Collins & Aikman Announces Results for the Q3 and Nine Months
31 October 2000
Collins & Aikman Announces Results for the Third Quarter and Nine Months Ended September 30, 2000
TROY, Mich.--Oct. 31, 2000--Collins & Aikman Corporation today reported third quarter and nine month results for its fiscal period ended September 30, 2000. For the current fiscal quarter, the Company reported sales of $423.0 million, operating income of $19.8 million and a net loss of $4.4 million or ($0.07) per share. Third quarter performance was ($0.03) below consensus estimates due principally to the negative impact of reduced Ford Explorer production and extraordinary costs associated with the early retirement of approximately $38 million in JPS bonds.Company Highlights Include:
| -- | 3Q 2000 free cash flow generation of $28 million - Over five-fold increase versus 3Q 1999. |
| -- | Early retirement of $38 million of JPS Bonds - Continuing to reduce financial leverage. |
| -- | S&P affirmed Collins & Aikman's corporate credit rating and positively revised its outlook to stable - Credit quality continuing to improve. |
| -- | Announced participation in Covisint Exchange - Committed to industry participation in electronic business-to-business initiatives. |
| -- | Announced key management appointments to the European Automotive Interior Systems operations team - Broadening talent globally. |
| -- | Completed closure of Vastra Frolunda, Sweden facility - Restructuring efforts on track. |
| -- | Achieved safety milestones of more than one million production hours at several North American facilities - Excellent workplace safety. |
Commenting on the Company's third quarter results, Collins & Aikman's Chairman and Chief Executive Officer, Thomas E. Evans, stated, "As evidenced by our continued strong free cash flow performance, the Collins & Aikman management team remains strongly focused on cash generation. Although our third quarter performance was adversely impacted by an unfavorable business mix and reduced Ford Explorer production, we continue to make solid operating improvements in virtually all our operations and steady progress in reducing our financial leverage. Additionally, during the quarter, we further strengthened our management team with the addition of several key executive appointments, completed the closure of our Vastra Frolunda, Sweden plant and joined Covisint's business-to-business exchange."
Third Quarter Performance Highlights
For the third quarter of 2000, the Company reported a net loss of $4.4 million, or ($0.07) per diluted share, reflecting a loss from continuing operations of $3.7 million, or ($0.06) per diluted share, and an extraordinary charge of $0.7 million, or ($0.01) per diluted share related to the early retirement of $38 million of JPS bonds. In the third quarter of 1999, the Company reported a net loss of $6.5 million, or ($0.10) per diluted share. Excluding a 1999 pre-tax restructuring charge of $15.3 million, or ($0.13) per diluted share after-tax, the Company estimates that its third quarter 1999 net earnings were $2.1 million, or $0.03 per diluted share.
Due primarily to an unfavorable business mix, significantly reduced volumes resulting from the model changeover of Chrysler's new Sebring convertible and the impact of reduced Ford Explorer production, operating income for the current quarter was $19.8 million, as compared to third quarter 1999 performance of $26.5 million, excluding the previously mentioned restructuring charge, or $11.3 million as reported. In spite of the decline in operating income, free cash flow for the current quarter rose over five-fold to $28 million versus $5 million in the 1999 third quarter, which excludes the previously mentioned restructuring charge. For the fiscal third quarter ended September 30, 2000, the Company had approximately 61.9 million shares outstanding on a weighted average diluted basis, as compared to 62.0 million shares a year ago.
Net sales for the 2000 third quarter were down one percent to $423.0 million, as compared with $427.9 million in the third quarter of 1999. Total sales for the Company's North American Automotive Interior Systems Division increased approximately three percent to $266.5 million driven primarily by growth in the Company's North American Plastics operations. In Europe, sales declined thirteen percent to $55.8 million, as compared to $64.4 million in the third quarter of 1999, primarily reflecting the negative impact of foreign currency translation. Net sales for the Company's Specialty Automotive Products Division decreased three percent to $100.7 million, primarily due to reduced production during the model changeover for the new Chrysler Sebring Convertible, partially offset by new fabric programs launched during the quarter.
