Collins & Aikman Announces Third Quarter Results
28 October 1997
Collins & Aikman Announces Third Quarter Results
CHARLOTTE, N.C., Oct. 28 -- Collins & Aikman Corporation
reported today that it incurred charges of approximately $57.9
million for the third quarter ended September 27, principally related to its
Collins & Aikman Plastics subsidiary (formerly Manchester Plastics). The
Company also reported a gain of $1.45 per share from the July sale of the
Company's Mastercraft Group for $310.0 million, subject to adjustment.
C&A Plastics incurred charges for the quarter that included asset
impairments, reductions in goodwill, provisions for certain programs operating
at a loss, inventory adjustments, certain previously deferred costs and other
provisions. C&A Plastics also experienced manufacturing inefficiencies during
the quarter related to product launches and record volume for its current
products.
"In our judgment, the key issues have been identified at C&A Plastics and
our management team is aggressively implementing solutions," said Thomas E.
Hannah, Chief Executive Officer of Collins & Aikman. "Because we believe the
automotive plastics business offers C&A a tremendous growth opportunity in
North America and abroad, we have made some significant changes at C&A
Plastics, including installing a strong, new management team, enhancing our
staff resources and implementing new policies, plans and technology
advancements."
Sales for Collins & Aikman's continuing operations were $368.0 million for
the third quarter, up 37.9 percent over the third quarter of 1996. The
Company incurred an operating loss of $39.8 million for the quarter from
continuing operations, principally because of the Collins & Aikman Plastics'
charges. In the comparable 1996 quarter, Collins & Aikman had operating
earnings from continuing operations of $24.7 million. EBITDA for continuing
operations, for the third quarter, after giving effect to other non-cash
charges, was a negative $0.9 million, versus $33.2 million in the comparable
1996 quarter.
The Company reported a loss from continuing operations of $42.0 million,
or $0.62 per share, versus a profit of $6.9 million, or $0.10 per share, in
the comparable 1996 quarter. Income from discontinued operations totaled $97.0
million, or $1.44 per share, including the gain from the sale of Mastercraft.
Other Developments
Wallcoverings Update
Collins & Aikman also reported today that it has received a proposal for
the acquisition of its Imperial Wallcoverings subsidiary. In view of this,
the Company is now reviewing all its options with respect to Imperial. The
Company had previously announced that it intended to spin off its Imperial
subsidiary to Collins & Aikman stockholders and expected the spin-off to occur
in the second half of 1997. Although no decision has been made to date by the
Company to pursue any option other than a spin-off to shareholders, Collins &
Aikman no longer expects a spin-off to take place in 1997. The Company stated
that no assurance can be given that Imperial will be sold, or with respect to
the price or other terms, including the timing, of any sale of Imperial.
German Operations Acquired
The Company also announced that it has completed the purchase of certain
Perstorp Components' automotive acoustics assets in Germany. The acquisition
comes about ten months after Collins & Aikman acquired certain of Perstorp
Components' automotive supply and related operations in North America, the
United Kingdom and Spain. Collins & Aikman and Perstorp AB also have a joint
venture relating to Perstorp's automotive components supply operations in
Sweden, Belgium and France.
The acquired operations have been renamed Collins & Aikman Automotive
Systems GmbH and will serve customers such as Mercedes Benz, Volkswagen, GM's
Opel, Matra, Nedcar and others.
"The European auto market is almost as large as the North American market.
More than 40 percent of the sourcing decisions for Europe are made in Germany.
In addition, many of the sourcing decisions of Germany-based OEMs are made in
Germany for other markets around the world," Hannah said. "It is very
important to our customers that we have the ability to supply them with
product and engineering support in a number of locations. With this
acquisition, we have significantly broadened our capabilities in Germany."
Collins & Aikman Plastics Name Change
The Company also announced today that it has changed the name of its
Manchester Plastics subsidiary to Collins & Aikman Plastics in order to
capitalize on the corporate identity of the Collins & Aikman name worldwide.
