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): July 16, 1997
COLLINS & AIKMAN CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-10218 13-3489233
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
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 July 16, 1997, Collins & Aikman Products Co., a wholly owned
subsidiary of Collins & Aikman Corporation (the "Company"), completed the sale
of the Mastercraft Group, a leading manufacturer of flat-woven upholstery
fabrics, to a subsidiary of Joan Fabrics Corporation. The asset sale was
pursuant to a Mastercraft Group Acquisition Agreement dated as of April 24,
1997. The sales price was approximately $310 million, subject to final balance
sheet adjustments, plus the assumption of specified liabilities. The
consideration paid in the sale was determined through arms-length negotiations
between the Company and the purchaser.
The Mastercraft Group, which included the Company's Mastercraft, Yarn
and Ack-Ti divisions, is engaged in the business of designing, manufacturing and
marketing fabrics for furniture upholstery, home textiles, recreational vehicles
and neckwear interlining and of manufacturing and selling yarn. Joan Fabrics
Corporation is a privately owned company currently operating manufacturing
facilities in Massachusetts and North Carolina, with a position in multiple
markets including automobile interior, contract systems, home furnishings and
export.
(b) Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable.
(b) The pro forma financial information furnished herein reflects the
disposition of the Mastercraft Group on the Company's consolidated financial
statements.
Page Number
Unaudited Pro Forma Consolidated Statements
of Operations for the Fiscal Year
Ended December 28, 1996................................... F - 2
Unaudited Pro Forma Consolidated Statements of
Operations for the Six Months Ended
June 28, 1997............................................. F - 5
Unaudited Pro Forma Consolidated Balance
Sheet at June 28, 1997.................................... F - 7
(c) The exhibits furnished in connection with this Report are as
follows:
Exhibit
Number Description
2.1 Mastercraft Group Acquisition Agreement
dated as of April 24, 1997 among Collins &
Aikman Products Co., Joan Fabrics
Corporation and MC Group Acquisition
Company, LLC is hereby incorporated by
reference to Exhibit 2.1 of Collins & Aikman
Corporation's Quarterly Report on Form 10-Q
for the quarter ended March 29, 1997.
99.1 Press Release dated July 16, 1997.
1
<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)
Date: July 29, 1997 By: /s/ J. Michael Stepp
------------------------
J. Michael Stepp
Executive Vice President
& Chief Financial Officer
2
<PAGE>
PRO FORMA CONSOLIDATED
FINANCIAL DATA
The following Unaudited Pro Forma Consolidated Statement of Operations
of the Company for the fiscal year ended December 28, 1996 reflects (i) the
issuance by Collins & Aikman Products Co. in June 1996 of $400 million aggregate
principal amount of its 11-1/2% Senior Subordinated Notes due 2006 (the "Notes")
and 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), (ii) the
application of the proceeds of the sale by the Company in February 1997 of its
Collins & Aikman Floor Coverings, Inc. subsidiary ("Floor Coverings"), (iii) the
December 1996 acquisition of JPS Automotive L.P. ("JPS Automotive") and (iv) the
application of the proceeds of the sale by the Company in July 1997 of the
Company's Mastercraft Group, as if the relevant transactions had occurred at the
beginning of the fiscal year ended December 28, 1996.
The following Unaudited Pro Forma Consolidated Statement of Operations
of the Company for the six months ended June 28, 1997 reflects (i) the issuance
by Collins & Aikman Products Co. in June 1996 of the Notes and 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), (ii) the application of the
proceeds of the sale by the Company in February 1997 of Floor Coverings, (iii)
the December 1996 acquisition of JPS Automotive and (iv) the application of the
proceeds of the sale by the Company in July 1997 of the Company's Mastercraft
Group, as if the relevant transactions had occurred at the beginning of the
fiscal year ended December 28, 1996.
The following Unaudited Pro Forma Consolidated Balance Sheet of the
Company as of June 28, 1997 reflects the sale of the Company's Mastercraft Group
as if it 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 each period presented or
on June 28, 1997, or to project the Company's consolidated results of operations
or financial position at any future date or for any future period.
