SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended July 29, 1995
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-10218
COLLINS & AIKMAN CORPORATION
A Delaware Corporation (IRS Employer Identification
No. 13-3489233)
701 McCullough Drive
Charlotte, North Carolina 28262
Telephone (704) 547-8500
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No.
As of September 8, 1995, the number of outstanding shares of
the Registrant's common stock, $.01 par value, was
69,817,178 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . $ 352,847 $ 359,749 $ 744,976 $ 750,195
Cost of goods sold . . . . . . . . . . . . . 271,670 272,392 570,101 561,884
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . 49,091 47,671 96,000 103,063
320,761 320,063 666,101 664,947
Operating income . . . . . . . . . . . . . . 32,086 39,686 78,875 85,248
Interest expense, net . . . . . . . . . . . . 12,163 25,554 23,704 54,615
Loss on sale of receivables . . . . . . . . . 1,943 2,710 4,637 2,710
Dividends on preferred stock of subsidiary . - 1,129 - 2,258
Income from continuing operations before
income taxes . . . . . . . . . . . . . . . 17,980 10,293 50,534 25,665
Income taxes . . . . . . . . . . . . . . . . 2,535 2,970 6,188 5,588
Income from continuing operations before
extraordinary loss . . . . . . . . . . . . 15,445 7,323 44,346 20,077
Extraordinary loss, net of income taxes . . - (106,528) - (106,528)
Net income (loss) . . . . . . . . . . . . . . $ 15,445 $ (99,205) $ 44,346 $ (86,451)
Dividends and accretion on preferred stock . - (7,322) - (14,408)
Excess of redemption cost over book value of
preferred stock . . . . . . . . . . . . . - (82,022) - (82,022)
Income (loss) applicable to common
stockholders . . . . . . . . . . . . . . . $ 15,445 $(188,549) $ 44,346 $(182,881)
Net income (loss) per primary and fully
diluted common share:
Continuing operations . . . . . . . . . $ .22 $ (2.17) $ .62 $ (2.26)
Extraordinary item . . . . . . . . . . - (2.82) - (3.15)
Net income (loss) . . . . . . . . . . . $ .22 $ (4.99) $ .62 $ (5.41)
Average common shares outstanding:
Primary . . . . . . . . . . . . . . . . . 71,529 37,813 71,639 33,821
Fully diluted . . . . . . . . . . . . . . 71,686 37,813 71,717 33,821
</TABLE>
See accompanying notes.
I-1
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
July 29, January 28,
1995 1995
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . $ 15,350 $ 3,317
Accounts and notes receivable, net . . . . . . . . . . . 77,384 92,082
Inventories . . . . . . . . . . . . . . . . . . . . . . 204,059 196,096
Other . . . . . . . . . . . . . . . . . . . . . . . . . 30,040 38,184
Total current assets . . . . . . . . . . . . . . . . . 326,833 329,679
Property, plant and equipment, at cost less accumulated
depreciation and amortization of $294,096 and $269,808 . 287,263 287,559
Other assets . . . . . . . . . . . . . . . . . . . . . . . 64,010 63,833
$ 678,106 $ 681,071
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable . . . . . . . . . . . . . . . . . . . . . $ 938 $ 1,723
Current maturities of long-term debt . . . . . . . . . . 32,722 18,114
Accounts payable . . . . . . . . . . . . . . . . . . . . 76,468 97,726
Accrued expenses . . . . . . . . . . . . . . . . . . . . 111,975 144,566
Total current liabilities . . . . . . . . . . . . . . 222,103 262,129
Long-term debt . . . . . . . . . . . . . . . . . . . . . . 550,034 547,963
Deferred income taxes . . . . . . . . . . . . . . . . . . . 1,447 1,377
Other, including postretirement benefit obligation . . . . 280,462 282,224
Commitments and contingencies . . . . . . . . . . . . . . .
Common stock (150,000 shares authorized, 70,521 shares issued
and outstanding at January 28, 1995 and 70,052
shares issued and outstanding at July 29, 1995) . . . . 705 705
Other paid-in capital . . . . . . . . . . . . . . . . . . . 585,898 586,281
Accumulated deficit . . . . . . . . . . . . . . . . . . . . (932,236) (976,549)
Foreign currency translation adjustments . . . . . . . . . (17,203) (13,655)
Pension equity adjustment . . . . . . . . . . . . . . . . . (9,404) (9,404)
Treasury stock, at cost (469 shares) . . . . . . . . . . . (3,700) -
Total common stockholders' deficit . . . . . . . . . . (375,940) (412,622)
$ 678,106 $ 681,071
</TABLE>
See accompanying notes.
I-2
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations . . . . . . $ 15,445 $ 7,323 $ 44,346 $ 20,077
Adjustments to derive cash flow from
continuing operating activities:
Depreciation and leasehold amortization 11,810 12,105 23,528 23,232
Amortization of other assets and
liabilities . . . . . . . . . . . . . 3,325 2,046 6,256 4,380
Decrease in accounts and notes receivable 24,526 25,269 42,698 12,929
Increase in inventories . . . . . . . . (4,354) (5,930) (7,963) (19,577)
Increase (decrease) in accounts payable 416 (5,557) (21,258) (12,960)
Increase (decrease) in interest and
dividends payable . . . . . . . . . . 3 (31,790) 733 (18,003)
Other, net . . . . . . . . . . . . . . . (7,731) (17,342) (12,955) (5,971)
Net cash provided by (used in)
continuing operating activities . . 43,440 (13,876) 75,385 4,107
Cash used in discontinued operations . . . . (11,526) (6,617) (18,846) (15,157)
INVESTING ACTIVITIES
Additions to property, plant and equipment . (20,704) (18,845) (42,166) (34,131)
Sales of property, plant and equipment . . . 42 60 316 71
Proceeds from sale-leaseback arrangement . . 17,645 - 17,645 -
Net proceeds from disposition of discontinued
operations . . . . . . . . . . . . . . . . - (3,678) - 67,767
Other, net . . . . . . . . . . . . . . . . . (2,187) (2,749) (4,437) (69)
Net cash provided by (used in)
investing activities . . . . . . . . (5,204) (25,212) (28,642) 33,638
FINANCING ACTIVITIES
Issuance of common stock . . . . . . . . . . - 232,436 - 232,436
Issuance of long-term debt . . . . . . . . . 3,639 669,841 4,356 670,878
Proceeds from (reduction of) participating
interests in accounts receivable, net of
redemptions . . . . . . . . . . . . . . . (23,000) 125,000 (28,000) 125,000
Redemption of preferred stock . . . . . . . . - (219,110) - (219,110)
Repayment and defeasance of long-term debt . (968) (875,091) (2,831) (880,426)
Net borrowings (repayments) on revolving
credit facilities . . . . . . . . . . . . - (11,750) 15,000 (16,750)
Net repayments on notes payable. . . . . . . (1,012) (1,299) (785) (2,120)
Purchase of treasury stock . . . . . . . . . (3,776) - (3,776) -
Proceeds from exercise of stock options . . . 43 - 43 -
Other, net . . . . . . . . . . . . . . . . . (5) 125 129 (140)
Net cash used in financing activities (25,079) (79,848) (15,864) (90,232)
Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . 1,631 (125,553) 12,033 (67,644)
Cash and cash equivalents at beginning of
period . . . . . . . . . . . . . . . . . . 13,719 139,282 3,317 81,373
Cash and cash equivalents at end of period . $ 15,350 $ 13,729 $ 15,350 $ 13,729
</TABLE>
See accompanying notes.
I-3
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT
(Unaudited)
A. Organization:
Collins & Aikman Corporation (the "Company") (formerly
Collins & Aikman Holdings Corporation) is a Delaware
corporation. Prior to July 13, 1994, the Company was a wholly-
owned subsidiary of Collins & Aikman Holdings II Corporation
("Holdings II"). In connection with an initial public
offering of common stock ("Common Stock") and a
recapitalization (the "Recapitalization"), Holdings II was
merged into the Company. Concurrently, Collins & Aikman
Group, Inc., a wholly-owned subsidiary of the Company
("Group"), was merged into its wholly-owned subsidiary,
Collins & Aikman Corporation, which changed its name to Collins
& Aikman Products Co. ("C&A Products"). On July 7, 1994, the
Company changed its name from Collins & Aikman Holdings
Corporation to Collins & Aikman Corporation.
Prior to the Recapitalization, the Company was jointly
owned by Blackstone Capital Partners L.P. ("Blackstone
Partners") and Wasserstein Perella Partners, L.P. ("WP
Partners") and their respective affiliates. As a result of
the Recapitalization, Blackstone Partners and WP Partners and
their respective affiliates collectively own approximately 76%
of the outstanding Common Stock.
The Company conducts all of its operating activities
through its wholly-owned C&A Products subsidiary.
B. Basis of Presentation:
The condensed consolidated financial statements include the
accounts of the Company and its subsidiaries. In the
opinion of management, the accompanying condensed
consolidated financial statements reflect all adjustments
(consisting of only normal recurring adjustments) necessary for
a fair presentation of financial position and results of
operations. Results of operations for interim periods are not
necessarily indicative of results for the full year. Certain
reclassifications have been made to the statement of cash flows
for the quarter ended July 30, 1994 to conform to the
fiscal 1995 presentation.
For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Collins & Aikman Corporation Annual Report on Form 10-K for the
fiscal year ended January 28, 1995.
C. Interest Rate Protection Program:
During September 1994, the Company entered into a program
designed to reduce its exposure to changes in the cost of its
variable rate borrowings by the use of interest rate cap and
corridor agreements. The strike price of these agreements
exceeded the current market levels at the time they were
entered into and their cost is included in interest expense
ratably during the life of the agreements. Payments to be
received, if any, as a result of the agreements are accrued
as a reduction of interest expense. Unamortized costs of these
arrangements are included in other assets. Under these
agreements, the Company has limited its exposure on notional
principal amounts as follows (in thousands):
Protection Period Notional Principal Amount Average LIBOR Strike Price
Thru October 1995 $ 300,000 6.92%
October 1995 thru
October 1996 $ 250,000 7.50%
I-4
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
Amortization of these agreements amounted to $.1 million and
$.3 million during the quarter and six months ended July 29,
1995.
D. Sale-Leaseback Transaction:
During the quarter ended July 29, 1995, the Company sold and
leased back for a term of eight years equipment utilized in
its Automotive Products and Interior Furnishings segments
pursuant to its master equipment lease agreement. The aggregate
net book values of the equipment totaling $17.6 million have been
removed from the balance sheet and the gain realized on the sale
has been deferred and is being recognized as an adjustment to
rent expense over the lease term. The Company's rental payments
on the leased equipment commence in September 1995 and amount to
$2.3 million annually until March 1999 when they increase to $2.9
million annually.
E. Receivables Facility:
On March 31, 1995, C&A Products repaid and terminated
the receivables financing arrangement it entered into in
connection with the Recapitalization (the "Bridge Receivables
Facility") and entered, through a trust (the "Trust") formed by
Carcorp, Inc., a wholly-owned, bankruptcy remote subsidiary of
C&A Products ("Carcorp"), into a new receivables facility (the
"Receivables Facility") comprised of (i) term certificates,
which were issued on March 31, 1995, in an aggregate face amount
of $110 million and have a term of five years and (ii) variable
funding certificates, which represent revolving commitments of
up to an aggregate of $75 million and have a term of five years.
Carcorp purchases on a revolving basis and transfers to the Trust
virtually all trade receivables generated by C&A Products and
certain of its subsidiaries (the "Sellers").