Year-To-Date Performance Highlights
For the nine months ended September 30, 2000, the Company earned net income of $20.4 million, or $0.33 per diluted share; reflecting net income from continuing operations of $14.4 million, or $0.23 per diluted share, net income from discontinued operations of $6.6 million, or $0.11 per diluted share and the previously mentioned extraordinary charge. For the first nine months of 1999, the Company reported a net loss of $7.7 million, or ($0.12) per diluted share. Excluding 1999 pre-tax restructuring charges of $19.8 million, or ($0.20) per diluted share after-tax, as well as the impact for the cumulative after-tax effect of a change in accounting principle of $8.9 million, or ($0.14) per diluted share, the Company estimates its net earnings for the first nine months of 1999 were $13.5 million, or $0.22 per diluted share.
Operating income for the first nine months of fiscal 2000 climbed to $106.1 million, as compared to nine month 1999 performance of $96.3 million excluding the previously mentioned 1999 restructuring charges, or $76.5 million, as reported. Year-to-date, free cash flow rose nearly 50 percent to $118 million, compared to $80 million for the first nine months of 1999, which excludes the previously mentioned restructuring charges. For the nine months ended September 30, 2000, weighted average diluted shares outstanding were 62.5 million, as compared to 62.3 million shares a year ago.
Year-to-date, consolidated sales for 2000 rose five percent to approximately $1.5 billion, as compared to approximately $1.4 billion in 1999. The sales increase in 2000 primarily reflects increased first-half production volume in the North American light vehicle market and the impact of an extra sales week in the first quarter of 2000. Excluding the impact of the extra sales week, year-to-date sales increased approximately three percent, in line with industry production. Sales for the Company's North American Automotive Interior Systems and Specialty Automotive Products Divisions rose nine percent and one percent, to $908.6 million and $337.4 million, respectively. Sales for the Company's European Automotive Interior Systems Division decreased two percent to $219 million.
Financial Outlook
For the fiscal fourth quarter 2000, the Company expects revenues approximately eight to ten percent lower than the fourth quarter of 1999 with operating income in the low-to-mid $30 million range. In addition to the continued negative impact of foreign currency exchange and rising oil prices, this revised fourth quarter operating income outlook primarily reflects recent product mix and volume adjustments, difficulties with certain commercial recovery issues and slower than planned production improvements at the Company's Farmville and Springfield facilities.
Although the Company has not fully completed its overall 2001 budgeting process, the Company currently expects slightly lower revenues due to an anticipated production decline of approximately seven to nine percent in the North American light vehicle market, partially offset by incremental new business. In spite of this slightly lower revenue outlook, due to a favorable business mix, the anticipated impact of operating performance improvements at a number of facilities in both North America and Europe, and the full-year impact of restructuring savings, the Company currently anticipates 2001 operating income in the range of approximately $155 - $165 million.
Evans continued, "In spite of industry pressures, I'm extremely confident in the achievements we continue to make in positioning Collins & Aikman for a solid future, as evidenced by the establishment of our new "advanced product" sales group and Global Product Development Division, both of which will be key to advancing Collins & Aikman's competitive position in the marketplace. While in the short-term we remain cautious with respect to industry volumes, raw material costs and the continued strength of the dollar versus foreign currencies, the long-term outlook for Collins & Aikman remains very positive. With the rapidly accelerating introduction of voice-activated controls and other telematic devices into vehicles, Collins & Aikman is better positioned than ever to serve the increasing needs of our customers to better manage interior noise, thereby enabling more effective use of such devices inside the vehicle. The organizational changes we've made, coupled with the strong management talent we continue to attract, will enable Collins & Aikman to offer a steady stream of industry-leading, innovative, integrated NVH system solutions for our worldwide customers."