"As we expand internationally, we believe it is important that our
Plastics operations be united under one name with the same focus," Hannah
said. "As a worldwide leader in automotive interiors, the C&A name will allow
our Plastics subsidiary to take full advantage of our name recognition through
targeted marketing efforts."
Other Third Quarter Highlights
The Automotive Carpet and Acoustics Group reported a $70.0 million dollar
increase in sales for the third quarter compared to sales of $86.6 million in
the comparable 1996 quarter. The JPS Automotive and Perstorp acoustics
operations were the primary reason for the increase for the quarter.
The Automotive Carpet and Acoustics Group recently teamed with Akro to win
several new, significant General Motors programs.
"As the trend moves closer toward total interior systems, we are
responding with full integration of carpet, acoustics and floor mats," Hannah
said. "The synergies we've established between our recently-acquired
acoustics operations and our various carpet operations have enhanced our
relationships with the OEMs, both in terms of service and product
engineering."
The Company reported that its Automotive Fabrics unit was selected by Ford
Motor Company this quarter as one of three fabrics suppliers for model years
2000 through 2002. "We believe this represents a dramatic improvement in our
Fabrics unit's prospects at Ford," said Hannah. "Ford historically has been
one of Fabrics' largest customers. The fact that Collins & Aikman was named a
supplier for 2000 through 2002 revitalizes our long-standing relationship with
Ford and is recognition of our dedication to quality and customer service,"
Hannah said.
Sales at the Fabrics unit were up approximately $14.1 million for the
third quarter as compared to the comparable 1996 quarter, principally due to
the JPS Automotive fabrics business. Shipments for the Nissan Altima and
Toyota Camry were very strong in the third quarter. Fabrics also won new
business for the GM Malibu and Chrysler Minivan during the third quarter.
Sales were up 8.0 percent for Akro, but premium freight costs for
expedited deliveries and an inventory writedown adversely affected operating
profit by approximately $4.0 million. Akro also incurred certain
manufacturing inefficiencies because of carryover effects from a strike at
Akro in the first quarter of this year, and high shipping levels and 13
program launches in the third quarter.
"New programs and the tremendous success of our products in the market
created some manufacturing inefficiencies at Akro. Our management team has
been fine-tuning and adapting our operations and technology to handle the
increased volume. We have also finalized a plan to expand Akro's capacity
early next year. We are confident that these combined efforts will pave the
way for a much smoother year for Akro in 1998," said Hannah.
In the third quarter, Dura Convertible Systems launched new programs for
the Chevrolet Corvette and the Chrysler Prowler and won business for the new
Dodge Viper convertible 2001 model. Sales for Dura were $15.7 million in the
third quarter, down 33.8 percent from the comparable quarter of last year, due
to record sales levels of the Chrysler Sebring throughout 1996.
This release, other than historical financial information, contains
forward-looking statements that involve a number of risks and uncertainties.
Important factors that could cause actual results to vary materially from
those anticipated in the forward-looking statements are set forth in Collins &
Aikman's Securities and Exchange Commission filings, including, without
limitation, in Items 1 and 7 of the Company's Transition Report on Form 10-K
for the transition period from January 28, 1996 to December 28, 1996 and in
Item 2 of the Company's Quarterly Report on Form 10-Q for the quarter ended
June 28, 1997.
