Collins & Aikman (NYSE:CKC)
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Collins & Aikman Announces Second Quarter Financial Results
TROY, Mich., Aug. 2 /PRNewswire-FirstCall/ -- Collins & Aikman Corporation
(C&A) (NYSE:CKC) today reported results for second quarter and six months ended
June 30, 2004. The company reported record second quarter 2004 net sales of
$1.036 billion. The company reported a loss of 35 cents per share in the
second quarter of 2004, which included after-tax charges for restructuring and
long-lived asset impairments of $26.0 million (or 31 cents per share). In the
comparable 2003 quarter, the company had income of 13 cents per share, which
included after-tax charges for restructuring and long-lived asset impairments
of $4.4 million (or 5 cents per share).
Commenting on the company's second quarter operating results, David A.
Stockman, C&A Chairman and CEO, stated, "For the fourth consecutive quarter our
EBITDA performance, excluding restructuring and impairment charges was up
significantly from the prior year on a comparable basis. The savings from the
restructuring program that began in the third quarter of 2003 is resulting in
significant fixed cost savings as indicated by our year-over-year decline in
selling, general and administrative expenses."
The second quarter 2004 pre-tax restructuring charge of $10.4 million included
costs associated with additional actions to rightsize its overhead structure,
further reduce salaried headcount and streamline the senior management team on
a worldwide basis. This restructuring initiative is expected to further reduce
the company's cost structure by approximately $11 million when fully
implemented. During the second quarter 2004, the company recognized $27.4
million of impairments of long-lived assets primarily related to $13.6 million
of Intellimold assets and $11.0 million of customer contracts as a result of
changes in customer sourcing.
For the six months ended June 30, 2004, the company reported sales of $2.103
billion compared to $2.069 billion for the comparable period of 2003. The
company also reported a net loss of $53.0 million or 63 cents per share, which
included $35.6 million (or 43 cents per share) of after-tax charges for
restructuring and long-lived asset impairments. For the comparable 2003
period, the net loss was $15.5 million or 19 cents per share, which included
after-tax charges for restructuring and long-lived asset impairments of $17.2
million (or 21 cents per share).
C&A's net debt, including outstandings under an off-balance sheet accounts
receivable facility, was $1.439 billion at June 30, 2004.
EBITDA Discussion
EBITDA was $62.6 million for the second quarter of 2004, which was reduced by
charges of $10.4 million for restructuring and $27.4 million for the impairment
of long-lived assets. The second quarter 2003 EBITDA was $78.3 million, which
was reduced by charges of $4.9 million for restructuring and $0.8 million for
the impairment of long-lived assets. EBITDA was $129.5 million for the six
months ended June 30, 2004, which was reduced by charges of $19.9 million for
restructuring and $30.4 million for impairment of long- lived assets. EBITDA
for the six months ended June 30, 2003 was $130.9 million, which was reduced by
charges of $4.9 million for restructuring and $18.9 million for the impairment
of long-lived assets. A reconciliation of our EBITDA, a non-GAAP financial
measure, to U.S. GAAP loss from continuing operations, 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. 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.
New Business Wins
During the second quarter of 2004, Collins & Aikman continued to achieve good
progress on increasing new business by adding $450 million of annual newly
booked business. This brings the year-to-date total to over $550 million.
These programs begin with model years incepting 2005 to 2007. Wins during the
quarter included content on vehicles including European luxury sedans, a
European compact vehicle, two Big-Three cross-over vehicles, several Big-Three
SUV programs and a Transplant small-car program. The content on these vehicles
includes products from the plastics and soft-trim divisions of the company.
2004 Outlook
The company continues to estimate net sales for the full year 2004 will be
approximately $4.0 billion. EBITDA is expected to be at the lower end of the
$355 million to $370 million range given in our previous guidance. Our
guidance for 2004 net earnings is to now range between a loss of 20 cents and a
loss of 30 cents per common share. This adjustment in EPS guidance is
principally due to higher than expected foreign exchange losses, slightly
increased interest and depreciation and amortization expense and lower tax
benefits. All of these numbers exclude the impacts of restructuring or
impairment charges. Capital spending remains on track at $150 million for 2004
as per prior guidance.
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 10:00 a.m. EDT on Monday, August 2, 2004 to
discuss its second quarter results and other matters. To participate by phone,
please dial (973) 582-2729. 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 current operations span the globe
through 16 countries, more than 100 facilities and nearly 24,000 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 conditions affecting the markets
and industry within which we operate, including declines in North American,
South American and European automobile and light truck builds, our dependence
on significant automotive customers, the level of competition in the automotive
supply industry and pricing pressures from automotive customers, fluctuations
in the productions of vehicles for which we are a supplier, changes in the
popularity of particular cars and interior trim programs, labor costs and
strikes at our major customers and at our facilities and risks associated with
doing business in foreign countries; the adequacy of our liquidity and capital
resources and required capital expenditures; our high debt levels and our
ability to obtain financing and service or refinance our debt, uncertainty
regarding our future operating results, prevailing levels of interest rates and
other factors detailed in the company's filings with the Securities and
Exchange Commission.
