Collins & Aikman Reports Strong Third-Quarter Results
20 October 1999
Collins & Aikman Reports Strong Third-Quarter Results
Operating Income of $27 Million, EPS of $.03, Both Excluding
Restructuring Charge
TROY, Mich., Oct. 20 -- Collins & Aikman Corporation
today reported, before a restructuring charge, 1999 third quarter
operating income of $27 million and net income of $2.1 million, or $.03 per
share. The Company also announced that in conjunction with its previously
disclosed restructuring program, it recorded a charge of $15.3 million in the
third quarter and anticipates finalizing global restructuring plans and
recording an additional charge of approximately $15 million in the 1999 fourth
quarter. The third quarter charge is primarily related to the Company's North
American operations, while the fourth quarter charge is expected to be largely
related to restructuring the Company's European operations. The Company also
anticipates incurring one-time costs of approximately $10 million associated
with the Company's overall restructuring program.
Highlights for the 1999 third quarter continuing automotive operations
included:
* Sales up 13 percent to $428 million - Highest 3rd quarter sales ever.
* Operating income excluding restructuring charge rose to $27 million
- Highest 3rd quarter operating income ever.
* EPS excluding restructuring charge rose to $.03 - Strong bottom line
performance.
* Shah & Peisner appointed to key positions - Strengthened management
team.
* S&P affirmed Corporate credit ratings - Removed from CreditWatch.
* Restructuring plans nearly complete - Savings anticipated in excess of
$30 million annually by 2001.
* Received "Quest for Excellence" award from Automotive Industries
Magazine - Excellent customer quality and service recognized.
Commenting on the Company's third quarter accomplishments, Thomas E.
Evans, Collins & Aikman Chairman and Chief Executive Officer, stated, "We are
extremely pleased with both our core financial results as well as the other
operational objectives we achieved in the quarter. Collins & Aikman's
underlying financial performance continues to benefit from the strength of the
North American vehicle build and our focus on improving operating
efficiencies. As our strong third quarter results demonstrate, the
restructuring program is beginning to provide us real benefits. Additionally
during the quarter, we continued to strengthen our senior management team and
received recognition for industry-leading quality from our customers. We
firmly believe these accomplishments highlight the underlying value and
industry leadership of Collins & Aikman."
Due to the effect of the restructuring charge, for the quarter ended
September 25, 1999, the Company reported a net loss of $6.5 million or ($.10)
per share, versus a net loss of $8.4 million or ($.13) per share in the third
quarter of 1998. Excluding the effect of the restructuring charge, the
Company earned net income of $2.1 million, or $.03 per share for the 1999
third quarter. Excluding the impact of the restructuring charge, operating
income for the 1999 third quarter rose to $27 million, versus $0.3 million for
1998's third quarter. For the most recent quarter, the Company had
approximately 1.8 million fewer shares outstanding on a weighted average
basis.
Net sales for the third quarter of 1999 rose 13 percent to $428 million,
as compared to $378 million in the third quarter of 1998. This increase was
due primarily to strong sales growth from the Company's North American
Automotive Interior Systems division and Specialty Automotive Products
division, partially offset by lower revenues in the Company's European
Automotive Interior Systems division. Net sales for the Company's North
American Automotive Interior Systems division rose 19 percent to $260 million,
while net sales for the Specialty Automotive Products division increased 26
percent to $104 million. Due primarily to lower acoustic product revenues at
the Company's U.K. and Swedish operations, 1999 third quarter sales in the
Company's European Automotive Interior Systems division declined to $64
million, from $78 million in the 1998 third quarter.