F-1
<PAGE>
Unaudited Pro Forma Consolidated Statement of Operations
Fiscal Year Ended December 28, 1996
(In thousands except per share amounts)
<TABLE>
<CAPTION>
As Adjusted
Adjustments for for the 1996
the 1996 Subordinated
Subordinated Debt Offering
Debt Offering and the 1996 As Further
and the 1996 Amendment of Adjusted for
Amendment of the Bank Sale of Floor the Sale of
Actual the Bank Credit Credit Coverings Floor Coverings
Facilities Facilities
--------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Net sales $ 1,055,931 $ - $ 1,055,931 $ - $ 1,055,931
Cost of goods sold 867,257 - 867,257 - 867,257
Selling general and
administrative expenses 86,625 - 86,625 - 86,625
--------------- ----------------- ---------------- ----------------- ----------------
Operating income 102,049 - 102,049 - 102,049
Interest expense 39,850 3,488 (1) (2) 43,338 (2,183) (4) 41,155
Loss on the sale of
receivables 4,533 - 4,533 - 4,533
Minority interest in
consolidated subsidiary - - - - -
Other (income) expense 113 - 113 - 113
--------------- ----------------- ---------------- ----------------- ----------------
Income from continuing
operations before
income taxes 57,553 (3,488) 54,065 2,183 56,248
Income tax expense
(benefit) 24,442 (1,482) (3) 22,960 928 (5) 23,888
--------------- ----------------- ---------------- ----------------- ----------------
Income from continuing
operations $ 33,111 $ (2,006) $ 31,105 $ 1,255 $ 32,360
--------------- ----------------- ---------------- ----------------- ----------------
Other data from continuing operations:
Avg. primary shares
outstanding 69,908 69,908
Income from continuing
operations per primary and
fully diluted common share $ 0.47 $ 0.46
</TABLE>
F-2
<PAGE>
Unaudited Pro Forma Consolidated Statement of Operations (continued)
Fiscal Year Ended December 28, 1996
(In thousands except per share amounts)
<TABLE>
<CAPTION>
JPS Automotive
As Further for the As Further
Adjusted for period from JPS Adjusted
the Sale of January 28, Automotive for the Sale of
Floor 1996 to Acquisition JPS Mastercraft Pro Formas
Coverings December 28, Adjustments Automotive Group as adjusted
1996 Acquisition
-------------- ---------------- --------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 1,055,931 $ 259,622 $ - $1,315,553 $ - $ 1,315,553
Cost of goods sold 867,257 218,654 (2,750) (6) 1,083,161 - 1,083,161
Selling general and
administrative expenses 86,625 21,977 (2,567) (7) 106,035 - 106,035
-------------- ---------------- --------------- ------------ -------------- --------------
Operating income 102,049 18,991 5,317 126,357 - 126,357
Interest expense 41,155 18,809 (511) (8) 59,453 5,264 (11) 64,717
Loss on the sale of
receivables 4,533 - - 4,533 - 4,533
Minority interest in
consolidated subsidiary - 334 (334) (9) - - -
Other (income) expense 113 18 - 131 - 131
-------------- ---------------- --------------- ------------ -------------- --------------
Income from continuing
operations before income
taxes 56,248 (170) 6,162 62,240 (5,264) 56,976
Income tax expense
(benefit) 23,888 315 2,231 (10) 26,434 (2,237) (12) 24,197
-------------- ---------------- --------------- ------------ -------------- --------------
Income from continuing
operations $ 32,360 $ (485) $ 3,931 $ 35,806 $ (3,027) $ 32,779
-------------- ---------------- --------------- ------------ -------------- --------------
Other data from continuing operations:
Avg. primary shares
outstanding 69,908 69,908
Income from continuing
operations per primary and
fully diluted common share $ 0.46 $ 0.47
</TABLE>
(1) Represents 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
discontinued operations.
