Collins & Aikman Announces Improved Third Quarter Financial Results
13 November 2003 - 5:59PM
PR Newswire (US)
Collins & Aikman Announces Improved Third Quarter Financial
Results TROY, Mich., Nov. 13 /PRNewswire-FirstCall/ -- Collins
& Aikman Corporation (C&A) today reported third quarter and
year-to-date results for the nine months ended September 30, 2003.
For the third quarter, which is the company's seasonally weakest
quarter, the company reported net sales of $902 million compared to
$923 million in the third quarter of 2002, a 2% decline which
mainly reflected reduced North American customer build volumes. The
company also reported a loss of 38 cents per share from continuing
operations versus a loss of 54 cents per share in the same period
in 2002. The third quarter results included after-tax charges for
restructuring and long-lived asset impairments of $16.0 million (or
19 cents per share) and $21.4 million (or 26 cents per share) in
2003 and 2002, respectively. Commenting on the company's improved
third quarter results, David Stockman, C&A Chairman and
recently appointed CEO, stated, "Aside from the restructuring
charges, we had a solid third quarter, which is the first inning of
C&A's rebound in financial performance. Plant level operations
in both Europe and North America were much stronger this quarter
than last year's comparable period," Stockman added. "We are now
highly confident that we have completed phase one of our
integration program, which was the sweeping consolidation of our
global factory footprint by closing a dozen sub-scale or obsolete
plants," the Chairman and CEO said, "and we are now in the midst of
phase two, which is the rightsizing of our salaried workforce." The
third quarter 2003 pre-tax restructuring charge of $21.9 million
included costs associated with reducing the company's salaried
workforce by 750 or 14%. Stockman said, "These cuts are designed to
strengthen the company's cost structure and will not impact our
commitment to our customers." The rightsizing actions coupled with
other operational restructuring activities are expected to result
in additional cash restructuring charges of approximately $11
million over the next two quarters and are expected to reduce the
fixed-cost structure by $75 million per year. For the nine-month
period, the company reported sales of $2.97 billion compared to
$2.92 billion in the same period of 2002. The company also reported
a net loss available to common shareholders from continuing
operations of $47.6 million or 57 cents per share. This included
$33.1 million (or 40 cents per share) of after-tax charges for
restructuring and long-lived asset impairments. For the comparable
2002 period, the net loss available to common shareholders from
continuing operations was $84.5 million or $1.15 per share. These
2002 results included after tax charges for restructuring and
long-lived asset impairments of $27.9 million (or 38 cents per
share). C&A's net debt, including outstandings under an
off-balance sheet accounts receivable facility, was $1.34 billion
during the second quarter 2003. The company had $22.5 million of
cash on hand on September 30, 2003. Net Business Wins and Other
Accomplishments During the third quarter 2003, Collins & Aikman
continued to achieve solid marketing progress by adding $200
million of newly booked business, bringing the year-to-date total
to over $700 million in annualized revenues incepting with model
year 2005. These figures are net of business being transitioned to
other suppliers. In early October, the company announced that Ford
Motor Company had selected Collins & Aikman as a full service
supplier for a significant portion of the interior systems on the
all-new Ford Futura. "An award of this magnitude is a reflection of
our ability to deliver on cost, quality, craftsmanship and
innovation across our entire breadth of interior products,"
Stockman added. "This award includes the instrument panel, console,
doors and interior trim, the full carpet and acoustics package and
JIT assembly and sequencing of four major interior modules. Earning
this significant Ford interior business is also further
confirmation that our business model is sound and our leadership
position in the global automotive interiors market is secure."
During the third quarter, Collins & Aikman's Guelph, Ontario,
Canada operation was honored by IndustryWeek as a winning facility
in the publication's annual "10 Best Plants" competition. The
company had an additional four facilities named as top 25 finalists
in this competition. EBITDA Discussion EBITDA was $41.9 million for
the third quarter of 2003 as compared to $21.8 million for the
third quarter of 2002. The third quarter 2003 EBITDA was reduced by
charges of $21.9 million for restructuring and $2.2 million for the
impairment of long-lived assets. Results for the third quarter of
2002 included pre-tax charges of $25.1 million for restructuring
and $8.7 million for the impairment of long-lived assets. A
reconciliation of our EBITDA, a non-GAAP financial measure, to U.S.
