Collins & Aikman Reports 1998 Fourth-Quarter And Full-Year Results
23 February 1999
Collins & Aikman Reports 1998 Fourth-Quarter And Full-Year Results
CHARLOTTE, N.C., Feb. 23 -- Collins & Aikman Corporation
announced today that sales for the fourth quarter ended December
26, 1998 increased 17.8 percent to $506.1 million, from $429.7 million in the
fourth quarter of the prior year. EBITDA was $54.0 million, compared with
$57.1 million in the fourth quarter of 1997. Operating income for the quarter
was $35.0 million, compared with $42.2 million in the prior year.
"Our fourth-quarter sales growth reflected gains in the newly created
North America Automotive Interior Systems Division, our largest business
segment, as well as an approximately $53.1 million sales increase at our
Europe Automotive Interior Systems Division, also established as part of our
reorganization earlier this month. The sales growth at these divisions was
largely due to the recent acquisitions of acoustics and plastics businesses,"
said Thomas E. Hannah, Chief Executive Officer of Collins & Aikman.
"At the same time, the substantial decrease in volume experienced by our
fabrics businesses throughout 1998 caused unfavorable manufacturing variances,
and fabrics also incurred charges for certain idle manufacturing equipment in
the fourth quarter."
The 1998 volume decrease, Hannah noted, was related to program run-offs
and an increase in leather penetration on a broader range of vehicle
platforms.
"However, the Fabrics business, which is a part of our Specialty
Automotive Products Division, completed one of its most successful marketing
efforts in recent memory. We believe Fabrics won approximately 45 percent of
the total automotive fabric business awarded in North America during 1998.
This is expected to have a very positive impact on operating margins when we
start gearing up for production in late 1999."
The Company stated that fourth quarter 1998 margins were also impacted by
certain inefficiencies at its North American carpet operations, as well as the
impact of unfavorable foreign currency fluctuations.
For the fourth quarter of 1998, income before income taxes declined to
$11.9 million from $20.5 million in 1997, and net income was $22,000 versus
$9.0 million, or 14 cents per share, in the prior year, reflecting weaker
profits in the Fabrics operations and higher European taxes in 1998 as
compared with 1997.
"The car build in both North America and Europe was very strong during
1998 at approximately 15.4 million units and 17.6 million units respectively,"
said Hannah. "For 1999, North America appears to be positioned for another
solid year, though Europe has experienced somewhat softer conditions in the
retail automotive market during January and February."
"The most significant events in the automotive industry during 1998 and
the beginning of this year were the merger of Chrysler with Daimler Benz and
Ford Motor Company's acquisition of the Volvo car business," said Hannah.
"Both these strategic alliances, we believe, will benefit Collins & Aikman in
the coming years given our existing strong relationships with these great
companies. Ford and Chrysler have been long-standing customers in North
America and with the Perstorp acquisition in 1996, Volvo became our sixth
largest customer worldwide."
Earlier this month, Collins & Aikman announced the realignment of its
operations into three customer-focused segments. Two of the segments, the
North America Automotive Interior Systems Division and the Europe Automotive
Interior Systems Division, combine the Company's automotive carpet, acoustics,
plastics and accessory mats businesses, and the third, the Specialty
Automotive Products Division, encompasses the Company's automotive fabrics and
Dura Convertible Systems businesses.
"This realignment allows us to provide one-stop shopping for our OEM
customers on a local, regional and international basis, and thus positions us
to respond to the ongoing reconfiguration of the automotive industry," Hannah
said.
For full-year 1998, net sales increased 12 percent to $1.8 billion from
$1.6 billion the year before. EBITDA rose to $167.5 million from $166.0
million, operating income increased to $98.5 million from $84.5 million, and
income from continuing operations before taxes rose to $5.2 million from $2.9
million. For 1998, income before extraordinary loss was a loss of $91,000,
compared with a gain of $156.0 million in the prior year, the result of an
after-tax gain on the sale of discontinued operations of $162.0 million.