(2) 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 amendment.
Excludes the write-off of $10.8 million of previously incurred deferred
financing fees.
(3) Includes a net 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 operation,
resulting from 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.
(6) Represents a reduction in depreciation expense related to the adjusted
fixed asset values.
F-3
<PAGE>
(7) Represents a reduction of (i) $1.9 million related to the removal of
duplicative selling and administrative costs, and (ii) a net reduction of
$.7 million in goodwill amortization relating to the reversal of JPS
Automotive's previous goodwill amortization of $4.1 million and the
establishment of an annual goodwill amortization of $3.4 million based on a
forty year life.
(8) Reflects a net adjustment for (i) a net reduction of $2.1 million in
interest expense related to $68 million of JPS Automotive 11.125% Senior
Notes due 2001 ("the JPS Automotive Notes") repurchased and retired with
amounts under the Company's Term Loan Facility and the $200 million Delayed
Draw Term Loan Facility entered into in connection with the JPS Automotive
acquisition ("Delayed Draw Facility"). Interest on these facilities is
based on an interest rate of LIBOR plus 1.75%. Average LIBOR in effect
during the period was 5.51%. (ii) the removal of $1.0 million in
amortization of JPS Automotive deferred financing fees, (iii) annual
amortization of $1.0 million in income related to the excess of market
value of JPS Automotive Notes over face value on the acquisition date, (iv)
additional interest expense of $3.1 million related to the financing of $43
million in purchased equity of JPS Automotive and related expenses under
the Company's Credit Agreement Facilities and (v) eleven months
amortization of deferred financing fees related to the Company's Delayed
Draw Facility.
(9) Reflects the acquisition of the 20% minority interest in JPS Automotive's
Cramerton Automotive Products.
(10) Represents income taxes related to the total of the historical JPS
Automotive results and pro forma adjustments at a 42.5% effective rate less
amounts previously reported in JPS Automotive historical results.
(11) Represents an increase of interest expense of $5.3 million after reflecting
the reduction of interest expense resulting from the payment of Bank
Credit Facilities with the estimated net proceeds of $266.3 million from
the sale of the Mastercraft Group offset by amounts previously allocated to
the Mastercraft Group discontinued operation.
(12) Represents income taxes related to the pro forma net increase in interest
expense at a 42.5% effective rate.
F-4
<PAGE>
Unaudited Pro Forma Consolidated Statement of Operations
Six Months Ended June 28, 1997
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Adjustments for
the 1996 As Adjusted
Subordinated for the 1996
Debt Offering Subordinated
and the 1996 Debt Offering As Further
Amendment of and the 1996 Adjusted for
the Bank Credit Amendment of Sale of Floor the Sale of
Actual Facilities the Bank Credit Coverings Floor Coverings
Facilities
--------------- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Net sales $ 831,578 $ - $ 831,578 $ - $ 831,578
Cost of goods sold 689,144 - 689,144 - 689,144
Selling general and
administrative expenses 60,256 - 60,256 - 60,256
--------------- ----------------- ----------------- ------------------ --------------
Operating income 82,178 - 82,178 - 82,178
Interest expense 38,084 131 (1) 38,215 (524) (3) 37,691
Loss on the sale of receivables 2,763 - 2,763 - 2,763
Other expense 972 - 972 - 972
--------------- ----------------- ----------------- ------------------ --------------
Income from continuing
operations before income
taxes 40,359 (131) 40,228 524 40,752
Income tax expense (benefit) 17,494 (63) (2) 17,431 250 (4) 17,681
