424B3 1 y96967b3e424b3.txt K & F INDUSTRIES, INC. Filed Pursuant to Rule 424 (b)(3) of the Rules and Regulations Under the Securities Act of 1933 Registration Statement No. 333-40977 PROSPECTUS SUPPLEMENT (To Prospectus dated April 19, 2004) $185,000,000 K & F Industries, Inc. 9 1/4% Senior Subordinated Notes Due 2007 This Prospectus Supplement, together with Prospectus, is to be used by Lehman Brothers in connection with offers and sales of the above-referenced securities in market-making transactions at negotiated prices related to prevailing market prices at the time of sale. Lehman Brothers may act as principal or agent in such transactions. May 7, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2004 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 33-29035 K & F Industries, Inc. -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 34-1614845 -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 600 Third Avenue, New York, New York 10016 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 297-0900 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of April 30, 2004, there were 740,398 shares of common stock outstanding. K & F INDUSTRIES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004 INDEX
Page ---- Part I. Consolidated Financial Information Item 1. Consolidated Financial Statements (Unaudited) a) Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003 3 b) Consolidated Statements of Operations for the three months ended March 31, 2004 and 2003 4 c) Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003 5 d) Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Item 4. Controls and Procedures 14 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS K & F INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, December 31, 2004 2003 -------------- -------------- ASSETS: Current Assets: Cash and cash equivalents $ 44,547,000 $ 24,464,000 Accounts receivable, net 39,777,000 41,595,000 Inventory 50,645,000 50,087,000 Other current assets 1,435,000 1,527,000 Income taxes receivable -- 851,000 -------------- -------------- Total current assets 136,404,000 118,524,000 -------------- -------------- Property, plant and equipment 173,980,000 173,328,000 Less, accumulated depreciation and amortization 111,483,000 109,748,000 -------------- -------------- 62,497,000 63,580,000 -------------- -------------- Deferred charges, net of amortization 57,466,000 54,232,000 Intangible assets, net of amortization 15,931,000 16,238,000 Goodwill 167,011,000 167,011,000 -------------- -------------- $ 439,309,000 $ 419,585,000 ============== ============== LIABILITIES AND STOCKHOLDERS' DEFICIENCY: Current Liabilities: Accounts payable, trade $ 12,869,000 $ 15,029,000 Interest payable 13,166,000 3,797,000 Other current liabilities 49,785,000 49,621,000 -------------- -------------- Total current liabilities 75,820,000 68,447,000 -------------- -------------- Pension liabilities 26,885,000 26,885,000 Deferred income taxes 20,321,000 19,373,000 Postretirement benefit obligation other than pensions 85,125,000 84,468,000 Other long-term liabilities 14,447,000 12,383,000 9 1/4% senior subordinated notes due 2007 145,000,000 145,000,000 9 5/8% senior subordinated notes due 2010 250,000,000 250,000,000 Stockholders' Deficiency: Common stock, $.01 par value - authorized, 1,000,000 shares; issued and outstanding, 740,398 shares 7,000 7,000 Additional paid-in capital (263,259,000) (263,259,000) Retained earnings 112,628,000 104,039,000 Accumulated other comprehensive loss (27,665,000) (27,758,000) -------------- -------------- Total stockholders' deficiency (178,289,000) (186,971,000) -------------- -------------- $ 439,309,000 $ 419,585,000 ============== ==============
See notes to consolidated financial statements. 3 K & F INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended --------------------------------- March 31, March 31, 2004 2003 -------------- -------------- Sales $ 83,149,000 $ 82,075,000 Costs and expenses 59,302,000 59,888,000 Amortization 1,146,000 1,040,000 -------------- -------------- Operating income 22,701,000 21,147,000 Interest and investment income 101,000 85,000 Interest expense (9,863,000) (11,083,000) -------------- -------------- Income before income taxes 12,939,000 10,149,000 Income tax provision (4,350,000) (2,733,000) -------------- -------------- Net income $ 8,589,000 $ 7,416,000 ============== ==============
See notes to consolidated financial statements. 