Availability under the variable funding certificates at any
time depends primarily on the amount of receivables generated by
the Sellers from sales to the auto industry, the rate of
collection on those receivables and other characteristics of
those receivables that affect their eligibility (such as
bankruptcy or downgrading below investment grade of the obligor,
delinquency and excessive concentration). Based on these
criteria, at July 29, 1995 approximately $7.0 million was
available under the variable funding certificates, all of which
was utilized.
The term certificates bear interest at an average rate equal
to one-month LIBOR plus .34% per annum. The variable funding
certificates bear interest, at Carcorp's option, at LIBOR plus
.40% per annum or a prime rate.
As of July 29, 1995, the Trust's receivables pool was
$175.9 million net of allowances for doubtful accounts. As of
July 29, 1995, the holders of term certificates and variable
funding certificates collectively possessed a $117 million
undivided senior interest (net of settlements in transit) in the
Trust's receivables pool and, accordingly, such receivables were
not reflected in the Company's accounts receivable balance as
of that date. As of July 29, 1995, Carcorp owned a subordinated
interest in the receivables pool.
I-5
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
F. Inventories:
Inventory balances are summarized as follows (in thousands):
July 29, January 28,
1995 1995
Raw materials . . . . . . . . . . . . . . . .$ 78,807 $ 81,669
Work in process . . . . . . . . . . . . . . . 28,924 24,149
Finished goods . . . . . . . . . . . . . . . 96,328 90,278
$ 204,059 $ 196,096
G. Interest Expense, Net:
Interest expense for the quarters ended July 29, 1995 and
July 30, 1994 is net of interest income of $.8 million and $2.6
million, respectively. Interest expense for the six months ended
July 29, 1995 and July 30, 1994 is net of interest income of $1.7
million and $4.9 million, respectively.
H. Related Party Transactions:
Pursuant to the Stockholders' Agreement among the
Company, Group, Blackstone Partners and WP Partners dated
December 1988, the Company paid Blackstone Partners and WP
Partners, or their respective affiliates, operating,
management and advisory fees aggregating $5.0 million annually
until the agreement's amendment in July 1994.
Under the Amended and Restated Stockholders' Agreement
among the Company, C&A Products, Blackstone Partners and WP
Partners, the Company pays Blackstone Partners and WP Partners,
or their respective affiliates, each an annual monitoring fee of
$1.0 million, which is payable quarterly and which commenced in
the quarter ended October 29, 1994.
During the first quarter of 1994, the Company incurred
expenses of $2.5 million for services performed by affiliates of
Blackstone Partners and WP Partners in connection with a
comprehensive review of the Company's liabilities associated
with discontinued operations, including surplus real estate,
postretirement and workers compensation liabilities. The
Company also incurred during the first quarter of 1994 expenses of
$2.75 million for services performed by affiliates of WP Partners
and $3.25 million for services performed by affiliates of
Blackstone Partners in connection with the Company's review of
refinancing and strategic alternatives as well as other advisory
services; these fees are included in "selling, general and
administrative expenses" for the six month period ended July 30,
1994.
In connection with the Company's discontinued operations,
the Company incurred fees of $.1 million during the first quarter
of 1994 to an affiliate of Blackstone Partners for advisory
services in connection with the sale of inventory, real estate
and other assets of Builders Emporium, a former division of
Group.
I-6
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
I. Information About Segments of the Company's Operations:
Information about the Company's segments for the second
quarter and first six months of fiscal 1995 and 1994 follows (in
thousands):
<TABLE>
<CAPTION>
Quarter Ended Net Gross Operating Capital
July 29, 1995 Sales Margin Income Expenditures
<S> <C> <C> <C>
Automotive Products . . . $ 204,794 $ 35,062 $ 19,166 $ 13,991
Interior Furnishings . . 97,068 29,912 12,779 4,781
Wallcoverings . . . . . . 50,985 16,203 141 1,613
352,847 81,177 32,086 20,385
Corporate items . . . . . - - - 319
$ 352,847 $ 81,177 $ 32,086 $ 20,704
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Net Gross Operating Capital
July 30, 1994 Sales Margin Income (Loss) Expenditures
<S> <C> <C> <C>
Automotive Products . . . $ 206,873 $ 40,911 $ 27,739 $ 12,076
Interior Furnishings . . 102,769 31,690 14,463 5,053
Wallcoverings . . . . . . 50,107 14,756 867 1,607
359,749 87,357 43,069 18,736
Corporate items . . . . . - - (3,383) 109
$ 359,749 $ 87,357 $ 39,686 $ 18,845
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Net Gross Operating Capital
July 29, 1995 Sales Margin Income Expenditures
<S> <C> <C> <C>
Automotive Products . . . $ 448,488 $ 80,790 $ 50,246 $ 29,302
Interior Furnishings . . 188,264 57,767 23,975 9,406
Wallcoverings . . . . . . 108,224 36,318 4,654 2,820
744,976 174,875 78,875 41,528
Corporate items . . . . . - - - 638
$ 744,976 $ 174,875 $ 78,875 $ 42,166
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Net Gross Operating Capital
July 30, 1994 Sales Margin Income (Loss) Expenditures
<S> <C> <C> <C>
Automotive Products . . . $ 429,864 $ 89,060 $ 63,129 $ 23,310
Interior Furnishings . . 209,898 63,570 28,137 7,626
Wallcoverings . . . . . . 110,433 35,681 6,004 2,893
750,195 188,311 97,270 33,829
Corporate items . . . . . - - (12,022) (a) 302
$ 750,195 $ 188,311 $ 85,248 $ 34,131
</TABLE>
a) Corporate items for the six months ended July 30, 1994
include $6.0 million related to services performed by
affiliates of WP Partners and of Blackstone Partners in
connection with the Company's review of refinancing and
strategic alternatives as well as certain other advisory
services.
I-7
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
J. Commitments and Contingencies:
See "PART II - OTHER INFORMATION, Item 1. Legal
Proceedings." The ultimate outcome of the legal proceedings to
which the Company is a party will not, in the opinion of the
Company's management based on the facts presently known to it,
have a material effect on the Company's consolidated financial
condition or results of operations.
See also "PART I - FINANCIAL INFORMATION, Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations."
C&A Products (or its predecessor, Group) has assigned
leases related to divested businesses. Although C&A Products
has obtained releases from the lessors of certain of these
properties, C&A Products remains contingently liable under most
of the leases. C&A Products' future liability for these leases,
in management's opinion, based on the facts presently known to
it, will not have a material effect on the Company's
consolidated financial condition or results of operations.
K. Common Stockholders' Deficit:
Activity in common stockholders' deficit was as follows (in
thousands):
<TABLE>
<CAPTION>
Foreign
Other Currency Pension
Common Paid-in Accumulated Translation Equity Treasury
Stock Capital Deficit Adjustments Adjustment Stock Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 28, 1995 . . . . .$ 705 $586,281 $(976,549) $ (13,655) $ (9,404) $ - $(412,622)
Compensation expense
adjustment . . . . . . . . - (383) - - - - (383)
Purchase of Treasury
Stock (480 shares) . . . . - - - - - (3,776) (3,776)
Exercise of stock
options (11 shares) . . . - - (33) - - 76 43
Net income . . . . . . . . . - - 44,346 - - - 44,346
Foreign currency
translation
adjustments . . . . . . . - - - (3,548) - - (3,548)
Balance at
July 29, 1995 . . . . . .$ 705 $585,898 $(932,236) $ (17,203) $ (9,404) $(3,700) $(375,940)
</TABLE>
L. Earnings Per Share:
Earnings (loss) per common share is based on the weighted
average number of shares of Common Stock outstanding during each
period and the assumed exercise of employee stock options less
the number of treasury shares assumed to be purchased from the
proceeds, including applicable compensation expense. In
connection with the merger of Holdings II into the Company, the
35,035,000 shares of Common Stock of the Company outstanding
prior to the Recapitalization were canceled and approximately
28,164,000 shares of Common Stock were issued in exchange for the
common stock of Holdings II. All historical amounts and
earnings (loss) per share computations have been adjusted to
reflect the merger. For the quarter and six months ended July
30, 1994, net income has been adjusted by dividends and accretion
requirements on preferred stock and the excess of redemption
cost over book value of preferred stock to compute the loss
applicable to common stockholders.
I-8
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
INITIAL PUBLIC OFFERING AND RECAPITALIZATION
During July 1994, the Company completed an initial
public offering and a Recapitalization. In connection with
the Recapitalization, Holdings II, formerly the sole common
stockholder of the Company, was merged into the Company and the
Company changed its name to Collins & Aikman Corporation.
Concurrently, Group was merged into its wholly- owned
subsidiary, Collins & Aikman Corporation, which changed its name
to Collins & Aikman Products Co.
GENERAL
The Company's continuing business segments consist of
Automotive Products, which supplies interior trim products to
the North American automotive industry; Interior Furnishings,
which manufactures residential upholstery and commercial
floorcoverings for sale in the United States and for export; and
Wallcoverings, which produces residential and commercial
wallpaper for sale in North America. The Company's net sales in
the second quarter of fiscal 1995 were $352.8 million, with
approximately $204.8 million (58.0%) in Automotive Products,
$97.0 million (27.5%) in Interior Furnishings, and $51.0
million (14.5%) in Wallcoverings. All references to a year with
respect to the Company refer to the fiscal year of the Company
which ends on the last Saturday of January of the following year.
The industries in which the Company competes are cyclical.
Automotive Products is influenced by the level of North American
vehicle production. Interior Furnishings is primarily
influenced by the level of residential, institutional
and commercial construction and renovation. Wallcoverings is
influenced also by levels of construction and renovation and by
trends in home remodeling.
RESULTS OF OPERATIONS
Discussion of results of each of the Company's operating segments
follows:
Automotive Products
<TABLE>
<CAPTION>
Quarter Ended
July 29, 1995 July 30, 1994
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
(in thousands)
Net sales $204,794 100.0% $206,873 100.0%
Cost of goods sold 169,732 82.9 165,962 80.2
Gross margin 35,062 17.1 40,911 19.8
Selling, general & administrative
expenses 15,896 7.7 13,172 6.4
Operating income $ 19,166 9.4% $ 27,739 13.4%
</TABLE>
I-9
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
<TABLE>
<CAPTION>
Six Months Ended
July 29, 1995 July 30, 1994
Amount Percent Amount Percent
(in thousands)
<S> <C> <C> <C> <C>
Net sales $448,488 100.0% $429,864 100.0%
Cost of goods sold 367,698 82.0 340,804 79.3
Gross margin 80,790 18.0 89,060 20.7
Selling, general & administrative
expenses 30,544 6.8 25,931 6.0
Operating income $ 50,246 11.2% $ 63,129 14.7%
Net Sales: Automotive Products' net sales decreased 1% to
approximately $204.8 million in the second quarter of 1995, down
$2.1 million from the comparable 1994 quarter. The decrease
is primarily attributable to a 3% decline in the overall North
American vehicle build in the second quarter of 1995 compared to
the second quarter of 1994. The Company currently expects the
North American vehicle build to be slightly below last year.
Automotive seat fabric net sales decreased 4.3% and a
decline in the convertible automotive build resulted in a 17%
decrease in convertible top system sales for the second quarter of
1995 compared to the prior year period. These decreases were
partially offset by a 7.6% increase in sales of molded floor
carpet and increased shipments of accessory floor mats and
luggage compartment trim.
