Collins & Aikman Reports Q3 Results
27 October 1998
Collins & Aikman Reports Third Quarter Results
CHARLOTTE, N.C., Oct. 27 -- Collins & Aikman Corporation
reported today a net loss from continuing operations of
$8.4 million, or $(0.13) per share, for the third quarter of 1998.
"The GM strike had a severe impact on our third quarter," said Thomas E.
Hannah, Chief Executive Officer of Collins & Aikman. "General Motors
represents more than one-third of our business. We estimate that the strike
negatively impacted sales by approximately $43.2 million in the third quarter
of 1998."
The net loss from continuing operations of $8.4 million, or $(0.13) per
share, for the third quarter of 1998, compares to a net loss from continuing
operations of $42.0 million, or $(0.64) per share, in the third quarter of
1997. The 1997 third quarter loss included one-time charges of $57.9 million,
principally related to the Company's plastics operations.
EBITDA for the third quarter of 1998 was $16.6 million, compared to
$(0.9) million in the third quarter of 1997.
Sales for the third quarter of 1998 were $377.9 million, an increase of
$9.9 million, or 3 percent, over the comparable 1997 period.
"We continued to make progress in the third quarter on the rationalization
of the former JPS Automotive operations with both the Carpet & Acoustics and
Automotive Fabrics divisions. We expect these efforts to reap substantial
rewards for the Company in the future," Hannah said. "We are also very
pleased that our Automotive Fabrics Division has garnered more than one-half
of the automotive fabrics placements in North America awarded so far this year
for models beginning production in 1999 and ramping up over the next three
years."
For the nine months ended Sept. 26, 1998, EBITDA from continuing
operations was $113.6 million, compared to $108.9 million for the first nine
months of 1997.
Sales from continuing operations for the first nine months of 1998 totaled
$1.3 billion, up 10 percent from $1.2 billion, in the first nine months of
1997. Operating profit from continuing operations for the first nine months
of 1998 was up $21.1 million to $63.5 million.
Net loss from continuing operations for the nine months ended Sept. 26,
1998, was $(158) thousand, compared to net loss of $(19.1) million for the
first nine months of 1997.
Other Third Quarter Highlights
Carpet & Acoustics
Molded carpet revenues decreased 3 percent to $84.0 million for the third
quarter of 1998, due primarily to the GM strike.
Luggage compartment trim sales were down 15 percent to $17.4 million in
the third quarter of 1998 due to the effects of the GM strike and lower
volumes on models from Ford, Nissan and Mazda.
Acoustical products sales increased 38 percent over the third quarter of
1997 to $53.3 million, driven by the Company's acquisition of operations in
Germany, Sweden and Belgium, as well as year over year sales increases from
the balance of the Company's acoustics operations in the U.S., Canada and
Europe. Sales for acoustical products in the U.K. rose on increased demand
for the Rover 200 and Rover Freelander, while volume increases from Mercedes
pushed up sales levels for the Company's operations in Spain.
Automotive Fabrics
Year to date, the Automotive Fabrics Division has been awarded more than
half of all the available OEM fabric business for the model years 2000-2002.
In the third quarter of 1998, the awards included models for Dodge, Isuzu,
Ford and Pontiac.
Sales of automotive bodycloth were $49.0 million in the third quarter of
1998, compared to $69.0 million in the third quarter last year. Sales of
headliner fabric were $6.5 million in the third quarter, compared to
$7.8 million in the third quarter of 1998.
The GM strike accounted for an estimated $10.6 million in lost sales for
the Automotive Fabrics Division in the third quarter of 1998.
Unfavorable fabric mix and usage, unfavorable vehicle build mix and
program run-outs on the Mercury Sable, Pontiac Grand Am and Dodge Intrepid
contributed to the reduced revenues in the third quarter of 1998. These
reductions were partially offset by third quarter launches on several new
fabrics programs, including the Honda Civic and Mitsubishi Galant.