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Quarter Ended
-------------------------------------------
Adjusted (1)
September 30, September 25, September 25,
2000 1999 1999
------------- ------------- -------------
Net sales $ 423,001 $ 427,873 $ 427,873
Cost of goods sold 369,836 363,710 363,710
------------- ------------- -------------
Gross profit 53,165 64,163 64,163
Selling, general and
administrative expenses 33,413 37,615 37,615
Restructuring charge - 15,293 -
------------- ------------- -------------
Operating income 19,752 11,255 26,548
Interest expense, net 23,208 22,997 22,997
Loss on sale of receivables 1,697 1,201 1,201
Other expense (income) (550) 1,670 1,670
------------- ------------- -------------
Income (loss) before
income taxes (4,603) (14,613) 680
Income tax benefit (925) (8,129) (1,375)
------------- ------------- -------------
Income (loss) before
extraordinary charge (3,678) (6,484) 2,055
Extraordinary charge, net
of income taxes of $457 (686) - -
------------- ------------- -------------
Net income (loss) $ (4,364) $ (6,484) $ 2,055
------------- ------------- -------------
------------- ------------- -------------
Net income (loss) per basic
and diluted common share:
Continuing operations $ (0.06) $ (0.10) $ 0.03
Extraordinary charge (0.01) - -
------------- ------------- -------------
Net income (loss) $ (0.07) $ (0.10) $ 0.03
------------- ------------- -------------
------------- ------------- -------------
Average common shares
outstanding:
Basic 61,895 61,955 61,955
------------- ------------- -------------
------------- ------------- -------------
Diluted 61,895 61,955 62,352
------------- ------------- -------------
------------- ------------- -------------
(1) Excludes restructuring charge.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
Nine Months Ended
-------------------------------------------
Adjusted (1)
September 30, September 25, September 25,
2000 1999 1999
(40 weeks) (39 weeks) (39 weeks)
------------- ------------- -------------
Net sales $ 1,464,971 $ 1,393,031 $ 1,393,031
Cost of goods sold 1,243,958 1,180,018 1,180,018
------------- ------------- -------------
Gross profit 221,013 213,013 213,013
Selling, general and
administrative expenses 114,949 116,692 116,692
Restructuring charge - 19,847 -
------------- ------------- -------------
Operating income 106,064 76,474 96,321
Interest expense, net 72,699 67,821 67,821
Loss on sale of receivables 7,503 3,835 3,835
Other expense 897 2,864 2,864
------------- ------------- -------------
Income before income taxes 24,965 1,954 21,801
Income tax expense 10,524 804 8,284
------------- ------------- -------------
Income from continuing
operations before
extraordinary charge and
cumulative effect of a
change in accounting
principle 14,441 1,150 13,517
Income from discontinued
operations, net of income
taxes of $4,400 6,600 - -
------------- ------------- -------------
Income before extraordinary
charge and cumulative
effect of a change in
accounting principle 21,041 1,150 13,517
Extraordinary charge, net of
income taxes of $457 (686) - -
Cumulative effect of a
change in accounting
principle, net of income
taxes of $5,083 - (8,850) (8,850)
------------- ------------- -------------
Net income (loss) $ 20,355 $ (7,700) $ 4,667
------------- ------------- -------------
------------- ------------- -------------
Net income (loss) per basic
and diluted common share:
Continuing operations $ 0.23 $ 0.02 $ 0.22
Discontinued operations 0.11 - -
Extraordinary charge (0.01) - -
Cumulative effect of a
change in accounting
principle - (0.14) (0.14)
------------- ------------- -------------
Net income (loss) $ 0.33 $ (0.12) $ 0.08
------------- ------------- -------------
------------- ------------- -------------
Average common shares
outstanding:
Basic 61,888 61,965 61,965
------------- ------------- -------------
------------- ------------- -------------
Diluted 62,457 62,335 62,335
------------- ------------- -------------
------------- ------------- -------------
(1) Excludes restructuring charges.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
September 30, December 25,