--------------- ----------------- ----------------- ------------------ --------------
Income from continuing
operations $ 22,865 $ (68) $ 22,797 $ 274 $ 23,071
--------------- ----------------- ----------------- ------------------ --------------
Other data from continuing operations:
Avg. primary shares outstanding 67,761 67,761
Income from continuing
operations per primary and
fully diluted common share $ 0.34 $ 0.34
</TABLE>
F-5
<PAGE>
Unaudited Pro Forma Consolidated Statement of Operations (continuted)
Six Months Ended June 28, 1997
(In thousands except per share amounts)
<TABLE>
<CAPTION>
As Further As Further
Adjusted for JPS Adjusted
the Sale of Automotive for the
Floor Acquisition JPS Sale of Pro Formas as
Coverings Adjustments Automotive Mastercraft adjusted
Acquisition Group
-------------- --------------- ------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Net sales $ 831,578 $ - $ 831,578 $ - $ 831,578
Cost of goods sold 689,144 - 689,144 - 689,144
Selling general and
administrative expenses 60,256 - 60,256 - 60,256
-------------- --------------- ------------ ----------------- ---------------
Operating income 82,178 - 82,178 - 82,178
Interest expense 37,691 (19) (5) 37,672 1,397 (7) 39,069
Loss on the sale of
receivables 2,763 - 2,763 - 2,763
Other expense 972 - 972 - 972
-------------- --------------- ------------ ----------------- ---------------
Income from continuing
operations before
income taxes 40,752 19 40,771 (1,397) 39,374
Income tax expense
(benefit) 17,681 9 (6) 17,690 (668) (8) 17,022
-------------- --------------- ------------ ----------------- ---------------
Income from continuing
operations $ 23,071 $ 10 $ 23,081 $ (729) $ 22,352
-------------- --------------- ------------ ----------------- ---------------
Other data from continuing operations:
Avg. primary share
outstanding 67,761 67,761
Income from continuing
operations per primary and
fully diluted common share $ 0.34 $ 0.33
</TABLE>
(1) Represents interest on the additional borrowings related to the pro forma
adjustment as reflected in the Unaudited Statement of Operations for the
fiscal year ended December 28, 1996 for the offering of the Notes.
(2) Represents a reduction of income taxes related to the pro forma net increase
in interest expense at a 48.0% effective rate.
(3) Represents a reduction in interest expense of $.5 million, net of amounts
previously allocated to the Floor Coverings discontinued operation,
resulting from the application of estimated net proceeds of $179.1 million
and a reduction of interest as a result of the pro forma adjustment
reflected in the Unaudited Statement of Operations for the fiscal year
ended December 28, 1996.
(4) Represents income taxes related to the pro forma net decrease in interest
expense at a 48.0% effective rate.
(5) Represents a reduction of interest expense related to reduced borrowings as
adjusted for the acquisition of JPS Automotive as reflected in the Unaudited
Pro Forma Statement of Operations for the fiscal year ended December 28,
1996.
(6) Represents an increase of income taxes related to the pro forma net decrease
in interest expense at a 48.0% effective rate.
(7) Represents an increase in interest expense of $1.4 million after reflecting
the reduction of interest expense resulting from the payment of Bank Credit
Facilities with the estimated net proceeds of $266.3 million from the sale
of the Mastercraft Group and the interest on the additional borrowings
incurred related to the additional interest expense reflected in the
Unaudited Pro Forma Statement of Operations for the fiscal year ended
December 28, 1996, net of amounts previously allocated to the Mastercraft
Group discountinued operation.
(8) Represents a decrease of income taxes related to the pro forma net increase
in interest expense at a 48.0% effective rate.
