Collins & Aikman Corporation Announces Results For the First Quarter
TextStart -->TROY, Mich., May 13 Collins & Aikman Corporation today reported first quarter results for its fiscal period ended March 31, 2002. For the first quarter of 2002, the Company reported net sales of $914.8 million, EBITDA as defined by the Company's senior credit facility of $106.8 million and a net loss of $6.0 million, or ($.04) per diluted share. Included in the results were costs for subsidiary preferred stock requirements of $11.2 million, a $9.1 million restructuring charge and integration activities of $9.8 million primarily related to the Company's recent acquisitions of Becker Plastics, Joan Fabrics and Textron's automotive trim division (TAC-Trim). Excluding the impact of these costs, the Company estimates that it would have reported net income of $18.6 million, or $.11 per diluted share.
Recent Highlights Include:
* Further reduced net debt leverage ratio to 3.4-to-1
* Relative to first quarter 2001, limited inventory increase to
$18 million, while achieving sales increase in excess of $450 million
* Named one of General Motors Global Suppliers of the Year
* Introduced Intellimold(TM) Xtrasoft(TM) at Plastec West 2002 Expo
* Received Nissan of Mexico's "Zero Defect" Award and Honda of America
and Honda of Canada's "Quality Performance" Award
"I'm extremely encouraged by both the financial performance of our operating divisions during this period of integration, as well as the continued quality recognition we're receiving," stated Collins & Aikman's Chairman and Chief Executive Officer, Thomas E. Evans. "As a whole, Collins & Aikman has improved its operating margin by over 250 basis points versus the year ago period, as the benefits of previous restructuring activities, facility rationalizations and acquisition synergies have begun to be realized. Perhaps most importantly of all, these results demonstrate Collins & Aikman's ability to achieve both top line growth and solid cash flow performance."
First Quarter Performance Highlights
For the first quarter of 2002, the Company reported net sales of $914.8 million, EBITDA as defined by the Company's senior credit facility of $106.8 million and a net loss of $6.0 million, or ($.04) per diluted share. Excluding costs associated with first quarter restructuring and acquisition integration activities, as well as subsidiary preferred stock requirements, the Company estimates that it would have reported first quarter net income of $18.6 million, or $.11 per diluted share. For the quarter ended March 31, 2002, the Company had approximately 168.0 million shares outstanding on a weighted average diluted basis, versus 71.3 million shares in the year ago period.
In the first quarter of 2001, the Company reported net sales of $453.1 million, EBITDA, excluding a $9.2 million restructuring charge, of $40 million and a net loss of $7.4 million, or ($.10) per diluted share. Excluding costs associated with restructuring, goodwill amortization and the early redemption of JPS Automotive Senior Notes, the Company estimates that it would have reported first quarter 2001 net income of $1.8 million, or $.03 per diluted share.
Compared to the first quarter of fiscal 2001, net sales in the current quarter rose approximately $462 million. This increase was primarily driven by additional sales from the Company's recent acquisitions as well as a five percent increase in light vehicle production in North America, partially offset by customer price reductions, unfavorable mix and the impact of a nine percent decline in European light vehicle production.
Evans continued, "Although we're beginning to see the benefits of our integration activities, Collins & Aikman remains more focused than ever on maximizing its true earnings potential through internal growth, targeted acquisitions, expanded product offerings and continued facility rationalizations. I'm confident that the foundation we're creating for the 'new' Collins & Aikman Corporation will strategically position us to take advantage of our 'Mega Tier 2' strategy and further strengthen our ability to provide our customers with industry leading product solutions."
EBITDA
In connection with financing the TAC-Trim acquisition, the Company entered into new credit facilities and issued new high yield debt securities. Copies of these debt instruments have been filed with the SEC. Due to interest in our EBITDA after giving effect to our Becker, Joan and TAC-Trim acquisitions and to avoid selective disclosure to our debt investors and lenders, we are reporting our EBITDA as defined under our senior credit facility. Our credit facility definition includes stipulated amounts for the second and third quarters of 2001 that were based upon actual historical results for Collins & Aikman and the acquired entities, and allows for certain adjustments for matters such as restructuring charges, integration expenses, fees associated with our acquisitions, management fees payable to our largest shareholder and a variety of non-cash charges. Reference is made to our senior credit facility on file with the SEC for the complete definition of EBITDA. The information is not presented in accordance with generally accepted accounting principles and is not intended to be equivalent to the other pro forma EBITDA information that we previously filed with the SEC for Regulation FD purposes in connection with the TAC-Trim acquisition.
The following table shows our calculation of EBITDA in accordance with our senior credit facility:
- First Quarter 2002
- Reported operating income $55.8
- Depreciation and amortization 29.1
- Restructuring charge (1) 9.1
- Restructuring and acquisition
integration costs 9.8
Non-cash write-offs 2.0
Other allowable cash charges,
including Heartland advisory fee 1.0
First quarter 2002 EBITDA as per
Credit Agreement $106.8
EBITDA for last 3 quarters of 2001 $260.8
Trailing 12 months EBITDA as of 3/31/02 $367.6
(1) Restructuring charge includes $5.4 million in severance costs and
$3.7 million in reserves for future commitments.