GAAP operating income, our most comparable GAAP figure, is set out
in the attached EBITDA reconciliation schedule. The company
believes that EBITDA is a meaningful measure of performance as it
is commonly utilized in the industry to analyze operating
performance, liquidity and entity valuation. EBITDA should not be
construed as income from operations, net income (loss) or cash flow
from operating activities as determined by generally accepted
accounting principles. Other companies may calculate EBITDA
differently. Absence of Independent Auditor Review As previously
disclosed, the company's Audit Committee, represented by an
independent counsel, is conducting the inquiry initiated in August,
2003. As was the case with the company's second quarter results,
the company has been advised by its independent auditors, KPMG,
LLP, that they will be unable to complete their SAS 100 review of
the third quarter results to be included in the company's third
quarter Form 10-Q prior to completion of the Audit Committee's
independent inquiry and their consideration of the results of the
inquiry. The company intends to file a report on Form 10-Q with its
third quarter results, although such review is required, and its
Chief Executive Officer and Chief Financial Officer are expected to
certify the report in accordance with the requirements of
Sarbanes-Oxley. While senior management of the company believes the
assertions which are the subject of the inquiry to be without
merit, the company cannot predict the outcome of the inquiry and
whether or not it will impact our financial results. 2003 Outlook
Effectively, there is no change to prior guidance for earnings
excluding restructuring and impairment charges. All estimates below
are after the impact of full-year pre-tax restructuring and
impairment charges of $62 million, increased from our prior
estimate of $42 million. We estimate net sales for the full year
will be $3.9 billion to $4.0 billion and we expect operating income
to be in the $115 million to $125 million range for 2003. EBITDA is
expected to be in the $245 million to $260 million range. We now
anticipate that full year 2003 will result in a loss per common
share of $60 cents to 70 cents range. Capital spending is expected
to be in the $155 million to $165 million range for 2003. The
company will hold a briefing with automotive institutional
investors and security analysts, news media representatives and
other interested parties, including its security holders, at 1:00
p.m. EST on Thursday, November 13, 2003 to discuss its third
quarter results and other matters. To participate by phone, please
dial (877) 692-2590 or (973) 582-2749 (from international
locations). The briefing will also be audio webcast, on our website
at: http://www.collinsaikman.com/investor/confcalls.html . A slide
presentation will also be used in conjunction with this
teleconference and will be available on the company's website.
Collins & Aikman Corporation, a Fortune 500 company, is a
global leader in cockpit modules and automotive floor and acoustic
systems and a leading supplier of instrument panels, automotive
fabric, plastic-based trim and convertible top systems. The
company's operations span the globe through 15 countries, more than
100 facilities and over 25,000 employees who are committed to
achieving total excellence. Collins & Aikman's high-quality
products combine superior design, styling and manufacturing
capabilities with NVH "quiet" technologies that are among the most
effective in the industry. 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, changes in the
popularity of particular car models, labor disputes involving the
company or its significant customers, changes in consumer
preferences, dependence on significant automotive customers, the
level of competition in the automotive supply industry, pricing
pressure from automotive customers, the substantial leverage of the
company and its subsidiaries, limitations imposed by the company's
debt facilities, implementation of the reorganization plan, the
outcome of the pending audit committee inquiry, charges made in
connection with the integration of operations acquired by the
company, the 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. COLLINS &
AIKMAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three months ended Nine months ended September 30,
September 30, 2003 2002 2003 2002 (In millions, except per share
data) Net sales $902.2 $922.5 $2,970.8 $2,922.6 Cost of goods sold
806.7 821.8 2,641.2 2,532.3 Gross profit 95.5 100.7 329.6 390.3
Selling, general and administrative expenses 63.1 71.2 210.1 215.8
Restructuring charges 21.9 25.1 26.8 34.1 Impairment of long-lived
assets 2.2 8.7 21.1 8.7 Operating income (loss) 8.3 (4.3) 71.6