Hannah estimated that the full year negative impact of the General Motors
strike, GM's longest ever, which lasted 54 days, was approximately $44.1
million in sales and $18.8 million in operating income. General Motors is the
Company's largest customer, and the negative impact included not only loss of
profits on sales, but also increased labor costs, including overtime,
particularly in the fourth quarter as GM attempted to make up for lost sales.
Income tax expense for the 1998 fourth quarter and year was significantly
impacted by state franchise taxes and taxes paid by the Company's foreign
operations. The Company does not expect to pay any US federal income tax for
1998.
Cash used for continuing operations, discontinued operations and investing
activities was $19.6 million for fourth quarter of 1998 compared with cash
provided of $3.7 million in the comparable quarter of 1997. The principal use
of funds during the fourth quarter of 1998 was for capital expenditures of
$27.1 million.
Other Fourth Quarter Highlights
North America Automotive Interior Systems
Most of the North America Automotive Interior Systems Division product
lines registered sales increases, with double-digit percentage gains for
molded carpet, acoustical products and plastics.
Molded carpet revenues were up 14 percent to $107.5 million, driven by
sales to Chrysler for the Dodge Durango, to General Motors for the Grand Am
and Alero and to Toyota for the Camry and Sienna minivan.
Plastics revenue rose 12 percent to $89.0 million, with the key
contributors being climate control systems to GM for the Sierra/Silverado and
to Ford for the Crown Victoria, door trim panels to GM for the Alero, and
instrument panels to GM for the Cadillac S5S.
Acoustics revenues increased 16 percent to $30.1 million, powered by sales
to Ford for the F-350 truck and Mercury Cougar, and to Mercedes for the M-
Class sport utility vehicle.
Accessory floormat sales edged up 3 percent and totaled $42.8 million, on
several models including the Chrysler Concorde and Intrepid and the GM C/K
truck series.
Luggage compartment trim revenues decreased 29 percent to $21.3 million
due to lower sales to Chrysler for the Stratus/Cirrus and to Nissan for the
Sentra.
Europe Automotive Interior Systems
The Europe Automotive Interior Systems Division turned in a strong
performance. Molded carpet revenues climbed 54 percent to $12.5 million,
reflecting sales for the Rover Tempest and Toyota Avensis. Acoustics revenues
rose 15 percent to $30.1 million, primarily due to operations in Sweden,
acquired as part of a joint venture in December 1996 and the remaining
interest in which Collins & Aikman purchased in December 1997.
Plastics revenues totaled $30.9 million, versus $78,000 in the fourth
quarter of 1997, mainly attributable to the U.K. plastics and Swedish joint
venture acquisitions. Sales for accessory floormats by our recently acquired
Pepers BV business were $5.3 million.
Specialty Automotive Products
The Specialty Automotive Products Division had mixed results, with fabrics
revenues slipping 1 percent to $67.3 million because of decreased sales to GM
for the C/K truck series and Grand Am. Dura Convertibles' revenues, however,
rose almost 12 percent to $24.2 million, powered by sales for the Ford Mustang
and Chrysler Sebring.
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 in Item 2 of the Company's Quarterly Reports, on
Form 10-Q for the quarters ended March 28, 1998, June 27, 1998 and September
27, 1998.
Collins & Aikman Corporation is a global supplier of automotive interior
systems, including textile and plastic trim, acoustics and convertible top
systems. The Company employs more than 15,000 employees and operates 65
manufacturing facilities in twelve countries.
The following financial statements are below:
-- Consolidated Statements of Operations for the quarters and years ending
December 26, 1998 and December 27, 1997.
-- Consolidated Balance Sheets as of December 26, 1998 and December 27,
1997.
