Collins & Aikman Announces Record Second Quarter Results
31 July 2000
Collins & Aikman Announces Record Second Quarter Results
TROY, Mich. - Collins & Aikman Corporation today reported record second quarter results for its fiscal period ended July 1, 2000. Compared with the second quarter of 1999, second quarter 2000 sales increased four percent to $507.2 million, operating income rose to $46.2 million and net income from continuing operations increased to $11.1 million, or $0.18 per diluted share.Second Quarter Automotive Highlights Include:
-- Record operating income of $46.2 million -- Fifth consecutive
quarter of year-over-year improvement.
-- Diluted earnings per share from continuing operations of $0.18
-- Strong bottom-line performance.
-- Collins & Aikman's Old Fort, North Carolina Facility rated
"excellent" by DaimlerChrysler -- Leading in product quality
and delivery.
-- Established Global Product Development Division and unveiled
ReMyx(TM) design concept -- Enhanced focus on product
integration, innovation and growth.
-- Awarded Automotive Industries' "Quest for Excellence" second
year in a row -- Strong commitment to customer service,
quality, value, delivery and innovation.
Commenting on the Company's second quarter results, Collins & Aikman's Chairman and Chief Executive Officer, Thomas E. Evans, stated, "Our solid operating performance for the second quarter of 2000 is a true reflection of the core earnings power of Collins & Aikman. Since the Company's debut as a pure-play automotive supplier, current quarter operating income sets an all-time quarterly record and marks the fifth consecutive quarter of year-over-year improvement in our operating income. Despite softness in our convertible systems business, our revenue continues to benefit from the strength of the overall North American light vehicle market. Even more importantly, and as evidenced by the Company's bottom-line performance, our operations continue to benefit from both structural and variable cost reductions we're achieving through our restructuring initiatives and ongoing Kaizen activities."
For the second quarter of 2000, the Company earned net income of $17.7 million, or $0.29 per diluted share, reflecting net income from continuing operations of $11.1 million, or $0.18 per diluted share, and net income from discontinued operations of $6.6 million, or $0.11 per diluted share relating to the settlement of certain prior claims. In the second quarter of 1999, the Company earned net income of $5.3 million, or $0.09 per diluted share, which includes a pre-tax restructuring charge of $4.6 million, or $0.06 per diluted share after-tax.
Operating income for the current quarter rose to $46.2 million, as compared to second quarter 1999 performance of $35.4 million, or $40.0 million excluding the previously mentioned restructuring charge. For the fiscal second quarter ended July 1, 2000, the Company had approximately 62.6 million shares outstanding on a weighted average diluted basis, as compared to 62.3 million shares a year ago.
Net sales for the 2000 second quarter rose four percent to $507.2 million, as compared with $486.8 million in the second quarter of 1999. Total sales for the Company's North American Automotive Interior Systems division rose eight percent to $315.4 million driven by strong increases in the Company's North American plastics, carpet and acoustics operations. In Europe, sales of $77.0 million were flat compared to the second quarter of 1999, with gains from industry production and new business offset by the negative impact of foreign currency translation. Net sales for the Company's Specialty Automotive Products division decreased two percent to $114.8 million, reflecting slightly lower convertible volumes on Ford's Mustang and reduced production for Chrysler's Sebring Convertible which is undergoing a major model changeover.
For the six months ended July 1, 2000, the Company earned net income of $24.7 million, or $0.40 per diluted share, reflecting net income from continuing operations of $18.1 million, or $0.29 per diluted share, and net income from discontinued operations of $6.6 million, or $0.11 per diluted share relating to the settlement of certain prior claims. For the first six months of 1999, the Company incurred a net loss of $1.2 million, or ($0.02) per diluted share, which included the impact of the previously mentioned restructuring charge, 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.
Operating income for the first six months climbed to $86.3 million, as compared to six month 1999 performance of $65.2 million, or $69.8 million, excluding the previously mentioned restructuring charge. For the six months ended July 1, 2000, weighted average diluted shares outstanding were 62.5 million, as compared to 62.3 million shares a year ago.
Year-to-date, 2000 sales rose eight percent to $1.0 billion, as compared to $965.2 million in 1999, reflecting the continued strength of the North American light vehicle market and an extra week of sales in the first quarter of 2000. Excluding the impact of the extra sales week, year-to-date sales increased approximately four percent, consistent with industry production levels. Sales for the Company's North American Automotive Interior Systems division rose 11 percent to $642.1 million, while sales for the Company's European Automotive Interior Systems and Specialty Automotive Products divisions each increased three percent to $163.2 million and $236.7 million, respectively.