ASSETS 2000 1999
------------ ------------
Current Assets:
Cash and cash equivalents $ 31,655 $ 13,980
Accounts and other receivables, net 204,387 233,819
Inventories 139,447 132,625
Other 81,525 84,942
------------ ------------
Total current assets 457,014 465,366
Property, plant and equipment, net 432,861 443,526
Deferred tax assets 80,781 86,235
Goodwill, net 246,672 256,362
Other assets 78,707 97,401
------------ ------------
$ 1,296,035 $ 1,348,890
------------ ------------
------------ ------------
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Short-term borrowings $ 7,772 $ 3,088
Current maturities of long-term debt 77,395 27,992
Accounts payable 174,761 198,466
Accrued expenses 135,088 132,709
------------ ------------
Total current liabilities 395,016 362,255
Long-term debt 791,047 884,550
Other, including post-retirement
benefit obligation 253,677 253,206
Commitments and contingencies
Common stock (150,000 shares authorized,
70,521 shares issued and 61,895 shares
outstanding at September 30, 2000 and
70,521 shares issued and 61,904 shares
outstanding at December 25, 1999) 705 705
Other paid-in capital 586,191 585,484
Accumulated deficit (620,762) (641,117)
Accumulated other comprehensive loss (46,851) (33,260)
Treasury stock, at cost (8,626 shares
at September 30, 2000 and 8,617 shares
at December 25, 1999) (62,988) (62,933)
------------ ------------
Total common stockholders' deficit (143,705) (151,121)
------------ ------------
$ 1,296,035 $ 1,348,890
------------ ------------
------------ ------------
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Quarter Ended
-----------------------------
September 30, September 25,
2000 1999
(13 weeks) (13 weeks)
------------- -------------
OPERATING ACTIVITIES
Income (loss) from continuing operations $ (3,678) $ (6,484)
Adjustments to derive cash flow from
continuing operating activities:
Impairment of long-lived assets - 5,057
Deferred income tax expense (benefit) (3,484) (8,136)
Depreciation and amortization 17,438 17,013
Decrease (increase) in accounts and
other receivables 11,336 (13,326)
Increase in inventories (7,144) (13,034)
Increase (decrease) in accounts payable 5,994 10,975
Increase in interest payable 14,744 13,243
Other, net (7,245) (14,278)
------------- -------------
Net cash provided by (used in)
continuing operating activities 27,961 (8,970)
Net cash provided by (used in)
discontinued operations (2,017) (1,355)
------------- -------------
INVESTING ACTIVITIES
Additions to property, plant
and equipment (19,738) (22,835)
Sales of property, plant and equipment 1,258 7,319
Other, net - -
------------- -------------
Net cash used in investing activities (18,480) (15,516)
------------- -------------
FINANCING ACTIVITIES
Issuance of long-term debt - -
Repayment of long-term debt (38,592) (5,849)
Proceeds from (reduction of)
participating interests in accounts
receivable 8,250 (3,900)
Net borrowings (repayments) on
revolving credit facilities (10,606) 9,779
Increase on short-term borrowings 1,643 6,477
Dividends paid - -
Reissuance (purchase) of treasury
stock, net 18 (284)
------------- -------------
Net cash provided by (used in)
financing activities (39,287) 6,223
------------- -------------
Net increase (decrease) in cash and
cash equivalents (31,823) (19,618)
Cash and cash equivalents at
beginning of period 63,478 44,005
------------- -------------
Cash and cash equivalents at
end of period $ 31,655 $ 24,387
------------- -------------
------------- -------------
Nine Months Ended
-----------------------------
September 30, September 25,
2000 1999
(40 weeks) (39 weeks)
------------- -------------
OPERATING ACTIVITIES
Income (loss) from continuing operations $ 14,441 $ 1,150
Adjustments to derive cash flow from
continuing operating activities:
Impairment of long-lived assets - 5,593
Deferred income tax expense (benefit) 1,853 (9,367)
Depreciation and amortization 54,692 51,944
Decrease (increase) in accounts and
other receivables 37,802 225
Increase in inventories (6,822) (2,651)
Increase (decrease) in accounts payable (23,705) (10,232)
Increase in interest payable 16,246 14,591
Other, net 9,599 (18,785)
