Collins & Aikman Announces First Quarter Financial Results And Record First Quarter Sales
TROY, Mich., May 6, 2004 -- Collins & Aikman Corporation (C&A) today reported results for the first quarter ended March 31, 2004. The company reported record first quarter net sales in 2004 of $1.066 billion compared to $1.035 billion in the first quarter of 2003, a 3% increase which mainly reflects improved currency impact. The company reported a loss of $23.3 million or 28 cents per share in the first quarter of 2004, which included after-tax charges for restructuring, long-lived asset impairments and costs related to early extinguishment of debt of $10.6 million (or 13 cents per share). In the comparable 2003 quarter, the company had a loss of $26.2 million or 31 cents per share, which included after-tax charges for restructuring and long-lived asset impairments of $13.2 million (or 15 cents per share).
Commenting on the company's first quarter operating results, David A. Stockman, C&A Chairman and CEO stated, "We are pleased with the significant performance improvement in EBITDA before restructuring and impairment charges. For the third consecutive quarter our EBITDA results were up double digits from the prior year on a comparable basis. We are also seeing our previous problem plants turning around their financial results from the 2003 levels."
The first quarter 2004 pre-tax restructuring charge of $9.5 million included costs associated with additional rightsizing efforts to reduce corporate overhead and salaried headcount and to close additional manufacturing facilities. This restructuring initiative is expected to further reduce the company's fixed-cost structure by approximately $13 million when fully implemented.
C&A's net debt, including outstandings under an off-balance sheet accounts receivable facility, was $1.432 billion at March 31, 2004.
EBITDA Discussion
EBITDA was $66.9 million for the first quarter of 2004, which was reduced by charges of $9.5 million for restructuring and $3.0 million for the impairment of long-lived assets. The first quarter 2003 EBITDA was $52.6 million, which was reduced by $18.1 million for the impairment of long-lived assets. A reconciliation of our EBITDA, a non-GAAP financial measure, to U.S. GAAP net loss, is set out in the attached EBITDA reconciliation schedule. The company believes that EBITDA is a meaningful measure of performance as it is commonly utilized in its industry to analyze operating performance. EBITDA should not be construed as income from operations, net income (loss) or cash flow from operating activities as determined by generally accepted accounting principles. Other companies may calculate EBITDA differently.
Awards
The Company received the prestigious Triple Crown Award from NUMMI (New United Motor Manufacturing Inc., a joint venture between Toyota and General Motors). This award was given for C&A's achievements in quality, cost and delivery. C&A also received an award from Honda for quality and delivery performance associated with products from the Soft Trim Business Unit.
Director Resignations
The company also announced today that Charles Becker and Elkin McCallum have resigned as directors of the company effective as of May 6, 2004.
Mr. Becker was first elected to the board in July 2001, following the company's acquisition of Becker Group, LLC, an affiliate of Mr. Becker. He was re-elected to the board last year and has two years remaining in his term. Mr. Becker beneficially owns 9.0% of the company's stock.
Mr. McCallum, whose term as a director was scheduled to expire at the company's upcoming 2004 annual stockholders meeting, was first elected to the board in September 2001, following the company's acquisition of the automotive fabric operations of Joan Fabrics, an affiliate of Mr. McCallum. Mr. McCallum beneficially owns 6.1% of the company's stock.
"We have been fortunate to have had Chuck and Elkin on our board during this intensive three-year period of growth and transition. Their experience and insight have been instrumental in creating the foundation for the company's future success," commented Stockman. "We understand their desire to resign at this time due to other business interests and thank them for their efforts on behalf of the company."
Since neither Mr. Becker nor Mr. McCallum would have qualified as an independent director with respect to the company because of their stock ownership positions, their resignations will facilitate the company's ongoing process of working towards compliance with the New York Stock Exchange's requirements for independent board composition prior to the company's 2004 annual stockholders meeting. The company expects to announce other changes in the composition of its board as it completes the compliance process in the near future.
