Collins & Aikman (NYSE:CKC)
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Collins & Aikman Audit Committee Retains Independent Counsel for
Investigation of Previously-Reported Accounting Matters
TROY, Mich., March 24 /PRNewswire-FirstCall/ -- Collins & Aikman Corporation
(NYSE:CKC) announced today that its Audit Committee has retained independent
counsel to assist it in its investigation of the Company's accounting for
certain supplier rebates. The company previously reported that it had
identified certain accounting for supplier rebates that led to premature or
inappropriate revenue recognition or that was inconsistent with relevant
accounting standards and the Company's policies and practices. The company's
management immediately initiated an internal review of these matters while
keeping the company's Audit Committee and outside auditors, KPMG LLP, informed
of the status of its review. The Audit Committee has determined to conduct an
independent investigation into these matters. It has retained independent
counsel, Davis Polk & Wardwell, for that purpose, and they expect to retain
such other advisors, including an accounting expert, as they deem appropriate.
As previously announced, the company's internal review of vendor rebates
covered an aggregate of approximately $88 million of vendor transactions in
fiscal years 2002 through 2004. Of such amount, the company's management
believes that net adjustments of approximately $10 - $12 million are required
primarily occurring during fiscal 2004. For further clarification, the company
announced that management's preliminary analysis indicates that, of such
amounts, approximately $8 - 10 million would impact the previously reported
nine months ended September 30, 2004 with the balance impacting 2003. The
company expects to restate its results for the nine months ended September 30,
2004 to reflect these revisions and is continuing to evaluate whether a
restatement of its 2003 results will be necessary. The company's Audit
Committee and the Company's outside auditors, KPMG LLP, have not commented upon
management's current expectations. The company cannot presently comment upon
the timing for completion of, or the ultimate scope or outcome of, the Audit
Committee investigation, the audit or any necessary restatements. Nor can it
comment upon whether the outcome of the investigation will impact the foregoing
adjustments.
As previously disclosed, the company has not yet filed its annual report on
Form 10-K for 2004 due to this accounting matter and the need for additional
time for completion of the 2004 audit and the review of internal controls over
financial reporting under Section 404 under Sarbanes-Oxley. The company further
announced that it initiated a process for obtaining waivers of the financial
statement delivery requirements for a period of time from its lenders under its
senior credit facility and for modifications of certain of its financial
covenants. There can be no assurance that any of the required or desirable
waivers from our senior lenders, lessors or others will be received on a timely
basis, and the failure to obtain waivers could materially and adversely affect
the company and its liquidity.
Collins & Aikman Corporation, a Fortune 500 company, is a global leader in
cockpit modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based trim, and
convertible top systems. Headquartered in Troy, Michigan, we have a workforce
of approximately 23,000 and a network of more than 100 technical centers, sales
offices and manufacturing sites in 17 countries throughout the world.
Information about Collins & Aikman is available on the Internet at
http://www.collinsaikman.com/ .
Cautionary Statement Concerning Forward-Looking Information
The foregoing reflects the Company's views about the accounting investigation,
its financial condition, performance and other matters that constitute
"forward-looking" statements, as that term is defined by the federal securities
laws. You can find many of these statements by looking for words such as "may,"
"will," "expect," "anticipate," "believe," "estimate," "should," "continue,"
"predict," "preliminary" and similar words used herein. These forward-looking
statements are intended to be subject to the safe harbor protection provided by
the federal securities laws. These forward-looking statements are subject to
numerous assumptions, risks and uncertainties. Because the statements are
subject to risks and uncertainties, actual developments and results may differ
materially from those expressed or implied by the forward-looking statements.
Readers are cautioned not to place undue reliance on the statements, which
speak only as of the date hereof.
Various factors that may affect actual outcomes and performance and results
include, but are not limited to, general economic conditions in the markets in
which the Company operates, declines in North American, South American and
European automobile and light truck builds; labor costs and strikes at the
Company's major customers and at the Company's facilities; fluctuations in the
production of vehicles for which we are a supplier; changes in the popularity
of particular car models, particular interior trim packages or the loss of
programs on particular vehicle models; dependence on significant automotive
customers; the level of competition in the automotive supply industry and
pricing pressure from automotive customers; risks associated with conducting
business in foreign countries; and fluctuation in the price of certain raw
materials, including resins and other petroleum-based products. In addition,
the following may have a material impact on actual outcomes and performance and
results: the results of the pending investigation; the Company's ability to
maintain satisfactory relations with its sources of liquidity, suppliers,
customers and creditors; the Company's high leverage and ability to service its
debt; and the impact of any defaults under its material agreements and debt
instruments.
The cautionary statements set forth above should be considered in connection
with any subsequent written or oral forward-looking statements that the Company
or persons acting on its behalf may issue. The Company does not undertake any
obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date of this report or to reflect the
occurrence of unanticipated events.
DATASOURCE: Collins & Aikman Corporation
CONTACT: Bryce Koth, Chief Financial Officer, +1-248-824-1520,
, or David A. Youngman, Director of Corporate
Communications, +1-248-733-4355, , both for Collins &
Aikman Corporation
Web site: http://www.collinsaikman.com/