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 March 28, 1998
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 May 11, 1998, the number of outstanding shares of the Registrant's common
stock, $.01 par value, was 65,611,864 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)
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Quarter Ended
--------------
March 28, 1998 March 29, 1997
-------------- --------------
Net sales........................................ $ 478,140 $ 415,560
------------ ------------
Cost of goods sold............................... 400,918 345,315
Selling, general and administrative
expenses...................................... 37,709 30,226
------------ ------------
438,627 375,541
------------ ------------
Operating income................................. 39,513 40,019
Interest expense, net............................ 20,479 18,779
Loss on sale of receivables...................... 1,624 1,201
Other expense.................................... 240 471
------------ -------------
Income from continuing operations
before income taxes........................... 17,170 19,568
Income taxes..................................... 8,492 8,303
------------ -------------
Income from continuing operations................ 8,678 11,265
Income from discontinued operations,
net of income taxes of $738................... - 921
Gain on sale of discontinued operations,
net of income taxes of $53,358................ - 85,292
------------- -------------
Net income....................................... $ 8,678 $ 97,478
============ ============
Net income per basic common share:
Continuing operations......................... $ 0.13 $ 0.17
Discontinued operations....................... - 0.01
Gain on sale of discontinued operations....... - 1.27
------------ ------------
Net income.................................... $ 0.13 $ 1.45
============ ============
Net income per diluted common share:
Continuing operations......................... $ 0.13 $ 0.17
Discontinued operations....................... - 0.01
Gain on sale of discontinued operations....... - 1.25
------------ ------------
Net income.................................... $ 0.13 $ 1.43
============ ============
Average common shares outstanding:
Basic ........................................ 65,701 67,125
============ ============
Diluted....................................... 66,571 68,161
============ ============
</TABLE>
I-1
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COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
March 28, December 27,
ASSETS 1998 1997
------- -----
Current Assets:
Cash and cash equivalents................................... $ 14,866 $ 24,004
Accounts and notes receivable, net.......................... 221,810 198,125
Inventories................................................. 154,176 142,042
Net assets of discontinued operations....................... - 53,004
Other....................................................... 104,284 92,116
-------------- -------------
Total current assets...................................... 495,136 509,291
Property, plant and equipment, net............................. 408,230 388,087
Deferred tax assets............................................ 56,621 59,293
Goodwill, net.................................................. 272,527 263,007
Other assets................................................... 89,693 82,714
-------------- --------------
$ 1,322,207 $ 1,302,392
============== =============
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable............................................... $ 1,822 $ 1,314
Current maturities of long-term debt........................ 14,866 30,301
Accounts payable............................................ 152,950 135,468
Accrued expenses............................................ 193,968 148,201
-------------- -------------
Total current liabilities................................. 363,606 315,284
Long-term debt................................................. 728,932 752,376
Other, including postretirement benefit obligation............. 285,621 301,582
Commitments and contingencies..................................
Common stock (150,000 shares authorized, 70,521 shares
issued and 65,612 shares outstanding at March 28, 1998
and 70,521 shares issued and 65,851 outstanding at 705 705
December 27, 1997)..........................................
Other paid-in capital.......................................... 585,757 585,890
Accumulated deficit............................................ (568,173) (576,851)
Accumulated other comprehensive income......................... (35,406) (39,823)
Treasury stock, at cost (4,909 shares at March 28, 1998
and 4,670 shares at December 27, 1997)...................... (38,835) (36,771)
-------------- -------------
Total common stockholders' deficit........................ (55,952) (66,850)
-------------- -------------
$ 1,322,207 $ 1,302,392
============== =============
</TABLE>
I-2
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COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Quarter Ended
--------------
March 28, 1998 March 29, 1997
-------------- --------------
OPERATING ACTIVITIES
Income from continuing operations............................................... $ 8,678 $ 11,265
Adjustments to derive cash flow from continuing operating activities:
Deferred income tax expense................................................ 4,298 3,544
Depreciation and leasehold amortization.................................... 14,220 10,869
Amortization of goodwill................................................... 1,773 1,844
Amortization of other assets............................................... 2,339 1,881
Decrease (increase) in accounts and notes receivable....................... (6,839) 26,117
Increase in inventories.................................................... (8,929) (591)
Increase in accounts payable............................................... 2,079 242
Increase in interest payable............................................... 13,544 13,583
Other, net................................................................. (7,886) (1,752)
------- -------
Net cash provided by continuing operating activities..................... 23,277 67,002
------- -------
Cash provided by (used in) Wallcoverings, Floorcoverings, Airbag and the
Mastercraft Group discontinued operations....................................... (15,052) 837
Cash used in other discontinued operations...................................... (3,001) (3,701)
-------- ------
Net cash used in discontinued operations................................. (18,053) (2,864)
--------- -------
INVESTING ACTIVITIES
Additions to property, plant and equipment...................................... (26,732) (16,751)
Sales of property, plant and equipment.......................................... 3,738 329
Proceeds from disposition of discontinued operations............................ 71,200 195,600
Acquisition of businesses, net of cash acquired................................. (19,236) -
Other, net ..................................................................... (2,109) (18,060)
-------- --------
Net cash provided by investing activities................................ 26,861 161,118
-------- ---------
FINANCING ACTIVITIES
Issuance of long-term debt...................................................... - 4,495
Repayment of long-term debt..................................................... (28,578) (9,283)
Reduction of participating interests in accounts receivable..................... (1,000) (18,000)
Repayments on revolving credit facilities....................................... (10,000) (179,000)
Net borrowings on notes payable................................................. 737 51
Purchase of treasury stock...................................................... (2,064) (11,811)
Proceeds from exercise of stock options......................................... - 139
Other, net ..................................................................... (318) 35
-------- ---------
Net cash used in financing activities.................................... (41,223) (213,374)
--------- ---------
Net increase (decrease) in cash and cash equivalents............................ (9,138) 11,882
Cash and cash equivalents at beginning of period................................ 24,004 14,316
-------- --------
Cash and cash equivalents at end of period...................................... $ 14,866 $ 26,198
======== ========
</TABLE>
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. As of March 28, 1998,
Blackstone Capital Partners L.P. ("Blackstone Partners") and Wasserstein Perella
Partners L.P. ("WP Partners") and their respective affiliates collectively own
approximately 82% of the common stock of the Company (the "Common Stock").
The Company conducts all of its operating activities through its
wholly-owned Collins & Aikman Products Co. ("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
prior year items have been reclassified to conform with the fiscal 1998
presentation and are primarily related to the reclassification of JPS Automotive
L.P.'s ("JPS Automotive") discontinued air restraint and industrial fabric
operation ("Airbag").
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 December 27, 1997.
C. Acquisitions:
The Company acquired Kigass Automotive Group ("Kigass") on February 2,
1998. The total purchase price for the acquisition was approximately $24.2
million, subject to post-closing adjustment. Initial goodwill resulting from the
purchase was approximately $10.4 million. Kigass is an automotive interior
plastic trim products manufacturer located in the United Kingdom. Under the
terms of the purchase agreement, the Company assumed effective control of Kigass
on January 1, 1998. The Company had entered into a joint venture agreement with
Kigass in October 1997 in which the Company and Kigass each owned 50% of the
joint venture.
D. Interest Rate and Foreign Currency Protection Programs:
The Company limited its interest rate exposure through April 2, 1998 on
$80 million of notional principal amount utilizing zero cost collars with 4.75%
floors and a weighted average cap of 7.86%. The zero cost collars were not
renewed. In addition, during April 1997, the Company entered into a two year
interest rate swap agreement in which the Company effectively exchanged $27
million of 11-1/2% fixed rate debt for floating rate debt at six month LIBOR
plus a 4.72% margin. In connection with this swap agreement, the Company also
limited its interest rate exposure by entering into an 8.50% cap on LIBOR on $27
million of notional principal amount. Payments to be received, if any, as a
result of these agreements are accrued as an adjustment to interest expense.
The primary purpose of the Company's foreign currency hedging
activities is to protect against the volatility associated with foreign currency
purchase transactions. The Company's policies prescribe the range of allowable
hedging activity. The Company primarily utilizes forward exchange contracts and
purchased options with durations of generally less than 12 months. The Company
has in place forward exchange contracts denominated in multiple currencies which
will mature during fiscal 1998. These contracts aggregated a U.S. dollar
equivalent of $25 million at March 28, 1998. The fair value of these contracts
approximated the contract value at March 28, 1998.
During April 1997, the Company entered into an agreement to limit its
foreign currency exposure related to $45 million of U.S. dollar denominated
borrowings of a Canadian subsidiary. The agreement swaps LIBOR based interest
rates for the Canadian equivalent as well as fixes the exchange rate for the
principal balance when the remaining amount comes due in 2002. During the first
quarter of 1998, this agreement resulted in reductions of interest expense and
other expenses of approximately $65 thousand. At March 28, 1998, the remaining
$18 million of U.S. dollar denominated borrowings of the Canadian subsidiary
were hedged under this agreement.
I-4
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
E. Goodwill:
Goodwill, representing the excess of purchase price over the fair value
of net assets of acquired entities, is being amortized on a straight-line basis
over a period of forty years. Amortization of goodwill applicable to continuing
operations for the first quarter of 1998 and the first quarter of 1997 was $1.8
million and $1.9 million, respectively. Accumulated amortization at March 28,
1998 was $12.7 million. The carrying value of goodwill at an enterprise level is
reviewed periodically based on the non-discounted cash flows and pretax income
of the entities acquired over the remaining amortization periods. Should this
review indicate that the goodwill balance will not be recoverable, the Company's
carrying value of the goodwill will be reduced. At March 28, 1998, the Company
believes the recorded value of its goodwill of $273 million is fully
recoverable.
F. Facility Closing Costs:
In connection with the acquisition of JPS Automotive, the Company has
eliminated certain redundant sales and administrative functions and closed one
manufacturing facility in 1997 and a second facility in January 1998. In 1997,
the Company also formulated plans to exit an additional manufacturing facility
in the second quarter of 1998, and currently is in the process of relocating
certain manufacturing processes from a JPS Automotive facility to an existing
C&A Products facility.
These actions affect approximately 640 employees. Total costs accrued
for the shutdown of facilities and severance and other personnel costs were $2.7
million and $7.7 million, respectively.
The components of the reserves for the relocation and facility
closures, which are expected to be completed during fiscal 1998, are as follows
(in thousands):
<TABLE>
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Original Changes In Remaining
Reserve Reserve Reserve
---------------------- ------------------- --------------
Anticipated expenditures to close and dispose of
idled facilities......................................... $ 2,746 $ (1,192) $ 1,554
Anticipated severance benefits............................... 7,655 (3,518) 4,137
----------------- --------------- ------------
$ 10,401 $ (4,710) $ 5,691
================= =============== ============
</TABLE>
G. Discontinued Operations:
On March 13, 1998, the Company completed its sale of Imperial
Wallcoverings, Inc. subsidiary ("Wallcoverings") to an affiliate of Blackstone
Partners for a purchase price of $71.2 million, subject to adjustment, and an
option for 6.7% of the common stock of the purchaser (which includes
Wallcoverings and the wallcovering and vinyl units of Borden, Inc.) outstanding
as of the closing date. The proceeds were used to repay long-term debt. In
connection with the sale, the Company recorded a loss of approximately $21.1
million, net of an estimated income tax benefit of $33.0 million, in the third
quarter of 1997 to adjust the recorded value to the expected proceeds.
Accordingly, no gain or loss was recognized at the sale date.
Losses incurred by Wallcoverings subsequent to April 1996 (the date of
Wallcoverings' discontinuance) were charged to the Company's existing
discontinued operations reserves. The Wallcoverings operating losses were in
excess of management's forecasted expectations as of the date of discontinuance
but within previously established accruals.
On February 6, 1997, the Company completed the sale of its
Floorcoverings subsidiary ("Floorcoverings") for approximately $195.6 million
and the net proceeds were used to pay down debt incurred to finance the
Company's automotive strategy. The sale resulted in a net after tax gain of
$85.3 million.
The Company's discontinued operations reported income of $0.9 million,
net of income taxes of $0.7 million, in the first quarter of 1997.