F-6
<PAGE>
Unaudited Pro Forma Consolidated Balance Sheet
<TABLE>
<CAPTION>
Collins & Aikman Sale of
Corporation as of Mastercraft
June 28, 1997 Group Pro Forma
----------------------- ---------------- -------------------
(In thousands)
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 12,421 $ - $ 12,421
Accounts and notes receivable, net 179,302 - 179,302
Inventories 126,345 - 126,345
Net assets of discontinued operations 232,486 (84,386) (1) 148,100
Other 124,297 (33,366) (2) 90,931
----------------------- ---------------- -----------------
Total current assets 674,851 (117,752) 557,099
Property, plant & equipment, net 350,028 - 350,028
Deferred tax assets 41,366 - 41,366
Goodwill, net 279,629 - 279,629
Other assets 79,674 - 79,674
----------------------- ---------------- -----------------
$ 1,425,548 $ (117,752) $ 1,307,796
----------------------- ---------------- -----------------
Liabilities and Common Stockholders'
Equity (Deficit)
Current Liabilities:
Notes Payable $ 1,643 $ - $ 1,643
Current maturities of long-term debt 51,632 - 51,632
Accounts payable 127,596 42,100 (3) 169,696
Accrued expenses 141,457 - 141,457
----------------------- ---------------- -----------------
Total current liabilities 322,328 42,100 364,428
Long-term debt 944,460 (266,300) (4) 678,160
Other 258,701 - 258,701
Common Stockholders' Equity (Deficit):
Common stock 705 - 705
Other paid in capital 586,495 586,495
Accumulated deficit (618,945) 106,448 (5) (512,497)
Foreign currency translation adjustments (23,779) - (23,779)
Pension equity adjustment (10,165) - (10,165)
Treasury stock, at cost (34,252) - (34,252)
----------------------- ---------------- -----------------
Total common stockholders' equity
(deficit) (99,941) 106,448 6,507
----------------------- ---------------- -----------------
$ 1,425,548 $ (117,752) $ 1,307,796
----------------------- ---------------- -----------------
</TABLE>
(1) Reflects the removal of net assets associated with the Mastercraft Group
disposition.
(2) Reflects the utilization of current deferred tax assets related to the
federal tax gain on the sale of the Mastercraft Group.
(3) Reflects the amount due to the purchaser to be paid as the Company receives
amounts attributable to the collection of the Mastercraft Group's accounts
receivable previously sold to and owned by the Company's Carcorp
subsidiary.
(4) Reflects the application of net cash proceeds to repay a portion of the
amounts outstanding under the Company's Bank Credit Facilities.
(5) Reflects the anticipated net gain on the disposition of the Mastercraft
Group after income taxes at a 40.0% effective tax rate.
F-7
COLLINS & AIKMAN COMPLETES SALE OF MASTERCRAFT GROUP
TO JOAN FABRICS CORPORATION
Transaction Strengthens Company's Automotive Interiors Focus
CHARLOTTE, NC - July 16, 1997 -- Collins & Aikman Corporation (NYSE: CKC)
announced today that it has completed the previously announced sale of the
Mastercraft Group to Joan Fabrics Corporation for a purchase price of
approximately $310 million, subject to adjustment.
Mastercraft is a leading manufacturer of flat-woven upholstery fabrics.
Collins & Aikman expects net proceeds from the sale after taxes to be
approximately $280 million, which will be used to reduce the Company's
long-term debt.
"The sale of the Mastercraft Group is an important step toward two of
Collins & Aikman's goals - increasing financial flexibility by reducing our
long-term debt and aggressively pursuing our core automotive interior systems
business," said Thomas E. Hannah, Chief Executive Officer of Collins &
Aikman.
<PAGE>
The Mastercraft Group, which includes Collins & Aikman's Mastercraft,
Yarn and Ack-Ti divisions, had total revenues of approximately $264 million
for the 11 months ended December 28, 1996.
Collins & Aikman Corporation is a global supplier of automotive interior
systems, including textile and plastic trim, acoustics and convertible top
systems. Headquartered in Charlotte, NC, the Company's recent acquisitions
of JPS Automotive and Perstorp Components significantly expanded Collins
& Aikman's product offering and international presence to include additional
operations in the U.S., Mexico, Spain, Canada, Sweden, Belgium, France and
the U.K. The Company employs more than 13,000 employees and operates 56
manufacturing facilities in 8 countries.
Joan Fabrics Corporation is a privately owned company, founded in 1932,
currently operating manufacturing facilities in Massachusetts and North
Carolina. Joan has a major position in multiple markets including automobile
interiors, contract systems, home furnishings and export. With the addition
of Mastercraft, Joan's combined sales volume will exceed $500 million.
<PAGE>