Convertible Systems
In the third quarter of 1998, sales of convertible top systems were
$16.2 million, up 9 percent on increased volumes for the Ford Mustang and
Chevrolet Corvette.
Plastics
Worldwide sales for plastic-based interior trim systems were $83.4 million
in the 1998 third quarter versus $69.9 million in the same period last year,
driven by revenues from the Company's operations in Sweden, Belgium and the
U.K.
"At this time last year we reported one time charges related to our North
American plastics operations. We continue to make progress on these issues,
and have achieved significant improvements throughout our plastics plants in
North America in terms of quality, safety, customer service, efficiency and
organizational integrity," Hannah said. "We believe the automotive plastics
market holds tremendous potential for us, so we are continuing to work toward
enhanced operations that are capable of higher sustainable growth."
Accessory Mats
Sales of accessory floormats increased $3.9 million to $35.8 million for
the third quarter of 1998. Revenues from the Company's recent acquisition of
an automotive floormats business in the Netherlands contributed the majority
of the increase.
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 fiscal year
ended December 27, 1997 and Item 2 of the Reports on Form 10-Q for the
quarters ended March 28, 1998 and June 27, 1998.
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 15,000 employees and
operates 65 manufacturing facilities in 12 countries.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Quarter Ended Nine Months Ended
September 26, September 27, September 26, September 27,
1998 1997 1998 1997
Net sales $ 377,928 $ 368,008 $ 1,319,403 $ 1,199,586
Cost of goods
sold 339,351 350,793 1,138,279 1,039,937
Selling, general
and administrative
expenses 38,288 34,464 117,661 94,720
Impairment of long
lived assets - 22,600 - 22,600
377,639 407,857 1,255,940 1,157,257
Operating income
(loss) 289 (39,849) 63,463 42,329
Interest expense,
net 20,921 19,807 60,834 57,891
Loss on sale of
receivables 1,009 532 4,315 3,295
Other (income)
expense 1,327 (2,269) 5,052 (1,297)
Loss from continuing
operations before
income taxes (22,968) (57,919) (6,738) (17,560)
Income tax expense
(benefit) (14,614) (15,917) (6,580) 1,577
Income (loss) from
continuing
operations (8,354) (42,002) (158) (19,137)
Income from
discontinued
operations,
net of income
taxes of ($336)
and $2,835 - (496) - 4,306
Gain on sale of
discontinued
operations,
net of income taxes
of $32,000 and
$85,358 - 76,449 - 161,741
Income (loss) before
extraordinary
loss (8,354) 33,951 (158) 146,910
Extraordinary loss,
net of income taxes
of $2,452 and $443 - - (3,679) (721)
Net income
(loss) $ (8,354) $ 33,951 $ (3,837) $ 146,189
Net income (loss) per basic
and diluted common
share:
Continuing
operations $ (.13) $ (.64) $ - $ (.29)
Discontinued
operations - (.01) - .07
Gain on sale of
discontinued
operations - 1.16 - 2.43
Extraordinary loss - - (.06) (.01)
Net income
(loss) $ (.13) $ .51 $ (.06) $ 2.20
Average common shares
outstanding:
Basic and diluted 63,753 66,072 64,967 66,447
EBITDA $ 16,568 $ (936) $ 113,581 $ 108,865
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
ASSETS September 26, 1998 December 27, 1997
Current Assets:
Cash and cash equivalents $ 26,808 $ 24,004
Accounts and notes receivable, net 251,408 198,125
Inventories 157,047 142,042
Net assets of discontinued operations - 53,004
Other 99,539 92,116
Total current assets 534,802 509,291
Property, plant and equipment, net 438,666 388,087
Deferred tax assets 77,067 59,293