Due to the effect of restructuring charges and the cumulative effect of a
change in accounting principle in the 1999 first quarter, for the nine months
ended September 25, 1999, the Company reported a net loss of $7.7 million or
($.12) per share, versus a net loss of $3.8 million or ($.06) per share for
the first nine months of 1998. Excluding the effects of the restructuring
charges, as well as the cumulative effect of a change in accounting principle,
the Company earned net income of $13.5 million, or $.22 per share, for the
first nine months of 1999. Excluding the effect of the restructuring charges,
operating income for the first nine months of 1999 rose over 50 percent to
$96.3 million, versus $63.5 million in 1998's comparable period. For the nine
months ended September 25, 1999, the Company had approximately 2.6 million
fewer shares outstanding on a weighted average basis.
Net sales for the first nine months of 1999 rose six percent to $1.4
billion, as compared to $1.3 billion in the first nine months of 1998. This
increase was due primarily to strong sales growth from the Company's North
American Automotive Interior Systems division and Specialty Automotive
Products division, partially offset by lower revenues in the Company's
European Automotive Interior Systems division. Net sales for the Company's
North American Automotive Interior Systems division rose 10 percent to $836
million, while net sales for the Specialty Automotive Products division
increased seven percent to $333 million. Sales for the Company's European
Automotive Interior Systems division declined to $224 million from $246
million in the prior year period.
Evans comments continued, "Collins & Aikman's solid third quarter
performance continues to reflect our ability to provide our global customers
with industry-leading products that are second to none. As we further
implement our global restructuring program, our core earnings and cash flow
generating ability should continue to increase. While the restructuring
actions we are taking are both difficult and painful, we believe these steps
will further strengthen our position in the industry and steadily improve our
financial performance. Most importantly of all, we are confident that these
actions will be beneficial to both our customers and our shareholders."
Collins & Aikman is the global leader in automotive floor and acoustic
systems and is a leading supplier of automotive fabric, interior trim and
convertible top systems. The Company's operations span the globe through 65
facilities, 12 countries and more than 16,000 employees who are committed to
achieving total excellence. Collins & Aikman's high-quality products combine
industry-leading design and styling capabilities, superior manufacturing
capabilities and the industry's most effective NVH "quiet" technologies.
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from the anticipated results because of certain risks and
uncertainties, including but not limited to general economic conditions in the
markets in which Collins & Aikman operates, fluctuations in the production of
vehicles for which the Company is a supplier, labor disputes involving the
Company or its significant customers, risks associated with conducting
business in foreign countries and other risks detailed from time to time in
the Company's Securities and Exchange Commission filings including without
limitation, in Items 1 and 7 of the Company's Annual Report on Form 10-K for
the year-ended December 26, 1998 and Item 2 of each of the Reports on Form
10-Q for the quarters ended March 27, 1999 and June 26, 1999.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Quarter Ended
Adjusted (A)
September 25, September 25, September 26,
1999 1999 1998
Net sales $ 427,873 $ 427,873 $ 377,928
Cost of goods sold 363,710 363,710 339,351
Selling, general and
administrative
expenses 37,615 37,615 38,288
Restructuring charge 15,293 -- --