I-5
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
Net interest expense of discontinued operations was $6.1 million for
the quarter ended March 29, 1997 and was allocated based on the ratio of net
book value of discontinued operations (including reserves for loss on disposal)
to consolidated invested capital. A portion of the loss on sale of receivables
has been allocated to discontinued operations based on the ratio of (x)
receivables included in the receivable pool of the trust maintained by the
Company's Carcorp, Inc. subsidiary (the "Trust") related to discontinued
operations to (y) the total of the Trust's receivables pool. For the quarter
ended March 29, 1997, $355 thousand of loss on sale of receivables was allocated
to discontinued operations.
H. Related Party Transactions:
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. During the
first quarter of 1997, the Company incurred fees and expenses for services
performed by Blackstone Partners and WP Partners, or their respective
affiliates, in connection with the sale of Floorcoverings, totaling
approximately $2.6 million.
As discussed above, on March 13, 1998 the Company completed its sale of
Wallcoverings to an affiliate of Blackstone Partners. The transaction was
approved by a special committee of the Company's Board of Directors composed of
independent directors. See Note G for additional information regarding this
transaction. During the first quarter of 1998, the Company incurred fees and
expenses for services performed by WP Partners or its affiliates, in connection
with the sale of Wallcoverings, totaling approximately $0.8 million.
I. Information About the Company's Operations:
The Company's continuing operations primarily supply automotive
interior systems - textile and plastic trim, acoustics and convertible tops - to
the global automotive industry.
The Company performs periodic credit evaluations of its customers'
financial condition and, although the Company does not generally require
collateral, it does require cash payments in advance when the assessment of
credit risk associated with a customer is substantially higher than normal.
Receivables generally are due within 45 days, and credit losses have
consistently been within management's expectations and are provided for in the
consolidated financial statements.
Direct and indirect sales to significant customers in excess of ten
percent of consolidated net sales from continuing operations are as follows:
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For the Quarter Ended
---------------------
March 28, 1998 March 29, 1997
-------------- --------------
General Motors Corporation....................... 32.8% 21.8%
Ford Motor Company............................... 13.2% 8.8%
Chrysler Corporation............................. 16.8% 13.4%
</TABLE>
I-6
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
Information about the Company's continuing operations in different
geographic areas for the quarters ended March 28, 1998, and March 29, 1997 is
presented below (in thousands). These amounts have been restated to reflect
Floorcoverings, Wallcoverings, Airbag and the Company's former Mastercraft Group
operations as discontinued operations:
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For the Quarter Ended March 28, 1998 United Other Discontinued
States Canada Mexico Countries Operations Consolidated
------ ------ ------ --------- ---------- ------------
Net sales.............................. $ 274,423 $ 95,398 $ 22,404 $ 85,915 $ - $ 478,140
Operating income (a)................... 19,477 11,322 6,379 2,335 - 39,513
Depreciation and amortization (b)...... 10,792 2,231 642 4,667 - 18,332
Identifiable assets ................... 818,606 233,452 38,391 231,758 - 1,322,207
Capital expenditures .................. 16,771 4,333 678 4,950 - 26,732
For the Quarter Ended March 29, 1997 United Other Discontinued
States Canada Mexico Countries Operations Consolidated
------ ------ ------ --------- ---------- ------------
Net sales.............................. $ 283,108 $ 85,292 $ 18,760 $ 28,400 $ - $ 415,560
Operating income (a)................... 21,548 12,141 5,645 685 - 40,019
Depreciation and amortization (b)...... 10,348 2,216 764 1,266 - 14,594
Identifiable assets ................... 837,244 268,039 38,934 78,765 230,009 1,452,991
Capital expenditures .................. 7,049 3,780 567 1,470 3,885 16,751
</TABLE>
(a) Operating income is determined by deducting all operating expenses,
including goodwill write-off and other costs, from revenues. Operating
expenses do not include interest expense. Corporate services provided by
the Company have been allocated to the business units based on a
combination of estimated use and the relative sales of the business units
to the total consolidated operations of the Company.
(b) Depreciation and amortization includes the amortization of goodwill and
other assets and liabilities.
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 has assigned leases related to real and personal property
of 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:
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. Comprehensive income is the change in
equity of a business enterprise during a period from transactions and other
events and circumstances from nonowner sources. Comprehensive income includes
net income and other comprehensive income - revenues, expenses, gains and losses
that, under generally accepted accounting principles, are included in
comprehensive income but excluded from net income. SFAS No.130 requires that an
enterprise classify items of other comprehensive income by their nature in a
financial statement and display the accumulated balance
I-7
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
of other comprehensive income separately from retained earnings and additional
paid in capital in the equity section of a balance sheet. The Company adopted
SFAS No. 130 on December 28, 1997. Total comprehensive income for the quarters
ended March 28, 1998 and March 29, 1997 was $13.1 million and $94.5 million,
respectively. Activity in the common stockholders' deficit since December 27,
1997 is as follows (in thousands):
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Accumulated
Curent Year Other
Comprehensive Retained Comprehensive Common Paid-in Treasury
Income Total Earnings Income Stock Capital Stock
------------- ------- ---------- ------------ ------ -------- --------
Balance at December 27, 1997............... $(66,850) $(576,851) $(39,823) $ 705 $585,890 $(36,771)
Comprehensive income.......................
Net income.............................. $ 8,678 8,678 8,678 - - - -
Other comprehensive income, net of tax -
Foreign currency translation
adjustments.......................... 4,417 4,417 - 4,417 - - -
--------
Total comprehensive income................. $ 13,095
========
Compensation expense adjustment............ (133) - - - (133) -
Purchase of treasury stock (239 shares).... (2,064) - - - - (2,064)
-------- -------- --------- ----- -------- --------
Balance at March 28, 1998.................. $(55,952) $(568,173) $(35,406) $ 705 $585,757 $(38,835)
======== ======== ========= ===== ======== ========
</TABLE>
The accumulated balances and current period activity for each component of
Accumulated Other Comprehensive Income are as follows (in thousands):
<TABLE>
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Foreign
Currency Pension Accumulated Other
Translation Equity Comprehensive
Adjustments Adjustment Income
--------------- ------------------ --------------------
Beginning balance...................................... $ (29,123) $ (10,700) $ (39,823)
Current-period change.................................. 4,417 - 4,417
------------------ ------------------- ------------------
Ending balance......................................... $ (24,706) $ (10,700) $ (35,406)
================== ================== ==================
</TABLE>
L. Earnings Per Share:
The Company adopted SFAS No. 128, "Earnings Per Share," (SFAS No.128)
in December 1997. Basic earnings per common share are computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted earnings per common share are determined assuming the
exercise of the stock options issued under the Company's stock option plans. The
following table reconciles the number of common shares used in the basic and
diluted earnings per share from continuing operations (in thousands except per
share data):
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Quarter Ended Quarter Ended
March 28, 1998 March 29, 1997
------------------------------------------ -------------------------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
------- ------- ------- ------- ------- --------
Basic earnings per share........... $ 8,678 65,701 $ 0.13 $ 11,265 67,125 $ 0.17
Effect of stock option plans....... - 870 - - 1,036 -
--------- ------- ----- ---------- ------- -------
Diluted earnings per share......... $ 8,678 66,571 $ 0.13 $ 11,265 68,161 $ 0.17
========= ======= ===== ========== ======= =======
</TABLE>
I-8
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
M. Significant Subsidiary:
The Company conducts all of its operating activities through its
wholly-owned subsidiary, C&A Products. The following represents summarized
consolidated financial information of C&A Products and its subsidiaries for the
following periods (in thousands):
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For the Quarter Ended
--------------------------------------------
March 28, March 29,
1998 1997
---------- -----------
Net sales..................................................... $ 478,140 $ 415,560
Gross margin.................................................. 77,222 70,245
Income from continuing operations............................. 8,510 11,227
Net income ................................................... 8,510 97,440
March 28, 1998 December 27, 1997
------------------- ---------------------
Current assets................................................ $ 494,757 $ 508,864
Noncurrent assets............................................. 826,034 792,199
Current liabilities........................................... 363,561 315,268
Noncurrent liabilities........................................ 1,011,971 1,051,376
</TABLE>
The consolidated financial information for fiscal 1997 has been
restated to reflect Airbag as a discontinued operation.
Separate financial statements of C&A Products are not presented because
they would not be material to the holders of any debt securities of C&A Products
that have been or may be issued, there being no material differences between the
financial statements of C&A Products and the Company. The absence of separate
financial statements of C&A Products is also based upon the fact that any debt
of C&A Products issued, and the assumption that any debt to be issued, under the
Registration Statement of Form S-3 filed by the Company and C&A Products
(Registration No. 33-62665) is or will be fully and unconditionally guaranteed
by the Company.
N. Newly Issued Accounting Standards:
In April 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position No. 98-5, "Reporting on the Costs of
Start-up Activities" ("SOP 98-5"). SOP 98-5 provides guidance on the financial
reporting of start-up costs and organization costs and requires that all
nongovernmental entities expense the costs of start-up activities as these costs
are incurred instead of being capitalized and amortized. SOP 98-5 is effective
for financial statements for fiscal years beginning after December 15, 1998. The
Company currently estimates that the impact of the adoption of SOP 98-5 at the
beginning of fiscal 1999 will be in the range of $1.5 million to $2.5 million,
net of tax.
I-9
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
The Company is a global supplier of automotive interior systems,
including textile and plastic trim, acoustics and convertible top systems.
The automotive supply industry in which the Company competes is
cyclical and is influenced by the level of North American and European vehicle
production. Management believes the long-term trends in the design and
manufacture of automotive products include the increased use of plastic
components, the increased sourcing of interior systems and U.S. automotive
manufacturers' movement to fewer suppliers and to suppliers with engineering and
design capabilities. The Company anticipates the reduction in the supply chain
will result in integration whereby the complete interior of an automobile will
be co-designed and developed with fewer suppliers who will manufacture and
deliver required components. The Company anticipates these capabilities will be
essential to its long-term strategic positioning as a key supplier within the
automotive industry and with its customers.
RESULTS OF OPERATIONS
<TABLE>
<S> <C>
Quarter Ended
---------------------------------------------------
March 28, 1998 March 29, 1997
-------------- --------------
Amount Percent Amount Percent
------ ------- ------ -------
(dollar amounts in thousands)
Net sales........................................... $ 478,140 100.0% $ 415,560 100.0%
Cost of goods sold.................................. 400,918 83.8 345,315 83.1
------- ---- ------- ----
Gross margin........................................ 77,222 16.2 70,245 16.9
Selling, general & administrative expenses.......... 37,709 7.9 30,226 7.3
------ --- ------ ---
Operating income.................................... $ 39,513 8.3% $ 40,019 9.8%
======== === ======== ====
EBITDA (1).......................................... $ 57,350 12.0% $ 53,830 12.6%
======== ==== ======== =====
</TABLE>
(1) EBITDA represents earnings before deductions for net interest expense,
loss on sale of receivables, income taxes, depreciation, amortization,
other income and expense and the non-cash portion of non-recurring
charges. EBITDA does not represent and should not be considered as an
alternative to net income or cash flow from operations as determined by
generally accepted accounting principles.
Net Sales: The Company's net sales increased 15.1% to approximately $478.1
million in the first quarter of 1998, up $62.6 million over the comparable 1997
quarter. The overall increase was due primarily to the acquisition from Perstorp
A.B. ("Perstorp") in December 1997 of its remaining interest in the Collins &
Aikman/Perstorp automotive acoustics joint venture operations in Sweden, Belgium
and France (the "Collins & Aikman/Perstorp Joint Venture"), the acquisition of
certain of Perstorp's German operations in August 1997 (the "German Operations")
and the acquisition of Kigass on February 2, 1998. The Company assumed effective
control of Kigass, which is located in the United Kingdom, on January 1, 1998.
These acquired entities generated combined sales of $56.6 million during the
quarter ended March 28, 1998.
The Company operates five divisions, with seven primary product lines. Certain
products are sold by more than one division. Sales in the Company's product
lines are discussed below. As a result of the Company's acquisition and
expansion activities, certain prior year product line sales data has been
recategorized to provide comparability.
I-10
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation (continued)
Molded Floor Carpet: Molded floor carpet sales for the first quarter of 1998
increased 6.3% to $105.4 million, up $6.2 million from the first quarter of
1997. Sales were positively impacted by increased sales to the Chrysler LH and
the Buick Regal, offset by decreased sales to the Chrysler Minivan.
