SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 6, 1997
COLLINS & AIKMAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-10218 13-3489233
(State or other jurisdiction of incorporation) (Commission File
Number) (IRS Employer Identification No.)
701 McCullough Drive
Charlotte, North Carolina 28262
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 547-8500
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On February 6, 1997, Collins & Aikman Corporation (the ACompany@) sold
its floorcoverings business through a sale of all the outstanding stock of its
indirect wholly owned subsidiary Collins & Aikman Floor Coverings, Inc. (AFloor
Coverings@) to CAF Acquisition Corporation, a corporation formed by Quad-C,
Inc., a Virginia merchant banking firm, and Paribas Principal Inc., the U.S.
private equity unit of Groupe Paribas. The sales price, including a payment for
the use of certain trade names in the floorcoverings business, was $195.6
million, subject to final balance sheet adjustments.
The consideration paid in the sale was determined through arms-length
negotiations between the Company and the purchasers. Floor Coverings and its
United Kingdom subsidiary are presently engaged in the business of designing,
manufacturing and marketing commercial carpets and related products and
performing certain related services.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable.
(b) The pro forma financial information furnished herein reflects the
disposition of Floor Coverings on the Company=s consolidated financial
statements.
Page Number
Pro Forma Consolidated Statements
of Operations for the Eleven Months
Ended December 28, 1996........................... 2
Pro Forma Consolidated Statements of
Operations for the Fiscal Year Ended
January 27, 1996.................................. 4
Pro Forma Consolidated Balance
Sheet at December 28, 1996........................ 6
(c) The exhibits furnished in connection with this Report are as follows:
Exhibit
Number Description
2.1 Acquisition Agreement dated as of December 9, 1996 among
Collins & Aikman Products Co., Collins & Aikman Floor
Coverings Group, Inc., Collins & Aikman Floor Coverings,
Inc., CAF Holdings, Inc. And CAF Acquisition Corp. is hereby
incorporated by reference to Exhibit 2.7 of Collins &
Aikman=s Current Report on Form 8-K dated December 10, 1996.
99.1 Press Release dated February 6, 1997.
<PAGE> 1
PRO FORMA CONSOLIDATED
FINANCIAL DATA
The following Unaudited Pro Forma Consolidated Statement of Operations of
the Company for the 11 months ended December 28, 1996 reflects (i) the issuance
by Collins & Aikman Products Co. of $400 million aggregate principal amount of
its 11-1/2% Senior Subordinated Notes due 2006 (the "Notes"), the application of
the estimated net proceeds therefrom to pay down indebtedness under the
Company's Credit Agreement Facilities (consisting of a Term Loan Facility and
Revolving Facility entered into in July 1994) and (ii) the application of the
proceeds of the sale of Floor Coverings as if the relevant transactions had
occurred at the beginning of the eleven months ended December 28, 1996. The
following Unaudited Pro Forma Consolidated Statement of Operations of the
Company for the year ended January 27, 1996 reflects (i) the issuance by Collins
& Aikman Products Co. of the Notes, the application of the estimated net
proceeds therefrom to pay down indebtedness and the amendment to the Company's
Credit Agreement Facilities and a Term Loan B Facility entered into to finance
the January 1996 purchase of Manchester Plastics, Inc. ("Manchester Plastics")
(together the "Bank Credit Facilities"), (ii) The October 1995 acquisition of
the business of Amco Manufacturing Corporation and its Mexican affiliate
(together "Amco") and the January 1996 acquisition of Manchester Plastics
(together with the Amco acquisition, the ("1995 Acquisitions") and (iii) the
application of the proceeds of the sale of Floor Coverings as if the relevant
transactions had occurred at the beginning of fiscal 1996. The following
Unaudited Pro Forma Consolidated Balance Sheet of the Company as of December 28,
1996 reflects those events as if they had occurred on that date. The pro forma
statements do not purport to represent what the Company's financial position or
results of operations would actually have been if the relevant transactions had
occurred at the beginning of fiscal 1996 or on December 28, 1996, or to project
the Company's consolidated results of operations or financial position at any
future date or for any future period.