416,618 401,325 377,639
Operating income 11,255 26,548 289
Interest expense, net 22,997 22,997 20,921
Loss on sale of
receivables 1,201 1,201 1,009
Other expense 1,670 1,670 1,327
Income (loss) before
income taxes (14,613) 680 (22,968)
Income tax expense
(benefit) (8,129) (1,375) (14,614)
Net income (loss) $ (6,484) $ 2,055 $ (8,354)
Net income (loss) per basic
and diluted common
share: $ (0.10) $ 0.03 $ (0.13)
Average common shares outstanding:
Basic 61,955 61,955 63,753
Diluted 61,955 62,352 63,753
(A) Excludes impact of restructuring.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Nine Months Ended
Adjusted (A)
September 25, September 25, September 26,
1999 1999 1998
Net sales $ 1,393,031 $ 1,393,031 $ 1,319,403
Cost of goods sold 1,180,018 1,180,018 1,138,279
Selling, general and
administrative
expenses 116,692 116,692 117,661
Restructuring charge 19,847 -- --
1,316,557 1,296,710 1,255,940
Operating income 76,474 96,321 63,463
Interest expense, net 67,821 67,821 60,834
Loss on sale of
receivables 3,835 3,835 4,315
Other expense 2,864 2,864 5,052
Income (loss) before
income taxes 1,954 21,801 (6,738)
Income tax expense
(benefit) 804 8,284 (6,580)
Income (loss) before
extraordinary charge and
cumulative effect of a
change in accounting
principle 1,150 13,517 (158)
Extraordinary charge, net
of income taxes of $2,452 -- -- (3,679)
Cumulative effect of a
change in accounting
principle, net of income
taxes of $5,083 (8,850) (8,850) --
Net income (loss) $ (7,700) $ 4,667 $ (3,837)
Net income (loss) per basic
and diluted common share:
Income (loss) before
extraordinary charge and
cumulative effect of a
change in accounting
principle $ 0.02 $ 0.22 $ --
Extraordinary charge -- -- (0.06)
Cumulative effect of a
change in accounting
principle (0.14) (0.14) --
Net income (loss) $ (0.12) $ 0.08 $ (0.06)
Average common shares outstanding:
Basic 61,965 61,965 64,967
Diluted 62,335 62,335 64,967
(A) Excludes impact of restructuring.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for per share data)
(Unaudited)
ASSETS September 25, 1999 December 26, 1998
Current Assets:
Cash and cash equivalents $ 24,387 $ 23,755
Accounts and other receivables, net 243,520 237,645
Inventories 155,491 152,840
Other 105,906 96,156
Total current assets 529,304 510,396
Property, plant and equipment, net 441,046 447,121
Deferred tax assets 86,066 70,632
Goodwill, net 258,263 264,138
Other assets 87,147 89,924
$1,401,826 $1,382,211
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Short-term borrowings. $ 11,811 $ 10,954
Current maturities of long-term debt 28,107 19,942
Accounts payable 159,576 169,808
Accrued expenses 155,103 143,302
Total current liabilities 354,597 344,006
Long-term debt 917,169 846,107
Other, including postretirement benefit
obligation 274,855 271,869
Commitments and contingencies
Common stock (150,000 shares authorized,
70,521 shares issued and 61,914 shares
outstanding at September 25, 1999 and
70,521 shares issued and 62,182
outstanding at December 26, 1998) 705 705
Other paid-in capital 585,325 585,401
Accumulated deficit (638,602) (580,666)
Accumulated other comprehensive loss (29,347) (23,427)
Treasury stock, at cost (8,607 shares
at September 25, 1999 and 8,339 shares
at December 26, 1998) (62,876) (61,784)
Total common stockholders' deficit (144,795) (79,771)
$1,401,826 $1,382,211
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Quarter Ended
September 25, September 26,
1999 1998
OPERATING ACTIVITIES
Income (loss) from continuing
operations $ (6,484) $ (8,354)
Adjustments to derive cash flow
from continuing operating activities:
Impairment of long-lived assets 5,057 --
Deferred income tax benefit (8,136) (17,907)
Depreciation and amortization 17,013 16,279
Decrease (increase) in accounts and
other receivables (13,326) (15,292)
Decrease (increase) in inventories (13,034) 2,670
Increase (decrease) in accounts
payable 10,975 12,032
Increase in interest payable 13,243 14,461