Luggage Compartment Trim: Luggage compartment trim sales for the first quarter
of 1998 increased 8.4% to $25.8 million, up $2.0 million from the first quarter
of 1997. The increase is attributable to revenue generated by the entities
constituting the former Collins & Aikman/Perstorp Joint Venture, offset by
decreased sales in the North American market resulting from lower sales to the
Honda Accord and the Pontiac Grand Prix.
Accessory Floormats: Accessory floormat sales for the first quarter of 1998
increased 14% to $39.6 million, up $4.9 million from the first quarter of 1997.
This increase is attributable to sales to the GM C/K truck series and Ford
Explorer. Overseas sales also increased to Honda and Subaru, offset by a decline
in sales to Toyota and Nissan.
Automotive Bodycloth: Automotive bodycloth sales for the first quarter of 1998
decreased 15% to $66.2 million, down $11.6 million from the first quarter of
1997. Sales increases to the Nissan Altima were offset by decreased sales to the
Pontiac Grand Am and the Chevrolet Lumina/Impala. Sales were also adversely
affected by an increased demand for leather seating applications during the
quarter.
Plastic-Based Interior Trim Systems: Plastic-based interior trim systems sales
for the first quarter of 1998 increased 52% to $108.9 million, up $37.3 million
from the first quarter of 1997. This increase is primarily due to the
acquisitions of Kigass and Perstorp's remaining interest in the former Collins &
Aikman/Perstorp Joint Venture, which generated combined sales of plastic
components of $31.4 million in the first quarter of 1998. Sales at the Collins &
Aikman Plastics, Inc. ("C&A Plastics") North American locations increased more
than $5.8 million principally due to sales to the Buick Regal/Century, partially
offset by decreased sales to the Cadillac DeVille/Concours.
Convertible Top Systems: Convertible top systems sales for the first quarter of
1998 increased 37% to $30.8 million, up $8.2 million from the first quarter of
1997. This increase resulted primarily from the spring ramp-up, with increased
volumes of the Ford Mustang, Chrysler Sebring and Chevrolet Corvette, offset by
lower sales to Alfa Romeo. Management currently expects convertible build rates
to decrease for the balance of the year, with the spring ramp-up easing off in
the latter half of the second quarter.
Acoustical Products: Acoustical products sales for the first quarter of 1998
increased 42.1%, to $53.7 million, up $15.9 million from the first quarter of
1997. This increase is attributable to the acquisitions of the German Operations
as well as Perstorp's remaining interest in the operations which were formerly
included in the Collins & Aikman/Perstorp Joint Venture. These operations
generated aggregate sales of $15.4 million in the first quarter of 1998.
Other: The Company also had sales of other products of $47.7 million in the
first quarter of 1998 and $48.0 million in the first quarter of 1997. These
products include headliner fabric, casket lining, residential floormats and
fabric for industrial uses.
Approximately 41% of the Company's sales in the first quarter of 1998 were
attributable to products utilized in vehicles built outside North America,
compared to approximately 32% in the first quarter of 1997. The change in sales
mix is attributable to the Company's recent acquisitions in the United Kingdom,
Germany, Sweden, France and Belgium.
The above factors resulted in the Company's average revenue per North American
produced vehicle increasing to approximately $93 for the first quarter of 1998,
compared to an average of approximately $89 for the fiscal 1997 year. The
Company's content per build in Europe was approximately $18 for the first
quarter of 1998, compared to an average of approximately $17 for the fiscal 1997
year, including the operations of the Collins & Aikman/Perstorp Joint Venture.
Gross Margin: For the first quarter of 1998, gross margin was 16.2%, down from
16.9% in the comparable period in 1997. The decrease in gross margin is due in
part to lower volume and unfavorable product mix in automotive bodycloth and
inefficiencies associated with the relocation and closing of certain
manufacturing facilities. (See Note F to Condensed Consolidated Financial
Report). In addition, an ice storm in Canada caused business interruptions at
several of the Company's facilities and adversely impacted gross margin.
I-11
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased 24.8% to $37.7 million in the first quarter of
1998, up $7.5 million over the comparable period in 1997. This increase is
primarily due to the acquisitions of Kigass, Perstorp's remaining interest in
the operations constituting the former Collins & Aikman/Perstorp Joint Venture
and the German Operations, which had combined selling, general and
administrative expenses of $4.9 million in the first quarter of 1998. As a
percentage of sales, selling, general and administrative expenses increased to
7.9% in the first quarter of 1998, compared to 7.3% in the comparable 1997
period.
Interest Expense: Interest expense, net of interest income of $0.7 million for
the first quarter of 1998, increased $1.7 million over interest expense
allocated to continuing operations, net of interest income of $0.3 million, for
the first quarter of 1997 to $20.5 million from $18.8 million. Total interest
expense, including amounts allocated to discontinued operations, was $26.4
million for the first quarter of 1997. No amounts were allocated to discontinued
operations during the first quarter of 1998.
Loss on the Sale of Receivables: The Company sells on a continuous basis,
through its Carcorp subsidiary, interests in a pool of accounts receivable. In
connection with the receivables sales, a loss of $1.6 million was recognized in
the first quarter of 1998, compared to a $1.2 million loss, net of amounts
allocated to discontinued operations, in the first quarter of 1997. The total
loss on the sale of receivables, including amounts allocated to discontinued
operations, was $1.6 million in the first quarter of 1997. The increase in the
loss on the sale of receivables is a result of C&A Plastics being added as a
seller under the Receivables Facility during June 1997.
Other Expense: Other expense decreased principally due to lower foreign currency
transaction losses during the first quarter of 1998 in comparison to the first
quarter of 1997.
Income Taxes: In the first quarter of 1998, the Company recognized an $8.5
million tax provision compared to an $8.3 million tax provision in the first
quarter of 1997. The Company's effective tax rate was 49.5% in the first quarter
of 1998, compared to 42.4% in the first quarter of 1997. The increase in the
effective tax rate is due to a higher proportion of foreign income tax at
greater than U.S. rates and the impact of certain state taxes.
Discontinued Operations: No income from discontinued operations has been
reflected for the first quarter of 1998, as the operations of Wallcoverings have
been charged to the Company's discontinued operations reserves. The Company's
income from discontinued operations was $0.9 million for the first quarter of
1997.
The Company recorded a loss of $21.1 million, net of an income tax benefit of
$33.0, million in September 1997, to adjust the recorded value of Wallcoverings
to the expected proceeds. Accordingly, no gain or loss resulted from the sale of
Wallcoverings.
The sale of Floorcoverings for approximately $195.6 million was completed in
February 1997, resulting in a gain on the sale of discontinued operations of
$85.3 million, net of income taxes of $53.4 million.
Net Income: The combined effect of the foregoing resulted in net income of $8.7
million in the first quarter of 1998, compared to $97.5 million in the first
quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company and its subsidiaries had cash and cash equivalents totaling
$14.9 million and $24.0 million at March 28, 1998 and December 27, 1997,
respectively. The Company had a total of $234.0 million of borrowing
availability under its credit arrangements as of March 28, 1998. The total was
comprised of $227.3 million under the Revolving Facility, approximately $2.7
million under bank demand lines of credit in Canada and Austria, and $4.0
million available under the Receivables Facility.
As part of a recapitalization in 1994, the Company entered into credit
facilities consisting of (i) a Term Loan Facility, (ii) a Revolving Facility
(together with the Term Loan Facility, the "Credit Agreement Facilities") and
(iii) a bridge receivables facility, which was terminated and replaced with the
Receivables Facility described below. On
I-12
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
December 22, 1995, the Company and C&A Products entered into a $197 million
credit facility (the "Term Loan B Facility") to finance the January 1996
purchase of C&A Plastics.
On June 3, 1996, the Company and C&A Products entered into an amendment
and restatement (the "Amendment") of the Credit Agreement Facilities and the
Term Loan B Facility (collectively, the "Bank Credit Facilities"). The Amendment
was effected in connection with the sale of the 11-1/2% Senior Subordinated
Notes due 2006 (the "Subordinated Notes") described below and the use of
proceeds from such sale to repay various outstanding loans under the Credit
Agreement Facilities. As a result of the Amendment and the repayment of a
portion of the Credit Agreement Facilities with a portion of the proceeds from
the Subordinated Notes, the Bank Credit Facilities consisted of (i) the Term
Loan Facility, in an aggregate principal amount of $195 million (including a $45
million facility in Canada), payable in installments until final maturity on
July 13, 2002, (ii) the Term Loan B Facility, in the principal amount of $195.8
million, payable in installments until final maturity on December 31, 2002, and
(iii) the Revolving Facility, having an aggregate principal amount of up to $250
million and terminating on July 13, 2001.
The Company has discussed with its bank group refinancing and replacing
its existing credit facilities primarily to accommodate the more global nature
of the Company's operations and to amend certain financial covenants (the
"Proposed Facilities"). The Proposed Facilities are currently expected to
consist of: (i) a five year senior secured term loan facility in an aggregate
principal amount of up to $100 million, (ii) a seven year senior secured term
loan facility in an aggregate principal amount of up to $125 million and (iii) a
five year senior secured revolving credit facility in an aggregate principal
amount of up to $250 million (of which $60 million (or the equivalent in
Canadian dollars) would be available to certain of the Company's Canadian
subsidiaries and of which up to $50 million would be available as a letter of
credit facility for general corporate purposes). The Proposed Facilities are
also expected to include a provision for up to an additional $150 million in
loan borrowings at any time up to the termination of the seven year senior
secured term loan facility. This additional $150 million facility would be
uncommitted. The Company currently expects to enter into the $475 million of
Proposed Facilities in the second quarter of 1998.
On February 6, 1997, the Company sold its Floorcoverings subsidiary for
approximately $195.6 million. The net proceeds were used to pay down the
outstanding portion of the Revolving Facility and a portion of the Receivables
Facility. The Company completed the sale of the Mastercraft Group in July 1997
for a purchase price of approximately $310 million, subject to adjustment. The
Company utilized a portion of the net proceeds from the sale to further reduce
long-term debt. In addition, effective July 16, 1997, receivables generated by
members of the Mastercraft Group ceased to be sold in connection with the
Receivables Facility, as discussed below. Also, the Company completed the sale
of Airbag in July 1997 for a purchase price of approximately $56 million.
Pursuant to the indenture governing the JPS Automotive 11-1/8% Senior Notes due
2001 (the "JPS Automotive Senior Notes"), in connection with such sale, the
Company caused JPS Automotive to make an offer to purchase (up to the amount of
the net proceeds from the sale) the JPS Automotive Senior Notes at 100% of their
principal amount. Pursuant to such offer (which expired September 16, 1997), JPS
Automotive repurchased and retired $23 thousand principal amount of JPS
Automotive Senior Notes. In December 1997, the Company repaid $88.5 million
under the Term Loan Facility (including $27 million under the Canadian facility)
and $13.5 million under the Term Loan B Facility.
On March 13, 1998, the Company sold Wallcoverings for $71.2 million,
subject to post-closing adjustment, and an option for 6.7% of the common stock
of the purchaser outstanding as of the closing date. The proceeds were used to
repay long-term debt.
At March 28, 1998, the Company had outstanding $17.8 million on the
Term Loan Facility and $167.4 million on the Term Loan B Facility. No amounts
were outstanding under the Revolving Credit Facility.
The Bank Credit 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, amortization and other non-cash charges) and interest coverage
ratios, leverage and liquidity tests and various other restrictive covenants
which are customary for such facilities. Certain of these tests and covenants
were waived for the second, third and fourth quarters of 1997 and the first
quarter of 1998 in connection with the third quarter 1997 charges incurred at
C&A Plastics and the sales of the Mastercraft Group and Floorcoverings. As
discussed above, the Company expects to refinance and replace its existing
credit facilities in the second quarter of 1998.
I-13
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
The Proposed Facilities are expected to include
various restrictive covenants including maintenance of EBITDA and interest
coverage ratios, leverage and liquidity tests and various other restrictive
covenants similar to those contained in the Bank Credit Facilities, although the
specifics of certain tests and covenants are expected to vary. In addition,
under the Bank Credit Facilities, C&A Products is generally prohibited from
paying dividends or making other distributions to the Company except to the
extent necessary to allow the Company to (w) pay taxes and ordinary expenses,
(x) make permitted repurchases of shares or options, (y) make permitted
investments in finance, foreign or acquired subsidiaries and (z) pay permitted
dividends. In addition, the Company is permitted to pay dividends and repurchase
shares of the Company in any fiscal year in an aggregate amount equal to the
greater of (i) $12 million (which amount was increased to $24 million for fiscal
1997) and (ii) if certain financial ratios are satisfied, 25% of the Company's
consolidated net income for the previous fiscal year, and is permitted to pay
additional dividends in amounts representing certain net proceeds from the sale
of Wallcoverings. The Company's obligations under the Bank Credit Facilities are
secured by a pledge of the stock of C&A Products and its significant
subsidiaries. It is expected that the Proposed Facilities will contain
restrictions on dividends and distributions similar to those contained in the
Bank Credit Facilities and will also be secured by a pledge of the stock of C&A
Products and its significant subsidiaries.