For the first six months of 1995, Automotive Products' net sales
of $448.5 million were $18.6 million higher than the comparable
period in 1994. Automotive Products' net sales changes are
attributable primarily to increased shipments of four of the
segment's five high volume products: automotive seat fabric,
molded floor carpets, accessory floor mats and luggage
compartment trim. These increased shipments were partially
offset by decreased shipments of the fifth high volume
product, convertible top systems. The Company's average sales
content per vehicle built in North America was $54 for the quarter
and six months ended July 29, 1995 compared to an average of $53
for the fiscal 1994 year.
The automotive seat fabric increase for the six months was due
primarily to increased production of the Company's jacquard
velvets product line currently utilized in such high volume
models as the General Motors C/K Truck Line. Additional product
placements, which contributed to the overall increase in
bodycloth volume, were the Chevrolet Cavalier, Lumina and
Suburban, the Ford Contour/Mystique, the Chrysler
Cirrus/Stratus, the Jeep Grand Cherokee, the Toyota Avalon and
Camry, and the GEO Prism.
The molded floor carpet increase was due to a 9% increase in
unit shipments for the six month period principally related to
increased production of high volume models, including the
Chevrolet Lumina and Monte Carlo, the Cutlass Supreme, the
Chrysler Cirrus/Stratus and T-300, and the Ford Explorer.
The convertible top systems decrease for the quarter and six
month period resulted from reduced production of the Ford Mustang
convertible and the Chrysler LeBaron convertible. Chrysler is
expected to begin production of the JX replacement for the
LeBaron in the latter part of the Company's third quarter.
I-10
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Gross Margin: Automotive Products' gross margin as a percentage
of net sales decreased to 17.1% in the second quarter of 1995
from 19.8% in the prior year period. The decline is attributable
primarily to reduced margins in automotive seat fabric. The
reduced margins in automotive seat fabric resulted primarily
from manufacturing inefficiencies and from commission weaving
costs incurred due to capacity constraints for certain fabrics.
The Company terminated commission weaving during the second
quarter of 1995. Additionally, the gross margin percentage was
impacted by reduced convertible top system sales which carry
higher margins than the segment's average and to a lesser
extent by certain raw material price increases. The impact of
raw material price increases was reduced by reengineering and
cost improvement efforts.
For the first six months of 1995 Automotive Products' gross
margin as a percentage of net sales decreased 2.7% from the
comparable period in 1994 due to the manufacturing
inefficiencies in automotive seat fabric and lower convertible
top system sales discussed above. The manufacturing
inefficiencies incurred during the first quarter and a portion
of the second quarter resulted from the startup of fabric lines
previously produced under the Company's commission weaving
program as well as certain fabric lines reengineered according
to customer specifications.
Selling, General and Administrative Expenses: Automotive
Products' selling, general and administrative expenses increased
20.7% and 17.8% in the second quarter and first six months of
1995, respectively, over the comparable 1994 periods. The
increases are primarily due to the allocation of previously
unallocated corporate expenses and costs incurred in divisional
reorganizations.
Interior Furnishings
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
July 29, 1995 July 30, 1994
Amount Percent Amount Percent
(in thousands)
<S> <C> <C> <C> <C>
Net sales $ 97,068 100.0% $102,769 100.0%
Cost of goods sold 67,156 69.2 71,079 69.2
Gross margin 29,912 30.8 31,690 30.8
Selling, general & administrative
expenses 17,133 17.6 17,227 16.8
Operating income $ 12,779 13.2% $ 14,463 14.0%
</TABLE>
I-11
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
<TABLE>
<CAPTION>
Six Months Ended
July 29, 1995 July 30, 1994
Amount Percent Amount Percent
(in thousands)
<S> <C> <C> <C> <C>
Net sales $188,264 100.0% $209,898 100.0%
Cost of goods sold 130,497 69.3 146,328 69.7
Gross margin 57,767 30.7 63,570 30.3
Selling, general & administrative
expenses 33,792 18.0 35,433 16.9
Operating income $ 23,975 12.7% $ 28,137 13.4%
</TABLE>
Net Sales: Interior Furnishings' net sales for the second
quarter and six month period were $97.1 million and $188.3
million compared with $102.8 million and $209.9 million,
respectively, in the prior year periods.
The Decorative Fabrics group net sales for the second quarter
and six month period were $60.4 million and $127.9 million, down
$11.9 million and $28.6 million, respectively, from the comparable
prior year periods. Decorative Fabrics' net sales decline
resulted primarily from a softer retail market for flatwoven
upholstery fabrics, increased competition on lower priced goods
and reduced market share in furniture velvets due to the Company's
redeployment of manufacturing capacity to automotive fabrics to
meet customer product demands during the second half of 1994. The
Company believes that the lower sales at the Decorative Fabrics
group's Mastercraft division may reflect a shift in consumer
tastes. Additionally, the 1994 results included the Warner
and Greeff product lines, which contributed net sales of $2.8
million and $7.0 million, respectively, in the second quarter and
six months ended July 30, 1994. The Warner and Greeff product
lines were sold in the fourth quarter of 1994.
The Floorcoverings group net sales for the second quarter and
six months were $36.7 million and $60.4 million, up $6.2
million and $7.0 million, respectively, from the comparable
prior year periods. The Floorcoverings group net sales
increase is largely attributable to a 16% increase in unit
shipments, primarily in six foot roll sales to the educational,
healthcare, retail and export customers.
Gross Margin: Interior Furnishings' gross margin of 30.8% of
sales remained flat for the second quarter of 1995 as compared to
the prior year period. Lower absorption of overhead costs in the
Decorative Fabrics group, due to lower sales volumes, were
offset by an increase in unit shipments in the Floorcoverings
group, whose products carry higher margins than the segment's
average.
For the first six months of 1995 gross margin as a percentage of
sales increased .4% as compared to the prior year period. The
increase reflects improvements from increased unit shipments in
the higher margin Floorcoverings group and manufacturing
efficiencies from the Mastercraft loom modernization and cost
improvement programs. These improvements were partially offset by
lower overhead absorption in the Decorative Fabrics group as a
result of lower sales volumes and raw material price increases.
I-12
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Selling, General and Administrative Expenses: Interior
Furnishings' selling, general and administrative expenses
decreased $.1 million or .1% in the second quarter and $1.6
million or 5% in the first six months of 1995 from the comparable
1994 periods. Decreases of $1.0 million and $3.2 million for
the second quarter and first six months of 1994, respectively,
related primarily to the Warner and Greeff product lines, which
were sold in the fourth quarter of 1994. These decreases were
partially offset by the allocation to Interior Furnishings of
previously unallocated corporate expenses. Additionally, the
second quarter decrease was also partially offset by an
increase of $.6 million in selling, styling and development
expenses in the Floorcoverings group as a result of its
increased sales.
Wallcoverings
<TABLE>
<CAPTION>
Quarter Ended
July 29, 1995 July 30, 1994
Amount Percent Amount Percent
(in thousands)
<S> <C> <C> <C> <C>
Net sales $50,985 100.0% $ 50,107 100.0%
Cost of goods sold 34,782 68.2 35,351 70.6
Gross margin 16,203 31.8 14,756 29.4
Selling, general & administrative
expenses 16,062 31.5 13,889 27.7
Operating income $ 141 .3% $ 867 1.7%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
July 29, 1995 July 30, 1994
Amount Percent Amount Percent
(in thousands)
<S> <C> <C> <C> <C>
Net sales $108,224 100.0% $110,433 100.0%
Cost of goods sold 71,906 66.4 74,752 67.7
Gross margin 36,318 33.6 35,681 32.3
Selling, general & administrative
expenses 31,664 29.3 29,677 26.9
Operating income $ 4,654 4.3% $ 6,004 5.4%
</TABLE>
Net Sales: Wallcoverings' net sales for the second quarter and six
month period were $51.0 million and $108.2 million compared with
$50.1 million and $110.4 million, respectively, in the prior
year periods. The change from the prior year periods
reflects lower shipments to converter businesses and planned
reductions in sales to independent distributors, partially
offset by increased sales to independent retailers ("dealers") and
chain stores.
Gross Margin: For the second quarter and first six months of
1995, gross margin as a percentage of net sales increased 2.4%
and 1.3%, respectively, over the comparable prior year periods.
The improvement in gross margin as a percentage of net sales
resulted from a shift to dealer sales from lower margin
converter and independent distributor sales combined with price
increases on certain product lines offset partially by an increase
in raw material prices.
I-13
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Selling, General and Administrative Expenses: Wallcoverings'
selling, general and administrative expenses increased $2.2
million and $2.0 million in the second quarter and first six
months of 1995, respectively, over the prior year periods. The
increases are attributable primarily to increased promotional
costs and allocations to Wallcoverings of previously unallocated
corporate expenses, partially offset by a reduction in the
number of sample books produced in 1995. The reduction in sample
books over the comparable prior year period reflects a relatively
high number of sample books in the prior year as the segment
was reestablishing its shelf space with dealers.
Company As A Whole
Net Sales: Net sales decreased 1.9% to $352.8 million in the
second quarter of 1995, down $6.9 million over the second quarter
of 1994. For the first six months of 1995, net sales of $745.0
million were $5.2 million lower than the comparable period in
1994. The net sales declines are primarily due to a lower
overall North American automotive build than in 1994, a
significant reduction in convertible automotive build and
softer retail environments in the residential furniture fabrics
and wallpaper lines.
Gross Margin: Gross margin decreased to $81.2 million or 23.0%
of sales in the second quarter of 1995, down from $87.4 million
or 24.3% of sales in the second quarter of 1994. For the first six
months of 1995 gross margin as a percentage of sales decreased to
$174.9 million or 23.5% of sales from $188.3 million or 25.1%
sales in 1994. The overall decrease in gross margin as a
percentage of sales resulted primarily from manufacturing
inefficiencies in automotive seat fabrics, commission weaving
costs incurred due to capacity constraints for certain
automotive fabrics and reduced convertible top system sales in
the Automotive Products segment, partially offset by efficiencies
in the Interior Furnishings segment and a somewhat improved
product mix in the Wallcoverings segment. To a lesser extent,
the decline in gross margin is attributable to raw material
price increases in all three segments which have been partially
offset by price increases to customers, reengineering efforts and
continued reductions in the cost of nonconformance. The Company
expects additional raw material price increases in the
remainder of fiscal 1995 and believes the impact can be
somewhat reduced by its reengineering and cost improvement
efforts.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased in the second quarter of 1995 to
$49.1 million and were $1.4 million higher than the comparable
period in 1994. For the second quarter of 1995, the increase in
selling, general and administrative expenses resulted from an
increase of approximately $1.8 million at Wallcoverings due
to increased promotional costs and an increase of
approximately $.6 million in selling, styling and development
costs at Floorcoverings which were offset by the savings from the
sale of the Warner and Greeff product lines in the fourth
quarter of 1994 and the reduction in the number of sample books
produced in 1995 at Wallcoverings. For the first six
months of 1995, selling, general and administrative expenses
decreased 6.9% to $96.0 million. The improvement is primarily
attributable to a reduction of advisory fees, which were paid
in the first quarter of 1994, and to the sale of the Warner and
Greeff product lines.
I-14
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Interest Expense: Interest expense, net of interest income,
decreased $13.4 million to $12.2 million in the second quarter
of 1995 from $25.6 million in the second quarter of 1994. For
the first six months of 1995, interest expense, net of
interest income, decreased to $23.7 million from $54.6 million.
