Keystone Automotive Industries, Inc. (NasdaqNM:KEYS) is still in the process of assessing the full impact of Hurricane Katrina on its six locations in the Gulf region and addressing the needs of its employees at the affected locations. Five of the six locations are operational. It appears the New Orleans facility will take several months to rebuild. 

Based on a preliminary assessment of damages to its operations in the Gulf region, the company expects the financial impact in the second fiscal quarter ending September 2005 will reduce sales by approximately $1.0 million and result in write-offs totaling $450,000 relating to account receivables and insurance deductibles for property damage. These estimates are subject to revisions. The company is unable to determine the impact, if any, on future quarters at this time.

"The financial impact on operations from Hurricane Katrina should have a relatively modest effect on Keystone's overall operations. However, a number of Keystone team members, their families and many customers have been significantly affected by the destruction caused by the hurricane in the Gulf Coast region and our organization has worked diligently to address the human situation," said Richard Keister, president and chief executive officer.

He noted that payroll continuity and meeting other needs of Keystone's team members, some of whom have lost their homes and their possessions, have been a top priority for the company. Keister indicated that the company has reassigned a couple employees to positions elsewhere, but the majority will continue to support Keystone's customer service efforts in the region.

"We are also extremely concerned about the impact of Katrina on Keystone's automotive body shop customers in the region. Helping customers get their businesses running and their employees back to productive work is another top priority of Keystone, as well as the Collision Industry Foundation - which we support," Keister said.

When it rains...

Separately, Keystone said its inventory recovery facility located in Greenville, Michigan, which recycles plastic bumpers, was recently destroyed in a fire and operations have been temporarily relocated to its operation in Saranac, Michigan. The company said that, fortunately, there were no injuries to employees. While the company does not anticipate any impact on sales as a result of the fire, property damage is estimated to be approximately $250,000 net of insurance.