Unaudited Pro Forma Consolidated Statement of Operations
Eleven Months Ended December 28, 1996
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Adjustments for the
1996 Subordinated
Offering and the 1996
Amendment of the
Bank Credit
Actual Facilities
<S> <C> <C>
Net sales.................. $1,055,931 $
-
-
Cost of goods sold......... 867,257 -
Selling, general and 86,625 -
administrative expenses....
Operating income........... 102,049 -
Interest expense........... 39,850 3,488 (1) (2)
Loss on the sale of 4,533 -
Receivables................
Other income (expense), net 113 -
Income from continuing 57,553 (3,488)
operations before income
taxes......................
Income taxes expense....... 24,442 (1,482) (3)
Income from continuing $ 33,111 $
operations................. (2,006)
Average common shares 69,908
outstanding................
Income from continuing
operations per share of $ 0.47
common .............stock
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
As Adjusted
for the i)
1996
Subordinate
d Debt Floorcov Pro forma
Offering erings as Adjusted
and ii) Disposit
1996 ion
Amendment
of the Bank
Credit
Facilities
<S> <C> <C> <C>
Net sales.................. $1,055,931 $ $ 1,055,931
-
Cost of goods sold......... 867,257 - 867,257
Selling, general and 86,625 - 86,625
administrative expenses....
Operating income........... 102,049 - 102,049
Interest expense........... 43,338 (2,183) (4) 41,155
Loss on the sale of 4,533 - 4,533
Receivables................
Other income (expense), net 113 - 113
Income from continuing 54,065 2,183 56,248
operations before income
taxes......................
Income taxes expense....... 22,640 828 (5) 23,888
Income from continuing $ 31,605 $ 1,255 $32,360
operations.................
Average common shares 69,908
outstanding................
Income from continuing
operations per share of $ 0.46
common .............stock
</TABLE>
(1) Represent interest of $17.3 million on the Notes at an interest rate of
11.50% and $.5 million in amortization of deferred financing fees on the
Notes, partially offset by interest savings of $9.7 million on the
repayment of $339.0 million of indebtedness, interest income of $.7 million
at an assumed rate of 5.3% on the remaining proceeds and an allocation of
$3.6 million related to the Floor Coverings and Mastercraft Group
dicontinued operations.
(2) Includes the amortization of (I) the deferred financing fees related to the
partial repayment and amendment of the Bank Credit Facilities and (ii) a
portion of the previously incurred deferred financing fees related to such
facilities prior to their partial repayment and amendment. Excludes the
write-off of $10.8 million of previously incurred deferred financing fees.
(3) Represents a reduction of income taxes related to the pro forma net
increase in interest expense at a 42.5% effective rate.
(4) Represents a reduction of interest expense of $2.2 million net of amounts
previously allocated to the Floor Coverings discontinued operations related
to the application of estimated net proceeds of $179.1 million.
(5) Represents income taxes related to the pro forma net decrease in interest
expense at a 42.5% effective rate.
<PAGE> 3
Unaudited Pro Forma Consolidated Statement of
Operations
Year Ended January 27, 1996
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Adjustment
s for the
1996
Pro forma Subordinat
1995 for ed Debt
Actual Acquisiti the 1995 Offering
ons Acquisitio and the
ns 1996
Amendment
of the
Bank
Credit
Facilities
<S> <C> <C> <C> <C> <C> <C>
Net sales............ $1,291,466 $182,063 (1) $1,473,529 $
-
Cost of goods sold... 1,012,358 156,226 (1) 1,168,584 -
Selling, general and 131,280 21,549 (1) 152,829 -
administrative (2)
expenses.............
Operating income..... 147,828 4,288 152,116 -
Interest expense..... 47,938 14,900 (3) 62,838 19,185 (5) (6)
Loss on the sale of 8,688 - 8,688 -
Receivables..........
Other income - - - -
(expense), net.......
Income from
continuing operations 91,202 (10,612) 80,590 (19,185)
before income ..taxes
Income taxes expense (138,520) 248 (4) (138,272) (7,482) (7)
(benefit)............