Collins & Aikman Corporation is a global leader in cockpit modules and automotive floor and acoustic systems and a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company's current operations span the globe through 15 countries, more than 120 facilities and over 25,000 employees who are committed to achieving total excellence. Collins & Aikman's high-quality products combine superior design, styling and manufacturing capabilities with NVH "quiet" technologies that are among the most effective in the industry. Information about Collins & Aikman is available on the Internet at www.collinsaikman.com .
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including but not limited to general economic conditions in the markets in which Collins & Aikman operates, fluctuations in the production of vehicles for which the Company is a supplier, changes in the popularity of particular car models or particular interior trim packages, the loss of programs on particular car models, labor disputes involving the Company or its significant customers, changes in consumer preferences, dependence on significant automotive customers, the level of competition in the automotive supply industry, pricing pressure from automotive customers, the substantial leverage of the Company and its subsidiaries, limitations imposed by the Company's debt facilities, charges made in connection with the integration of operations acquired by the Company, the implementation of the reorganization plan, risks associated with conducting business in foreign countries and other risks detailed from time-to-time in the Company's Securities and Exchange Commission filings including without limitation, in Items 1 and 7 of the Company's Annual Report on Form 10-K for the year-ended December 31, 2001.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except for per share data)
Quarter ended
March 31, March 31,
2002 2001
Net sales $914.8 $453.1
Cost of goods sold (b) 783.7 394.3
Gross profit 131.1 58.8
Selling, general and
administrative expenses (b,e) 66.2 38.2
Restructuring charges (a) 9.1 9.2
Operating income 55.8 11.4
Interest expense, net 37.3 23.3
Loss on sale of receivables 1.1 1.4
Subsidiary preferred stock
requirements (c) 11.2 -
Other expense, net 6.3 1.7
Loss from continuing
operations before taxes (0.1) (15.0)
Income tax expense (benefit) (a,b,e) 5.9 (7.9)
Loss from continuing
operations before extraordinary
loss (6.0) (7.1)
Extraordinary charge, net of
income taxes of $0.2 (d) - (0.3)
Net loss $(6.0) $(7.4)
Net loss per basic
and diluted common share:
Continuing operations $(0.04) $(0.10)
Extraordinary charge - -
Net loss $(0.04) $(0.10)
Average common shares outstanding:
Basic and diluted 168.0 71.3
Adjusted Net Income (Loss) Reconciliation:
Reported net loss $(6.0) $(7.4)
Adjustment (a) 9.1 9.2
Adjustment (b) 9.8 -
Adjustment (c) 11.2 -
Adjustment (d) - 0.3
Adjustment (e) - 1.8
Tax effect on the above items (5.5) (2.1)
Adjusted net income $18.6 $1.8
Adjusted net income per diluted common share $0.11 $0.03
Collins & Aikman Corporation and Subsidiaries
Financial Disclosures
(Figures are pre-tax unless otherwise stated)
(in millions)
During the first quarter of 2001, the Company undertook a restructuring program to de-layer management, resulting in a charge of $9.2 million. The charge included $8.4 million of severance cost and $.8 million of asset impairment.
- (b) During the first quarter of 2002, the Company incurred costs of $9.8 million related to acquisition integration and facility rationalization. These costs include charges for inventory and machinery relocation, facility installation and preparation and product recertification.
- (c) During the first quarter of 2002, the Company incurred charges of $11.2 million related to subsidiary preferred stock, which was used to partially finance the TAC-Trim acquisition.
- (d) During the first quarter of 2001, the Company incurred an after-tax extraordinary loss of $.3 million resulting from the early extinguishment of debt by repurchasing JPS Automotive Senior Notes at prices in excess of carrying values.
- (e) During the first quarter of 2001, the Company incurred goodwill amortization charges of $1.8 million. In accordance with SFAS No. 142, the Company did not amortize goodwill for the first quarter of 2002.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
March 31, December 31,
ASSETS 2002 2001
Current Assets:
Cash and cash equivalents $92.1 $73.9
Accounts and other receivables, net 487.4 406.1
Inventories 143.8 132.6
Other 148.4 131.9
Total current assets 871.7 744.5
Property, plant and equipment, net 614.2 618.1
Deferred tax assets 132.9 136.5
Goodwill, net 1,289.8 1,253.8
Other assets 191.4 240.5
TOTAL ASSETS $3,100.0 $2,993.4
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $33.0 $35.7
Current maturities of long-term debt 22.2 19.5
Accounts payable 531.7 468.7
Accrued expenses 295.7 245.2
Total current liabilities 882.6 769.1
Other, including post-retirement
benefit obligation 403.3 402.7
Long-term debt 1,276.4 1,282.4
Mandatorily redeemable
preferred stock of subsidiary 160.5 149.3
Minority interest in consolidated
subsidiaries 14.3 15.2
Contingencies
Common stock ($0.1 par value, 300.0
shares authorized, 168.0 shares issued and
outstanding at March 31, 2002 and
December 31, 2001) 1.7 1.7
Other paid-in capital 1,123.1 1,123.1
Accumulated deficit (688.8) (682.8)
Accumulated other comprehensive loss (73.1) (67.3)
Total common stockholders' equity $362.9 $374.7
TOTAL LIABILITIES AND COMMON
STOCKHOLDERS' EQUITY $3,100.0 $2,993.4