On June 10, 1996, C&A Products issued $400 million principal amount of
Subordinated Notes, which mature in 2006. The Subordinated Notes are guaranteed
by the Company. The indenture governing the Subordinated Notes generally
prohibits the Company, C&A Products and any Restricted Subsidiary (as defined)
from making certain payments and investments (generally, dividends and
distributions on their capital stock; repurchases or redemptions of their
capital stock; repayment prior to maturity of debt subordinated to the
Subordinated Notes; and investments (other than permitted investments))
("Restricted Payments") if (i) there is a default under the Subordinated Notes
or (ii) after giving pro forma effect to the Restricted Payment, C&A Products
could not incur at least $1.00 of additional indebtedness under the indenture's
general test for the incurrence of indebtedness, which is a specified ratio
(currently 2.0 to 1.0 and increasing to 2.25 to 1.0 after June 30, 1998) of cash
flow to interest expense or (iii) the aggregate of all such Restricted Payments
from the issue date exceeds a specified threshold (based, generally, on 50% of
cumulative consolidated net income since the quarter in which the issue date
occurred plus 100% of the net proceeds of capital contributions to C&A Products
from stock issuances by the Company). These prohibitions are subject to a number
of significant exceptions, including dividends to stockholders of the Company or
stock repurchases not exceeding $10 million in any fiscal year or $20 million in
the aggregate until the maturity of the Subordinated Notes, dividends to
stockholders of the Company of the amount of net available proceeds from the
sale of Wallcoverings and dividends to the Company to permit it to pay its
operating and administrative expenses. The Subordinated Notes indenture also
contains other restrictive covenants (including, among others, limitations on
the incurrence of indebtedness, asset dispositions and transactions with
affiliates) which are customary for such exceptions. The Company does not expect
to meet the Subordinated Note indenture's general test for the incurrence of
indebtedness for a portion of the second half of 1998. However, the Company
expects all its borrowing needs for the foreseeable future (including the
Proposed Facilities) to be allowed under exceptions for permitted indebtedness
in the indenture.
In connection with the closing of the acquisition of JPS Automotive
(the "JPS Automotive Acquisition"), in early December 1996 the Company amended
the Bank Credit Facilities primarily to allow for the existence of the JPS
Automotive Senior Notes and to allow the Company to use the proceeds from the
sale of Floorcoverings to pay down the Revolving Facility and a portion of the
Receivables Facility. As part of the JPS Automotive Acquisition, the Company
paid off approximately $15 million of outstanding bank indebtedness of JPS
Automotive. The cash portion of the purchase price of the JPS Automotive
Acquisition, the purchase price for the acquisition of a minority interest in a
JPS Automotive subsidiary and the bank indebtedness at JPS Automotive that was
repaid at the time of closing were funded through the Company's Revolving
Facility. In addition, as a result of the JPS Automotive Acquisition, holders of
the JPS Automotive Senior Notes had the right to put their notes to JPS
Automotive at a price of 101% of their principal amount plus accrued interest.
Approximately $3.9 million principal amount of JPS Automotive Senior Notes were
so put to JPS Automotive and then purchased by JPS Automotive in the first
quarter of 1997. During the second quarter of 1997, an additional $19.4 million
principal amount of JPS Automotive Notes were purchased by JPS Automotive on the
open market and retired. No open market purchases were made during the third and
fourth quarters of 1997, although $23 thousand principal amount of JPS
Automotive Senior Notes were repurchased and retired pursuant to an offer to
purchase due to the sale of Airbag. No amounts were purchased during the first
quarter of 1998. After giving effect to the above, JPS Automotive had as of
March 28, 1998 approximately $91.6 million of indebtedness outstanding
(including a premium of $3.0 million) related to the JPS Automotive Senior
Notes. JPS Automotive repurchased and retired $2.0
I-14
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
million principal amount of JPS Automotive Senior Notes in April 1998. The
Company is operating JPS Automotive as a restricted subsidiary under the Bank
Credit Facilities and the indenture governing the Subordinated Notes.
The indenture governing the JPS Automotive Senior Notes generally
prohibits JPS Automotive from making certain restricted payments and investments
(generally, dividends and distributions on its equity interests; purchases or
redemptions of its equity interests; purchases of any indebtedness subordinated
to the JPS Automotive Senior Notes; and investments other than as permitted)
("JPS Automotive Restricted Payments") unless (i) there is no default under the
JPS Automotive Senior Notes indenture; (ii) after giving pro forma effect to the
JPS Automotive Restricted Payment, JPS Automotive would be permitted to incur at
least $1.00 of additional indebtedness under the indenture's general test for
the incurrence of indebtedness which is a specified ratio (currently 2.5 to 1.0)
of cashflow to interest expense, and (iii) the aggregate of all JPS Automotive
Restricted Payments from the issue date is less than a specified threshold
(based, generally, on 50% of JPS Automotive's cumulative consolidated net income
since the issue date plus 100% of the aggregate net cash proceeds of the
issuance by JPS Automotive of certain equity and convertible debt securities and
cash contributions to JPS Automotive) (the "JPS Automotive Restricted Payments
Tests"). These conditions were satisfied immediately following the closing of
the JPS Automotive Acquisition and as of March 28, 1998. The JPS Automotive
Restricted Payments Tests are subject to a number of significant exceptions. The
indenture governing the JPS Automotive Senior Notes also contains other
restrictive covenants (including, among others, limitations on the incurrence of
indebtedness and issuance of preferred stock, asset dispositions and
transactions with affiliates including the Company and C&A Products) which are
customary for such securities. These covenants are also subject to a number of
significant exceptions.
Additionally, in December 1996, in connection with the JPS Automotive
Acquisition, the Company entered into a $200 million delayed draw term loan (the
"Delayed Draw Term Loan"). The Delayed Draw Term Loan is a 5.25 year term loan
which was entered into to finance or refinance the purchase of any JPS
Automotive Senior Notes put by the holders to JPS Automotive as a result of the
change in control resulting from the JPS Automotive Acquisition or otherwise
acquired. The Company was entitled to draw upon the Delayed Draw Term Loan until
December 11, 1997. Prior to the JPS Automotive Acquisition, the Company had
purchased in the open market $68.0 million principal amount of JPS Automotive
Senior Notes, which were subsequently retired by JPS Automotive. As of March 28,
1998, $23.8 million was outstanding under the Delayed Draw Term Loan and there
was no further availability. The Delayed Draw Term Loan's security and
restrictive covenants are identical to those in the Bank Credit Facilities.
Certain of these tests and covenants were waived for the second, third and
fourth quarters of 1997 and the first quarter of 1998 in connection with the
charges incurred at C&A Plastics and the sales of the Mastercraft Group and
Floorcoverings. The Delayed Draw Term Loan and the Bank Credit Facilities are
expected to be refinanced and replaced in the second quarter of 1998 with the
Proposed Facilities. The Proposed Facilities are expected to include various
restrictive covenants including maintenance of EBITDA and interest coverage
ratios, leverage and liquidity tests and various other restrictive covenants
similar to those contained in the Bank Credit Facilities, although the specifics
of certain tests and covenants are expected to vary.
On March 31, 1995, C&A Products entered, through the Trust formed by
Carcorp, into 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"). 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 automotive industry, the rate of collection on those receivables
and other characteristics of those receivables which affect their eligibility
(such as the bankruptcy or downgrading below investment grade of the obligor,
delinquency and excessive concentration). Based on these criteria, at March 28,
1998 the maximum amount available under the variable funding certificates was
$75 million, of which $4.0 million was available and unutilized.
I-15
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
In connection with the then proposed disposition of Wallcoverings,
Wallcoverings was terminated as a Seller of receivables under the Receivables
Facility on September 21, 1996. The Company also terminated Floorcoverings as of
February 6, 1997 as a Seller of receivables under the Receivables Facility in
connection with the Company's sale of Floorcoverings. On March 25, 1997, the
Trust redeemed $30 million face value of term certificates primarily as a result
of the Trust collecting Wallcoverings and Floorcoverings receivables which were
not replaced by eligible receivables. In connection with the sale of the
Mastercraft Group, effective July 16, 1997 receivables generated by the
Mastercraft Group ceased to be sold to Carcorp and transferred to the Trust, and
the Company terminated Ack-Ti-Lining, Inc., a member of the Mastercraft Group,
as a Seller of receivables under the Receivables Facility. The collections of
the Mastercraft Group receivables resulted in the redemption of $30 million face
value of term certificates on November 25, 1997. The reduction in the term
certificates was offset by increases in the variable funding certificates
through the addition of C&A Plastics and its subsidiaries as Sellers under the
facility.
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. 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, modifications of the terms of receivables, and changes
in credit and collection practices) customary for facilities of this type. The
commitments under the Receivables Facility are subject to termination 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 also has outstanding indebtedness totaling approximately
$32.8 million at its subsidiaries operating in Sweden, Belgium and France
constituting the former operations of the Collins & Aikman/Perstorp Joint
Venture. This debt consists of: (i) a 120 million Swedish krona loan ($15.3
million at March 28, 1998), which bears interest at the Stockholm interbank
offered rate for Krona - denominated deposits ("STIBOR") plus 0.75% and is
secured by a pledge of the operating assets of the Swedish operating subsidiary;
(ii) a 108 million Swedish krona loan ($10.3 million at March 28, 1998), which
bears interest at STIBOR plus 0.75% and is due in June 1998; and (iii) a 200
million Belgium franc loan ($5.2 million at March 28, 1998), which bears
interest at the Brussels interbank offered rate for deposits denominated in
Belgian francs ("BIBOR") plus 1.0% and is secured by a pledge of the operating
assets of the Belgian operating subsidiary. In addition, Perstorp has provided a
loan in the amount of 75 million Belgian francs ($2.0 million at March 28,
1998), to the Belgian subsidiary, which bears interest at BIBOR plus 1% and is
due on August 1, 1998.
The Company has a master equipment lease agreement for a maximum of $50
million of machinery and equipment. At March 28, 1998, the Company had $20.0
million of potential availability under this master lease for future machinery
and equipment requirements of the Company subject to the lessor's approval. In
the quarter ended March 28, 1998, the Company made lease payments relating to
continuing operations of approximately $1.4 million for machinery and equipment
sold and leased back under this master lease. The Company expects lease payments
for continuing operations under this master lease to be $4.4 million during the
remainder of fiscal 1998.
The Company's principal sources of funds are cash generated from
continuing operating activities, borrowings under its credit facilities and the
sale of receivables under the Receivables Facility. Net cash provided by the
operating activities of the Company's continuing operations was $23.3 million
for the first quarter of 1998.
The Company's principal uses of funds from operating activities and
borrowings for the next several years are expected to be to fund interest and
principal payments on its indebtedness, net working capital increases and
capital expenditures. At March 28, 1998, the Company had total outstanding
indebtedness of $743.8 million (excluding approximately $22.7 million of
outstanding letters of credit) at an average interest rate of 9.9% per annum. Of
the total outstanding indebtedness, $609.0 million relates to the Bank Credit
Facilities and the Subordinated Notes.
I-16
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
The Company's Board of Directors authorized the expenditure of up to
$10 million in 1998 to repurchase shares of the Company's Common Stock at
management's discretion. The Company believes it has sufficient liquidity under
its existing credit arrangements to effect the repurchase program. The Company
spent $2.1 million to repurchase shares during the first quarter of fiscal 1998.