------------- -------------
Net cash provided by (used in)
continuing operating activities 104,106 32,468
------------- -------------
Net cash provided by (used in)
discontinued operations 2,229 (5,786)
------------- -------------
INVESTING ACTIVITIES
Additions to property, plant
and equipment (50,310) (55,212)
Sales of property, plant and equipment 1,832 9,953
Other, net - (1,169)
------------- -------------
Net cash used in investing activities (48,478) (46,428)
------------- -------------
FINANCING ACTIVITIES
Issuance of long-term debt - 100,000
Repayment of long-term debt (60,045) (15,335)
Proceeds from (reduction of)
participating interests in accounts
receivable (1,570) (6,100)
Net borrowings (repayments) on
revolving credit facilities 15,599 (7,602)
Increase on short-term borrowings 5,917 1,205
Dividends paid - (50,198)
Reissuance (purchase) of treasury
stock, net (83) (1,592)
------------- -------------
Net cash provided by (used in)
financing activities (40,182) 20,378
------------- -------------
Net increase (decrease) in cash and
cash equivalents 17,675 632
Cash and cash equivalents at
beginning of period 13,980 23,755
------------- -------------
Cash and cash equivalents at
end of period $ 31,655 $ 24,387
------------- -------------
------------- -------------
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
THIRD QUARTER 2000 - SUPPLEMENTAL SCHEDULE
(Unaudited - in millions, except CPV)
SALES DATA:
----------- Quarter Ended
----------------------------
DIVISION: September 30, September 25,
2000 1999
(13 weeks) (13 weeks)
------------- -------------
North American Automotive Interior Systems $266 $260
European Automotive Interior Systems 56 64
Specialty Automotive Products 101 104
------------- -------------
Total $423 $428
------------- -------------
------------- -------------
OPERATING INCOME:
----------------- Quarter Ended
----------------------------
DIVISION: September 30, September 25,
2000 1999
(13 weeks) (13 weeks)(a)
------------- -------------
North American Automotive Interior Systems $17 $15
European Automotive Interior Systems 2 3
Specialty Automotive Products - 7
Other 1 1
------------- -------------
Total $20 $26
------------- -------------
------------- -------------
STATISTICAL DATA:
----------------- Quarter Ended
---------------------------------------
September 30, 2000 September 25, 1999
(13 weeks) (13 weeks)(a)
------------------ ------------------
EUROPEAN CPV $13 $14
N. AMERICAN CPV $86 $88
EBITDA $37 $44
CAPITAL EXPENDITURES $20 $23
FREE CASH FLOW (b) $28 $ 5
(a) 1999 Excludes restructuring charges.
(b) Free Cash Flow equals EBITDA (excluding restructuring charges)
less capital expenditures, plus/minus the operating change in accounts
receivable, accounts payable, and inventory.
SALES DATA:
----------- Nine Months Ended
----------------------------
DIVISION: September 30, September 25,
2000 1999
(40 weeks) (39 weeks)
------------- -------------
North American Automotive Interior Systems $ 909 $ 836
European Automotive Interior Systems 219 224
Specialty Automotive Products 337 333
------------- -------------
Total $1,465 $1,393
------------- -------------
------------- -------------
OPERATING INCOME:
----------------- Nine Months Ended
----------------------------
DIVISION: September 30, September 25,
2000 1999
(40 weeks) (39 weeks)(a)
------------- -------------
North American Automotive Interior Systems $ 77 $ 55
European Automotive Interior Systems 9 7
Specialty Automotive Products 20 33
Other - 1
------------- -------------
Total $106 $ 96
------------- -------------
------------- -------------
STATISTICAL DATA:
----------------- Nine Months Ended
---------------------------------------
September 30, 2000 September 25, 1999
(40 weeks) (39 weeks)(a)
------------------ ------------------
EUROPEAN CPV $ 15 $ 15
N. AMERICAN CPV $ 89 $ 86
EBITDA $161 $148
CAPITAL EXPENDITURES $ 50 $ 55
FREE CASH FLOW (b) $118 $ 80
(a) 1999 Excludes restructuring charges.
(b) Free Cash Flow equals EBITDA (excluding restructuring charges)
less capital expenditures, plus/minus the operating change in accounts
receivable, accounts payable, and inventory.