4 K & F INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended --------------------------------- March 31, March 31, 2004 2003 -------------- -------------- Cash flows from operating activities: Net income $ 8,589,000 $ 7,416,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,876,000 3,010,000 Non-cash interest expense - amortization of deferred financing charges 459,000 535,000 Non-cash interest income - change in fair market value of interest rate swap -- (732,000) Deferred income taxes 948,000 2,732,000 Changes in assets and liabilities: Accounts receivable, net 1,873,000 1,664,000 Inventory (520,000) (3,849,000) Other current assets 943,000 97,000 Accounts payable, interest payable and other current liabilities 7,373,000 (1,594,000) Postretirement benefit obligation other than pensions 657,000 775,000 Other long-term liabilities 2,064,000 1,979,000 -------------- -------------- Net cash provided by operating activities 25,262,000 12,033,000 -------------- -------------- Cash flows from investing activities: Capital expenditures (647,000) (286,000) Deferred charges (4,532,000) -- -------------- -------------- Net cash used in investing activities (5,179,000) (286,000) -------------- -------------- Net increase in cash and cash equivalents 20,083,000 11,747,000 Cash and cash equivalents, beginning of period 24,464,000 22,735,000 -------------- -------------- Cash and cash equivalents, end of period $ 44,547,000 $ 34,482,000 ============== ============== Supplemental cash flow information: Interest paid during period $ 35,000 $ 986,000 ============== ============== Income taxes paid during the period $ 334,000 $ 1,000 ============== ==============
See notes to consolidated financial statements. 5 K & F INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying unaudited consolidated financial statements have been prepared by K & F Industries, Inc. and Subsidiaries (the "Company") pursuant to the rules of the Securities and Exchange Commission ("SEC") and, in the opinion of the Company, include all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of financial position, results of operations and cash flows. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules. The Company believes that the disclosures made are adequate to make the information presented not misleading. The consolidated statement of operations for the three months ended March 31, 2004 is not necessarily indicative of the results to be expected for the full year. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's December 31, 2003 Annual Report on Form 10-K. 2. Accounting Pronouncements On December 8, 2003, the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act"). The Act introduces a Federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In January 2004, the Financial Accounting Standards Board (the "FASB") issued Staff Position No. 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug Improvement and Modernization Acts of 2003," which permits a sponsor of a postretirement health care plan that provides drug benefits to make a one-time election to defer accounting for the effects of the Act. In accordance with FASB Staff Position No. 106-1, the Company is electing to defer recognition of any potential savings on the measure of the accumulated postretirement benefit obligation or net periodic benefit cost as a result of the Act until specific authoritative guidance on the accounting of the Federal subsidy is issued. 6 K & F INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 3. Receivables are summarized as follows:
March 31, December 31, 2004 2003 -------------- -------------- Accounts receivable, principally from commercial customers $ 35,557,000 $ 35,306,000 Accounts receivable, on U. S Government and other long-term contracts 5,464,000 7,505,000 Allowances (1,244,000) (1,216,000) -------------- -------------- $ 39,777,000 $ 41,595,000 ============== ==============
4. Inventory consists of the following:
March 31, December 31, 2004 2003 -------------- -------------- Raw materials and work-in-process $ 24,401,000 $ 22,324,000 Finished goods 13,827,000 15,839,000 Inventoried costs related to U.S. Government and other long-term contracts 12,417,000 11,924,000 -------------- -------------- $ 50,645,000 $ 50,087,000 ============== ==============
The Company customarily sells original wheel and brake equipment below cost as an investment in a new airframe which is expected to be recovered through the subsequent sale of replacement parts. These commercial investments (losses) are recognized when original equipment is shipped. Losses on U.S. Government contracts are immediately recognized in full when determinable. Inventory is stated at average cost, not in excess of net realizable value. In accordance with industry practice, inventoried costs may contain amounts relating to contracts with long production cycles, a portion of which will not be realized within one year. Reserves for slow moving and obsolete inventories are provided based on current assessments about future product demand and production requirements for the next twelve months. The Company evaluates the adequacy of these reserves quarterly. 7 K & F INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 5. Other current liabilities consist of the following:
March 31, December 31, 2004 2003 -------------- -------------- Accrued payroll costs $ 12,966,000 $ 14,451,000 Accrued income taxes 1,926,000 -- Accrued property taxes and other taxes 3,222,000 2,711,000 Accrued costs on long-term contracts 3,985,000 5,061,000 Accrued warranty costs 14,950,000 13,261,000 Customer credits 5,023,000 5,918,000 Postretirement benefit obligation other than pensions 3,000,000 3,000,000 Other 4,713,000 5,219,000 -------------- -------------- $ 49,785,000 $ 49,621,000 ============== ==============