Indebtedness under the Term Loan Facility, the Revolving Facility and
the Delayed Draw Term Loan bears interest at a per annum rate equal to the
Company's choice of (i) Chase Manhattan Bank's ("Chase's") Alternate Base Rate
(which is the highest of Chase's announced prime rate, the Federal Funds Rate
plus .5% and Chase's base certificate of deposit rate plus 1%) plus a margin
(the "ABR 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 (the "LIBOR margin") ranging from 1% to
1.75%. Margins, which are subject to adjustment based on changes in the
Company's ratios of senior funded debt to EBITDA and cash interest expense to
EBITDA, were 1.75% in the case of the LIBOR Margin and .75% in the case of the
ABR Margin on March 28, 1998. Such margins will increase by .25% over the
margins then in effect on July 13, 1999. Indebtedness under the Term Loan B
Facility bears interest at a per annum rate equal to the Company's choice of (i)
Chase's Alternate Base Rate (as described above) plus a margin of 1.25% or (ii)
LIBOR of one, two, three or six months, as selected by the Company, plus a
margin of 2.25%. The weighted average rate of interest on the Bank Credit
Facilities and the Delayed Draw Term Loan at March 28, 1998 was 7.8%. As
discussed above, the Company is seeking to refinance and replace its existing
credit facilities in the second quarter of 1998 with the Proposed Facilities,
which, if entered into, will bear interest as set forth therein at rates which
are expected to be comparable to or slightly lower than those of the Company's
existing credit facilities. The weighted average interest rate on the sold
interests under the Receivables Facility at March 28, 1998 was 6.7%. 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. The Subordinated Notes bear interest at a rate of 11.5% per annum.
The JPS Automotive Senior Notes pay interest at a rate of 11.125% per annum.
Cash interest paid was $7.1 million and $12.2 million for the quarters ended
March 28, 1998 and March 29, 1997, respectively.
Due to the variable interest rates under the Bank Credit Facilities,
the Delayed Draw Term Loan and the Receivables Facility, the Company is
sensitive to increases in interest rates. Accordingly, during April 1996, the
Company limited its exposure through April 2, 1998 on $80 million of notional
principal amount utilizing zero cost collars with 4.75% floors and a weighted
average cap of 7.86%. The collars were not renewed upon their expiration. During
April 1997, the Company entered into a two year interest rate swap agreement in
which the Company effectively exchanged $27.0 million of 11-1/2% fixed rate debt
for floating rate debt at six month LIBOR plus a 4.72% margin. In connection
with this swap agreement, the Company also limited its interest rate exposure by
entering into an 8.50% cap on LIBOR on $27.0 million of notional principal
amount. Based upon amounts outstanding at March 28, 1998, a .5% increase in
LIBOR (5.7% at March 28, 1998) would impact interest costs by approximately $1.0
million annually on the Bank Credit Facilities and the Delayed Draw Term Loan
and $1.0 million annually on the Receivables Facility. During April 1997, the
Company entered into an agreement to limit its foreign currency exposure related
to $45.0 million of US dollar denominated borrowings of a Canadian subsidiary.
The agreement swaps LIBOR based interest rates for the Canadian equivalent as
well as fixes the exchange rate for the principal balance when the amount comes
due in 2002. At March 28, 1998, the remaining $18.0 million of U.S. dollar
denominated borrowings of the Canadian subsidiary were hedged under this
agreement.
The current maturities of long-term debt primarily consist of the
current portion of the Bank Credit Facilities, vendor financing, an industrial
revenue bond and other miscellaneous debt.
The maturities of long-term debt of the Company's continuing operations
during the remainder of 1998 and for 1999, 2000, 2001 and 2002 are $14.4
million, $24.1 million, $54.0 million, $126.0 million and $80.9 million,
respectively. The JPS Automotive Senior Notes will mature in 2001. In addition,
the Bank Credit Facilities and the Delayed Draw Term Loan provide for mandatory
prepayments of the Term Loan and Term Loan B Facilities and the Delayed Draw
Term Loan with certain excess cash flow of the Company, net cash proceeds of
certain asset sales or other dispositions by the Company other than proceeds
generated from the sale of Floorcoverings or Wallcoverings, net cash proceeds of
certain sale/leaseback transactions and net cash proceeds of certain issuances
of debt obligations. The Proposed Facilities, if entered into, are expected to
include similar provisions regarding mandatory prepayments. The indenture
governing the Subordinated Notes provides that in the event of certain asset
dispositions, C&A Products must apply net
I-17
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
proceeds (to the extent not reinvested in the business) first to repay Senior
Indebtedness (as defined, which includes the Bank Credit Facilities and the
Delayed Draw Term Loan and will include the Proposed Facilities, if entered
into) and then, to the extent of remaining net proceeds, to make an offer to
purchase outstanding Subordinated Notes at 100% of their principal amount plus
accrued interest. C&A Products must also make an offer to purchase outstanding
Subordinated Notes at 101% of their principal amount plus accrued interest if a
Change in Control (as defined) of the Company occurs. In addition, the Delayed
Draw Term Loan (if not refinanced or replaced as expected) will require
quarterly installments of approximately $2.2 million beginning in July 1999 and
ending January 2002. In addition, the indenture governing the JPS Automotive
Senior Notes requires JPS Automotive to apply the net proceeds from the sale of
assets of JPS Automotive to offer to purchase JPS Automotive Senior Notes, to
the extent not applied within 270 days of such asset sale to an investment in
capital expenditures or other long term tangible assets of JPS Automotive, to
permanently reduce senior indebtedness of JPS Automotive or to purchase JPS
Automotive Senior Notes in the open market. As discussed above, the Company
caused JPS Automotive to make such an offer to purchase JPS Automotive Senior
Notes in connection with the sale of Airbag.
The Company makes capital expenditures on a recurring basis for
replacements and improvements. As of March 28, 1998, the Company's continuing
operations had approximately $41.1 million in outstanding capital expenditure
commitments. The Company currently anticipates that its capital expenditures for
continuing operations for fiscal 1998 (including costs incurred to date and
outstanding commitments in the remainder of fiscal 1998) will aggregate
approximately $85 million, a portion of which may be financed through leasing.
The Company's capital expenditures in future years will depend upon demand for
the Company's products and changes in technology.
The Company is sensitive to price movements in its raw material supply
base. During the first quarter of 1998, prices for most of the Company's primary
raw materials remained constant with price levels at December 27, 1997. 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 value engineering/value analysis and cost
improvement programs and by continued reductions in the cost of nonconformance.
Since Wallcoverings was classified as a discontinued operation in April
1996, Wallcoverings continued to experience sales declines. From April 1996
through October 1997, the Company expended approximately $67.1 million to fund
operations, working capital and capital expenditures and to replace receivables
previously sold to Carcorp. Of these amounts, $21.0 million represents
repayments of intercompany amounts owed to Wallcoverings. From November 1, 1997
through its disposition, the Company expended an estimated $19.2 million
principally to fund Wallcoverings' operations, working capital and capital
expenditure requirements. Of this amount, an estimated $13.2 million, which is
subject to adjustment, was the responsibility of the purchaser of Wallcoverings
under the sales agreement and was included in the purchase price paid at
closing.
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 $28.0 million during the remainder of fiscal 1998. 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 cash needs
relating to discontinued operations can be provided by operating activities from
continuing operations and by borrowings under its credit facilities.
I-18
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
Tax Matters
At December 27, 1997, the Company had outstanding net operating loss
carryforwards ("NOLs") of approximately $119.4 million for Federal income tax
purposes. Substantially all of these NOLs expire over the period from 2008 to
2011. The Company also has unused Federal tax credits of approximately $14.9
million, $2.2 million of which expire during the period 1998 to 2006.
Approximately $17.1 million of the Company's NOLs and $2.2 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. Future sales of common stock by the Company
or its principal shareholders, or changes in the composition of its principal
shareholders, could constitute a "change in control" that would result in annual
limitations on the Company's use of its NOLs and unused tax credits. Management
cannot predict whether such a "change in control" will occur. If such a "change
in 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 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
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 future 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 United States 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 theory 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
PRPs, 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 liability with respect
to environmental sites, provisions have been made in accordance with generally
accepted accounting principles. As of March 28, 1998, including sites relating
to the acquisition of C&A Plastics, JPS Automotive and Perstorp Components and
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 25 sites where the Company is
participating in the investigation or remediation of the site, either directly
or through financial contribution, and 9 additional sites where the Company is
alleged to be responsible for costs of investigation or remediation. As of March
28, 1998, the Company's estimate of its liability for these 34 sites is
approximately $33.2 million. As of March 28, 1998, the Company has established
reserves of approximately $45.8 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 future results of operations. However, there can be no assurance that the
Company has identified or properly assessed all
I-19
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
potential environmental liability arising from the activities or properties of
the Company, its present and former subsidiaries and their corporate
predecessors.
Impact of Year 2000 Compliance
In order to improve operating performance, the Company has undertaken,
or will undertake in the near future, a number of significant information
systems initiatives. One goal of such systems initiatives is to make the
Company's systems Year 2000 compliant. Based upon a recent assessment, the
Company expects at this time that the cost of the overall information systems
initiatives (which includes the cost of ensuring that its remaining computer
systems are Year 2000 compliant) should not have a material adverse effect on
the Company. The Company has completed a preliminary assessment of each of its
operations and their Year 2000 readiness and believes that appropriate actions
are being taken. The Company currently expects to complete its overall Year 2000
remediation prior to any anticipated impact on its operations. The Company
believes that, with modifications to existing software and conversions to new
systems, the Year 2000 issue should not pose significant operational problems
for its computer systems. However, if such modifications and conversions are not
made, or are not completed timely, the Year 2000 issue could have a material
adverse impact on the operations of the Company. Whether such modifications and
conversions are timely completed may to some extent depend on the availability
of outside consultants as well as establishing reliable telecommunication links
with the Company's operations in Europe and Mexico. Further, while the Company
has initiated communications with a number of its significant suppliers to
determine the extent to which the Company's interface systems are vulnerable to
those third parties' failure to remediate their own Year 2000 issues, and plans
to initiate similar communications with the balance of its major suppliers and
major customers in 1998, there is no guarantee that the systems of other
companies on which the Company's systems rely will be timely converted and would
not have an adverse effect on the Company's systems.
Currency Rate Exposure
The primary purpose of the Company's foreign currency hedging
activities is to protect against the volatility associated with foreign currency
purchase transactions. Corporate policy prescribes the range of allowable
hedging activity. The Company primarily utilizes forward exchange contracts and
purchased options with durations of generally less than 12 months.
Gains and losses related to qualifying hedges of foreign currency firm
commitments or anticipated transactions are included in the basis of the
underlying transactions. To the extent that a qualifying hedge is terminated or
ceases to be effective as a hedge, any deferred gains and losses up to that
point continue to be deferred and are included in the basis of the underlying
transaction. All other foreign exchange contracts are marked-to-market on a
current basis and are generally charged to other income (expense). To the extent
that the anticipated transactions are no longer likely to occur, the related
hedges are closed with gains or losses charged to earnings on a current basis.
Based on the Company's overall currency rate exposure as of March 28,
1998, including derivative and other foreign currency sensitive instruments, a
near-term change in currency rates in amounts indicated by historical currency
rate movements would not materially affect the consolidated financial position,
results of operations, or cash flows of the Company.
Safe Harbor Statement
This Form 10-Q contains statements which, to the extent they are not
historical fact, constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 (the "Safe Harbor Acts"). All forward-looking statements
involve risks and uncertainties. The forward-looking statements in this Form
10-Q are intended to be subject to the safe harbor protection provided by the
Safe Harbor Acts.
Risks and uncertainties that could cause actual results to vary
materially from those anticipated in the forward-looking statements included in
this Form 10-Q include industry-based factors such as possible declines in the
North American or European automobile and light truck build, labor strikes at
the Company's major customers, changes in consumer preferences, dependence on
significant automotive customers, the level of competition in the automotive
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<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation (continued)
supply industry and Year 2000 compliance issues, as well as factors more
specific to the Company such as the substantial leverage of the Company and its
subsidiaries, limitations imposed by the Company's debt facilities and changes
made in connection with the integration of operations acquired by the Company.
The Company's divisions may also be affected by changes in the popularity of
particular car models or the loss of programs on particular car models. For a
discussion of certain of these and other important factors which may affect the
Company's operations, products and markets, see "ITEM 1. BUSINESS" in the
Company's Annual Report on Form 10-K for the fiscal year ended December 27, 1997
(the "10-K") and "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" in the 10-K and above in this Form 10-Q and
also see the Company's other filings with the Securities and Exchange
Commission.
Item 3. Quantitative And Qualitative Disclosures About Market Risk
Disclosures are not required at this time.
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 Report on
Form 10-K for the fiscal year ended December 27, 1997.
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 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 3.2 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year ended
January 27, 1996.