Collins & Aikman Corporation is a global supplier of automotive interior
systems, including textile and plastic trim, acoustics and convertible top
systems. Headquartered in Charlotte, NC, the Company's recent acquisitions
have significantly expanded Collins & Aikman's product offering and
international presence. The Company employs more than 13,000 employees and
operates 58 manufacturing facilities in 9 countries.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Quarter Ended
September 27, September 21,
1997 1996
Net sales $368,008 $266,903
Cost of goods sold 351,055 220,495
Selling, general and administrative
expenses 34,202 21,680
Impairment of long lived assets 22,600 --
407,857 242,175
Operating income (loss) (39,849) 24,728
Interest expense, net 19,807 11,631
Loss on sale of receivables 532 1,084
Other income (2,269) (15)
Income (loss) from continuing operations
before income taxes (57,919) 12,028
Income tax expense (benefit) (15,917) 5,141
Income (loss) from continuing operations (42,002) 6,887
Income (loss) from discontinued
operations, net of income taxes (496) 4,791
Gain on sale of discontinued operations,
net of income taxes 97,500 --
Net income $ 55,002 $ 11,678
Net income per primary and fully diluted
common share:
Continuing operations $(.62) $.10
Income (loss) from discontinued
operations (.01) .07
Gain on sale of discontinued operations 1.45 --
Net income $.82 $.17
Average common shares outstanding:
Primary 67,248 69,925
Fully diluted 67,260 69,937
EBITDA:
Continuing operations $(936) $33,166
Nine Months Ended
September 27, September 21,
1997 1996
Net sales $1,199,586 $ 827,411
Cost of goods sold 1,040,199 674,040
Selling, general and administrative
expenses 94,458 68,252
Impairment of long lived assets 22,600 --
1,157,257 742,292
Operating income (loss) 42,329 85,119
Interest expense, net 57,891 28,517
Loss on sale of receivables 3,295 3,668
Other income (1,297) (402)
Income (loss) from continuing operations
before income taxes (17,560) 53,336
Income tax expense (benefit) 1,577 (127,711)
Income (loss) from continuing operations (19,137) 181,047
Income (loss) from discontinued
operations, net of income taxes 4,306 (12,271)
Gain on sale of discontinued operations,
net of income taxes 182,792 --
Income before extraordinary loss 167,961 168,776
Extraordinary loss, net of income taxes (721) (6,610)
Net income $167,240 $162,166
Net income per primary and fully
diluted common share:
Continuing operations $(.28) $2.59
Income (loss) from discontinued operations .06 (.18)
Gain on sale of discontinued operations 2.70 --
Extraordinary loss (.01) (.09)
Net income $2.47 $2.32
Average common shares outstanding:
Primary 67,590 70,016
Fully diluted 67,692 70,020
EBITDA:
Continuing operations $ 108,865 $ 109,524
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
ASSETS September 27, December 28,
1997 1996
Current Assets:
Cash and cash equivalents $ 89,369 $ 14,314
Accounts and other receivables, net 212,380 200,763
Inventories 138,549 121,971
Net assets of discontinued operations 96,851 263,523
Other 102,205 128,762
Total current assets 639,354 729,333
Property, plant and equipment, net 353,822 351,282
Deferred tax assets 65,549 91,690
Goodwill, net 260,401 283,271
Other assets 84,350 74,713
$1,403,476 $1,530,289
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable $1,187 $1,920
Current maturities of long-term debt 38,992 37,565
Accounts payable 126,833 123,899
Accrued expenses 224,073 176,147
Total current liabilities 391,085 339,531
Long-term debt 803,651 1,138,029
Other, including postretirement
benefit obligation 256,425 247,307
Commitments and contingencies
Common stock (150,000 shares
authorized, 70,521 shares
issued and 66,046 shares outstanding at
September 27, 1997 and 70,521 shares
issued and 67,723 shares outstanding
at December 28, 1996) 705 705
Other paid-in capital 586,945 585,207
Accumulated deficit (564,813) (729,315)
Foreign currency translation
adjustments (25,303) (20,798)
Pension equity adjustment (10,165) (10,165)
Treasury stock, at cost (4,475 shares
at September 27, 1997 and 2,798
shares at December 28, 1996) (35,054) (20,212)
Total common stockholders'
deficit (47,685) (194,578)
$1,403,476 $1,530,289
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Quarter Ended