-- Consolidated Statements of Cash Flows for the quarters and years ending
December 26, 1998 and December 27, 1997.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Quarter Ended
December 26, 1998 December 27, 1997
Net sales $ 506,066 $ 429,746
Cost of goods sold 438,965 356,411
Selling, general and administrative
expenses 32,086 31,154
Impairment of long lived assets -- --
471,051 387,565
Operating income 35,015 42,181
Interest expense, net 21,170 19,690
Loss on sale of receivables 1,751 1,405
Other (income) loss 163 619
Income from continuing operations
before income taxes 11,931 20,467
Income tax expense 11,864 11,421
Income (loss) from continuing
operations 67 9,046
Income from discontinued operations, net
of income taxes -- --
Gain on sale of discontinued operations,
net of income taxes -- --
Income (loss) before extraordinary loss 67 9,046
Extraordinary loss, net of income taxes (45) --
Net income (loss) $ 22 $ 9,046
Net income (loss) per basic common share:
Continuing operations $ -- $ 0.14
Income from discontinued operations -- --
Gain on sale of discontinued
operations -- --
Extraordinary loss -- --
Net income (loss) $ -- $ 0.14
Net income (loss) per diluted common share:
Continuing operations $ -- $ 0.14
Income from discontinued
operations -- --
Gain on sale of discontinued
operations -- --
Extraordinary loss -- --
Net income (loss) $ -- $ 0.14
Average common shares outstanding:
Basic 62,493 66,006
Diluted 63,020 66,994
EBITDA $ 53,966 $ 57,079
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Year Ended
December 26, 1998 December 27, 1997
Net sales $ 1,825,469 $ 1,629,332
Cost of goods sold 1,577,244 1,396,172
Selling, general and administrative
expenses 149,747 126,050
Impairment of long lived assets - 22,600
1,726,991 1,544,822
Operating income 98,478 84,510
Interest expense, net 82,004 77,581
Loss on sale of receivables 6,066 4,700
Other (income) loss 5,215 (678)
Income from continuing operations
before income taxes 5,193 2,907
Income tax expense 5,284 12,998
Income (loss) from continuing operations (91) (10,091)
Income from discontinued operations, net
of income taxes -- 4,306
Gain on sale of discontinued operations,
net of income taxes -- 161,741
Income (loss) before extraordinary loss (91) 155,956
Extraordinary loss, net of income taxes (3,724) (721)
Net income (loss) $ (3,815) $ 155,235
Net income (loss) per basic common share:
Continuing operations $ -- $ (0.15)
Income from discontinued operations -- 0.06
Gain on sale of discontinued
operations -- 2.44
Extraordinary loss (0.06) (0.01)
Net income (loss) $ (0.06) $ 2.34
Net income (loss) per diluted common share:
Continuing operations $ -- $ (0.15)
Income from discontinued operations -- 0.06
Gain on sale of discontinued
operations -- 2.44
Extraordinary loss (0.06) (0.01)
Net income (loss) $ (0.06) $ 2.34
Average common shares outstanding:
Basic 64,348 66,337
Diluted 64,348 66,337
EBITDA $ 167,547 $ 165,950
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
ASSETS December 26, December 27,
1998 1997
Current Assets:
Cash and cash equivalents $ 23,755 $ 24,004
Accounts and other receivables, net 237,645 198,125
Inventories 152,840 142,042
Net assets of discontinued operations -- 53,004
Other 96,156 92,116
Total current assets 510,396 509,291
Property, plant and equipment, net 447,121 388,087
Deferred tax assets 70,632 59,293
Goodwill, net 264,138 263,007
Other assets 89,924 82,714
$ 1,382,211 $ 1,302,392
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Short-term borrowings $ 10,954 $ 11,057
Current maturities of long-term debt 19,942 20,558
Accounts payable 169,808 135,468
Accrued expenses 143,302 148,201
Total current liabilities 344,006 315,284
Long-term debt 846,107 752,376
Other, including postretirement
benefit obligation 271,869 301,582
Commitments and contingencies
Common stock (150,000 shares authorized,
70,521 shares issued and 62,182 shares
outstanding at December 26, 1998, and
150,000 shares authorized, 70,521 shares
issued and 65,851 shares outstanding
at December 27, 1997) 705 705
Other paid-in capital 585,401 585,890
Accumulated deficit (580,666) (576,851)
Accumulated other comprehensive income (23,427) (39,823)