Income from $229,722 $(10,860) $218,862 $
continuing operations (11,703)
Average common shares 71,194
outstanding..........
Income from
continuing operations $3.23
per share of common
stock................
</TABLE>
<PAGE> 4
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended January 27, 1996
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
As Adjusted
for the (i) Reclass Reclass
1996 Floor Mastercraft
Subordinate Coverings Group Sale of Pro forma as
d Debt as as Floorcov Adjusted
Offering Discontin Discontinue erings
and (ii) ued d
1996 Operation Operations
Amendment s (8) (9)
of the Bank
Credit
Facilities
<S> <C> <C> <C> <C> <C>
Net sales............ $1,473,529 $ $ (267,280) $ - $1,084,080
(122,169)
Cost of goods sold... 1,168,584 (71,915) (200,351) - 896,318
Selling, general and 152,829 (27,300) (37,714) - 87,815
administrative
expenses.............
Operating income..... 152,116 (22,954) (29,215) - 99,947
Interest expense..... 82,023 (10,139) (26,087) (3,688) (10) 42,109
Loss on the sale of 8,688 (816) (1,626) - 6,246
Receivables..........
Other income - - - - -
(expense), net.......
Income from
continuing operations 61,405 (11,999) (1,502) (3,688) 51,592
before income ..taxes
Income taxes expense (145,754) 291 2,341 1,438 (11) (141,684)
(benefit)............
Income from $207,159 $(12,290) $ (3,843) $ $ 193,276
continuing operations 2,250
Average common shares 71,194
outstanding..........
Income from
continuing operations $2.71
per share of common
stock................
</TABLE>
(1) Represents the adjustment to add the 1995 operating results for Manchester
Plastics and Amco prior to their respective dates of acquisitions. In the
case of Amco, sales have been adjusted to eliminate intercompany sales to
the Company.
(2) Includes an additional $3.7 million in annual goodwill amortization for the
periods prior to each acquisition (based on an assumed forty year life).
(3) Represents interest expense of $14.8 million on the $197 million Term Loan
B Facility for the period prior to the acquisition of Manchester Plastics
plus interest expense on $7.2 million of borrowings on the Revolving
Facility for the period prior to the acquisition of Amco. Interest on the
Term Loan B Facility is based on an interest rate of LIBOR plus 2.25%.
Average LIBOR in effect during the period was 5.97%.
(4) Represents income taxes related to the pro forma operating results offset
by tax benefits relating to the increase in pro forma net interest expense.
(5) Represents annual interest of $46 million on the Notes and $1.3 million in
amortization of deferred financing fees partially offset by interest
savings of $25.8 million on the repayment of $339 million of indebtedness
and interest income of $2.0 million at an assumed rate of 5.3% on remaining
proceeds.
(6) Includes the amortization of (i) the deferred financing fees related to the
partial repayment and restatement of the Company's Bank Credit Facilities
and (ii) a portion of the previously incurred deferred financing fees
related to such facilities prior to their partial repayment and
restatement. Excludes the write-off of $11.3 million of previously
incurred deferred financing fees.
(7) Includes a net reduction of income taxes related to the pro forma net
increase in interest expense at a 39% effective rate.
(8) Reflects the reclassification of Floor Coverings as a discontinued
operation. Included in the reclassification is an allocated portion of the
incremental pro forma interest expense related to the Notes. Income tax
expense has been adjusted to reflect the pro forma net reduction in
interest expense at a 42.5% effective rate.
(9) Reflects the reclassification of the Mastercraft Group as a discontinued
operation. Included in the reclassification is an allocated portion of the
incremental pro forma interest expense related to the Notes. Income tax
expense has been adjusted to reflect the pro forma net reduction in
interest expense at a 42.5% effective rate.
(10) Represents a reduction of interest expense of $3.7 million, net of amounts
previously allocated to the Floor Coverings discontinued operation,
resulting from the application of estimated net proceeds of sale of $179.1
million.
