second quarter's results represent a more accurate year-over-year comparison than the first quarter ended March 31, as customer attrition resulting from the acquisition of Reliable occurred primarily in last year's second quarter. Nevertheless, sales growth in this year's second quarter was still modestly suppressed by customer attrition that occurred throughout last year's second quarter and the remainder of the year.
  
• Gross profit for the quarter ended June 30, 2007 was $52.6 million versus $53.6 million in the prior year, a decrease of $1.0 million, or 1.9%. The decline was primarily attributable to lower product selling margins resulting from competitive pressures in the marketplace. Gross margin declined to 30.5% in the quarter ended June 30, 2007 compared to 31.7% for the same period in the prior year.
• Operating income for the quarter ended June 30, 2007 was $10.6 million, a decrease of $2.2 million, compared to $12.8 million for the same period in the prior year. The decline was primarily due to the decrease in gross profit noted above and an increase in operating expenses in support of strategic investments.
• The Company recorded net income of $0.8 million in the quarter ended June 30, 2007 versus net income of $2.7 million in the prior year, driven by lower product selling margins, an increase in selling, general and administrative expense and higher interest expense. These decreases to pretax income were partially offset by a corresponding decrease in income tax expense.
  

"This quarter's results were a substantial improvement over last quarter, and we are very encouraged by the positive sales trends versus the prior year. We believe we gained market share in most geographic areas as customers are valuing Keystone for the breadth and depth of our inventory investment and our timely delivery capability," said Ed Orzetti, Chief Executive Officer of Keystone Automotive Operations.  "Despite tough economic conditions, Keystone is in a much stronger competitive position than a year ago.  We are beginning to reap the benefits of our focused efforts and investments over the past year, which was demonstrated by the positive results we delivered this quarter."

Summary Financials (Unaudited)

  Summary Income Statement
  ($ in millions)

                                   Three Months Ended     Three Months Ended
                                      July 1, 2006            June 30, 2007

  Net sales                               $169.2                   $172.6
  Gross profit                              53.6                     52.6
  Operating income                          12.8                     10.6
  Net income (loss)                         $2.7                     $0.8


  Summary Balance Sheet
  ($ in millions)

                               As of December 30, 2006   As of June 30, 2007
  Assets
  Current assets                          $194.5                   $219.3
  Property, plant and equipment, net        52.4                     51.3
  Other non-current assets                 441.6                    434.5
  Total Assets                            $688.5                   $705.1

  Liabilities and Stockholder's Equity
  Current liabilities                      $64.6                    $89.5
  Long-term debt                           372.9                    372.0
  Other long-term liabilities               63.3                     62.2
  Total Liabilities                        500.8                    523.7
  Stockholder's Equity                     187.7                    181.4
  Total Liabilities
   and Stockholder's Equity               $688.5                   $705.1

ABOUT KEYSTONE AUTOMOTIVE OPERATIONS

Keystone Automotive Operations, Inc. (www.eKeystone.com/) is the leading distributor and marketer of specialty automotive equipment and accessories in North America, providing product lines from approximately 825 vendors to approximately 23,500 wholesale customers. The Company operates four distribution centers and 20 non-inventory stocking cross-docks in the U.S. and Canada, as well as a fleet of approximately 370 trucks that provide multi-day per week delivery and returns covering 42 states and parts of Canada.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. As such, final results could differ from estimates or expectations due to risks and uncertainties, including but not limited to: incomplete or preliminary information; changes in government regulations and policies; continued acceptance of the Company's products and services in the marketplace; competitive factors; technological changes; the Company's dependence upon third-party suppliers; and other risks. For any of these factors, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended.