Collins & Aikman Reports Q1 Sales
28 April 1998
Collins & Aikman Reports 15% Increase In Sales For First Quarter 1998
CHARLOTTE, N.C., April 28 -- Collins & Aikman Corporation
announced today that its sales were $478.1 million for the first
quarter ended March 28, 1998, up 15 percent or $62.6 million, over the
comparable period of 1997. EBITDA for the first quarter of 1998 was $57.4
million versus $53.8 million in the 1997 comparable period, a 7 percent
increase. Operating profit was $39.5 million compared to $40.0 million for
the comparable 1997 period.
"Our solid increase in sales for the first quarter was driven by our
various recent acquisitions around the world," said Thomas E. Hannah, Chief
Executive Officer of Collins & Aikman. "Sales for our largest operating unit,
the Carpet and Acoustics Group, increased $39.6 million to $221.2 million for
the quarter largely as a result of our 1997 acquisitions in Sweden, Belgium
and Germany. C&A Plastics sales increased $21.1 million principally due to
the recent acquisition of Kigass Automotive in the United Kingdom."
More than 41 percent of sales in the first quarter of 1998 were generated
outside the U.S., compared with approximately 32 percent in the first quarter
of 1997 due primarily to the Company's acquisitions in the United Kingdom,
Germany, Sweden and Belgium.
"One of our primary objectives as a tier one automotive interior systems
provider is to serve our customers around the world, offering them the
engineering, research and product development services that they need," said
Hannah. "We benefited in the first quarter from the breadth of our operations
around the world and strong auto builds in North America and Europe."
Net income for the first quarter was $8.7 million, or $.13 per share
compared to $.17 per share from continuing operations for the first quarter of
1997.
Interest expense (including the loss on the sale of receivables) in the
first quarter of 1998 rose to $22.1 million, compared to approximately $20.0
million in the comparable 1997 quarter. The $2.1 million increase had an
after tax impact of approximately $.02 per share on reported first quarter
earnings.
The effective tax rate for first quarter 1998 was approximately 49.5
percent compared to approximately 42.4 percent for the first quarter of 1997,
reflecting relatively higher foreign tax expense at greater than U.S. rates
and the impact of certain state taxes. The increased tax rate impacted
reported earnings by about $.02 per share for the first quarter of 1998.
In addition, the Company experienced a severe ice storm at several of its
Canadian operations in the first quarter of 1998, which unfavorably impacted
income by approximately $1.5 million, or in excess of $.01 per share, after
expected insurance reimbursement for various business interruption costs.
"Unfavorable mix on certain models for several product lines and some
adverse trim level selections for our automotive bodycloth products somewhat
offset our otherwise strong revenue growth this quarter," Hannah said. "The
Canadian ice storm knocked out power for almost a month in the communities in
which we operate two of our automotive carpet plants. Through the cooperation
of one of our biggest customers and inter-company teamwork, we were able to
secure temporary generators and meet production requirements."
Hannah continued, "We not only met our manufacturing deadlines, but also
provided shelter, food and supplies to our surrounding communities for three
weeks. Although we suffered business interruption costs as a result of the
power failure, we realize that the financial damages could have been much
worse without the aid of our customers and the hard work of our employees in
both Canada and the U.S."
Other First Quarter Highlights
Molded carpet revenues increased 6 percent to $105.4 million, driven
mainly by increased volume on models from Chrysler, Honda, Toyota and General
Motors. Revenues for products of the U.K. carpet and acoustics operation were
also up due to increased sales of automotive roll carpet to the Rover Group.
Sales were up $15.9 million, or 42 percent, to $53.7 million on acoustics
systems, driven principally by the recent acquisitions of the Sweden and
German operations of Perstorp Components.
Sales of automotive bodycloth were $66.2 million for the first quarter,
down about 14.9 percent, principally due to an unfavorable mix on several
models and a strong demand for leather for seating applications during the
quarter.
Collins & Aikman was awarded new business placements for automotive
bodycloth in the first quarter of 1998 and included programs for the Ford
Windstar and the Dodge Intrepid for the year 2000 and several other new
programs for the year 2001.
Sales of accessory floormats increased approximately $4.9 million for the
first quarter of 1998, following last year's record volumes. Strong sales to
General Motors for the CK truck series and to Ford for the Explorer
contributed to the majority of the increase.
Worldwide plastic revenues were $108.9 million, up 52 percent, including
$16.2 million in sales from the acquisitions in Sweden and Belgium and $15.2
million in sales from the U.K. operations acquired in early 1998. Plastics
revenues were up more than $5.8 million in North America with increased
volumes on General Motors' Cadillac S5S and the Buick Regal/Century.
Collins & Aikman Plastics also had several new business wins in the first
quarter, including the console assembly for the year 2000 Chevy Venture/ Olds
Silhouette, the instrument panel trim cluster for the year 2000 Pontiac Grand
Prix and the headrest for the 1999 Nissan truck.
"We continue to be pleased with our process improvement at C&A Plastics.
Six of the plants recently passed their six-month QS 9000 audits, which is an
ongoing symbol of the improvements being made and the culture changes that are
taking place within our plastics organization," Hannah said.
"In addition, the new plastics operations in the U.K. have planned 1998
product launches, including climate control components for the Opel Astra,"
Hannah continued. "Emblematic of the changes at C&A Plastics, Nissan has
awarded our U.K. plastics operation its 'Cogent' award for being one of
Nissan's 'Best 25 Suppliers'."
Sales for convertible top systems increased $8.2 million, or 37 percent,
in the first quarter of 1998 as compared to the same period of 1997. The
normal 1998 ramp-up substantially increased volumes on the Ford Mustang, the
Chrysler Sebring and Chevrolet Corvette convertibles.
"We expect convertible build rates to decrease for the balance of the
year, with the spring ramp-up easing off in the latter half of the second
quarter," Hannah said.
This press 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 filings, including, without limitation, in
Items 1 and 7 of the Company's Annual Report on Form 10-K for the year-ended
December 27, 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
significantly expanded Collins & Aikman's product offering and international
presence. The Company employs more than 15,000 employees and operates 64
facilities in 11 countries.
Collins & Aikman Corporation And Subsidiaries
Consolidated Statements Of Operations
(Unaudited)
(in thousands, except for per share data)
Quarter Ended
March 28, March 29,
1998 1997
Net sales $ 478,140 $ 415,560
Cost of goods sold 400,918 345,315
Selling, general and administrative
expenses 37,709 30,226
438,627 375,541
Operating income 39,513 40,019
Interest expense, net 20,479 18,779
Loss on sale of receivables 1,624 1,201
Other expense 240 471
Income from continuing operations
before income taxes 17,170 19,568
Income taxes 8,492 8,303
Income from continuing operations 8,678 11,265
Income from discontinued operations,
net of income taxes of $738 -- 921
Gain on sale of discontinued operations,
net of income taxes of $53,358 -- 85,292
Net income $ 8,678 $ 97,478
Net income per basic common share:
Continuing operations $ 0.13 $ 0.17
Discontinued operations -- 0.01
Gain on sale of discontinued operations -- 1.27
Net income $ 0.13 $ 1.45
Net income per diluted common share:
Continuing operations $ 0.13 $ 0.17
Discontinued operations -- 0.01
Gain on sale of discontinued operations -- 1.25
Net income $ 0.13 $ 1.43
Average common shares outstanding:
Basic 65,701 67,125
Diluted 66,571 68,161
EBITDA $ 57,350 $ 53,830
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
ASSETS March 28, December 27,
1998 1997
Current Assets:
Cash and cash equivalents $ 14,866 $ 24,004
Accounts and notes receivable, net 221,810 198,125
Inventories 154,176 142,042
Net assets of discontinued operations -- 53,004
Other 104,284 92,116
Total current assets 495,136 509,291
Property, plant and equipment, net 408,230 388,087
Deferred tax assets 56,621 59,293
Goodwill, net 272,527 263,007
Other assets 89,693 82,714
$1,322,207 $1,302,392
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable $ 1,822 $ 1,314
Current maturities of long-term debt 14,866 30,301
Accounts payable 152,950 135,468
Accrued expenses 193,968 148,201
Total current liabilities 363,606 315,284
Long-term debt 728,932 752,376
Other, including postretirement
benefit obligation 285,621 301,582
Commitments and contingencies
Common stock (150,000 shares authorized,
70,521 shares issued and 65,612 shares
outstanding at March 28, 1998 and 70,521
shares issued and 65,851 outstanding at
December 27, 1997) 705 705
Other paid-in capital 585,757 585,890
Accumulated deficit (568,173) (576,851)
Accumulated other comprehensive income (35,406) (39,823)
Treasury stock, at cost (4,909 shares at
March 28, 1998 and 4,670 shares at
December 27, 1997) (38,835) (36,771)
Total common stockholders' deficit (55,952) (66,850)
$1,322,207 $1,302,392
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Quarter Ended
March 28, 1998 March 29, 1997
OPERATING ACTIVITIES
Income from continuing operations $ 8,678 $ 11,265
Adjustments to derive cash flow from
continuing operating activities:
Deferred income tax expense 4,298 3,544
Depreciation and leasehold amortization 14,220 10,869
Amortization of goodwill 1,773 1,844
Amortization of other assets 2,339 1,881
Decrease (increase) in accounts and notes
receivable (6,839) 26,117
Increase in inventories (8,929) (591)
Increase in accounts payable 2,079 242
Increase in interest payable 13,544 13,583
Other, net (7,886) (1,752)
Net cash provided by continuing
operating activities 23,277 67,002
Cash provided by (used in) Wallcoverings,
Floorcoverings, Airbag and the Mastercraft
Group discontinued operations (15,052) 837
Cash used in other discontinued operations (3,001) (3,701)
Net cash used in discontinued
operations (18,053) (2,864)
INVESTING ACTIVITIES
Additions to property, plant and equipment (26,732) (16,751)
Sales of property, plant and equipment 3,738 329
Proceeds from disposition of discontinued
operations 71,200 195,600
Acquisition of businesses, net of cash
acquired (19,236) --
Other, net (2,109) (18,060)
Net cash provided by investing
activities 26,861 161,118
FINANCING ACTIVITIES
Issuance of long-term debt -- 4,495
Repayment of long-term debt (28,578) (9,283)
Reduction of participating interests in
accounts receivable (1,000) (18,000)
Repayments on revolving credit facilities (10,000) (179,000)
Net borrowings on notes payable 737 51
Purchase of treasury stock (2,064) (11,811)
Proceeds from exercise of stock options -- 139
Other, net (318) 35
Net cash used in financing activities (41,223) (213,374)
Net increase (decrease) in cash and cash
equivalents (9,138) 11,882
Cash and cash equivalents at beginning
of period 24,004 14,316
Cash and cash equivalents at end
of period $ 14,866 $ 26,198
SOURCE Collins & Aikman Corporation