3.3 - Certificate of Elimination of Cumulative Exchangeable Redeemable
Preferred Stock of Collins & Aikman Corporation is hereby
incorporated by reference to Exhibit 3.3 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter ended
October 28, 1995.
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 - Indenture, dated as of June 1, 1996, between Collins & Aikman
Products Co., Collins & Aikman Corporation and First Union
National Bank of North Carolina, as Trustee, is hereby
incorporated by reference to Exhibit 4.2 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter ended
April 27, 1996.
4.3 - First Supplemental Indenture dated as of June 1, 1996, between
Collins & Aikman Products Co., Collins & Aikman Corporation and
First Union National Bank of North Carolina, as Trustee, is hereby
incorporated by reference to Exhibit 4.3 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter ended
April 27, 1996.
4.4 - Amended and Restated Credit Agreement, dated as of June 3, 1996,
among Collins & Aikman Products Co., as Borrower, Collins & Aikman
Canada Inc., as Canadian Borrower, Collins & Aikman Corporation,
as Guarantor, the lenders named therein, Bank of America N.T.S.A.
and NationsBank, N.A., as Managing Agents, and Chemical Bank, as
Administrative Agent, is hereby incorporated by reference to
Exhibit 4.1 of Collins & Aikman Corporation's Current Report on
Form 8-K dated June 3, 1996.
II-1
<PAGE>
Exhibit
Number Description
- ------ -----------
4.5 - Amendment, dated as of December 5, 1996, to the Amended and
Restated Credit Agreement, dated as of June 3, 1996, among Collins
& Aikman Products Co., as Borrower, Collins & Aikman Canada Inc.,
as Canadian Borrower, Collins & Aikman Corporation, as Guarantor,
the Lenders parties thereto, and The Chase Manhattan 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 October 26, 1996.
4.6 - Waiver, dated as of June 28, 1997, to the Amended and Restated
Credit Agreement, dated as of June 3, 1996 among Collins & Aikman
Products Co., Collins & Aikman Canada, Inc., Collins & Aikman
Corporation, the Lenders parties thereto and The Chase Manhattan
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 June 28, 1997.
4.7 - Waiver, dated as of October 27, 1997, to the Amended and Restated
Credit Agreement, dated as of June 3, 1996 among Collins & Aikman
Products Co., Collins & Aikman Canada Inc., Collins & Aikman
Corporation, the Lenders parties thereto, and The Chase Manhattan
Bank, as Administrative Agent is hereby incorporated by reference
to Exhibit 4.7 of Collins & Aikman Corporation's Report on Form
10-Q for the fiscal quarter ended September 27, 1997.
4.8 - Waiver, dated as of January 12, 1998, to the Amended and Restated
Credit Agreement, dated as of June 3, 1996 among Collins & Aikman
Products Co., Collins & Aikman Canada Inc., Collins & Aikman
Corporation, the Lenders parties thereto, and The Chase Manhattan
Bank, as Administrative Agent is hereby incorporated by reference
to Exhibit 4.8 of Collins & Aikman Corporation's Report on Form
10-K for the fiscal year ended December 27, 1997.
4.9 - Credit Agreement, dated as of December 5, 1996, among Collins &
Aikman Products Co., as Borrower, Collins & Aikman Corporation, as
Guarantor, the Lenders named therein and The Chase Manhattan 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 October 26, 1996.
4.10 - Waiver, dated as of June 28, 1997, to the Credit Agreement, dated
as of December 5, 1996, among Collins & Aikman Products Co.,
Collins & Aikman Corporation, the Lenders parties thereto and The
Chase Manhattan Bank, as Administrative Agent is hereby
incorporated by reference to Exhibit 4.8 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter ended
June 28, 1997.
4.11 - Waiver, dated as of October 27, 1997, to the Credit Agreement,
dated as of December 5, 1996, among Collins & Aikman Products Co.,
Collins & Aikman Corporation, the Lenders parties thereto, and The
Chase Manhattan Bank, as Administrative Agent is hereby
incorporated by reference to Exhibit 4.10 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter ended
September 27, 1997.
4.12 - Waiver, dated as of January 12, 1998, to the Credit Agreement,
dated as of December 5, 1996, among Collins & Aikman Products Co.,
Collins & Aikman Corporation, the Lenders parties thereto and The
Chase Manhattan Bank, as Administrative Agent is hereby
incorporated by reference to Exhibit 4.12 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year ended
December 27, 1997.
4.13 - Waiver, dated as of March 27, 1998 to the Amended and Restated
Credit Agreement dated as of June 3, 1996 among Collins & Aikman
Products Co., Collins & Aikman Canada Inc., Collins & Aikman
Corporation, the Lenders parties thereto, and The Chase Manhattan
Bank, as Administrative Agent is hereby incorporated by reference
to Exhibit 4.13 of Collins & Aikman Corporation's Report on Form
10-K for the fiscal year ended December 27, 1997.
4.14 - Waiver, dated as of March 27, 1998 to the Credit Agreement, dated
as of December 5, 1996, among Collins & Aikman Products Co.,
Collins & Aikman Corporation, the Lenders parties thereto, and The
Chase Manhattan Bank, as Administrative Agent is hereby
incorporated by reference to Exhibit 4.14 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year ended
December 27, 1997.
II-2
<PAGE>
Exhibit
Number Description
- -------- ------------
4.15 - Amendment, dated as of March 27, 1997 to the Amended and Restated
Credit Agreement, dated as of June 3, 1996, among Collins & Aikman
Products Co., Collins & Aikman Canada, Inc., Collins & Aikman
Corporation, the Lenders parties thereto, and The Chase Manhattan
Bank, as Administrative Agent is hereby incorporated by reference
to Exhibit 4.15 of Collins & Aikman Corporation's Report on Form
10-K for the fiscal year ended December 27, 1997.
4.16 - Amendment, dated as of March 27, 1997, to the Credit Agreement,
dated as of December 5, 1996, among Collins & Aikman Products Co.,
Collins & Aikman Corporation, the Lenders parties thereto, and The
Chase Manhattan Bank, as Administrative Agent is hereby
incorporated by reference to Exhibit 4.16 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year ended
December 27, 1997.
4.17 - Indenture dated as of June 28, 1994, between JPS Automotive
Products Corp., as Issuer, JPS Automotive L.P., as Guarantor and
Shawmut Bank Connecticut, N.A., as Trustee, is hereby incorporated
by reference to Exhibit 4.2 of JPS Automotive Corp.'s Registration
Statement on Form S-1, Registration No. 33-75510.
4.18 - First Supplemental Indenture, dated as of October 5, 1994, between
JPS Automotive Products Corp. and JPS Automotive L.P., as
Co-Obligors, and Shawmut Bank Connecticut, N.A., as Trustee is
hereby incorporated by reference to Exhibit 4.48A of JPS
Automotive L.P.'s and JPS Automotive Products Corp.'s Report on
Form 10-Q for the fiscal quarter ended October 2, 1994.
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 - Amended and Restated Stockholders Agreement dated as of June 29,
1994 among the Company, Collins & Aikman Group, Inc., Blackstone
Capital Partners L.P. and Wasserstein Perella Partners, L.P. is
hereby incorporated by reference to Exhibit 10.1 of Collins &
Aikman Corporation's Report on Form 10-K for the fiscal year ended
January 28, 1995.
10.2 - Employment Agreement dated as of July 18, 1990 between Wickes
Companies, Inc. and an executive officer is hereby incorporated by
reference to Exhibit 10.3 of Wickes Companies, Inc.'s Report on
Form 10-K for the fiscal year ended January 26, 1991.
10.3 - Letter Agreement dated as of May 16, 1991 and Employment Agreement
dated as of July 22, 1992 between Collins & Aikman Corporation and
an executive officer is hereby incorporated by reference to
Exhibit 10.7 of Collins & Aikman Holdings Corporation's Report on
Form 10-K for the fiscal year ended January 30, 1993.
10.4 - First Amendment to Employment Agreement dated as of February 24,
1994 between Collins & Aikman Corporation and an executive officer
is hereby incorporated by reference to Exhibit 10.7 of Collins &
Aikman Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed April 19, 1994.
10.5 - Second Amendment, dated as of October 3, 1996, to the Employment
Agreement, dated as of July 22, 1992, as amended, between Collins
& Aikman Products Co. and an executive officer is hereby
incorporated by reference to Exhibit 10.26 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter ended
October 26, 1996.
10.6 - Third Amendment dated as of August 1, 1997, to the Employment
Agreement dated as of July 22, 1992, as amended, between the
Corporation and an executive officer is hereby incorporated by
reference to Exhibit 10.35 of Collins & Aikman Corporation's
Report on Form 10-Q for the fiscal quarter ended September 27,
1997.
10.7 - Letter Agreement dated as of May 16, 1991 between Collins & Aikman
Corporation and an executive officer is hereby incorporated by
reference to Exhibit 10.14 of Collins & Aikman Holdings
Corporation's Registration Statement on Form S-2 (Registration No.
33-53179) filed April 19, 1994.
II-3
<PAGE>
Exhibit
Number Description
- ------- ------------
10.8 - Employment Agreement dated as of April 6, 1995 between Collins &
Aikman Products Co. and an executive officer is hereby
incorporated by reference to Exhibit 10.24 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year ended
January 28, 1995.
10.9 - Letter Agreement dated as of June 30, 1995 between Collins &
Aikman Corporation and an executive officer is hereby incorporated
by reference to Exhibit 10.6 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended January 27, 1996.
10.10 - Letter Agreement dated October 9, 1992 between Collins & Aikman
Corporation and an executive officer. is hereby incorporated by
reference to Exhibit 10.10 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended December 27, 1997.
10.11 - Employment Agreement dated as of March 3, 1997 between Collins &
Aikman Plastics, Inc. and an executive officer.
10.12 - Collins & Aikman Corporation 1997 Executive Incentive
Compensation Plan is hereby incorporated by reference to Exhibit
10.9 of Collins & Aikman Corporation's Report on Form 10-Q for the
fiscal quarter ended September 27, 1997.
10.13 - Collins & Aikman Corporation Supplemental Retirement Income Plan
is hereby incorporated by reference to Exhibit 10.23 of Amendment
No. 5 to Collins & Aikman Holdings Corporation's Registration
Statement on Form S-2 (Registration No. 33-53179) filed July 6,
1994.
10.14 - 1993 Employee Stock Option Plan, as amended and restated, is
hereby incorporated by reference to Exhibit 10.13 of Collins &
Aikman Corporation's Report on Form 10-Q for the fiscal quarter
ended April 29, 1995.
10.15 - 1994 Employee Stock Option Plan, as amended through February 7,
1997, is hereby incorporated by reference to Exhibit 10.12 of
Collins & Aikman Corporation's Report on Form 10-Q for the fiscal
quarter ended March 29, 1997.
10.16 - 1994 Directors Stock Option Plan is hereby incorporated by
reference to Exhibit 10.15 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended January 28, 1995.
10.17 - Excess Benefit Plan of Collins & Aikman Corporation is hereby
incorporated by reference to Exhibit 10.25 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year ended
January 28, 1995.
10.18 - Change in control agreement dated March 17, 1998 between Collins &
Aikman Corporation and an executive officer is hereby incorporated
by reference to Exhibit 10.17 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended December 27, 1997.
10.19 - Change in control agreement dated March 17, 1998 between Collins &
Aikman Corporation and an executive officer is hereby incorporated
by reference to Exhibit 10.18 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended December 27, 1997.
10.20 - Change in control agreement dated March 17, 1998 between Collins &
Aikman Corporation and an executive officer is hereby incorporated
by reference to Exhibit 10.19 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended December 27, 1997.
10.21 - Change in control agreement dated March 17, 1998 between Collins &
Aikman Corporation and an executive officer is hereby incorporated
by reference to Exhibit 10.20 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended December 27, 1997.
10.22 - Change in control agreement dated March 17, 1998 between Collins &
Aikman Corporation and an executive officer.
II-4
<PAGE>
Exhibit
Number Description
- -------- -------------
10.23 - Lease, executed as of the 1st day of June 1987, between Dura
Corporation and Dura Acquisition Corp. is hereby incorporated by
reference to Exhibit 10.24 of Amendment No. 5 to Collins & Aikman
Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed July 6, 1994.