The overall decrease in interest expense was due to the
Recapitalization, which reduced the Company's overall
outstanding indebtedness and its borrowing rates.
Loss on the Sale of Receivables: Beginning with the
Recapitalization in July 1994, the Company has sold on a
continuous basis, through its Carcorp subsidiary, interests in
a pool of accounts receivable. In connection with the
receivables sales, a loss of $1.9 million was incurred in the
second quarter of 1995 compared to a loss of $2.7 million in the
second quarter of 1994. For the first six months of 1995, the
loss was $4.6 million compared to $2.7 million in 1994. Of the
$2.7 million loss recorded in the second quarter of 1994, $1.3
million related to one time fees and expenses related to the
Bridge Receivables Facility. See Note E to Condensed Consolidated
Financial Report.
Income Taxes: In the second quarter and six months ended July 29,
1995, the provision for income taxes was $2.5 million and
$6.2 million compared with $3.0 million and $5.6 million,
respectively, in the prior year periods. In the second quarter
and first six months of 1995 income tax expense consisted of
foreign, state, franchise and federal alternative minimum taxes.
In the comparable 1994 periods the Company did not incur any
federal alternative minimum taxes.
Extraordinary Loss on the Extinguishment of Debt: On July 13,
1994, the Company as part of the Recapitalization recognized a
loss on the extinguishment of debt of $106.5 million. The
second quarter 1994 loss consisted of $9.6 million of
premiums paid to redeem indebtedness and $96.9 million of
unamortized discounts, deferred financing charges and defeasance
costs.
Net Income: The combined effect of the foregoing resulted in net
income of $15.4 million in the second quarter of 1995 compared
to a net loss of $99.2 million in the second quarter of 1994
and net income of $44.3 million for the first six months of 1995
compared to a net loss of $86.5 million in the first six months of
1994.
Pro Forma Results: As previously discussed, in July 1994,
the Company completed a Recapitalization. Had the
Recapitalization occurred at the beginning of fiscal 1994, the pro
forma income and earnings per common share from continuing
operations for the second quarter and the first six months of
1994 would have been $25.6 million and $.35 and $58.5 million and
$.81, respectively (assuming 72.2 million fully diluted shares).
The pro forma results do not purport to represent what the
Company's results of operations would actually have been if the
Recapitalization had occurred as of the beginning of fiscal
1994, or to project the Company's results of operations at any
future date or for any future period.
I-15
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company and its subsidiaries had cash and cash
equivalents totalling $15.4 million and $3.3 million at July
29, 1995 and January 28, 1995, respectively. The increase in
the Company's cash balance is primarily due to the Receivables
Facility, which the Company entered into on March 31, 1995,
whereby collections of receivables are temporarily held until
the determination of availability. The Receivables Facility is
further discussed below.
As part of the Recapitalization, in July 1994 the Company's
C&A Products subsidiary entered into new credit facilities. The
new credit facilities consist of (i) the Term Loan Facilities,
comprised of term loans in an aggregate principal amount of $475
million (including a $45 million Canadian loan) and having a term
of eight years, which were drawn in full on the closing date,
(ii) the Revolving Facility, having an aggregate principal amount
of up to $150 million and a term of seven years and (iii) the
Bridge Receivables Facility, which was terminated and replaced
with the Receivables Facility (the Term Loan Facilities and
Revolving Facility, together, the "Facilities"). The Facilities,
which are guaranteed by the Company and its U.S. subsidiaries
(subject to certain exceptions), contain restrictive covenants
including maintenance of EBITDA (i.e. earnings before
interest, taxes, depreciation and amortization) and interest
coverage ratios, leverage and liquidity tests and various other
restrictive covenants which are typical for such facilities.
In addition, C&A Products is prohibited from paying dividends or
making other distributions to the Company except to the extent
necessary to allow the Company to pay taxes, ordinary expenses,
permitted dividends on the Common Stock and the price for
permitted repurchases of shares or options and to make permitted
investments in finance, foreign or acquired subsidiaries. The
Company does not believe such prohibition will have a material
adverse impact on the Company because all the Company's
operations are conducted, and all the Company's debt
obligations are issued, by C&A Products and its subsidiaries.
On March 31, 1995, C&A Products repaid and terminated
the Bridge Receivables Facility and entered, through the
Trust formed by its wholly-owned, bankruptcy remote subsidiary,
Carcorp, the Receivables Facility comprised of (i) term
certificates, which were issued on March 31, 1995, in an aggregate
face amount of $110 million and have a term of five years and
(ii) variable funding certificates, which represent
revolving commitments of up to an aggregate of $75 million and
have a term of five years. Carcorp purchases on a revolving
basis and transfers to the Trust virtually all trade receivables
generated by C&A Products and the Sellers. The certificates
represent the right to receive payments generated by the
receivables held by the Trust.
Availability under the variable funding certificates at any
time depends primarily on the amount of receivables generated by
the Sellers from sales to the auto industry, the rate of
collection on those receivables and other characteristics of
those receivables that affect their eligibility (such as
bankruptcy or downgrading below investment grade of the obligor,
delinquency and excessive concentration). Based on these
criteria, at July 29, 1995 approximately $7.0 million was
available under the variable funding certificates, all of which
was utilized.
I-16
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
The proceeds received by Carcorp from collections on
receivables, after the payment of expenses and amounts due on the
certificates, are used to purchase new receivables from the
Sellers. Collections on receivables are required to remain in
the Trust if at any time the Trust does not contain sufficient
eligible receivables to support the outstanding certificates.
At July 29, 1995, $3.6 million was retained in the Trust
as cash collateral. The Receivables Facility contains
certain other restrictions on Carcorp (including maintenance of
$25 million net worth) and on the Sellers (including limitations
on liens on receivables, on modifications of the terms of
receivables, and on changes in credit and collection practices)
customary for facilities of this type. The commitments under the
Receivables Facility will terminate prior to their term upon the
occurrence of certain events, including payment defaults, breach
of covenants, bankruptcy, insufficient eligible receivables to
support the outstanding certificates, default by C&A Products in
servicing the receivables and, in the case of the variable
funding certificates, failure of the receivables to satisfy
certain performance criteria.
The Company has a master equipment lease agreement with a
financial institution for a maximum of $50 million of machinery
and equipment. During the quarter ended July 29, 1995, the
Company sold and leased back $17.6 million of machinery and
equipment utilized in the Automotive Products and Interior
Furnishings segments. The financial institution at its option
may and has sold portions of the leased equipment to other
financial institutions. Any sales by the financial
institution create additional potential availability under the
master equipment lease agreement. At July 29, 1995, the
Company had $14.7 million of potential availability under this
master lease for future machinery and equipment requirements of
the Company subject to the lessor's approval.
The Company's principal sources of funds are cash
generated from continuing operating activities, borrowings under
the Revolving Facility and the sale of receivables under the
Receivables Facility. Net cash provided by the operating activities
of the Company's continuing operations was $43.4 million and $75.4
million for the quarter and six months ended July 29, 1995. The
Company had a total of $47.8 million of borrowing availability under its
credit arrangements as of July 29, 1995. The total was
comprised of $37.8 million under the Revolving Facility and
approximately $10.0 million under a bank demand line of credit in
Canada. The Company's principal uses of funds from these sources
in the next several years will be to fund interest and
principal payments on its indebtedness, net working capital
increases and capital expenditures. At July 29, 1995, the
Company had total outstanding indebtedness of $583.7 million
(excluding approximately $27.2 million of outstanding letters of
credit) at an average interest rate of 7.5% per annum. Of the
total outstanding indebtedness, $560 million relates to the
Facilities.
In connection with the Company's announced stock repurchase
program, the Company and its lenders entered into an amendment
to the Facilities effective May 30, 1995 that permits the
Company currently to spend up to $12 million annually to
repurchase its shares. The Company believes it has
sufficient liquidity under its existing credit arrangements to
effect the repurchase program. For the second quarter and
first six months of 1995, the Company has spent an aggregate
of $3.8 million to repurchase its shares.
I-17
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Indebtedness under the Facilities bears interest at a per
annum rate equal to the Company's choice of (i) Chemical
Bank's Alternate Base Rate (which is the highest of Chemical's
announced prime rate, the Federal Funds Rate plus .5% and
Chemical's base certificate of deposit rate plus 1%) plus a
margin ranging from 0% to .75% or (ii) the offered rates for
Eurodollar deposits ("LIBOR") of one, two, three, six, nine or
twelve months, as selected by the Company, plus a margin ranging
from 1% to 1.75%. Pursuant to the terms of the Facilities, the
Alternative Base Rate margin is currently .75% and the LIBOR
margin is currently 1.75%. The weighted average rate of interest
on the Facilities at July 29, 1995 was 7.5%. The weighted average
interest rate on the sold interests under the Receivables Facility
at July 29, 1995 was 6.3%. Under the Receivables Facility, the
term certificates bear interest at an average rate equal to
one-month LIBOR plus .34% per annum and the variable funding
certificates bear interest, at Carcorp's option, at LIBOR plus
.40% per annum or a prime rate. Cash interest paid during the
quarters ended July 29, 1995 and July 30, 1994 was $12.3 million
and $50.9 million ($16 million of which was paid in connection
with the Recapitalization), respectively. Cash interest paid
during the first six months of 1995 and 1994 aggregated
approximately $23.2 million and $59.4 million, respectively.
Due to the variable interest rates under the
Facilities and the Receivables Facility, the Company is
sensitive to increases in interest rates. Accordingly, the
Company has entered into a program to reduce its exposure to
increases in interest rates through the use of interest rate cap
and corridor agreements. Under these agreements, the Company has
limited its exposure through October 17, 1995 on $300 million
of notional principal amount at an average LIBOR strike price of
6.92% and on $250 million of notional principal amount from
October 17, 1995 through October 17, 1996 at an average LIBOR
strike price of 7.50%. Based upon amounts outstanding at July
29, 1995, a .5% increase in LIBOR (5.8% at July 29, 1995) would
impact interest costs by approximately $2.8 million annually on
the Facilities and $.6 million annually on the Receivables
Facility.
The current maturities of long-term debt primarily consist
of the current portion of the Term Loan Facilities, vendor
financing, industrial revenue bonds and other miscellaneous
debt. Repayments of indebtedness under the Term Loan
Facilities commence in the third fiscal quarter of 1995. The
maturities of long-term debt of the Company during the
remainder of fiscal 1995 and for 1996, 1997, 1998 and 1999
are $17.5 million, $41.4 million, $61.5 million, $77.2 million
and $83.6 million, respectively. In addition, the Term Loan
Facilities provide for mandatory prepayments with certain excess
cash flow of the Company, net cash proceeds of certain asset
sales or other dispositions by the Company, net cash proceeds
of certain sale-leaseback transactions and net cash proceeds of
certain issuances of debt obligations.
The Company makes capital expenditures on a recurring
basis for replacements and improvements. As of July 29, 1995,
the Company had approximately $60.9 million in outstanding
capital expenditure commitments. The Company currently
anticipates that its capital expenditures in 1995 will aggregate
approximately $75 million. The Company may make additional
capital expenditures in 1995 of approximately $35 million (and
enter into related sale-leaseback arrangements) or it may obtain
the equipment through existing and new operating leases. On
August 15, 1995, the Company announced the purchase of a 250,000
square-foot warehouse in Knoxville, Tennessee. The Company's
capital expenditures in future years will depend upon demand for
the Company's products and changes in technology.