COLLINS & AIKMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
(In millions, except per share data)
Net sales $1,036.5 $1,033.5 $2,102.7 $2,068.6
Cost of goods sold 918.8 914.4 1,882.7 1,846.2
Gross profit 117.7 119.1 220.0 222.4
Selling, general and
administrative expenses 53.8 69.3 113.7 135.3
Restructuring charges 10.4 4.9 19.9 4.9
Impairment of long-lived assets 27.4 0.8 30.4 18.9
Operating income 26.1 44.1 56.0 63.3
Net interest expense (40.3) (37.5) (80.5) (73.5)
Interest from subsidiary
preferred stock dividends (10.1) (6.7) (20.0) (13.2)
Interest from subsidiary
preferred stock accretion (0.5) (2.3) (1.0) (4.4)
Loss on sale of receivables (2.6) (1.3) (4.8) (2.7)
Other income (expense), net (5.8) 22.2 (6.3) 23.7
Income (loss) from continuing
operations before income taxes (33.2) 18.5 (56.6) (6.8)
Income tax benefit (expense) 3.5 (7.8) 3.6 (8.7)
Net (loss) income $(29.7) $10.7 $(53.0) $(15.5)
Net income (loss) per basic and
diluted common share data:
Total $(0.35) $0.13 $(0.63) $(0.19)
Basic and diluted shares
outstanding 83.6 83.6 83.6 83.6
COLLINS & AIKMAN
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2004 2003
(Unaudited)
(In millions)
ASSETS
Current assets:
Cash and equivalents $11.0 $13.2
Accounts and other receivables, net 301.7 257.3
Inventories 167.7 169.4
Other 197.3 212.2
Total current assets 677.7 652.1
Property, plant and equipment, net 782.0 834.1
Deferred tax assets 185.8 178.1
Goodwill and other intangible assets, net 1,408.8 1,430.0
Other assets 107.5 96.9
Total assets $3,161.8 $3,191.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $21.4 $16.0
Current maturities of long-term debt and
lease obl. 15.1 31.5
Accounts payable 606.0 638.9
Accrued expenses 228.5 238.9
Total current liabilities 871.0 925.3
Long-term debt and lease obligations 1,313.7 1,237.7
Mandatorily redeemable preferred stock of
subsidiary 182.2 161.2
Other, including pensions and post-
retirement obligations 418.9 423.4
Minority interest 0.8 3.3
Stockholders' equity 375.2 440.3
Total liabilities and stockholders' equity $3,161.8 $3,191.2
COLLINS & AIKMAN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months Six months
ended ended
June 30, June 30,
2004 2003 2004 2003
(In millions)
Operating activities
Net loss (income) $(29.7) $10.7 $(53.0) $(15.5)
Depreciation and amortization 36.5 34.2 73.5 67.6
Changes in working capital (45.2) (31.4) (89.6) (33.4)
Other 36.1 17.5 45.3 41.6
Net cash flow provided by operating
activities (2.3) 31.0 (23.8) 60.3
Investing activities
Capital expenditures (42.2) (39.7) (82.1) (75.1)
Sales of property, plant and
equipment 37.2 0.2 38.5 3.3
Payments of acquisitions and related
costs, net of cash acquired - (0.1) - (33.1)
Financing activities
Net increase (decrease) in debt 14.9 14.4 66.4 1.4
Effect of exchange rate changes on
cash (1.0) 2.0 (1.2) 2.0
Increase (decrease) in cash and
equivalents 6.6 7.8 (2.2) (41.2)
Cash and equivalents at beginning of
period 4.4 32.3 13.2 81.3
Cash and equivalents at end of period $11.0 $40.1 $11.0 $40.1
COLLINS & AIKMAN
SUPPLEMENTAL DATA - EBITDA RECONCILIATION SCHEDULE
(unaudited)
Three months Six months
ended ended
June 30, June 30,
2004 2003 2004 2003
(In millions)
Net (loss) income $(29.7) $10.7 $(53.0) $(15.5)
Income tax (benefit) expense (3.5) 7.8 (3.6) 8.7
Net interest expense 40.3 37.5 80.5 73.5
Loss on sale of receivables 2.6 1.3 4.8 2.7
Interest from subsidiary preferred
stock dividends and accretion 10.6 9.0 21.0 17.6
Other expense (income), net 5.8 (22.2) 6.3 (23.7)
Operating income $26.1 $44.1 $56.0 $63.3
Depreciation and amortization 36.5 34.2 73.5 67.6
EBITDA $62.6 $78.3 $129.5 $130.9
Memo:
Restructuring charges $10.4 $4.9 $19.9 $4.9
Impairment of long-lived assets 27.4 0.8 30.4 18.9
Total restructuring and impairment
charges $37.8 $5.7 $50.3 $23.8
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.
Management considers EBITDA to be a key measure of performance as it is
commonly utilized in the industry to analyze operating performance. 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