10.24 - Amended and Restated Receivables Sale Agreement dated as of March
30, 1995 among Collins & Aikman Products Co., Ack-Ti-Lining, Inc.,
WCA Canada Inc., Imperial Wallcoverings, Inc., The Akro
Corporation, Dura Convertible Systems Inc., each of the other
subsidiaries of Collins & Aikman Products Co. from time to time
parties thereto and Carcorp, Inc. is hereby incorporated by
reference to Exhibit 10.18 of Collins & Aikman Corporation's
Report on Form 10-K to the fiscal year ended January 28, 1995.
10.25 - Servicing Agreement, dated as of March 30, 1995, among Carcorp,
Inc., Collins & Aikman Products Co., as Master Servicer, each of
the subsidiaries of Collins & Aikman Products Co. from time to
time parties thereto and Chemical Bank, as Trustee is hereby
incorporated by reference to Exhibit 10.19 of Collins & Aikman
Corporation's Report on Form 10-K to the fiscal year ended January
28, 1995.
10.26 - Pooling Agreement, dated as of March 30, 1995, among Carcorp,
Inc., Collins & Aikman Products Co., as Master Servicer and
Chemical Bank, as Trustee, is hereby incorporated by reference to
Exhibit 10.20 of Collins & Aikman Corporation's Report on Form
10-K to the fiscal year ended January 28, 1995.
10.27 - Series 1995-1 Supplement, dated as of March 30, 1995, among
Carcorp, Inc., Collins & Aikman Products Co., as Master Servicer
and Chemical Bank, as Trustee, is hereby incorporated by reference
to Exhibit 10.21 of Collins & Aikman Corporation's Report on Form
10-K to the fiscal year ended January 28, 1995.
10.28 - Series 1995-2 Supplement, dated as of March 30, 1995, among
Carcorp, Inc., Collins & Aikman Products Co., as Master Servicer,
the Initial Purchasers parties thereto, Societe Generale, as Agent
for the Purchasers and Chemical Bank, as Trustee is hereby
incorporated by reference to Exhibit 10.22 of Collins & Aikman
Corporation's Report on Form 10-K to the fiscal year ended January
28, 1995.
10.29 - 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 Trustee
is hereby incorporated by reference to Exhibit 10.2 of Collins &
Aikman Corporation's Report on Form 10-Q for the fiscal quarter
ended July 29, 1995.
10.30 - Amendment No. 2, dated October 25, 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 is hereby incorporated by reference to Exhibit 10.2 of
Collins & Aikman Corporation's Report on Form 10-Q for the fiscal
quarter ended October 28, 1995.
10.31 - Amendment No. 1, dated February 29, 1996, to the Series 1995-1
Supplement, dated as of March 30, 1995, among Carcorp, Inc.,
Collins & Aikman Products Co., as Master Servicer, and Chemical
Bank, as Trustee, is hereby incorporated by reference to Exhibit
10.20 of Collins & Aikman Corporation's Report on Form 10-K for
the fiscal year ended January 27, 1996.
10.32 - Amendment No. 1, dated February 29, 1996, to the Series 1995-2
Supplement, dated as of March 30, 1995, among Carcorp, Inc.,
Collins & Aikman Products Co., as Master Servicer, Societe
Generale, as agent, and Chemical Bank, as Trustee, is hereby
incorporated by reference to Exhibit 10.21 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year ended
January 27, 1996.
10.33 - Master Equipment Lease Agreement dated as of September 30, 1994,
between NationsBanc Leasing Corporation of North Carolina and
Collins & Aikman Products Co. is hereby incorporated by reference
to Exhibit 10.27 of Collins & Aikman Corporation's Report on Form
10-Q for the fiscal quarter ended October 29, 1994.
II-5
<PAGE>
Exhibit
Number Decsription
- -------- ------------
10.34 - Equity Purchase Agreement by and among JPSGP, Inc., Foamex - JPS
Automotive L.P. and Collins & Aikman Products Co. dated August 28,
1996 is hereby incorporated by reference to Exhibit 2.1 of Collins
& Aikman Corporation's Report on Form 10-Q for the fiscal quarter
ended July 27, 1996.
10.35 - Amendment No. 1 to Equity Purchase Agreement by and among JPSGP,
Inc., Foamex - JPS Automotive L.P., Foamex International Inc. and
Collins & Aikman Products Co. dated as of December 11, 1996 is
hereby incorporated by reference to Exhibit 2.2 of Collins &
Aikman Corporation's Current Report on Form 8-K dated December 10,
1996.
10.36 - Equity Purchase Agreement by and among Seiren U.S.A. Corporation,
Seiren Automotive Textile Corporation, Seiren Co., Ltd. and
Collins & Aikman Products Co. dated December 11, 1996, is hereby
incorporated by reference to Exhibit 2.3 of Collins & Aikman
Corporation's Current Report on Form 8-K dated December 10, 1996.
10.37 - Acquisition Agreement between Perstorp A.B. and Collins & Aikman
Products Co. dated December 11, 1996 is hereby incorporated by
reference to Exhibit 2.4 of Collins & Aikman Corporation's Current
Report on Form 8-K dated December 10, 1996.
10.38 - Agreement among Perstorp A. B., Perstorp GmbH, Perstorp Biotec
A.B. and Collins & Aikman Products Co. dated December 11, 1996 is
hereby incorporated by reference to Exhibit 2.5 of Collins &
Aikman Corporation's Current Report on Form 8-K dated December 10,
1996.
10.39 - Shareholders Agreement among Collins & Aikman Products Co.,
Collins & Aikman Europe, Inc., Perstorp GmbH, Perstorp A.B.,
Perstorp Biotec A.B., Perstorp Components N.V. and Perstorp
Components A.B., dated December 11, 1996 is hereby incorporated by
reference to Exhibit 2.6 of Collins & Aikman Corporation's Current
Report on Form 8-K dated December 10, 1996.
10.40 - 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 Corporation's Current Report on Form 8-K
dated December 10, 1996.
10.41 - Mastercraft Group Acquisition Agreement dated as of April 25, 1997
among Collins & Aikman Products Co., Joan Fabrics Corporation and
MC Group Acquisition Company L.L.C., is hereby incorporated by
reference to Exhibit 2.1 of Collins & Aikman Corporation's Report
on Form 10-Q for this fiscal quarter ended March 29, 1997.
10.42 - Asset Purchase Agreement dated as of June 30, 1997 by and between
JPS Automotive L.P. and Safety Components International, Inc. is
hereby incorporated by reference to Exhibit 2.1 of JPS Automotive
L.P.'s and JPS Automotive Products Corp.'s Current Report on Form
8-K dated July 24, 1997.
10.43 - Closing Agreement dated July 24, 1997 between JPS Automotive L.P.,
Safety Components International, Inc. and Safety Components Fabric
Technologies, Inc. is hereby incorporated by reference to Exhibit
2.2 of JPS Automotive L.P.'s and JPS Automotive Products Corp.'s
Current Report on Form 8-K dated July 24, 1997.
10.44 - Amended and Restated Acquisition Agreement dated as of November 4,
1997 and amended and restated as of March 9, 1998, among Collins &
Aikman Products Co., Imperial Wallcoverings Inc. and BDPI Holdings
Corporation is hereby incorporated by reference to Exhibit 2.4 of
Collins & Aikman Corporation's Report on Form 10-K for the fiscal
year ended December 27, 1997.
11 - Computation of Earnings Per Share.
27 - Financial Data Schedule.
II-6
<PAGE>
Exhibit
Number Description
- --------- ------------
99 - Voting Agreement between Blackstone Capital Partners L.P. and
Wasserstein Perella Partners, L.P. is hereby incorporated by
reference to Exhibit 99 of Amendment No. 4 to Collins & Aikman
Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed June 27, 1994.
(b) Reports on Form 8-K
During the quarter for which this Report on Form 10-Q is being filed, the
Company filed no reports on Form 8-K.
II-7
<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.
Dated: May 12, 1998
COLLINS & AIKMAN CORPORATION
(Registrant)
By: /s/ J. Michael Stepp
---------------------
J. Michael Stepp
Chief Financial Officer and
Executive Vice President
(On behalf of the Registrant and as Principal
Financial and Accounting Officer)
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of March 3, 1997 between MANCHESTER PLASTICS, INC.
(the Company) and MICHAEL WESTON (Employee).
WHEREAS, the Company desires to employ Employee and to enter into an
agreement embodying the terms of such employment; and
WHEREAS, Employee desires to a accept such employment and to enter
into such agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Term of Employment. The Company hereby agrees to employ Employee and
Employee hereby accepts employment for a period of three (3) years, commencing
March 3, 1997 and ending March 2, 2000 subject to the terms and conditions of
this Agreement.
2. Position of Employment. During the term of this Agreement, Employee
shall be employed in the position of president of the Company and shall perform
such services for the Company and its subsidiaries as may be assigned to him
from time to time by the Board of Directors of the Company. Employee shall
devote his full time and attention to the affairs of the Company and his duties
in such position. Employee shall also be a member of the Operating Committee of
Collins & Aikman Products Co. (C&A), so long as the Operating Committee may
remain in effect during the term of this Agreement.
3. Salary, Bonus Plans and Shadow Equity.
3.1 Salary. The Company shall pay Employee a base salary at an annual
rate of not less than $275,000 during the term of his employment hereunder. Such
amount shall be reviewed annually by the Board of Directors of the Company or an
appropriate committee thereof (the Company's Board of Directors or such
committee being referred to herein as the "Compensation Board") and may be
increased in the sole discretion of the Compensation Board.
3.2 Bonus Plans. Employee shall be eligible to participate beginning in
1997 in the Company's annual Executive Incentive Compensation Plan (the "EIC
Plan") in accordance with the applicable provisions of the Plan. The standard
bonus for Employee under the EIC Plan shall be forty percent (40%) of Employees
base salary. However, in no event for the first year of his participation in the
EIC Plan shall he receive a cash bonus of less than $110,000 and less than
$70,000 for his second year of participation in the EIC Plan.
3.3 Stock Options. Employee shall be eligible to participate in
the Collins & Aikman Holdings Corporation 1994 Employee Stock Option Plan
<PAGE>
(the Option Plan) and shall be granted the option to purchase up to 100,000
shares, in accordance with the applicable terms and conditions of the Option
Plan and the Option Agreement between Collins & Aikman Holdings Corporation and
Employee, entered into contemporaneously with this Agreement. The option price
for all such shares shall be the price of Collins & Aikman Corporation shares on
the New York Stock Exchange as of the close of the day on which the Compensation
Board approves the award of these stock options to Employee. Subject to the
terms and conditions of the Option Plan and the Option Agreement, the option of
Employee to purchase up to the 100,000 shares shall vest as follows:
Vesting Date Total Number of Percentage Vested
Shares Vested
- ------------------------------------------------------------------------------
One year from date of 20,000 20%
grant
- ------------------------------------------------------------------------------
Two years from date 40,000 40%
of grant
- ------------------------------------------------------------------------------
Three years from date 100,000 100%
of grant
- ------------------------------------------------------------------------------
4. Benefits. Employee shall be entitled to such fringe benefits and
perquisites, and to participate in such pension, profit sharing and benefit
plans as are generally made available to executives of C&A as of March 3, 1997
and such other fringe benefits as may be determined by C&A during the term
hereof, including major medical, extended medical and disability insurance,
supplemental retirement income plan, group term life insurance and appropriate
annual holidays, sick days and vacation time of four weeks per year. Included in
such benefits to Employee, the Company shall furnish the use of an automobile
subject to applicable C&A policies and practice and shall reimburse Employee for
normal gasoline and maintenance charges, subject to proper allocation of
personal use for income tax purposes. The Company also shall pay the monthly
dues of the country club of which Employee is currently a member but shall not
be liable for any other charges, fees or assessments payable by Employee to such
club. However should Employees current employer have a right of reimbursement of
the initiation fee of such club, the Company shall reimburse Employee for such
initiation fee, but in no event shall such reimbursement exceed $35,000.00.
5. Reimbursement of Expenses. The Company shall reimburse Employee for
all reasonable travel, entertainment and other reasonable business expenses
reasonably incurred by Employee in connection with the performance of his duties
hereunder, provided that Employee furnishes to the Company adequate records or
other evidence respecting such expenditures.
2
<PAGE>
6. Termination of Employment
6.1 Voluntary Termination. Employees may terminate his employment
with the Company at any time. In the event Employee terminates such employment
voluntarily, upon such termination the Company shall pay Employee his unpaid
base salary under Section 3.1 accrued to the date on which his employment
terminates (the "Termination Date").