6. Income Taxes The Company's effective tax rate of 33.6% for the three months ended March 31, 2004 differs from the statutory rate of 35% due to tax benefits derived from export sales. The Company's effective tax rate of 26.9% for the three months ended March 31, 2003 differs from the statutory rate of 35% due to tax benefits derived from export sales and reversal of prior years tax reserves no longer needed. 7. Contingencies There are various lawsuits and claims pending against the Company incidental to its business. Although the ultimate resolution of such suits cannot be predicted with certainty, in the opinion of the Company's management, the ultimate settlement, if any, will not have a material adverse effect on the Company's consolidated financial statements. 8 K & F INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 8. Comprehensive Income
Three Months Ended --------------------------------- March 31, March 31, 2004 2003 -------------- -------------- Net income $ 8,589,000 $ 7,416,000 Other comprehensive income: Cumulative translation adjustments 93,000 72,000 Amortization of transition adjustment included in interest expense -- 46,000 -------------- -------------- Comprehensive income $ 8,682,000 $ 7,534,000 ============== ==============
9. Segments The following represents financial information about the Company's segments:
Three Months Ended --------------------------------- March 31, March 31, 2004 2003 -------------- -------------- Sales: Aircraft Braking Systems $ 68,877,000 $ 71,158,000 Engineered Fabrics 14,272,000 10,917,000 -------------- -------------- $ 83,149,000 $ 82,075,000 ============== ============== Operating Profit: Aircraft Braking Systems $ 20,498,000 $ 20,476,000 Engineered Fabrics 2,203,000 671,000 -------------- -------------- Operating income 22,701,000 21,147,000 Interest expense, net (9,762,000) (10,998,000) -------------- -------------- Income before income taxes $ 12,939,000 $ 10,149,000 ============== ==============
March 31, March 31, 2004 2003 -------------- -------------- Total Assets: Aircraft Braking Systems $ 363,683,000 $ 348,609,000 Engineered Fabrics 66,507,000 60,593,000 Deferred financing costs not allocated to segments 7,709,000 8,168,000 Corporate assets 1,410,000 1,364,000 Income taxes receivable not allocated to segments -- 851,000 -------------- -------------- $ 439,309,000 $ 419,585,000 ============== ==============
9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General We are a supplier to manufacturers and operators of commercial, general aviation and military aircraft. Since 2001, the commercial and general aviation segments of the industry we serve, and our financial results, have been adversely affected by the sluggish economy and the events of September 11, 2001. We believe, however, that conditions have improved throughout the industry and that prospects for us are good in each of the commercial, general aviation and military market sectors. The growing number of regional jets in service should lead to increased business for us, as will new opportunities for original equipment and spare part sales in what has been a stagnant general aviation marketplace. We expect military spending for new aircraft and spare parts to continue at high levels. On April 22, 2004, a three-year collective bargaining agreement was ratified at Engineered Fabrics. This labor agreement will expire in February 2007. Critical Accounting Policies and Estimates This section is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, inventories, intangible assets, income taxes, warranty obligations, workers compensation liabilities, pension and other postretirement benefits, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements. Inventory. Inventory is stated at average cost, not in excess of net realizable value. In accordance with industry practice, inventoried costs may contain amounts related to contracts with long production cycles, a portion of which will not be realized within one year. Reserves for slow moving and obsolete inventories are provided based on current assessments about future product demand and production requirements for the next twelve months. These factors are impacted by market conditions, technology changes, and changes in strategic direction, and require estimates and management judgment that may include elements that are uncertain. We evaluate the adequacy of these reserves quarterly. Although we strive to achieve a balance between market demands and risk of inventory excess or obsolescence, it is possible that, should conditions change, additional reserves may be needed. Any changes in reserves will impact operating income during a given period. This policy is consistently applied to each of our operating segments and we do not anticipate any changes to our policy in the near term. 10 Evaluation of Long-Lived Assets. Long-lived assets are assessed for recoverability on an ongoing basis in accordance with SFAS No. 144. In evaluating the value and future benefits of long-lived assets, their carrying value is compared to management's estimate of the anticipated undiscounted future net cash flows of the related long-lived asset. Any necessary impairment charges would be recorded when we do not believe the carrying value of the long-lived asset will be recoverable. Warranty. Estimated