Collins & Aikman's Strong Q4 Caps Turnaround Year For New Management Team
9 February 2000
Collins & Aikman's Strong Fourth-Quarter Caps Turnaround Year For New Management Team
EPS Of $.11, Excluding Restructuring Charge, Tops $.07 First Call Estimate
TROY, Mich., Feb. 9 -- Collins & Aikman Corporation
today reported 1999 fourth quarter operating income of
$35.6 million and net income of $6.6 million, or $.11 per share, both before a
restructuring charge. The Company also announced that in connection with its
previously disclosed global restructuring program, it recorded a charge of
$13.5 million in the fourth quarter, as compared to its original estimate of
approximately $15.0 million. As previously disclosed, the fourth quarter
charge is primarily related to rationalization actions for the Company's
European operations.
Fourth Quarter Highlights of Continuing Automotive Operations
(Excluding Restructuring Charge) Include:
* Operating income hits $35.6 million. -- Third consecutive quarter of
year-over-year improvement.
* Free cash flow generation of $87 million -- Over 100 percent
improvement versus 1998.
* Total debt down to $916 million -- Over $40 million in debt reduction.
* EPS of $.11 -- Exceeding First Call expectation of $.07.
* Strong incremental new business awards -- Over $100 million booked.
* Moody's confirmed corporate credit ratings -- Improved overall
operating performance and coverage ratios cited.
* Global Account Manager structure announced -- Enhanced customer focus.
* Honored by Pace(TM) 2000 Awards Committee -- Continued outstanding
product innovation.
Commenting on the Company's fourth quarter results, Thomas E. Evans,
Collins & Aikman's Chairman and Chief Executive Officer, stated, "The
management team of Collins & Aikman delivered very quickly on its commitment
to turnaround operations -- generating better than a 100 percent increase in
fourth quarter free cash flow of $87 million, before a restructuring charge.
We're also extremely pleased that these results mark our third consecutive
quarter of year-over-year growth in operating results. These outstanding
results reflect an overall improvement in working capital, and when combined
with our solid fourth quarter earnings performance, continue to demonstrate
our ability to grow both the cash flow and core earnings power of this
Company. This performance is especially gratifying given the issues we
addressed at our U.K. Plastics operation, restructuring actions taken during
the period, as well as the comparative strength of our 1998 fourth quarter
financial results. In summary, we believe that Collins & Aikman is now better
positioned than ever to deliver value for all our stakeholders."
The Company earned net income of $6.6 million, or $.11 per share in the
1999 fourth quarter, excluding the effect of the restructuring charge.
Operating income for the 1999 fourth quarter was $35.6 million, excluding the
impact of the restructuring charge, up two percent from 1998's fourth quarter.
Due to the effect of the restructuring charge, the Company reported a net loss
of ($2.5) million, or ($.04) per share for the quarter ended December 25,
1999, versus net income, before an extraordinary item, of $0.1 million, or
$.00 per share in the fourth quarter of 1998. For the most recent quarter,
the Company had approximately 0.5 million fewer shares outstanding on a
weighted average basis.
Cash flow for the 1999 fourth quarter was exceptionally strong as free
cash flow more than doubled, climbing to $87 million, excluding the impact of
the restructuring charge, versus $43 million in the fourth quarter of 1998.
Particularly noteworthy during the quarter was the solid reduction in working
capital, which declined by approximately $71 million, or
30 percent, from the third quarter of 1999.
Net sales for the fourth quarter of 1999 remained strong at
$505.6 million, as compared with $506.1 million in the fourth quarter of 1998,
which had benefited from unusually strong North American production by General
Motors. Overall strong production in North America helped to drive sales for
the Company's North American Automotive Interior Systems division up
approximately four percent to $315.7 million. Due primarily to lower acoustic
and floormat revenues, net sales for the Company's European Automotive
Interior Systems division declined ten percent to $82.9 million. For the
Company's Specialty Automotive Products division, net sales decreased three
percent to $107.0 million, as lower fabric sales offset increased convertible
top sales.
On a full year basis in 1999, the Company earned net income of
$20.1 million, or $.32 per share, excluding the effects of the restructuring
charges and the cumulative effect of a change in accounting principle. For
all of 1999, operating income rose over 30 percent to $131.9 million,
excluding restructuring charges, versus $98.5 million in 1998. Due to the
effects of restructuring charges and the cumulative effect of a change in
accounting principle, the Company reported a net loss of ($10.2) million, or
($.16) per share, versus a net loss of ($3.8) million, or ($.06) per share in
fiscal 1998. In 1998, the Company incurred an extraordinary charge of
($3.7) million, or ($.06) per share, and excluding this, 1998's net loss would
have been ($0.1) million, or ($.00) per share. Weighted average shares
outstanding were 62.4 million, 2.0 million fewer shares than were outstanding
in 1998.