Other, net (13,022) 2,818
Net cash provided by (used in)
continuing operating activities (7,714) 6,707
Cash used in Wallcoverings discontinued
operations -- --
Cash used in other discontinued
operations (1,355) (1,422)
Net cash used in discontinued
operations (1,355) (1,422)
INVESTING ACTIVITIES
Additions to property, plant and
equipment (22,835) (22,382)
Sales of property, plant and equipment 7,319 1,745
Proceeds from disposition of discontinued
operations -- --
Acquisition of businesses, net of cash
acquired -- (4,120)
Other, net (785) (954)
Net cash used in investing activities (16,301) (25,711)
FINANCING ACTIVITIES
Issuance of long-term debt -- --
Repayment of long-term debt (5,849) (14,795)
Reduction of a participating interest in
accounts receivable (3,900) (25,500)
Net borrowings (repayments) on revolving
credit facilities 9,779 77,830
Increase (decrease) on short-term
borrowings 6,477 8,000
Reissuance (purchase) of treasury stock,
net (171) (16,479)
Dividends paid -- --
Other, net (584) (2,145)
Net cash provided by financing
activities 5,752 26,911
Net increase (decrease) in cash and cash
equivalents (19,618) 6,485
Cash and cash equivalents at beginning
of period 44,005 20,323
Cash and cash equivalents at end of
period $ 24,387 $ 26,808
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 25, September 26,
1999 1998
OPERATING ACTIVITIES
Income (loss) from continuing
operations $ 1,150 $ (158)
Adjustments to derive cash flow from
continuing operating activities:
Impairment of long-lived assets 5,593 --
Deferred income tax benefit (9,367) (14,477)
Depreciation and amortization 51,944 50,118
Decrease (increase) in accounts and
other receivables 225 766
Decrease (increase) in inventories (2,651) (9,383)
Increase (decrease) in accounts
payable (10,232) (1,342)
Increase in interest payable 14,591 12,369
Other, net (22,741) (28,114)
Net cash provided by (used in)
continuing operating activities 28,512 9,779
Cash used in Wallcoverings discontinued
operations -- (15,052)
Cash used in other discontinued
operations (5,786) (9,224)
Net cash used in discontinued
operations (5,786) (24,276)
INVESTING ACTIVITIES
Additions to property, plant and
equipment (55,212) (71,887)
Sales of property, plant and equipment 9,953 5,669
Proceeds from disposition of discontinued
operations -- 71,200
Acquisition of businesses, net of cash
acquired (369) (24,359)
Other, net 973 2,583
Net cash used in investing activities (44,655) (16,794)
FINANCING ACTIVITIES
Issuance of long-term debt 100,000 225,000
Repayment of long-term debt (15,335) (271,186)
Reduction of a participating interest
in accounts receivable (6,100) (28,500)
Net borrowings (repayments) on revolving
credit facilities (7,602) 135,532
Increase (decrease) on short-term
borrowings 1,205 509
Reissuance (purchase) of treasury stock,
net (1,092) (23,024)
Dividends paid (50,198) --
Other, net 1,683 (4,236)
Net cash provided by financing
activities 22,561 34,095
Net increase (decrease) in cash and cash
equivalents 632 2,804
Cash and cash equivalents at beginning of
period 23,755 24,004
Cash and cash equivalents at end of
period $ 24,387 $ 26,808
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
THIRD QUARTER 1999 - SUPPLEMENTAL SCHEDULE
(Unaudited; $ in Millions, except CPV)
SALES DATA:
1999 1998
DIVISION: 3RD QTR YTD 3RD QTR YTD
North American Interiors $ 260.0 $ 836.1 $ 217.7 $ 761.4
European Interiors 64.4 223.5 77.8 245.9
Specialty 103.4 333.4 82.4 312.1
Total $ 427.8 $1,393.0 $ 377.9 $1,319.4
OPERATING INCOME (LOSS)*:
1999 1998
DIVISION: 3RD QTR YTD 3RD QTR YTD
North American Interiors $ 15.4 $ 55.6 $ 1.5 $ 43.7
European Interiors 3.0 7.0 2.3 7.2
Specialty 7.2 32.6 (3.3) 12.6
Other .9 1.1 (0.2) --
Total $ 26.5 $ 96.3 $ 0.3 $ 63.5
1999 1998
STATISTICAL DATA: 3RD QTR YTD 3RD QTR YTD
EUROPEAN CPV $ 18 $ 16 $ 19 $ 18
N. AMERICAN CPV $ 88 $ 86 $ 82 $ 87
EBITDA* $ 44 $ 148 $ 17 $ 114
* Excludes impact of restructuring charges.