costs of warranty are accrued when individual claims arise with respect to a product or performance. When we become aware of those types of defects, the estimated costs of all potential warranty claims arising from those types of defects are fully accrued. Pension and Other Postretirement Benefits. We have significant pension and postretirement benefit costs and liabilities. The determination of our obligation and expense for pension and other postretirement benefits is dependent on our selection of certain assumptions used by actuaries in calculating those amounts. Assumptions are made about interest rates, expected investment return on plan assets, rate of increase in health care costs, total and involuntary turnover rates, and rates of future compensation increases. In addition, our actuarial consultants use subjective factors such as withdrawal rates and mortality rates to develop our valuations. We generally review and update these assumptions at the beginning of each fiscal year. We are required to consider current market conditions, including changes in interest rates, in making these assumptions. The actuarial assumptions that we may use may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These differences may result in a significant impact on the amount of pension and postretirement benefits expense we have recorded or may record. The discount rate enables us to state expected future cash flows at a present value on the measurement date. The rate represents the market rate of high-quality fixed income investments. A lower discount rate increases the present value of benefit obligations and increases pension expense. We used a 6 3/4% discount rate in 2003 and are using a 6 1/4% discount rate for 2004 to reflect market interest rate conditions. To determine the expected long-term rate of return on pension plan assets, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. We assumed that the long-term return on our pension plan assets was 9.0% in 2003 and will remain at 9.0% for 2004 to reflect market interest rate conditions. The annual postretirement expense was calculated using a number of actuarial assumptions, including a health care cost trend rate and a discount rate. Our discount rate assumption for postretirement benefits is consistent with that used in the calculation of pension benefits. The healthcare cost trend rate being used to calculate the calendar year 2004 postretirement expense is 10.0% in 2004 trending down to 4.5% for 2010. Comparison of Results of Operations for the Three Months Ended March 31, 2004 and March 31, 2003 Our sales for the three months ended March 31, 2004 totaled $83,149,000, reflecting an increase of $1,074,000, compared with $82,075,000 for the same period in the prior year. This increase was due to higher sales at 11 Engineered Fabrics of $3,355,000, partially offset by lower sales at Aircraft Braking Systems of $2,281,000. Sales at Engineered Fabrics increased primarily due to higher military sales of fuel tanks, primarily for the Northrop Grumman F-18, the Boeing F-15 and the Sikorsky Blackhawk programs. Partially offsetting this increase was lower sales of oil containment booms. Commercial sales at Aircraft Braking Systems decreased $1,415,000, primarily due to lower sales of wheels and brakes on the Fokker FO-100, the Boeing DC-10, B-707 and DC-9 programs, partially offset by higher sales on the Embraer 170 program. Military sales decreased $3,230,000, primarily on the Boeing B-1B and Lockheed C-130 programs. Partially offsetting this decrease was higher general aviation sales of $2,364,000, primarily on the Lear 55 and 60 and Gulfstream aircraft. Our operating income increased $1,554,000 to $22,701,000, or 27.3% of sales for the three months ended March 31, 2004, compared with $21,147,000, or 25.8% of sales for the same period in the prior year. Aircraft Braking Systems operating income was $20,498,000, or 29.8% of sales for the three months ended March 31, 2004, compared with $20,476,000, or 28.8% of sales for the same period in the prior year. Engineered Fabrics operating income was $2,203,000, or 15.4% of sales for the three months ended March 31, 2004, compared with $671,000, or 6.1% of sales for the same period in the prior year. Aircraft Braking Systems operating income margins increased primarily due to a favorable mix of products sold and lower operating costs, partially offset by the unfavorable overhead absorption effect relating to lower sales and higher program investments. Engineered Fabrics operating income margins increased primarily due to the favorable overhead absorption effect relating to higher sales and operating efficiencies. Our net interest expense decreased by $1,236,000 for the three months ended March 31, 2004, compared with the same period in the prior year. This decrease was primarily due to a lower average debt balance. Our effective tax rate of 33.6% for the three months ended March 31, 2004 differs from the statutory rate of 35% due to tax benefits derived from export sales. Our effective tax rate of 26.9% for the three months ended March 31, 2003 differs from the statutory rate of 35% due to tax benefits derived from