Collins & Aikman Corporation, a Fortune 500 company, 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 operations span the globe through 16 countries, more than 100 facilities and nearly 24,000 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 .
COLLINS & AIKMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
2004 2003
(In millions, except per share data)
Net sales $1,066.2 $1,035.1
Cost of goods sold 963.9 931.8
Gross profit 102.3 103.3
Selling, general and administrative
expenses 59.9 66.0
Restructuring charges 9.5 -
Impairment of long-lived assets 3.0 18.1
Operating income 29.9 19.2
Net interest expense (40.2) (36.0)
Interest from subsidiary preferred stock
dividends (9.9) (6.5)
Interest from subsidiary preferred stock
accretion (0.5) (2.1)
Loss on sale of receivables (2.2) (1.4)
Other income (expense), net (0.5) 1.5
Loss from operations before income taxes (23.4) (25.3)
Income tax (expense) benefit 0.1 (0.9)
Net loss $(23.3) $(26.2)
Net loss per basic and diluted common
share data:
Total $(0.28) $(0.31)
Basic and diluted shares outstanding 83.6 83.6
COLLINS & AIKMAN
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2004 2003
(Unaudited)
(In millions)
ASSETS
Current assets:
Cash and equivalents $4.4 $13.2
Accounts and other receivables, net 335.9 257.3
Inventories 167.9 169.4
Other 217.0 212.2
Total current assets 725.2 652.1
Property, plant and equipment, net 833.4 834.1
Deferred tax assets 177.7 178.1
Goodwill and other intangible assets, net 1,424.2 1,430.0
Other assets 91.5 96.9
Total assets $3,252.0 $3,191.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $19.8 $16.0
Current maturities of long-term debt 6.3 31.5
Accounts payable 641.9 638.9
Accrued expenses 276.0 238.9
Total current liabilities 944.0 925.3
Long-term debt and lease obligations 1,310.4 1,237.7
Mandatorily redeemable preferred stock
of subsidiary 171.5 161.2
Other, including pensions and post-
retirement obligations 413.5 423.4
Minority interest 2.5 3.3
Stockholders' equity 410.1 440.3
Total liabilities and stockholders'
equity $3,252.0 $3,191.2
COLLINS & AIKMAN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months
ended
March 31,
2004 2003
(In millions)
Operating activities
Net loss $(23.3) $(26.2)
Depreciation and amortization 37.0 33.4
Impairment of long-lived assets 3.0 18.1
Changes in working capital (44.4) (2.0)
Other 6.2 6.0
Net cash flow (used in) provided by operating
activities (21.5) 29.3
Investing activities
Capital expenditures (39.9) (35.4)
Sales of property, plant and equipment 1.3 3.1
Acquisitions, net of cash acquired - (33.0)
Financing activities
Net increase (decrease) in long-term debt
and short-term borrowings 51.5 (13.0)
Effect of exchange rate changes on cash (0.2) -
Decrease in cash and equivalents (8.8) (49.0)
Cash and equivalents at beginning of period 13.2 81.3
Cash and equivalents at end of period $4.4 $32.3
COLLINS & AIKMAN
SUPPLEMENTAL DATA - EBITDA RECONCILIATION SCHEDULE
(unaudited)
Three months ended
March 31,
2004 2003
(In millions)
Net loss $(23.3) $(26.2)
Income tax (benefit) expense (0.1) 0.9
Net interest expense 40.2 36.0
Loss on sale of receivables 2.2 1.4
Interest from subsidiary preferred stock
dividends and accretion 10.4 8.6
Other expense (income), net 0.5 (1.5)
Operating income 29.9 19.2
Depreciation and amortization 37.0 33.4
EBITDA $66.9 $52.6
Memo:
Restructuring charges $9.5 $-
Impairment of long-lived assets 3.0 18.1
Total restructuring and impairment charges $12.5 $18.1
This supplemental data presented above is a reconciliation of a certain financial measure which is intended to facilitate analysis of Collins & Aikman Corporation's business and operating performance.