Goodwill, net 258,425 263,007
Other assets 88,311 82,714
$ 1,397,271 $ 1,302,392
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Short-term borrowings $ 12,493 $ 11,057
Current maturities of
long-term debt 15,484 20,558
Accounts payable 151,189 135,468
Accrued expenses 171,003 148,201
Total current liabilities 350,169 315,284
Long-term debt 851,697 752,376
Other, including post retirement
benefit obligation 281,909 301,582
Commitments and contingencies
Common stock (150,000 shares authorized,
70,521 shares issued and
62,584 shares outstanding at
September 26, 1998 and
70,521 shares issued and
65,851 outstanding at
December 27, 1997) 705 705
Other paid-in capital 585,411 585,890
Accumulated deficit (580,688) (576,851)
Accumulated other comprehensive
income (32,137) (39,823)
Treasury stock, at cost (7,937 shares
at September 26, 1998 and 4,670 shares
at December 27, 1997) (59,795) (36,771)
Total common
stockholders' deficit (86,504) (66,850)
$ 1,397,271 $ 1,302,392
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Quarter Ended Nine Months Ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
OPERATING ACTIVITIES
Loss from continuing
operations $ (8,354) $ (42,002) $ (158) $ (19,137)
Adjustments to derive
cash flow from
continuing operating
activities:
Impairment of long
lived assets - 22,600 - 22,600
Deferred income tax
expense (benefit) (17,907) (4,854) (14,477) 1,930
Depreciation and
leasehold
amortization 12,803 10,523 39,808 32,004
Amortization of
goodwill 1,774 1,682 5,313 5,139
Amortization of
other assets 1,702 4,108 4,997 6,793
Decrease (increase)
in accounts and other
receivables (15,292) 34,808 766 41,095
Decrease (increase) in
inventories 2,670 (10,118) (9,383) (14,492)
Decrease (increase) in
other current
assets 9,046 (19,265) (4,555) (14,618)
Increase in other
non-current
assets (3,754) (3,768) (16,131) (5,761)
Increase (decrease) in
accounts payable 12,032 (7,389) (1,342) 253
Increase in interest
payable 14,461 13,909 12,369 13,122
Other, net (4,371) 27,407 (7,428) 18,562
Net cash provided by
continuing operating
activities 4,810 27,641 9,779 87,490
Cash provided by (used in)
Wallcoverings,
Floorcoverings, Airbag
and Mastercraft Group
discontinued operations - (4,401) (15,052) 1,485
Cash used in other
discontinued
operations (1,422) (2,208) (9,224) (6,936)
Net cash used in
discontinued
operations (1,422) (6,609) (24,276) (5,451)
INVESTING ACTIVITIES
Additions to property,
plant and
equipment (22,382) (16,153) (71,887) (51,003)
Sales of property,
plant and equipment 1,745 404 5,669 1,176
Proceeds from disposition
of discontinued
operations - 366,500 71,200 562,100
Acquisition of businesses,
net of cash
acquired (4,120) (13,554) (24,359) (13,554)
Other, net (954) (58,688) 2,583 (95,442)
Net cash provided by
(used in) investing
activities (25,711) 278,509 (16,794) 403,277
FINANCING ACTIVITIES
Issuance of
long-term debt 565 - 226,372 5,406
Repayment of long-term
debt (7,316) (93,224) (272,005) (136,315)
Reduction of
participating interest
in accounts
receivables, net of
redemptions (25,500) (67,000) (28,500) (55,000)
Net borrowings
(repayments) on
revolving credit
facilities 77,830 (60,000) 135,532 (204,000)
Purchase of treasury
stock (16,479) (1,673) (23,024) (17,910)
Other, net (292) (696) (4,280) (2,442)
Net cash provided by
(used in) financing
activities 28,808 (222,593) 34,095 (410,261)
Net increase in cash
and cash equivalents 6,485 76,948 2,804 75,055
Cash and cash equivalents
at beginning of period 20,323 12,421 24,004 14,314
Cash and cash equivalents
at end of period $ 26,808 $ 89,369 $ 26,808 $ 89,369