Similar to the fourth quarter, cash flow generation for full year 1999 was
also very strong, as free cash flow climbed approximately 150 percent to
$168 million, excluding the impact of restructuring charges, versus
$68 million in 1998. For all of 1999, the Company was able to reduce its
overall investment in working capital by approximately $53 million, or
24 percent.
For the full year, 1999 sales rose four percent to $1.9 billion compared
to $1.8 billion in 1998. This increase was due to internal 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 eight
percent to $1.2 billion, while net sales for the Specialty Automotive Products
division increased four percent to $440.5 million. Sales for the Company's
European Automotive Interior Systems division declined to $306.4 million from
$338.0 million in the prior year period, primarily due to lower revenues in
the Company's U.K. operations.
Commenting on the Company's fiscal year results, Evans further stated,
"Our ability to simultaneously grow the top line in 1999 by four percent while
reducing inventories by 13 percent clearly highlights the new management
team's priorities of both growth and improving returns on invested capital.
When I arrived last April, I committed to implementing an aggressive
restructuring program, stepping up product innovation and quality, expanding
operating margins and focusing our entire organization on reducing working
capital and generating strong cash flow. Even after factoring in the benefits
of North America's record vehicle build, our strong core operating results and
new business wins in 1999 clearly demonstrate that Collins & Aikman's new
management team has delivered on each of these commitments."
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
63 facilities, 12 countries and nearly 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.
Information about Collins & Aikman is available on the Internet at
http://www.collinsaikman.com .
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, June 26, 1999 and September 25,
1999.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Quarter Ended
Adjusted (a)
December 25, December 25, December 26,
1999 1999 1998
Net sales $ 505,566 $ 505,566 $ 506,066
Cost of goods sold 433,862 433,862 438,965
Gross profit 71,704 71,704 67,101
Selling, general and
administrative expenses 36,115 36,115 32,086
Restructuring charge 13,544 -- --
Operating income 22,045 35,589 35,015
Interest expense, net 24,224 24,224 21,170
Loss on sale of receivables 1,521 1,521 1,751
Other expense (income) (627) (627) 163
Income (loss) before
income taxes (3,073) 10,471 11,931
Income tax expense (benefit) (558) 3,885 11,864
Income (loss) before
extraordinary charge (2,515) 6,586 67
Extraordinary charge,
net of income taxes -- -- (45)
Net income (loss) $ (2,515) $ 6,586 $ 22
Net income (loss) per basic and diluted common share:
Income (loss) before
extraordinary charge and
cumulative effect of a
change in accounting
principle $ (0.04) $ 0.11 $ --
Extraordinary item -- -- --
Net income (loss) $ (0.04) $ 0.11 $ --
Average common shares outstanding:
Basic 61,913 61,913 62,493
Diluted 61,913 62,531 63,020
(a) Excludes impact of restructuring charge.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Year Ended
Adjusted (a)
December 25, December 25, December 26,
1999 1999 1998
Net sales $1,898,597 $1,898,597 $1,825,469
Cost of goods sold 1,613,880 1,613,880 1,577,244
Gross profit 284,717 284,717 248,225
Selling, general and
administrative
expenses 152,807 152,807 149,747
Restructuring charge 33,391 -- --
Operating income 98,519 131,910 98,478
Interest expense, net 92,045 92,045 82,004
Loss on sale of receivables 5,356 5,356 6,066
Other expense 2,237 2,237 5,215
Income (loss) before
income taxes (1,119) 32,272 5,193
Income tax expense 246 12,169 5,284
Income (loss) before extraordinary
charge and cumulative effect
of a change in accounting
principle (1,365) 20,103 (91)
Extraordinary charge, net
of income taxes -- -- (3,724)
Cumulative effect of a change
in accounting principle,
net of income taxes (8,850) -- --
Net income (loss) $ (10,215) $ 20,103 $ (3,815)
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) $ 0.32 $ --
Extraordinary charge -- -- (0.06)
Cumulative effect of a
change in accounting
principle (0.14) -- --
Net income (loss) $ (0.16) $ 0.32 $ (0.06)
Average common shares outstanding:
Basic 61,952 61,952 64,348
Diluted 61,952 62,384 64,348
(a) Excludes impact of restructuring charge and the cumulative effect
of a change in accounting principle.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
ASSETS December 25, December 26,