Commenting on the Company's year-to-date results, Evans stated, "Collins & Aikman's consistently improving financial performance continues to demonstrate that our management team is well on-track in meeting the objectives of the operational turnaround initiated over a year ago. Even more importantly, we continue to expand our focus on growth, innovation and product integration, as demonstrated by the recent announcement of our new Global Product Development Division and the unveiling of our unique ReMyx(TM) modular interior surface design concept. As the vehicle telematics and multi-media revolution accelerates, we remain more confident than ever that Collins & Aikman's acoustic capabilities will provide us with exciting growth opportunities. Going forward, we'll move even faster to further integrate our acoustics technology with the surface design properties of our interior products and convertible top systems in order to add even greater value for all our global customers."
Collins & Aikman Corporation is the global leader in automotive floor and acoustic systems and a leading supplier of automotive fabric, interior trim, and convertible top systems. The Company's operations span the globe with 63 facilities and nearly 16,000 employees in 12 countries 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.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited -- in thousands, except per share data) Quarter Ended Six Months Ended July 1, June 26, July 1, June 26, 2000 1999 2000 1999 (13 weeks) (13 weeks) (27 weeks) (26 weeks) ----------- ----------- ----------- ----------- Net sales $ 507,209 $ 486,821 $1,041,970 $ 965,158 Cost of goods sold 423,076 408,559 874,122 816,308 ----------- ----------- ----------- ----------- Gross profit 84,133 78,262 167,848 148,850 Selling, general and administrative expenses 37,983 38,322 81,536 79,077 Restructuring charge -- 4,554 -- 4,554 ----------- ----------- ----------- ----------- Operating income 46,150 35,386 86,312 65,219 Interest expense, net 24,429 23,009 49,491 44,824 Loss on sale of receivables 1,988 1,323 5,806 2,634 Other expense (income) 2,527 (983) 1,447 1,194 ----------- ----------- ----------- ----------- Income before income taxes 17,206 12,037 29,568 16,567 Income tax expense 6,102 6,719 11,449 8,933 ----------- ----------- ----------- ----------- Income from continuing operations before cumulative effect of a change in accounting principle 11,104 5,318 18,119 7,634 Income from discontinued operations, net of income taxes of $4,400 6,600 -- 6,600 -- ----------- ----------- ----------- ----------- Income before cumulative effect of a change in accounting principle 17,704 5,318 24,719 7,634 Cumulative effect of a change in accounting principle, net of income taxes of $5,083 -- -- -- (8,850) ----------- ----------- ----------- ----------- Net income (loss) $ 17,704 $ 5,318 $ 24,719 $ (1,216) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net income per basic and diluted common share: Continuing operations $ 0.18 $ 0.09 $ 0.29 $ 0.12 Discontinued operations 0.11 -- 0.11 -- Cumulative effect of a change in accounting principle -- -- -- (0.14) ----------- ----------- ----------- ----------- Net income (loss) $ 0.29 $ 0.09 $ 0.40 $ (0.02) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Average common shares outstanding: Basic 61,879 61,947 61,884 61,970 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Diluted 62,631 62,303 62,498 62,327 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) July 1, December 25, 2000 1999 ASSETS ------------ ----------- Current Assets: Cash and cash equivalents $ 63,478 $ 13,980 Accounts and other receivables, net 223,973 233,819 Inventories 132,303 132,625 Other 79,554 84,942 ------------ ----------- Total current assets 499,308 465,366 Property, plant and equipment, net 437,471 443,526 Deferred tax assets 80,394 86,235 Goodwill, net 249,987 256,362 Other assets 83,348 97,401 ------------ ----------- $1,350,508 $1,348,890 ------------ ----------- ------------ ----------- LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT Current Liabilities: Short-term borrowings $ 6,500 $ 3,088 Current maturities of long-term debt 115,929 27,992 Accounts payable 168,767 198,466 Accrued expenses 132,477 132,709 ------------ ----------- Total current liabilities 423,673 362,255 Long-term debt 802,088 884,550 Other, including postretirement benefit obligation 259,627 253,206 Commitments and contingencies Common stock (150,000 shares authorized, 70,521 shares issued and 61,895 shares outstanding at July 1, 2000 and 70,521 shares issued and 61,904 shares outstanding at December 25, 1999) 705 705 Other paid-in capital 585,978 585,484 Accumulated deficit (616,398) (641,117) Accumulated other comprehensive loss (42,177) (33,260) Treasury stock, at cost (8,626 shares at July 1, 2000 and 8,617 shares at December 25, 1999) (62,988) (62,933) ------------ ----------- Total common stockholders' deficit (134,880) (151,121) ------------ ----------- $1,350,508 $1,348,890 ------------ ----------- ------------ ----------- COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited -- in thousands) Quarter Ended Six Months Ended ----------------------- ----------------------- July 1, June 26, July 1, June 26, 2000 1999 2000 1999 (13 weeks) (13 weeks) (27 weeks) (26 weeks) ----------- ----------- ----------- ----------- OPERATING ACTIVITIES Income from continuing operations $ 11,104 $ 5,318 $ 18,119 $ 7,634 Adjustments to derive cash flow from continuing operating activities: Impairment of long-lived assets -- 536 -- 536 Deferred income tax expense (benefit) 3,194 (38) 5,337 (1,231) Depreciation and amortization 18,493 17,699 37,254 34,931 Decrease in accounts and other receivables 17,074 34,326 26,466 13,551 Decrease (increase) in inventories 5,231 (751) 322 10,383 Decrease in accounts payable (19,374) (8,041) (29,699) (21,207) Increase (decrease) in interest payable (13,408) (12,783) 1,502 1,348 Other, net (15,124) (10,346) 16,844 (4,507) ----------- ----------- ----------- ----------- Net cash provided by continuing operating activities 7,190 25,920 76,145 41,438 ----------- ----------- ----------- ----------- Net cash provided by (used in) discontinued operations 7,434 (2,748) 4,246 (4,431) ----------- ----------- ----------- ----------- INVESTING ACTIVITIES Additions to property, plant and equipment (15,477) (19,843) (30,572) (32,377) Sales of property, plant and equipment 500 193 574 2,634 Acquisition of businesses, net of cash acquired -- (369) -- (369) Other, net -- -- -- (800) ----------- ----------- ----------- ----------- Net cash used in investing activities (14,977) (20,019) (29,998) (30,912) ----------- ----------- ----------- ----------- FINANCING ACTIVITIES Issuance of long-term debt -- 100,000 -- 100,000 Repayment of long-term debt (7,777) (4,897) (21,453) (9,486) Reduction of participating interests in accounts receivable (5,169) (10,500) (9,820) (2,200) Net borrowings (repayments) on revolving credit facilities 36,668 (26,881) 26,205 (17,381) Increase (decrease) in short-term borrowings (1,404) (7,423) 4,274 (5,272) Reissuance (purchase) of treasury stock, net 35 83 (101) (1,308) Dividends paid -- (44,005) -- (50,198) ----------- ----------- ----------- ----------- Net cash provided by (used in) financing activities 22,353 6,377 (895) 14,155 ----------- ----------- ----------- ----------- Net increase in cash and cash equivalents 22,000 9,530 49,498 20,250 Cash and cash equivalents at beginning of period 41,478 34,475 13,980 23,755 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period $ 63,478 $ 44,005 $ 63,478 $ 44,005 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES SECOND QUARTER 2000 - SUPPLEMENTAL SCHEDULE (Unaudited - in millions, except CPV) SALES DATA: ----------- Quarter Ended Year-to-Date ------------------- -------------------- DIVISION: July 1, June 26, July 1, June 26, 2000 1999 2000 1999 (13 weeks) (13 weeks) (27 weeks) (26 weeks) -------- -------- -------- -------- North American Automotive Interior Systems $ 315 $ 293 $ 642 $ 576 European Automotive Interior Systems 77 77 163 159 Specialty Automotive Products 115 117 237 230 ----- ----- ------ ----- Total $ 507 $ 487 $1,042 $ 965 ----- ----- ------ ----- ----- ----- ------ ----- OPERATING INCOME (LOSS)(a): -------------------------- Quarter Ended Year-to-Date ------------------ -------------------- DIVISION: July 1, June 26, July 1, June 26, 2000 1999 2000 1999 (13 weeks) (13 weeks) (27 weeks) (26 weeks) -------- -------- -------- -------- North American Automotive Interior Systems $ 31 $ 21 $ 59 $ 40 European Automotive Interior Systems 5 3 7 4 Specialty Automotive Products 9 15 21 26 Other 1 1 (1) -- ----- ----- ------ ----- Total $ 46 $ 40 $ 86 $ 70 ----- ----- ------ ----- ----- ----- ------ ----- STATISTICAL DATA: ----------------- Quarter Ended Year-to-Date ------------------ -------------------- July 1, June 26, July 1, June 26, 2000 1999 2000 1999 (13 weeks) (13 weeks) (27 weeks) (26 weeks) -------- -------- -------- -------- EUROPEAN CPV $ 14 $ 15 $ 15 $ 16 N. AMERICAN CPV $ 88 $ 88 $ 90 $ 86 EBITDA (a) $ 65 $ 58 $124 $105 CAPITAL EXPENDITURES $ 15 $ 20 $ 31 $ 32 FREE CASH FLOW (b) $ 52 $ 63 $ 90 $ 75 (a) Excludes restructuring charge. (b) Free Cash Flow equals EBITDA (excluding restructuring) less capital expenditures, plus/minus the operating change in accounts receivable, accounts payable, and inventory.