September 27, September 21,
1997 1996
OPERATING ACTIVITIES
Income (loss) from continuing
operations $(42,002) $6,887
Adjustments to derive cash flow from
continuing operating activities:
Impairment of long lived assets 22,600 --
Deferred income tax expense
(benefit) (4,854) 1,473
Depreciation and leasehold
amortization 10,524 6,623
Amortization of goodwill 1,682 1,011
Amortization of other assets 1,817 1,803
Decrease (increase) in accounts
and other receivables 34,807 5,295
Increase in inventories (10,118) (9,968)
Increase (decrease) in accounts
payable (7,389) 7,245
Increase in interest payable 13,908 12,993
Other, net 6,666 (4,715)
Net cash provided by
continuing operating
activities 27,641 28,647
Cash provided by (used in)
Wallcoverings, Floorcoverings,
Airbag and the Mastercraft
Group discontinued operations (4,401) 12,328
Cash provided by (used in) other
discontinued operations (2,208) (3,380)
Net cash provided by (used in)
discontinued operations (6,609) 8,948
INVESTING ACTIVITIES
Additions to property, plant
and equipment (16,153) (22,965)
Sales of property, plant and
equipment 404 41
Proceeds from disposition of
discontinued operations 366,500 --
Acquisition of businesses, net of
cash acquired (13,554) (3,077)
Proceeds from sale-leaseback
arrangement -- --
Other, net (58,688) (43,006)
Net cash provided by (used in)
investing activities 278,509 (69,007)
FINANCING ACTIVITIES
Issuance of long-term debt -- 2,381
Repayment of long-term debt (92,905) (6,015)
Proceeds from (reduction of)
participating interests in accounts
receivable, net of redemptions (67,000) 15,000
Net borrowings (repayments) on
revolving credit facilities (60,000) 22,000
Net repayments on notes payable (319) (634)
Purchase of treasury stock (1,673) (491)
Proceeds from exercise of stock
options -- 141
Other, net (696) --
Net cash provided by
(used in) financing
activities (222,593) 32,382
Net increase in cash and cash
equivalents 76,948 970
Cash and cash equivalents at
beginning of period 12,421 7,774
Cash and cash equivalents at
end of period $89,369 $8,744
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 27, September 21,
1997 1996
OPERATING ACTIVITIES
Income (loss) from continuing
operations $(19,137) $181,047
Adjustments to derive cash flow
from continuing operating activities:
Impairment of long lived assets 22,600 --
Deferred income tax expense (benefit) 1,930 (137,691)
Depreciation and leasehold
amortization 32,004 19,187
Amortization of goodwill 5,139 2,947
Amortization of other assets 5,260 5,031
Decrease (increase) in accounts
and other receivables 41,095 (38,847)
Increase in inventories (14,492) (161)
Increase (decrease) in
accounts payable 253 18,991
Increase in interest payable 13,121 14,385
Other, net (283) (1,751)
Net cash provided by continuing
operating activities 87,490 63,138
Cash provided by (used in)
Wallcoverings, Floorcoverings,
Airbag and the Mastercraft Group
discontinued operations 1,485 22,797
Cash provided by (used in) other
discontinued operations (6,936) 552
Net cash provided by (used in)
discontinued operations (5,451) 23,349
INVESTING ACTIVITIES
Additions to property, plant
and equipment (51,003) (67,313)
Sales of property, plant
and equipment 1,176 3,087
Proceeds from disposition of
discontinued operations 562,100 --
Acquisition of businesses, net of
cash acquired (13,554) (191,106)
Proceeds from sale-leaseback
arrangement -- 7,404
Other, net (95,442) (47,925)
Net cash provided by
(used in) investing
activities 403,277 (295,853)
FINANCING ACTIVITIES
Issuance of long-term debt 4,495 599,927
Repayment of long-term debt (134,905) (283,035)
Proceeds from (reduction of)
participating interests in
accounts receivable, net of
redemptions (55,000) (9,000)
Net borrowings (repayments) on
revolving credit facilities (204,000) (70,000)
Net repayments on notes payable (499) (1,540)
Purchase of treasury stock (17,910) (2,440)
Proceeds from exercise of
stock options 328 406
Other, net (2,770) (17,169)
Net cash provided by
(used in) financing
activities (410,261) 217,149
Net increase in cash and
cash equivalents 75,055 7,783
Cash and cash equivalents at
beginning of period 14,314 961
Cash and cash equivalents at
end of period $89,369 $8,744
SOURCE Collins & Aikman Corporation