I-18
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
The Company is sensitive to price movements in its raw
material supply base. During the second quarter of 1995, price
trends for many materials continued to increase. The Company
anticipates that announced price increases in its primary raw
materials could increase the cost of purchased materials by
approximately $20 to $25 million on an annualized basis. While
the Company may not be able to pass on future raw material price
increases to its customers, it believes that a significant
portion of the increased cost can be offset by continued
results of its reengineering efforts and by continued
reductions in the cost of nonconformance.
The Company currently has two facilities in Mexico to
supply automotive products to Mexican subsidiaries of U.S. based
automobile manufacturers, one of which is currently operational.
The Company believes that, based on the nature of its Mexican
operations, fluctuations in the Mexican peso will not have a
material impact on the Company's operations.
The Company has significant obligations relating to
postretirement, casualty, environmental, lease and other
liabilities of discontinued operations. In connection with the
sale and acquisition of certain businesses, the Company has
indemnified the purchasers and sellers for certain environmental
liabilities, lease obligations and other matters. In addition,
the Company is contingently liable with respect to certain lease
and other obligations assumed by certain purchasers and may be
required to honor such obligations if such purchasers are unable
or unwilling to do so. Management currently anticipates that the
net cash requirements of its discontinued operations will be
approximately $35.0 million in 1995. The increase from prior
estimates is primarily due to the anticipated settlement of the
Preferred Stock Redemption Litigation previously disclosed by
the Company and changes in the timing of lease terminations
and the settlement of other liabilities. However, because the
requirements of the Company's discontinued operations are
largely a function of contingencies, it is possible that
the actual net cash requirements of the Company's
discontinued operations could differ materially from
management's estimates. Management believes that the
Company's needs relating to discontinued operations can be
adequately funded in 1995 and into 1996 by net cash provided
by operating activities from continuing operations and by
borrowings under existing bank credit facilities.
Tax Matters
At January 28, 1995, the Company had outstanding
NOLs (net operating loss carryforwards) of approximately $391
million for Federal income tax purposes. These NOLs expire over
the period from 1996 to 2009. The Company also has unused Federal
tax credits of approximately $17.8 million, $10.7 million of
which expire during 1995 to 2003. The Company estimates that it
will generate tax deductions of approximately $65.0 million in
connection with the ultimate disposition of assets and
liabilities of its discontinued businesses during the period
1995 to 1997, which were previously accrued for financial
reporting purposes. The Company anticipates that utilization of
these NOLs, tax credits and deductions will result in minimal
Federal income taxes until these NOLs and tax credits are
exhausted.
The Company previously reported that its Federal income tax
returns for the period 1988 through 1991 were under
examination by the IRS and that the IRS had proposed
adjustments that could have resulted in the loss of a material
amount of the net operating losses otherwise available to the
Company in future years. On August 23, 1995, the IRS informed
the Company that the IRS intends to withdraw substantially all
of the proposed adjustments.
I-19
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Approximately $134.0 million of the Company's NOLs and
$10.7 million of the Company's unused Federal tax credits may
be used only against the income and apportioned tax liability of
the specific corporate entity that generated such losses or
credits or its successors. Because of the merger of Group and
C&A Products, such NOLs and credits may be used against the
income and apportioned tax liability of C&A Products, which the
Company believes will have sufficient taxable income and
apportioned tax liability to fully use such NOLs and to use
a substantial portion of such tax credits. The
Recapitalization did not constitute a "change in control" that
would result in annual limitations on the Company's use of its
NOLs and unused tax credits. However, future sales of Common
Stock by the Company or its principal shareholders, or changes
in the composition of the principal shareholders, could
constitute such a "change in control". Management cannot predict
whether such a "change in control" will occur. If such a "change
of control" were to occur, the resulting annual limitations on
the use of NOLs and tax credits would depend on the value of the
equity of the Company and the amount of "built-in gain" or
"built-in loss" in the Company's assets at the time of the "change
in control", which cannot be known at this time.
ENVIRONMENTAL MATTERS
The Company is subject to increasingly stringent
Federal, state and local environmental laws and regulations
that (i) affect ongoing operations and may increase capital
costs and operating expenses and (ii) impose liability for
the costs of investigation and remediation and otherwise
related to on-site and off-site soil and groundwater
contamination. The Company's management believes that it has
obtained, and is in material compliance with, all material
environmental permits and approvals necessary to conduct its
various businesses. Environmental compliance costs for continuing
businesses currently are accounted for as normal operating
expenses or capital expenditures of such business units. In the
opinion of management, based on the facts presently known to it,
such environmental compliance costs will not have a material
adverse effect on the Company's consolidated financial condition
or results of operations.
The Company is legally or contractually responsible or alleged
to be responsible for the investigation and remediation of
contamination at various sites. It also has received notices that
it is a potentially responsible party ("PRP") in a number of
proceedings. The Company may be named as a PRP at other sites in the
future, including with respect to divested and acquired businesses.
The Company is currently engaged in investigation or remediation at
certain sites. In estimating the total cost of
investigation and remediation, the Company has considered,
among other things, the Company's prior experience in
remediating contaminated sites, remediation efforts by other
parties, data released by the Environmental Protection Agency,
the professional judgment of the Company's environmental
experts, outside environmental specialists and other experts, and
the likelihood that other parties which have been named as PRPs
will have the financial resources to fulfill their obligations at
sites where they and the Company may be jointly and severally
liable. Under the scheme of joint and several liability, the
Company could be liable for the full costs of investigation and
remediation even if additional parties are found to be
responsible under the applicable laws. It is difficult to
estimate the total cost of investigation and remediation due to
various factors including incomplete information regarding
particular sites and other PRP's, uncertainty regarding the
extent of environmental problems and the Company's share, if any,
of liability for such problems, the selection of alternative
compliance approaches, the complexity of environmental laws and
regulations and changes in cleanup standards and techniques.
When it has been possible to provide reasonable estimates of the
Company's
I-20
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Concluded)
liability with respect to environmental sites, provisions have
been made in accordance with generally accepted accounting
principles. As of July 29, 1995, excluding sites at which the
Company's participation is anticipated to be de minimis or
otherwise insignificant or where the Company is being
indemnified by a third party for the liability, there are 13
sites where the Company is participating in the investigation or
remediation of the site, either directly or through
financial contribution, and 12 additional sites where the
Company is alleged to be responsible for costs of investigation or
remediation. As of July 29, 1995, the Company's estimate of its
liability for these 25 sites is approximately $29.4 million. As
of July 29, 1995, the Company has established reserves of
approximately $31.0 million for the estimated future costs
related to all its known environmental sites.
In the opinion of management, based on the facts
presently known to it, the environmental costs and
contingencies will not have a material adverse effect on the
Company's consolidated financial condition or results of
operations. However, there can be no assurance that the
Company has identified or properly assessed all potential
environmental liability arising from the activities or
properties of the Company, its present and former subsidiaries
and their corporate predecessors.
For additional information regarding the foregoing,
see "Part II - Other Information, Item 1 - Legal Proceedings"
elsewhere herein.
I-21
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material developments in legal proceedings
involving the Company or its subsidiaries since those reported in the
Company's Annual Report on Form 10-K for the fiscal year ended
January 28, 1995 and in the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended April 29, 1995.
Item 4. Submission of Matters to a Vote of Security Holders
(a), (c) On June 29, 1995, the Company held its Annual
Meeting of Stockholders. At such meeting, stockholders voted upon
the following matters: (1) the election of three directors to
hold office until the 1998 Annual Meeting of Stockholders;
and (2) the approval and ratification of the 1994 Directors
Stock Option Plan (the "Directors Plan"). The results of the
voting were as follows:
1. Election of Directors
<TABLE>
<CAPTION>
Nominee For Withheld Broker Nonvotes
<S> <C> <C> <C>
Thomas E. Hannah 66,635,745 136,602 0
Stephen A. Schwarzman 66,636,995 135,352 0
George L. Majoros, Jr. 66,637,395 134,952 0
</TABLE>
2. Approval and ratification of Directors Plan
<TABLE>
<CAPTION>
For Against Abstain Broker Nonvotes
<S> <C> <C> <C>
66,246,990 495,897 29,460 0
</TABLE>
II-1
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Please note that in the following description of exhibits,
the title of any document entered into, or filing made, prior to
July 7, 1994 reflects the name of the entity a party thereto
or filing, as the case may be, at such time. Accordingly,
documents and filings described below may refer to Collins &
Aikman Holdings Corporation, Collins & Aikman Group, Inc. or
Wickes Companies, Inc., if such documents and filings were
made prior to July 7, 1994.
Exhibit
Number Description
3.1 - Restated Certificate of Incorporation of Collins &
Aikman Corporation is hereby incorporated by
reference to Exhibit 4.1 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal
quarter ended July 30, 1994.
3.2 - By-laws of Collins & Aikman Corporation, as amended,
are hereby incorporated by reference to Exhibit 4.2
of Collins & Aikman Corporation's Report on Form
10-Q for the fiscal quarter ended July 30, 1994.
4.1 - Specimen Stock Certificate for the Common Stock is
hereby incorporated by reference to Exhibit 4.3 of
Amendment No.3 to Collins & Aikman Holdings
Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed June 21, 1994.
4.2 - Credit Agreement dated as of June 22, 1994 between
Collins & Aikman Products Co. (formerly Collins &
Aikman Corporation) as Borrower, WCA Canada Inc. as
Canadian Borrower, the Company as Guarantor, the
Lenders named therein, Continental Bank, N.A., and
NationsBank, N.A. as Managing Agents, and Chemical
Bank as Administrative Agent is hereby incorporated
by reference to Exhibit 4.5 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal
quarter ended July 30, 1994.
4.3 - First Amendment dated as of January 30, 1995 to the
Credit Agreement dated as of June 22, 1994 among
Collins & Aikman Products Co., WCA Canada Inc.,
Collins & Aikman Corporation, the financial
institutions party thereto and Chemical Bank, as
administrative agent is hereby incorporated by
reference to Exhibit 4.4 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year
ended January 28, 1995.
4.4 - Second Amendment dated as of May 22, 1995 to the
Credit Agreement dated as of June 22, 1994, as
amended, among Collins & Aikman Products Co., WCA
Canada Inc., Collins & Aikman Corporation, the
financial institutions party thereto and Chemical
Bank, as administrative agent is hereby incorporated
by reference to Exhibit 4.6 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal
quarter ended April 29, 1995.
4.5 - Third Amendment dated as of August 24, 1995 to the
Credit Agreement dated as of June 22, 1994, as
amended, among Collins & Aikman Products Co., WCA
Canada Inc., Collins & Aikman Corporation, the
financial institutions party thereto and Chemical
Bank, as administrative agent.
II-2
<PAGE>
Exhibit
Number Description
Collins & Aikman Corporation agrees to furnish to the
Commission upon request in accordance with Item
601(b)(4)(iii)(A) of Regulation S-K copies of
instruments defining the rights of holders of
long-term debt of Collins & Aikman Corporation or
any of its subsidiaries, which debt does not exceed
10% of the total assets of Collins & Aikman
Corporation and its subsidiaries on a consolidated
basis.
10.1 - Collins & Aikman Products Co. 1995 Executive Incentive
Compensation Plan.
10.2 - Amendment No.1, dated September 5, 1995, among
Carcorp, Inc., as Company, Collins & Aikman
Products Co., as Master Servicer, and Chemical
Bank, as Trustee, to the Pooling Agreement, dated
as of March 30, 1995, among the Company, the Master
Servicer and the Trustee.