Treasury stock, at cost (8,339 shares
at December 26, 1998, and 4,670 shares
at December 27, 1997) (61,784) (36,771)
Total common stockholders' deficit (79,771) (66,850)
$ 1,382,211 $ 1,302,392
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Quarter Ended
December 26, December 27,
1998 1997
OPERATING ACTIVITIES
Income (loss) from
continuing operations $ 67 $ 9,046
Adjustments to derive cash
flow from continuing operating
activities:
Impairment of long
lived assets -- --
Deferred income tax
expense (benefit) 7,244 2,322
Depreciation and
leasehold amortization 12,800 10,708
Amortization of goodwill 1,710 1,530
Amortization of
other assets 2,446 2,660
Decrease (increase) in
accounts and
other receivables (6,746) (5,276)
Decrease (increase)
in inventories 4,542 6,414
Increase (decrease) in
accounts payable 18,619 (4,379)
Decrease in interest
payable (14,998) (13,641)
Other, net (14,849) 2,007
Net cash provided
by continuing
operating activities 10,835 11,391
Cash used in Wallcoverings,
Floorcoverings, Airbag and
the Mastercraft Group
discontinued operations -- (6,204)
Cash used in other
discontinued operations (4,819) (5,316)
Net cash used in
discontinued
operations (4,819) (11,520)
INVESTING ACTIVITIES
Additions to property,
plant and equipment (27,104) (20,772)
Sales of property,
plant and equipment 2,284 4,703
Proceeds from disposition
of discontinued operations -- --
Acquisition of businesses,
net of cash acquired (898) 17,001
Other, net 128 2,908
Net cash provided by
(used in) investing
activities (25,590) 3,840
FINANCING ACTIVITIES
Issuance of long-term debt 967 7,740
Repayment of long-term debt (3,488) (126,511)
Proceeds from (reduction of)
participating interests in
accounts receivable,
net of redemptions 21,000 42,000
Net borrowings (repayments) on
revolving credit facilities 1,185 10,000
Purchase of treasury stock (1,989) (1,805)
Other, net (1,154) (500)
Net cash provided by
(used in) financing
activities 16,521 (69,076)
Net increase (decrease) in cash
and cash equivalents (3,053) (65,365)
Cash and cash equivalents
at beginning of period 26,808 89,369
Cash and cash equivalents
at end of period $ 23,755 $ 24,004
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Year Ended
December 26, December 27,
1998 1997
OPERATING ACTIVITIES
Income (loss) from
continuing operations $ (91) $ (10,091)
Adjustments to derive cash
flow from continuing
operating activities:
Impairment of long
lived assets -- 22,600
Deferred income tax
expense (benefit) (7,233) 4,252
Depreciation and
leasehold amortization 52,608 42,712
Amortization of goodwill 7,023 6,669
Amortization of
other assets 7,443 9,459
Decrease (increase) in
accounts and
other receivables (5,980) 35,819
Decrease (increase)
in inventories (4,841) (8,078)
Increase (decrease) in
accounts payable 10,031 (4,126)
Decrease in interest
payable (2,629) (520)
Other, net (42,963) 185
Net cash provided
by continuing
operating activities 13,368 98,881
Cash used in Wallcoverings,
Floorcoverings, Airbag
and the Mastercraft Group
discontinued operations (15,052) (4,719)
Cash used in other
discontinued operations (14,043) (12,252)
Net cash used in
discontinued
operations (29,095) (16,971)
INVESTING ACTIVITIES
Additions to property,
plant and equipment (98,991) (71,775)
Sales of property,
plant and equipment 7,953 5,879
Proceeds from disposition of
discontinued operations 71,200 562,100
Acquisition of businesses,
net of cash acquired (25,257) 3,447
Other, net 2,711 (92,534)
Net cash provided by
(used in) investing
activities (42,384) 407,117
FINANCING ACTIVITIES
Issuance of long-term debt 226,969 12,235
Repayment of long-term debt (267,807) (261,416)
Proceeds from (reduction of)
participating interests in
accounts receivable,
net of redemptions (7,500) (13,000)
Net borrowings (repayments) on
revolving credit facilities 136,717 (194,000)
Purchase of treasury stock (25,013) (19,715)
Other, net (5,504) (3,441)
Net cash provided by
(used in) financing
activities 57,862 (479,337)
Net increase (decrease) in
cash and cash equivalents (249) 9,690
Cash and cash equivalents at
beginning of period 24,004 14,314
Cash and cash equivalents
at end of period $ 23,755 $ 24,004