export sales and reversal of prior years tax reserves no longer needed. Liquidity and Financial Position Our cash and cash equivalents totaled $44.5 million at March 31, 2004, compared with $24.5 million at December 31, 2003. Our total debt was $395.0 million at March 31, 2004 and December 31, 2003, and we had $27.2 million (which is net of letters of credit of $2.8 million) available to borrow under our $30.0 million revolving credit facility. In the past, the cash generated from operations has been sufficient to pay our indebtedness. We do not have to pay principal on our notes until 2007, when $145.0 million of our 9 1/4% notes mature. We expect that our principal use of funds for the next several years will be 12 to pay interest and principal on indebtedness, fund capital expenditures and make program investments. Our primary source of funds for conducting our business activities and servicing our indebtedness has been cash generated from operations. The credit facility contains certain covenants and events of default, including limitations on additional indebtedness, liens, asset sales, making certain restricted payments, capital expenditures, creating guarantee obligations and material lease obligations. The credit facility also contains certain financial ratio requirements, including a cash interest coverage ratio and a leverage ratio. We were in compliance with all debt covenants at March 31, 2004. Our contractual obligations are detailed in our Annual Report on Form 10-K for the year ended December 31, 2003. As of March 31, 2004, our contractual obligations have not materially changed from December 31, 2003. Cash Flows During the three months ended March 31, 2004, net cash provided by operating activities amounted to $25,262,000, compared with $12,033,000 for the same period in the prior year, an increase of $13,229,000. Our cash flow from operating activities increased from the prior year primarily due to payments made in 2003 to the holders of our common stock in connection with the 2002 recapitalization, and lower increases in inventory in 2004 versus 2003. During the three months ended March 31, 2004, net cash used in investing activities amounted to $5,179,000 versus $286,000 for the same period in the prior year, an increase of $4,893,000. This increase was primarily due to $4,532,000 of program participation payments made during the three months ended March 31, 2004, compared with no payments made during the same period in the prior year. Accounting Pronouncements On December 8, 2003, the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003, or the Act. The Act introduces a Federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In January 2004, the Financial Accounting Standards Board, or the FASB, issued Staff Position No. 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003," which permits a sponsor of a postretirement health care plan that provides a prescription drug benefit to make a one-time election to defer accounting for the effects of the Act. In accordance with FASB Staff Position No. 106-1, we are electing to defer recognition of any potential savings on the calculation of our accumulated postretirement benefit obligation or net periodic benefit cost as a result of the Act until specific authoritative guidance on the accounting of the Federal subsidy is issued. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have $395.0 million of total fixed rate debt outstanding at March 31, 2004. Borrowings under the credit facility bear interest that varies with LIBOR, for which no borrowings were outstanding at March 31, 2004. 13 Given that all of our outstanding debt is at a fixed rate, a 10% change in interest rates would not have a significant impact on fair values, cash flows or earnings. We have no derivative financial instruments. ITEM 4. CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the designed control objectives. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2004. Based upon that evaluation and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures provided reasonable assurance that the disclosure controls and procedures are effective to accomplish their objectives. In addition, there was no change to our internal control over financial reporting that occurred during the quarter ended March 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 14 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 31.1 - Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)of the Securities Exchange Act, as amended. 31.2 - Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)of the Securities Exchange Act, as amended. 32.1 - Certification of Chief Executive Office pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 - Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K A report on Form 8-K dated March 29, 2004 was filed regarding the fourth quarter and year ended December 31, 2003 earnings. Items 1, 2, 3, 4 and 5 are not applicable and have been omitted. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. K & F INDUSTRIES, INC. Registrant /s/ DIRKSON R. CHARLES ------------------ Dirkson R. Charles Chief Financial Officer and Registrant's Authorized Officer Dated: May 7, 2004 16