11. - Computation of Earnings Per Share.
27. - Financial Data Schedule.
(b) Reports on Form 8-K.
No current reports on Form 8-K were filed during the
quarter for which this report on Form 10-Q is filed.
II-3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
COLLINS & AIKMAN CORPORATION
(Registrant)
Dated: September 12, 1995 By: /s/ J. MICHAEL STEPP
J. Michael Stepp
Chief Financial Officer and
Executive Vice President
(On behalf of the Registrant and as
Principal Financial Officer)
By: /s/ ANTHONY HARDWICK
Anthony Hardwick
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
Exhibit 4.5
THIRD AMENDMENT dated as of August 24, 1995
(this "Amendment") to the CREDIT AGREEMENT dated as of
June 22, 1994 and as amended and in effect immediately
prior to the date hereof (the "Credit Agreement") among
COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation (the
"Borrower"), WCA CANADA INC., a Canadian corporation
(the "Canadian Borrower"), COLLINS & AIKMAN
CORPORATION, a Delaware corporation ("Holdings"), the
financial institutions party thereto (the "Lenders"), and
CHEMICAL BANK, as administrative agent (the "Administrative
Agent").
A. The Borrower, the Canadian Borrower,
Holdings, the Lenders and the Administrative Agent desire
to amend the Credit Agreement in certain respects as
hereinafter set forth.
B. Capitalized terms used but not defined
herein shall have the meanings assigned to them in the
Credit Agreement.
Accordingly, the Borrower, the Canadian
Borrower, Holdings, the Lenders and the Administrative
Agent hereby agree as follows:
SECTION 1. Amendment of Credit Agreement. The
Credit Agreement is hereby amended, effective as of the
Effective Date (as hereinafter defined), as follows:
(a) Section 1.01 is amended by deleting
therefrom the definition of "Capital Expenditures"
and substituting therefor the following new
definition:
"'Capital Expenditures' shall mean, for
any person in any period, the aggregate amount
of all capital expenditures of such person
during such period (but not including
Permitted Business Acquisitions or Investments
permitted pursuant to subsection 6.07(l)).
For the purposes hereof, the amount of any
Capital Expenditure shall not include (i) an
amount equal to that portion of the proceeds
received upon any sale, transfer or other
disposition of assets or properties pursuant
to Section 6.08(a), (g) or (i) which is applied
to the purchase of replacement assets or
properties within 12 months of the receipt
thereof, (ii) expenditures that are accounted
for as capital expenditures of such person
and that actually are paid for by a third
party (excluding Holdings or any subsidiary
thereof) and for which neither Holdings nor
any subsidiary thereof has provided or is
required to provide, directly or indirectly,
any consideration to such third party or any
other person (whether before, during or after
such period), (iii) the book value of any
asset owned by such person prior to or during
such period to the extent that such book value
is included as a capital expenditure during such
period as a result of such person reusing or
beginning to reuse such asset during such
period without a corresponding expenditure
actually having been made in such period,
provided that any expenditure necessary in
order to permit such asset to be reused shall
be included as a Capital Expenditure during the
period that such expenditure actually is made
or (iv) expenditures of insurance proceeds
or condemnation awards received in connection
with the loss, damage, destruction or
condemnation of property of Holdings or its
subsidiaries."
(b) Section 2.10(b) is amended to read as follows:
<PAGE>
"(b) if less than all the outstanding
principal amount of any Borrowing shall be
converted or continued, the aggregate principal
amount of such Borrowing converted or continued
shall be not less than $5,000,000; provided
that the aggregate principal amount of each
Eurodollar Borrowing resulting from any such
conversion or continuation shall not be less
than $5,000,000;"
(c) Section 5.04 is amended by deleting the
phrase "each Credit Agreement Creditor" in the first
sentence thereof and substituting therefor the following:
"the Administrative Agent for distribution to each
Credit Agreement Creditor (with sufficient copies for
each Credit Agreement Creditor)"
(d) Section 5.04(i) is hereby amended by
deleting said Section in its entirety and substituting in
lieu thereof the following:
"(i) promptly following the creation or
acquisition of any Subsidiary, a certificate from a
Responsible Officer, identifying such new Subsidiary
and the ownership interest of Holdings and its
Subsidiaries therein; and concurrently with the
delivery of financial statements under (a) or (b)
above, a description of the Investments in
Unrestricted Subsidiaries made during the fiscal
quarter ending on the date of such financial
statements and the amount thereof; provided, that with
respect to the Subordinated Notes owed by Carcorp,
Inc. under the receivables financing facility (the
"Sub Notes"), the Borrower shall not be required to
report any changes in the outstanding principal amount
of Sub Notes, unless the aggregate outstanding
principal amount of such Sub Notes exceeds
$75,000,000;"
(e) Section 6.01(d) is amended by (1)
deleting the word "and" appearing at the end of clause
(iii) and substituting therefor a comma, (2) adding the
word "and" before the semicolon at the end of clause (iv)
and (3) adding a new clause (v) thereto, reading as follows:
"(v) Holdings to Borrower, in an amount
not greater than $2,000,000 at any time;"
(f) Section 6.01(l) is amended by deleting
the dollar amount "$150,000,000" appearing therein and
substituting therefor the new dollar amount
"$200,000,000".
(g) Section 6.03 is hereby amended by
deleting said Section in its entirety and substituting in
lieu thereof the following:
"SECTION 6.03 Capital Expenditures. Permit
Capital Expenditures of the Restricted Subsidiaries on
a consolidated basis during any fiscal year to be
greater than the amount set forth below for such
fiscal year:
Fiscal Year Amount
1994 $85,000,000
1995 130,000,000
1996 80,000,000
1997 80,000,000
1998 80,000,000
<PAGE>
1999 80,000,000
2000 80,000,000
2001 80,000,000
2002 80,000,000
provided, however, that (i) to the extent Capital
Expenditures made in any fiscal year are less than
the amount set forth above opposite such fiscal year,
Restricted Subsidiaries shall be permitted to carry
forward the unused amount to the succeeding
fiscal years so long as such aggregate Capital
Expenditures in any fiscal year do not exceed
$130,000,000; (ii) Capital Expenditures may not be
made by Holdings; and (iii) Capital Expenditures that
are refinanced with Sale and Lease-Back Transactions
within 270 days of acquisition which result in
Operating Leases shall be deemed not to be Capital
Expenditures."
(h) Section 6.13 is amended by adding to
the end thereof the following new clause (iii):
"or (iii) contained in agreements relating to
Permitted Acquisition Indebtedness".
SECTION 2. Effectiveness. This Amendment will
become effective on the date (the "Effective Date") on
which the following conditions have been satisfied: (a) the
Administrative Agent shall have received counterparts of
this Amendment which, when taken together, bear the
signatures of the Borrower, the Canadian Borrower,
Holdings, the Administrative Agent and the Required
Lenders, (b) on and as of the Effective Date and after
giving effect to this Amendment, no Default or Event of
Default shall have occurred and be continuing, (c) the
representations and warranties made by Holdings, the
Borrower and the Canadian Borrower in the Credit Agreement
shall be true and correct in all material respects on and as
of the Effective Date as if made on such date, except where
such representations and warranties expressly relate to an
earlier date in which case such representations and
warranties shall be true and correct in all material
respects as of such earlier date, and (d) the Administrative
Agent shall have received a certificate of a
Responsible Officer of the Borrower, dated the Effective
Date, certifying the matters referred to in clauses (b) and
(c) above.
SECTION 3. Applicable Law. This Amendment shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 4. Counterparts. This Amendment may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which when taken
together shall constitute but one instrument.
SECTION 5. Agreement. Except as expressly
amended hereby, the Credit Agreement shall continue in
full force and effect in accordance with the provisions
thereof on the date hereof.
SECTION 6. Expenses. The Borrower shall pay all
reasonable out-of- pocket expenses incurred by the
Administrative Agent in connection with the preparation of
this Amendment, including, but not limited to, the
reasonable fees and disbursements of counsel for the
Administrative Agent.
SECTION 7. Headings. The headings of this
Amendment are for the purposes of reference only and
shall not limit or otherwise affect the meanings hereof.
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Canadian
Borrower, Holdings, the Lenders signatory hereto and the
Administrative Agent have caused this Amendment to be duly
executed by their duly authorized officers, all as of the
dates first above written.
COLLINS & AIKMAN PRODUCTS CO.
By: J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President &
Chief Financial Officer
COLLINS & AIKMAN CORPORATION
By: J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President &
Chief Financial Officer
WCA CANADA INC.
By: Ronald T. Lindsay
Name: Ronald T. Lindsay
Title: Vice President
CHEMICAL BANK, as a Lender and
as Administrative Agent
By: Rosemary Bradley
Name: Rosemary Bradley
Title: Vice President
<PAGE>
BANK OF AMERICA ILLINOIS
By:___________________________
Name:
Title:
NATIONSBANK, N.A.
By:____________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By:____________________________
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:____________________________
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.
By: Junri Oda
Name: Junri Oda
Title: Senior Vice President
and Senior Manager
THE LONG-TERM CREDIT BANK OF JAPAN
LTD.
By:_____________________________
Name:
Title:
<PAGE>
THE TORONTO-DOMINION BANK
By: Kimberly Burleson
Name: Kimberly Burleson
Title: Mgr. Cr. Admin.
THE FIRST NATIONAL BANK OF BOSTON
By: William C. Purington
Name: William C. Purington
Title: Vice President
BANK OF SCOTLAND
By: Catherine M. Oniffrey
Name: Catherine M. Oniffrey
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By:_____________________________
Name:
Title:
BANQUE PARIBAS
By: David C. Buseck/Jeffrey J. Youle
Name: David C. Buseck/Jeffrey J.
Youle
Title: Vice President/
BARCLAYS BANK PLC
By:_____________________________
Name:
Title:
BRANCH BANKING AND TRUST COMPANY
By:_____________________________
Name:
Title:
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE
By: Charles J. Klenk
Name: Charles J. Klenk
Title: Vice President,
Corporate Finance
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
THE NIPPON CREDIT BANK, LTD.
By: Clifford Abramsky
Name: Clifford Abramsky
Title: Vice President &
Manager
SOCIETE GENERALE
By: Ralph Saheb
Name: Ralph Saheb
Title: Vice President
SOCIETY NATIONAL BANK
By: Sharon F. Weinstein
Name: Sharon F. Weinstein
Title: Vice President &
Manager
THE TRAVELERS INSURANCE COMPANY
By:_____________________________
Name:
Title:
<PAGE>
THE TRAVELERS INDEMNITY COMPANY
By:_____________________________
Name:
Title:
WACHOVIA BANK OF NORTH CAROLINA,
N.A.
By: Joanne M. Starnes
Name: Joanne M. Starnes
Title: Senior Vice President
WELLS FARGO BANK
By:_____________________________
Name:
Title:
VAN KAMPEN MERRITT PRIME RATE
INCOME TRUST
By: Jeffrey W. Maillet
Name: Jeffrey W. Maillet
Title: Sr. Vice President -
Portfolio Mgr.
ARAB BANKING CORPORATION
By: Louise Bilbro
Name: Louise Bilbro
Title: Vice President
BANK OF IRELAND
By: John Cusak
Name: John Cusak
Title: Assistant Treasurer
<PAGE>
THE BANK OF NEW YORK
By: H. S. Griffith
Name: H. S. Griffith
Title: Senior Vice President
CREDITANSTALT CORPORATE FINANCE,
INC.