131.7 Net interest expense (37.8) (37.0) (111.3) (112.6) Loss on
sale of receivables (1.8) (0.8) (4.5) (3.0) Subsidiary preferred
stock dividends (9.2) (6.2) (22.4) (24.4) Subsidiary preferred
stock accretion (0.4) (1.8) (4.8) (5.6) Other income (expense), net
0.2 (2.0) 23.9 (13.4) Loss from continuing operations before income
taxes (40.7) (52.1) (47.5) (27.3) Income tax expense (benefit)
(8.6) (6.9) .1 20.9 Loss from continuing operations (32.1) (45.2)
(47.6) (48.2) Income from discontinued operations - - - 9.5
Cumulative effect of change in accounting principle - - - (11.7)
Net loss $(32.1) $(45.2) $(47.6) $(50.4) Loss on redemption of
subsidiary preferred stock - - - (36.3) Net loss available to
common shareholders $(32.1) $(45.2) $(47.6) $(86.7) Net income
(loss) per basic and diluted common share data: Continuing
operations $(0.38) $(0.54) $(0.57) $(1.15) Discontinued operations
- - - 0.13 Change in acct. principle - - - (0.16) Total $(0.38)
$(0.54) $(0.57) $(1.18) Basic and diluted shares outstanding 83.6
83.6 83.6 73.7 COLLINS & AIKMAN CONDENSED CONSOLIDATED BALANCE
SHEETS September 30, December 31, 2003 2002 (Unaudited) (In
millions) ASSETS Current assets: Cash and equivalents $22.5 $81.3
Accounts and other receivables, net 351.7 373.0 Inventories 189.4
171.6 Other 173.3 177.4 Total current assets 736.9 803.3 Property,
plant and equipment, net 790.2 737.8 Deferred tax assets 171.3
165.0 Goodwill and other intangible assets, net 1,390.1 1,350.8
Other assets 94.5 100.2 Total assets $3,183.0 $3,157.1 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities Short-term borrowings
$13.3 $10.5 Current maturities of long-term debt 26.9 23.5 Accounts
payable 601.1 580.5 Accrued expenses 276.3 314.9 Total current
liabilities 917.6 929.4 Long-term debt and lease obligations
1,289.8 1,255.2 Mandatorily redeemable preferred stock of
subsidiary 151.1 123.9 Other, including pensions and
post-retirement obligations 412.4 438.4 Minority interest 4.7 12.7
Stockholders' equity 407.4 397.5 Total liabilities and
stockholders' equity $3,183.0 $3,157.1 COLLINS & AIKMAN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three
months ended Nine months ended September 30, September 30, 2003
2002 2003 2002 (In millions) Operating activities Net loss $(32.1)
$(45.2) $(47.6) $(50.4) Depreciation and amortization 33.6 26.1
101.2 84.8 Changes in working capital (19.4) (13.9) (50.7) 23.2
Other (0.9) 50.8 40.7 71.8 Net cash flow provided by (used in)
operating activities (18.8) 17.8 43.6 129.4 Net (decrease) increase
in long-term debt (0.0) 0.0 (0.0) 0.0 Investing activities Capital
expenditures (49.5) (35.4) (124.6) (101.2) Sales of property, plant
and equipment 11.9 - 15.2 0.2 Acquisitions and investments in joint
venture, net of cash acquired - (6.0) (33.1) (8.6) Payments of
acquisitions and related costs - (0.5) - (39.6) Financing
activities Net increase (decrease) in debt 38.8 (9.3) 40.1 (27.7)
Repayment of preferred stock - - - (100.0) Net proceeds from
issuance of common stock - (2.3) - 150.8 Increase (decrease) in
cash and equivalents (17.6) (35.7) (58.8) 3.3 Cash and equivalents
at beginning of period 40.1 112.9 81.3 73.9 Cash and equivalents at
end of period $22.5 $77.2 $22.5 $77.2 COLLINS & AIKMAN
SUPPLEMENTAL DATA - EBITDA RECONCILIATION SCHEDULE (unaudited)
Three months ended Nine months ended September 30, September 30,
2003 2002 2003 2002 (In millions) Operating income (loss) $8.3
$(4.3) $71.6 $131.7 Depreciation and amortization 33.6 26.1 101.2
84.8 EBITDA $41.9 $21.8 $172.8 $216.5 Memo: Restructuring charges
$21.9 $25.1 $26.8 $34.1 Impairment of long-lived assets 2.2 8.7
21.1 8.7 Total restructuring and impairment charges $24.1 $33.8
$47.9 $42.8 This supplemental data presented above is a
reconciliation of a certain financial measure which is intended to
facilitate analysis of Collins & Aikman Corporation's business
and operating performance. EBITDA is defined as operating income
plus depreciation and amortization. The company believes that
EBITDA is a meaningful measure of performance as it is commonly
utilized in the industry to analyze operating performance,
liquidity and entity valuation. EBITDA should not be construed as
income from operations, net income (loss) or cash flow from
operating activities as determined by generally accepted accounting
principles. Other companies may calculate EBITDA differently.
DATASOURCE: Collins & Aikman Corporation CONTACT: J. Michael
Stepp, Vice Chairman & CFO, +1-248-824-1520, , or Robert A.
Krause, Vice President & Treasurer, Head of Investor Relations,
+1-248-733-4355, , both of Collins & Aikman Corporation Web
site: http://www.collinsaikman.com/
http://www.collinsaikman.com/investor/confcalls.html
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