1999 1998
Current Assets:
Cash and cash equivalents $ 13,980 $ 23,755
Accounts and other receivables, net 233,819 237,645
Inventories 132,625 152,840
Other 89,807 86,445
Total current assets 470,231 500,685
Property, plant and equipment, net 443,526 447,121
Deferred tax assets 81,370 70,632
Goodwill, net 256,362 264,138
Other assets 97,401 99,635
$1,348,890 $1,382,211
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Short-term borrowings $ 3,088 $ 10,954
Current maturities of long-term debt 27,992 19,942
Accounts payable 198,466 169,808
Accrued expenses 132,709 143,302
Total current liabilities 362,255 344,006
Long-term debt 884,550 846,107
Other, including postretirement
benefit obligation 253,206 271,869
Commitments and contingencies
Common stock (150,000 shares authorized,
70,521 shares issued and 61,904 shares
outstanding at December 25, 1999 and
70,521 shares issued and 62,182 shares
outstanding at December 26, 1998) 705 705
Other paid-in capital 585,484 585,401
Accumulated deficit (641,117) (580,666)
Accumulated other comprehensive loss (33,260) (23,427)
Treasury stock, at cost (8,617 shares
at December 25, 1999 and 8,339 shares
at December 26, 1998) (62,933) (61,784)
Total common stockholders' deficit (151,121) (79,771)
$1,348,890 $1,382,211
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Quarter Ended Year Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1999 1998 1999 1998
OPERATING ACTIVITIES
Income (loss) from
continuing operations $ (2,515) $ 67 $ (1,365) $ (91)
Adjustments to derive cash
flow from continuing
operating activities:
Impairment of
long-lived assets 7,768 -- 13,361 --
Depreciation and
amortization 19,530 16,956 71,474 67,074
Decrease (increase) in
accounts and other
receivables 1,601 (6,746) 1,826 (5,980)
Decrease (increase)
in inventories 22,866 4,542 20,215 (4,841)
Increase in accounts
payable 38,890 18,619 28,658 10,031
Increase (decrease) in
interest payable (13,645) (14,998) 946 (2,629)
Other, net (11,331) (3,589) (43,298) (57,599)
Net cash provided by
continuing operating
activities 63,164 14,851 91,817 5,965
Cash used in Wallcoverings
discontinued operations -- -- -- (15,052)
Cash used in other
discontinued operations (10,984) (4,819) (16,770) (14,043)
Net cash used in
discontinued operations (10,984) (4,819) (16,770) (29,095)
INVESTING ACTIVITIES
Additions to property,
plant and equipment (31,218) (27,104) (86,430) (98,991)
Sales of property, plant
and equipment 173 2,284 10,126 7,953
Proceeds from disposition
of discontinued operations -- -- -- 71,200
Acquisition of businesses,
net of cash acquired (56) (898) (425) (25,257)
Other, net 4,212 (2,628) 7,245 6,661
Net cash used in
investing activities (26,889) (28,346) (69,484) (38,434)
FINANCING ACTIVITIES
Issuance of long-term debt -- -- 100,000 225,000
Repayment of long-term debt (5,272) (654) (20,607) (264,480)
Proceeds from (reduction of)
a participating interest
in accounts receivable 8,100 21,000 2,000 (7,500)
Net borrowings (repayments)
on revolving credit
facilities (27,691) 1,185 (35,293) 136,717
Decrease on short-term
borrowings (8,610) (1,867) (7,405) (1,358)
Purchase of treasury stock,
net (57) (1,989) (1,149) (25,013)
Dividends paid -- -- (50,198) --
Other, net (2,168) (2,414) (2,686) (2,051)
Net cash provided by
(used in) financing
activities (35,698) 15,261 (15,338) 61,315
Net decrease in cash and
cash equivalents (10,407) (3,053) (9,775) (249)
Cash and cash equivalents
at beginning of period 24,387 26,808 23,755 24,004
Cash and cash equivalents
at end of period $ 13,980 $ 23,755 $ 13,980 $ 23,755
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
FOURTH QUARTER 1999 - SUPPLEMENTAL SCHEDULE
($ in Millions, except CPV)
SALES DATA: 1999 1998
Fourth Year To Fourth Year To
DIVISION: Quarter Date Quarter Date
North American Interiors $ 316 $1,152 $ 304 $1,065
European Interiors 83 306 92 338
Specialty 107 440 110 422
Total $ 506 $1,898 $ 506 $1,825
OPERATING INCOME (LOSS): 1999* 1998
Fourth Year To Fourth Year To
DIVISION: Quarter Date Quarter Date
North American Interiors $ 34 $ 89 $ 31 $ 74
European Interiors (5) 2 2 9
Specialty 7 40 1 14
Other -- 1 1 1
Total $ 36 $ 132 $ 35 $ 98
STATISTICAL DATA: 1999* 1998
Fourth Year To Fourth Year To
Quarter Date Quarter Date
EUROPEAN CPV $ 16 $ 15 $ 17 $ 17
N. AMERICAN CPV $ 91 $ 88 $ 94 $ 89
EBITDA $ 55 $ 203 $ 54 $ 168
CAPITAL EXPENDITURES $ 31 $ 86 $ 27 $ 99
FREE CASH FLOW** $ 87 $ 168 $ 43 $ 68
* Excludes impact of restructuring charges.
** Free Cash Flow = EBITDA less capital expenditures plus/minus the
change in accounts receivable, accounts payable, and inventory.