By: Robert M. Biringer
Name: Robert M. Biringer
Title: Senior Vice President
By: Joseph P. Longosz
Name: Joseph P. Longosz
Title: Vice President
CRESTAR BANK
By:______________________________
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: K. Patrick McCormick
Name: K. Patrick McCormick
Title: Vice President
FUJI BANK
By:_____________________________
Name:
Title:
GIROCREDIT BANK
By:______________________________
Name:
Title:
<PAGE>
MIDLAND BANK
By:______________________________
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:______________________________
Name:
Title:
NATIONAL CITY BANK
By: Lisa Beth Lisi
Name: Lisa Beth Lisi
Title: Account Officer
NBD BANK
By: James D. Heinz
Name: James D. Heinz
Title: Vice President
THE SUMITOMO TRUST & BANKING CO.,
LTD.
By:______________________________
Name:
Title:
UNITED STATES NATIONAL BANK OF
OREGON
By: Stephen Mitchell
Name: Stephen Mitchell
Title: Vice President
<PAGE>
THE YASUDA TRUST & BANKING CO.,
LTD.
By: Neil T. Chau
Name: Neil T. Chau
Title: First Vice President
CRESCENT/MACH 1 PARTNERS, L.P.
By its General Partner
CRESCENT MACH 1 G.P. CORPORATION
By its attorney-in-fact
CRESCENT CAPITAL CORPORATION
By: Justin Driscoll
Name: Justin Driscoll
Title: Vice President
ALEXANDER HAMILTON LIFE INSURANCE
CO.
By:_____________________________
Name:
Title:
KEYPORT LIFE INSURANCE CO.
By:______________________________
Name:
Title:
SAKURA BANK
By: Hiroyasu Imanishi
Name: Hiroyasu Imanishi
Title: V.P. & Senior Manager
<PAGE>
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS
By:_____________________________
Name:
Title:
(Collins & Aikman logo appears here)
Collins & Aikman Products Co.
1995 EXECUTIVE INCENTIVE
COMPENSATION PLAN
<PAGE>
(Collins & Aikman Collins & Aikman Products Co.
logo appears 1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
here)
ARTICLE 1. Introduction: Plan Summary and Objectives
1.1 Plan Summary. The Collins & Aikman Products Co. (the
"Company") 1995 Executive Incentive Compensation Plan
(the "Plan") establishes the annual (fiscal year) bonus
program for key employees ("Participants") who are in a
position to have an impact on the attainment of the
goals of the Company, and the Company's operating
divisions. The Plan provides for substantial awards to
Participants whose unit meets or exceeds the specified
performance goal.
The bonuses of Participants in the 1995 Plan will be
based primarily on one financial measure: Earnings
Before Interest and Taxes ("EBIT") of the Participant's
unit. Threshold, Target and Maximum performance goals
will be established for this financial measure. These
goals shall be associated, respectively, with lowest,
expected and maximum bonus levels for each measure.
Awards are determined by assigning each Participant a
"Target Bonus" or expected bonus level that is equal to
a specified percent of base salary. The bonus actually
paid to the Participant will be based on the extent to
which the performance of his or her unit meets or
exceeds the predetermined goals, and on the
Participant's performance relative to other Plan
Participants. The maximum bonus payable shall be equal
to 200% of the Target Bonus.
1.2 Plan Objectives. The Plan objectives are:
a. to motivate key employees to achieve and
exceed the specified financial objectives,
b. to maintain management's focus on the
importance of earnings,
c. to encourage management to balance the longer
term needs of the business with shorter term
requirements, and
d. to attract and retain the quality and
quantity of key employees required to
successfully manage the Company's business.
ARTICLE 2. Plan Definitions
2.1 "Base Salary" means the annual base rate of pay,
exclusive of bonuses, long term incentive awards,
benefits, car allowances, awards under this Plan and any
other non-salary items, as in effect for a Participant
on the last day of the calendar year ending in the Plan
Year for which an incentive award is made.
<PAGE>
2.2 "Board" means the Board of Directors of the Company.
2.3 "Cause" means
a. fraud, misappropriation or gross misconduct with
respect to any business of the Company or an
affiliate of the Company or intentional material
damage to any property or business, or the
reputation, of the Company or an affiliate of the
Company,
b. willful failure by a Participant to perform his/her
duties and responsibilities and to carry out his/her
authority,
c. willful malfeasance or misfeasance or breach of duty
or representation to the Company or an affiliate of
the Company,
d. willful failure to act in accordance with any
specific lawful instructions of a majority of the
Board of Directors of the Company, or breach of any
written agreement between Participant and the
Company or an affiliate of the Company, or
e. conviction of a Participant of a felony.
2.4 "Committee" shall mean the Compensation Committee of the
Board of Directors of the Company or any parent company,
whose members are determined and appointed by the Board
or by the Board of Directors of any parent company in
their sole discretion.
2.5 "Company" shall mean Collins & Aikman Products Co.
2.6 "Division" means an operating division of the Company
for which EBIT performance goals are established and
approved by the Committee and the President and CEO.
2.7 "Earnings Before Interest and Taxes" ("EBIT") means
earnings before interest and taxes (including imputed
interest and taxes) as determined by the Company in
accordance with generally accepted accounting
principles.
2.8 "Effective Date" means January 29, 1995.
2.9 "Maximum Performance Goal" means the highest level of
performance specified for the EBIT financial measure.
Performance at (and above) this level is associated
with the maximum level of bonus payouts for each
measure.
2.10 "Participant" means a key executive or staff person
designated as being eligible for an award under the
Plan.
<PAGE>
2.11 "Plan Year" means the 1995 fiscal year ending January
27, 1996.
2.12 "Target Bonus" means a specified percentage of a
Participant's Base Salary as determined pursuant to
the provisions of the Plan.
2.13 "Target Performance Goal" is the expected level of
performance established for the EBIT financial
performance measure based on the Company's and, where
applicable, Division's budget and other
considerations. This level of performance is
associated with the Target Bonus level of bonus
payouts.
2.14 "Threshold Performance Goal" is the lowest acceptable
level of performance specified for the EBIT financial
performance measure. This level of performance is
associated with the lowest level of bonus payouts.
ARTICLE 3. Eligible Executives
3.1 Eligible Executives. Key executives and staff of the
Company and Divisions are eligible to be named
Participants in the Plan for the Plan Year. Generally,
only those executives and staff whose potential
contributions are deemed to be important to the success
of the Company or Division in achieving its objectives
will be designated as Participants. The designation of
eligible executives shall be the responsibility of the
Vice President - Human Resources and President and CEO
of the Company. See Article 5 regarding Participant
selection.
ARTICLE 4. Setting Performance Goals
4.1 Budgets and Performance Goals
The annual budget of the Company shall form the initial
basis for setting financial performance goals.
Threshold, Target and Maximum EBIT Performance Goals
will be established for the Company and each Division.
Threshold and Maximum goals may or may not be
pre-determined based on a fixed percent of the Target
goal.
The final determination of goals shall be subject to
the approval of the Committee, in their sole
discretion.
4.2 Performance Goal Setting Process
a. Performance Goal Recommendations: Upon
finalization of the Company's budget, the
President and CEO shall submit recommended
Threshold, Target and Maximum EBIT
Performance Goals and any interim goals.
<PAGE>
b. Performance Goal Approval: Final approval of
the performance goals shall be the
responsibility of the Committee. It is
contemplated that such goals, once set, will
not change for any reason during the fiscal
year. The Committee may, in its sole
discretion, alter or amend these goals if
deemed necessary or appropriate.
ARTICLE 5. Selecting Plan Participants; Assigning Target Bonuses
5.1 Participant Selection.
The President and CEO and each Division head (as
appropriate) shall recommend as a Plan Participant
any executive or key employee whose potential
contributions to his/her unit's performance are
considered important to the success of their unit.
Such recommendations are subject to the Plan and the
final approval of the Vice President - Human
Resources and President and CEO.
a. Eligible Group. The group of eligible
employees shall include, but not be limited
to, senior executives and their direct
reports at the Company staff level, Division
heads and senior management of the Divisions
and their direct reports. Key employees below
these levels may be included.
b. Approval. No employee shall become a
participant in the Plan, nor shall Plan
participation be discussed with an employee,
until approval is received in writing from the
Vice President - Human Resources.
5.2 Assignment of Target Bonuses
a. Target Bonus Guidelines The Vice President -
Human Resources and the President and CEO
have the responsibility to assign and
recommend a Target Bonus for each
Participant. The recommended Target Bonus,
will take into account the Participant's: a)
position relative to those of other
Participants, b) anticipated contribution to
the organization's performance and c)
external competitive bonus rates for similar
positions in similar industries.
b. Target Bonus Changes. From time to time, due
primarily to changes in position, it may be
necessary to modify an assigned Target Bonus.
The Vice President - Human Resources and
President and CEO shall have the authority to
make such modifications subject to the terms
of this Plan.
<PAGE>
5.3 Communication of Performance Goals, Participant
Eligibility and Target Bonuses
The Vice President - Human Resources has the
responsibility to communicate to each Participant his
or her unit's performance goals, Participant
eligibility and Participant Target Bonus, provided:
a) the necessary approvals have been obtained before
any communication takes place, b) any communication
regarding the Target Bonus, written or otherwise, is
fully consistent with this Plan, c) it is clear that
the recommendation for program participation and
bonus eligibility is not a guarantee of payment or
amount, and d) a Participant be provided a copy of
this Plan upon request.
ARTICLE 6. Granting Participant Bonuses
6.1 Introduction
Bonuses based on EBIT performance will be paid only if
the Participant's unit (i.e., Division or Company, as
appropriate) hits its EBIT Threshold. It is not
necessary for the Company to achieve its EBIT threshold
for a Division to receive a bonus based on EBIT.
All bonuses are subject to the final approval of the
Committee.
6.2 EBIT Bonus Calculation. When the EBIT bonus is
determined, it is calculated as a percent of the Target
Bonus per the following schedule:
Company/Division EBIT
Performance Level Achieved: Threshold Target Maximum
Payout as a % of Target Bonus 50% 100% 200%
In addition, the Committee may establish interim EBIT
performance levels. Straight line interpolation is used
between Threshold and Target; and between Target and
Maximum.
6.3 Bonus Recommendations, Approvals and Distribution
a. Bonus Recommendations. The President & CEO shall, as
soon as possible following the determination of
year-end results, submit to the Committee a list of
recommendations for all Plan Participants for actual
bonus awards. In determining bonus awards, the
President and CEO may, in his sole discretion, use
other factors such as cash flow, etc. in
determining the level of achievement of the financial
performance measure. Where a recommended award is
different than a calculated award, the variance
should be noted.
<PAGE>
In arriving at the recommended awards, the Vice
President - Human Resources shall work with each
Division head in considering the Participants' Target
Bonus levels, the calculated awards based on actual
EBIT performance, and the Participants' relative
contributions to the unit's performance. The
Division head has, therefore, the discretion to
modify individual calculated awards to account for
different performance levels. If one individual's
award is modified upward, however, other awards have
to be adjusted downward such that the net change of
all modifications is $0. In other words, the sum of
all awards calculated must stay the same regardless
of any changes in individual awards.