(11) Represents income taxes related to the pro forma net decrease in interest
at a 42.5% effective rate.
<PAGE> 5
Unaudited Pro Forma Consolidated Balance Sheet
<TABLE>
<CAPTION>
Actual as of Pro Pro Forma
December 28, Forma as
1996 Adjustme Adjusted
nts
(in thousands)
Assets
Current Assets:
<S> <C> <C> <C>
Cash and cash equivalents ..... $ $ $
14,316 - 14,316
Accounts and notes receivable, 210,263 - 210,263
net
Inventories ................... 129,860 - 129,860
Net assets of discontinued 212,039 (23,614) (1) 188,425
operations......................
Other ......................... 129,065 (45,039) (2) 84,026
Total current assets ......... 695,543 (68,653) 626,890
Property, plant & equipment, net 375,974 - 375,974
Deferred tax assets............. 92,011 - 92,011
Goodwill, net................... 298,239 - 298,239
Other assets.................... 74,713 - 74,713
$ $ $
1,536,480 (68,653) 1,467,827
Liabilities and Common
Stockholders Deficit
Current Liabilities:
Notes payable ................. $ $ $
1,920 - 1,920
Current maturities of long-term 38,190 - 38,190
debt............................
Accounts payable .............. 126,927 19,917 (3) 146,844
Accrued expenses .............. 177,462 1,500 (4) 178,962
Total current liabilities .... 344,499 21,417 365,916
Long-term debt.................. 1,138,029 (179,100 (5) 958,929
)
Other........................... 248,530 - 248,530
Minority interest............... - - -
Common Stockholders' Deficit:
Common stock .................. 705 - 705
Other paid in capital ......... 585,207 - 585,207
Accumulated deficit ........... (729,315) 89,030 (6) (640,285)
Foreign currency translation (20,798) - (20,798)
adjustments.....................
Pension equity adjustment ..... (10,165) - (10,165)
Treasury stock, at cost ....... (20,212) - (20,212)
Total common stockholders' (194,578) 89,030 (105,548)
deficit.........................
$ $ $
1,536,480 (68,653) 1,467,827
</TABLE>
(1) Reflects the removal of net assets associated with the Floor Coverings
disposition.
(2) Reflects the utilization of current deferred tax assets related to the
federal tax gain on the sale of Floor Coverings.
(3) Reflects the amount due to the purchaser to be paid as the Company receives
amounts attributable to the collection of Floor Coverings accounts
receivable previously sold to and owned by the Company's Carcorp
subsidiary.
(4) Reflects the accrual of certain transaction expenses.
(5) Reflects the application of net cash proceeds to repay amounts outstanding
under the Company's Revolving Credit Facility.
(6) Reflects the anticipated net gain on the disposition of Floor Coverings
after income taxes at a 42.5% effective rate.
<PAGE> 6
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)
Date: February 21, 1997 By:/s/ J. Michael Stepp
J. Michael Stepp
Executive Vice President
& Chief Financial Officer
<PAGE> 7
NEWS RELEASE
Contact: A. Dennis Mahedy
Treasurer
(704) 548-2072
J. Michael Stepp
Executive Vice President
& Chief Financial Officer
(704) 548-2395
COLLINS & AIKMAN SELLS FLOORCOVERINGS BUSINESS
Charlotte, North Carolina - February 6, 1997 - Collins & Aikman Corporation
(NYSE: CKC) today announced that it sold its floorcoverings business to a
company formed by Quad-C, Inc. and Paribas Principal Partners. The sales price,
including a payment for the use of certain trade names in the floorcoverings
business, was $195.6 million, subject to final balance sheet adjustments.
Thomas E. Hannah, Chief Executive Officer of Collins & Aikman Corporation,
said AWe expect to realize about $170 million in net after tax proceeds. This
will enable us to reduce debt while continuing to concentrate our strategic
focus on our core automotive interior trim operations.@
Collins & Aikman is a major supplier of automotive interior systems -
textile and plastic trim, acoustics and convertible tops - to the global
automotive industry.
###