Subject to the other provisions hereof, in no event
shall a Participant who is eligible for a calculated
award have his/her award reduced below 75% of the
award as calculated. Recommendations for Company
staff shall normally be based entirely on the actual
performance of the Company as a whole.
b. Final Approval. The Committee shall have final
approval of Company and Division operating results to
be used in bonus calculations and the timing, and
amount of all bonus payments.
c. Bonus Distribution. Final approval by the Committee
shall authorize the President and CEO to make bonus
grants as approved. The Vice President - Human
Resources shall effect the payment of the bonus as
soon as is administratively practicable once the
bonuses are approved.
ARTICLE 7. Plan Administration
7.1 Administrative Responsibilities
a. Overall Plan administration shall be the
responsibility of the Committee who shall have
absolute and final discretion regarding
interpretation of Plan and sole authority to make all
decisions with respect to Plan.
b. The Committee shall have the authority to, at their
discretion, approve all performance goals, actual
performance results, recommended bonuses, Plan
interpretations and modifications and to take any and
all other actions at any time they deem necessary or
appropriate for the administration of the Plan.
c. Responsibility for plan implementation and operation
has been delegated by the Committee to the President
and CEO and the Vice President - Human Resources who
shall have the responsibility for:
1. approving Participant rosters and Participant
Target Bonuses,
2. ensuring that performance goals are submitted,
reviewed and approved on a timely basis;
<PAGE>
3. ensuring that year-end results and recommended
bonuses for all eligible Participants are
submitted, reviewed and approved on a timely
basis; and
4. maintaining appropriate records with respect to
performance goals, eligible Participants,
Target Bonuses, actual awards, all necessary
written approvals and other records as
appropriate.
7.2 Award Payments
a. Payment of awards shall be made on or before April
1 of the year immediately following the year for
which the performance goals have been set.
b. In the event of a change of assignment or transfer
that would result in a change of Target Bonus during
the course of the year, the participant's bonus
calculation shall be determined by mutual agreement
with the Division head, the President and CEO and the
Vice President - Human Resources.
c. If a person is not on the payroll at the end of
the fiscal year, a bonus will not be paid
regardless of length of service or reason for
termination except as noted herein. Exceptions
may be made by the Vice President - Human
Resources and the President and CEO in their sole
discretion for terminations prior to the end of
the fiscal year due to death, total and permanent
disability (as defined by the applicable
disability plan(s)), and Early or Normal
Retirement (as defined by the applicable
retirement plan(s)). An exception may also be
made for employees on approved leaves of absence.
A pro rata bonus based on the executive's
contributions to his/her objectives may be payable
under these circumstances. In the event of the
death of a Participant, the Participant's
beneficiaries shall be entitled to the awards, if
any, to which the Participant would have otherwise
been entitled.
An additional exception may be made in the event of
the sale of a unit. In such cases, the Committee
may, in its sole discretion, award discretionary
bonuses based on performance to date. The sale of a
unit does not necessarily entitle a Plan participant
to a bonus under this Plan.
d. A former Plan Participant who is not on the payroll
when awards are distributed (approximately April 1)
but who was on the payroll at the end of the fiscal
year, shall generally be entitled to a bonus, subject
to the terms of this Plan.
e. An employee discharged for Cause, as defined above,
shall forfeit any and all rights to a bonus under
this Plan, even if the employee is on the payroll at
the end of the fiscal year.
<PAGE>
7.3 General Provisions
a. The Plan is intended to constitute an "unfunded" plan
for the incentive compensation of a select group of
key management employees of the Company and its
Divisions.
b. Neither the Plan nor any action taken under the Plan
shall be construed as:
1) giving any employee any right to be retained in
the employ of the Company, or Division.
2) affecting the right of the above-mentioned
entities to terminate the employment of
any individual at any time for any reason; or
3) interfering with the rights created under any
separate written employment or severance
agreement.
c. Should the provisions of a Participant's employment
contract not be consistent with the provisions of the
Plan, the provisions of the employment contract shall
control.
d. The Committee may alter, amend or terminate the Plan
at any time or from time to time.
e. Neither the Board nor the Committee, nor the Company
nor any Division, nor any officers, directors or
employees shall have any liability to any Participant
(or his/her beneficiaries) under the Plan or
otherwise on account of any action taken, or not
taken, in good faith by any of the foregoing persons
with respect to the business or operations of such
entities notwithstanding the fact that any such
action or inaction in any way whatsoever may
adversely affect the value of any awards, rights or
benefits of a Participant (or his/her beneficiaries)
under the Plan. Unless the Participant specifies
otherwise in writing to the Committee, beneficiaries,
for the purposes of this Plan, shall mean the
beneficiaries identified by the Participant for
his/her qualified pension or retirement plan(s).
f. The Plan and all actions taken pursuant to the Plan
shall be governed by, and construed in accordance
with, the internal laws of the State of New York.
g. The invalidity or unenforceability of any one or more
provisions of the Plan shall not affect the validity
or enforceability of any other provisions of the
Plan, which shall remain in full force and effect.
h. Correspondence regarding this Plan should be sent to
the Vice President - Human Resources, Collins &
Aikman Products Co., Post Office Box 32665,
Charlotte, NC 28232.
<PAGE>
<PAGE>
AMENDMENT NO. 1
TO
POOLING AGREEMENT
AMENDMENT NO. 1, dated September 5, 1995, among
Carcorp, Inc., a Delaware corporation (the "Company"), Collins &
Aikman Products Co., a Delaware corporation, as master servicer
(the "Master Servicer"), and Chemical Bank, as trustee (the
"Trustee") to that certain Pooling Agreement, dated as of March
30, 1995 (the "Agreement"), among the Company, the Master
Servicer and the Trustee.
WHEREAS, the Company, the Master Servicer and the
Trustee entered into the Agreement providing for, among other
things, (i) the creation of a master trust to which the Company
has and will transfer all of its right, title and interest in, to
and under the Receivables and the other Trust Assets owned by the
Company and (ii) the issuance by such master trust of one or more
Series of Investor Certificates, the Exchangeable Company
Certificate and the Subordinated Company Certificates
representing interests in the Receivables and such other Trust
Assets; and
WHEREAS, the Series 1 Certificates have been issued
pursuant to the Series 1995-1 Supplement, dated as of March 30,
1995 (the "Series 1 Supplement"), among the Company, the Master
Servicer and the Trustee; and
WHEREAS, the Series 2 Certificates have been issued
pursuant to the Series 1995-2 Supplement, dated as of March 30,
1995 (the "Series 2 Supplement"), among the Company, the Master
Servicer, Societe Generale, as Agent, and the Trustee; and
WHEREAS, Section 10.1(a) of the Agreement permits the
Agreement to be amended from time to time pursuant to the
provisions set forth therein; and
WHEREAS, the parties hereto wish to amend the Agreement
as set forth herein;
NOW, THEREFORE, in consideration of the above premises,
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the
Agreement, the Series 1 Supplement or the Series 2 Supplement, as
the case may be.
<PAGE>
2. (a) Section 2.7(j) of the Agreement is hereby
amended in its entirety to read as follows:
(j) Maintain a net worth of not less than $25,000,000
at all times which net worth shall not include any amounts
outstanding under (i) the Parent Note, (ii) the Subordinated
Notes or (iii) any advances or loans made by the Company to
C&A Products or the Canadian Seller permitted by Section
2.8(h).
(b) Section 2.8(h) of the Agreement is hereby amended
in its entirety to read as follows:
(h) Limitation on Investments, Loans and Advances.
Make any advance, loan, extension of credit or capital
contribution to, or purchase any stock, bonds, notes,
debentures or other securities of or any assets constituting
a business unit of, or make any other investment in, any
Person, except for (i) the Receivables and the other Trust
Assets and (ii) an advance or loan made to C&A Products or
the Canadian Seller, provided that there are no amounts then
outstanding under (A) the U.S. Dollar Subordinated Note or
Parent Note, in the case of an advance or loan made to C&A
Products, or (B) the Canadian Dollar Subordinated Note, in
the case of an advance or loan made to the Canadian Seller,
and, both before and after giving effect to such investment,
no Early Amortization Event or Potential Early Amortization
Event has occurred and is continuing. Notwithstanding the
above, no advance or loan made to the Canadian Seller shall
exceed the amount that the Company could then lawfully pay
as a dividend on its common stock.
3. Except as otherwise set forth herein, the
Agreement shall continue in full force and effect in accordance
with its terms.
4. This Amendment No. 1 may be executed in one or
more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to
be an original; such counterparts, together, shall constitute one
and the same agreement.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment No. 1 to the Agreement as of the day and year
first above written.
CARCORP, INC., as Company
By: /s/ Monte L. Miller
Name: Monte L. Miller
Title: President
COLLINS & AIKMAN PRODUCTS CO.,
as Master Servicer
By: /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President and
Chief Financial Officer
CHEMICAL BANK, not in its individual
capacity but solely as Trustee
By: /s/ Charles E. Dooley
Name: Charles E. Dooley
Title: Vice President
-3-
<PAGE>
Exhibit 11
Collins & Aikman Corporation
Computation of Earnings Per Share
In thousands, except per share data
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Average shares outstanding during
the period . . . . . . . . . . . 70,373 28,164 70,447 28,164
Incremental shares under stock
options computed under the
treasury stock method using the
average market price of
issuer's stock during the period 1,156 9,649 1,192 5,657
Total shares for primary EPS . 71,529 37,813 71,639 33,821
Additional shares under stock
options computed under the
treasury stock method using the
ending price of issuer's stock . 157 - 78 -
Total shares for fully diluted
EPS . . . . . . . . . . . . . 71,686 37,813 71,717 33,821
Income (loss) applicable to
common shareholders:
Continuing operations (1) . . . $ 15,445 $ (82,021) $ 44,346 $ (76,353)
Extraordinary item . . . . . . - (106,528) - (106,528)
Net income (loss) . . . . . . . $ 15,445 $ (188,549) $ 44,346 $ (182,881)
Income (loss) per primary and fully
diluted common share:
Continuing operations . . . . . $ .22 $ (2.17) $ .62 $ (2.26)
Extraordinary item . . . . . . - (2.82) - (3.15)
Net income (loss) . . . . . . . $ .22 $ (4.99) $ .62 $ (5.41)
</TABLE>
Notes:
(1) Loss from continuing operations for the quarter and six months
ended July 30, 1994 has been adjusted for dividends and accretion
requirements on redeemable preferred stock of $7,322 and $14,408,
respectively. In addition, loss from continuing operations for
the quarter and six months ended July 30, 1994 has been adjusted
for the loss on redemption of preferred stock of $82,022.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains Summary Financial information extracted from the
Company's Consolidated Balance Sheet and Consolidated Statement of
Operations for the six months ended July 29, 1995 and such is qualified
in its entirety by reference to such Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-END> JUL-29-1995
<CASH> 15,350
<SECURITIES> 0
<RECEIVABLES> 81,494
<ALLOWANCES> 4,110
<INVENTORY> 204,059
<CURRENT-ASSETS> 326,833
<PP&E> 581,359
<DEPRECIATION> 294,096
<TOTAL-ASSETS> 678,106
<CURRENT-LIABILITIES> 222,103
<BONDS> 550,034
<COMMON> 705
0
0
<OTHER-SE> (376,645)
<TOTAL-LIABILITY-AND-EQUITY> 678,106
<SALES> 744,976
<TOTAL-REVENUES> 744,976
<CGS> 570,101
<TOTAL-COSTS> 570,101
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 640
<INTEREST-EXPENSE> 23,704
<INCOME-PRETAX> 50,534
<INCOME-TAX> 6,188
<INCOME-CONTINUING> 44,346
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,346
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>