6.2 Involuntary Termination.
(a) Employee's employment with the Company shall automatically
terminate upon Employee's death or, unless the Board of Directors of the Company
in its sole discretion shall otherwise elect, Employee's physical or mental
disability for any consecutive six-month period (measured from the first date on
which Employee is absent from work due to such disability to the same date in
the sixth succeeding calendar month, or, if there is no such date or such date
is not a business day, the next succeeding business day). In the event
Employee's employment with the Company is terminated due to Employee's death or
physical or mental disability, the Company shall pay to Employee or, if
applicable, his estate or legal representative an amount equal to one year of
Employees then base salary. The amount due to Employee pursuant to this
paragraph (a) shall be paid, at the sole election of Employee or, if applicable,
his estate or legal representative, at the time of termination, either in a lump
sum or in a number of equal monthly installments to be specified by Employee or,
if applicable, Employee's estate or legal representative at the Termination
Date.
(b) In the event Employee's employment with the Company is
involuntarily terminated for any reason, other than termination for Cause (as
hereinafter defined), prior to the expiration of the term of employment, upon
such termination the Company shall be obligated to pay Employee an amount equal
to his then base salary for the entire remaining portion of the term of
employment; or if longer, for a one year period following the Termination Date.
The amount due to Employee pursuant to this paragraph (b) shall be paid on a
periodic basis in accordance with normal pay practice.
(c) The Company may at any time without notice terminate Employee's
employment with the Company for Cause. In the event Employee's employment with
the Company is terminated for Cause, Employee shall receive the same amount that
would be payable under Section 6.1 if such termination were voluntary.
(d) As used herein, the term "Cause" means (i) fraud or
misappropriation with respect to the business of the Company or intentional
material damage to the property or business of the Company, (ii) willful failure
by Employee to perform his duties and responsibilities and to carry out his
authority, (iii) willful malfeasance or misfeasance or breach of fiduciary duty
or representation to the Company or its stockholder, (iv) willful failure to act
in accordance with any specific lawful instructions of a majority of the
3
<PAGE>
Board of Directors of the Company, or (v) conviction of Employee of a felony.
7. Representations and Covenants of Employee.
7.1 No Violation. Employee represents and warrants that he has not
disclosed and will not disclose any confidential information or trade secrets
concerning his former employer to the Company or to C&A or its subsidiaries or
any directors or officers thereof, and that he can perform his duties for the
Company without disclosing or using any such confidential information or trade
secrets. Employee covenants and agrees that he will not use any confidential
information or trade secrets concerning any former employer or its subsidiaries
in violation of any obligations to such former employer during the term of his
employment by the Company.
7.2 No Conflicts. Employee represents to the best of his knowledge that
the terms of this Agreement do not conflict with any other agreement, written or
oral, to which Employee is a party or by which Employee is bound, including,
without limitation, any noncompetition agreement for the benefit of any former
employer.
7.3 Conduct. Employee will at all times refrain from taking any action
or making any statements, written or oral, which are intended to and do
disparage the goodwill or reputation of the Company or of C&A or any of its
subsidiaries or affiliates or any directors or officers thereof or which could
adversely affect the morale of employees of the Company or of C&A and its
subsidiaries.
7.4 Performance of Duties. In consideration of the payments to be made
hereunder, Employee agrees that during the term of his employment under this
Agreement, he shall devote his entire business time and attention to the
performance of his duties hereunder, serve the Company diligently and to the
best of his abilities. Employee further agrees not compete with the Company, C&A
or its subsidiaries in any way whatsoever within the United States during the
term of employment under this Agreement and after the Termination Date during
the period that Employee is receiving any payments pursuant to Section 6.
Without limiting the generality of the foregoing, Employee shall not, during any
such applicable period of time, directly or indirectly (whether for compensation
or otherwise), alone or as an agent, principal, partner, officer, employee,
trustee, director, shareholder or in any other capacity, own, manage, operate,
join, control or participate in the ownership, management, operation or control
of, or furnish any capital to, or be connected in any manner with or provide any
services as a consultant for any business which competes with the business of
the Company, its parent company or their subsidiaries or affiliates as it may be
conducted from time to time, provided, however, that notwithstanding the
foregoing, nothing contained in the Employment Agreement shall be deemed to
preclude Employee from owning not more than 5% of the publicly traded securities
of any entity which is in competition with the business of the Company, its
parent company or their subsidiaries or affiliates.
4
<PAGE>
7.5 Company Information. Employee agrees that so long as he is employed
by the Company and following any termination of this employment Employee will
keep confidential all confidential information and trade secrets of the Company
and of C&A and any of its subsidiaries or affiliates and will not disclose such
information to any person without the prior approval of the Board of Directors
of the Company or use such information for any purpose other than in the course
of fulfilling his duties of employment with the Company pursuant to this
Agreement. It is understood that for purposes of this Agreement the term
"confidential information" is to be construed broadly to include all material
nonpublic or proprietary information.
8. Release. In consideration of the compensation continuance available
in certain events pursuant to this Agreement, Employee unconditionally releases
and covenants not to sue the Company and C&A and its subsidiaries and affiliates
and directors, officers, employees and stockholders thereof, from any and all
claims, liabilities and obligations of any nature pertaining to termination of
employment other than those explicitly provided for by this Agreement including,
without limitation, any claims arising out of alleged legal restrictions on the
Company's rights to terminate its employees, such as any implied contract of
employment or termination contrary to public policy.
9. Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by the laws of Michigan , regardless of the laws
that might be applied under applicable principles of conflicts of laws.
10. Entire Agreement and Survivorship. This Agreement constitutes the
entire agreement and understanding between the parties hereto with respect to
the matters referred to herein and supersedes all prior agreements and
understandings between the parties hereto with respect to the matters referred
to herein. The representations, warranties and covenants of Employee contained
in all parts of Section 7, and the release contained in Section 8 shall survive
expiration, or termination of this Agreement by either party.
11. Notice. Any written notice required to be given by one party
to the other party hereunder shall be deemed effective if mailed by
certified or registered mail:
To the Company: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Harold R. Sunday
To Employee: Michael Weston
820 Hazelwood
Birmingham, Michigan 48009
or such other address as may be stated in notice given under this Section 11.
5
<PAGE>
12. Severability. The invalidity, illegality or enforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement or
such provision in any other jurisdiction, it being the intent of the parties
hereto that all rights and obligations of the parties hereto under this
Agreement shall be enforceable to the fullest extent permitted by law.
13. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their personal representatives,
and, in the case of the Company, its successors and assigns, and Section 8 shall
also inure to the benefit of the other persons and entities identified therein;
provided, however, that Employee shall not, without the prior written consent of
the Company, transfer, assign, convey, pledge or encumber this Agreement or any
interest under this Agreement. Employee understands that the assignment of this
Agreement or any benefits hereof or obligations hereunder by the Company to C&A,
or any subsidiary or affiliate of C&A, or to any purchaser of all or a
substantial portion of the assets of the Company or of C&A or any affiliated
company of C&A then employing Employee, and the employment of Employee by C&A or
such subsidiary or affiliate or by any such purchaser or by any successor of the
Company in a merger or consolidation, shall not be deemed a termination of
Employee's employment for purposes of Section 6.2 or otherwise.
14. Amendment. This Agreement may be amended or canceled only by
an instrument in writing duly executed and delivered by each party to
this Agreement.
15. Headings. Headings contained in this Agreement are for
convenience only and shall not limit this Agreement or affect the
interpretation thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
/s/ Michael Weston
--------------------
Michael Weston
MANCHESTER PLASTICS, INC.
By: /s/ Thomas E. Hannah
--------------------
Thomas E. Hannah,
Chief Executive Officer
6
<PAGE>
Exhibit 10.22
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the "Agreement") is made and entered
into this 17th day of March, 1998, by and between COLLINS & AIKMAN CORPORATION,
a Delaware corporation (the "Company"), and D. MICHAEL WESTON (the "Executive").
Statement of Purpose
The Company wishes to encourage the continued service and dedication of
Executive in the event of any actual or contemplated Change in Control (as
defined below) of the Company. The Company has determined that these objectives
are best accomplished by providing Executive with individual financial security
pursuant to the terms of this Agreement, which the Company believes are fair and
reasonable and consistent with the practices of other major corporations.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Company and Executive hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) Change in Control means and shall be deemed to have occurred upon:
(i) the acquisition, directly or indirectly, by any "person"
(within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended) within any 12 month period of more
than 80% of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors, including, but not limited to, by merger, consolidation or
similar corporate transaction or by purchase; excluding, however, the
following ("Excluded Transactions"): (A) any acquisition of beneficial
ownership by the Company, any subsidiary of the Company, Wasserstein
Perella Partners, L.P., Blackstone Capital Partners L.P. or an
affiliate of any of the foregoing, (B) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company
or any subsidiary of the Company, and (C) any merger, consolidation or
other form of business acquisition or combination transaction in which,
immediately after the transaction and giving effect thereto and the
issuance of securities therein, holders of Common Stock of the Company
beneficially own or are entitled to receive equity securities of the
acquiring, surviving or resulting entity (or any parent company or
other affiliate thereof) that, in the aggregate, represent more than
20% of the combined voting power entitled to be cast generally; or
(ii) the sale of any business, businesses or assets of the
Company in any single transaction or series of related transactions
effected within any 12-month period which, on an aggregate basis,
produced at least 80% of the consolidated net sales of the Company,
calculated by giving pro forma effect to such transactions, and any
acquisitions effected during the relevant period, for the fiscal year
immediately preceding such transaction or, if applicable, the first
such transaction in the 12-month period in which the transaction or
series of related transactions occurred, excluding, however, any
Excluded Transaction.
(b) Change in Control Period means the period commencing three months
prior to the date of a Change in Control and ending on the first anniversary of
such date or if later, the expiration of the 45 day period referred to in
Section 1(d)(3) below.
(c) Code means the Internal Revenue Code of 1986, as amended.
<PAGE>
(d) Constructive Termination means a termination of Executive's
employment by Executive during a Change in Control Period which is due to:
(i) the involuntary relocation of Executive to any office or
location more than fifty (50) miles from the office or location at
which Executive is then located;
(ii) a material reduction in Executive's total compensation
and benefit package; or
(iii) a significant reduction in Executive's responsibilities,
position or authority (including changes resulting from the assignment
to Executive of any duties inconsistent with his responsibilities,
position or authority in effect immediately prior to the Change in
Control Period);
provided, however, that, notwithstanding any other provision hereof, no event or
circumstance will constitute "Constructive Termination" for purposes of this
Agreement (A) if Termination For Cause exists or (B) unless (1) Executive shall
have given notice to the Company of Executive's determination of the occurrence
of such event, (2) such event constitutes one of the events specified in clauses
(i) - (iii) above, and (3) such event shall be continuing as of the end of 45
days after the giving of such notice.
(e) Date of Termination means the later of (i) the date of receipt of
the Notice of Termination by the Company or Executive, as the case may be, or
(ii) any later date specified therein (which shall be not more than thirty (30)
days after the giving of such notice).
(f) ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
(g) Involuntary Termination means a termination of Executive's
employment by the Company during a Change in Control Period other than a
Termination For Cause. Termination of Executive's employment during a Change in
Control Period by reason of Executive's death or disability shall not be
considered an Involuntary Termination.
(h) Notice of Termination means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide the
basis for termination of Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the date of receipt
of such notice, specifies the termination date (which shall be not more than
thirty (30) days after the giving of such notice).
(i) Termination For Cause means a termination of Executive's employment
by the Company as a result of:
(i) Executive's fraud or misappropriation with respect to the
business of the Company or intentional damage to the property or
business of the Company or any substantial asset;
(ii) willful failure by Executive to perform his duties and
responsibilities and to carry out his authority;
(iii) willful malfeasance or misfeasance or breach of
fiduciary duty or misrepresentation to the Company or its stockholders;
(iv) willful failure to act in accordance with any specific
lawful instructions of a majority of the Board of Directors of the
Company; or
(v) conviction of Executive of a felony.
<PAGE>
2. Benefits Upon Involuntary Termination or Constructive Termination
During Change in Control Period. Subject to the limitations of Section 3, in the
event of an Involuntary Termination or Constructive Termination of Executive for
which the Date of Termination is within a Change in Control Period, the Company
shall pay to Executive the following benefits in a lump sum payment (without
discounting to present value) within 30 days of the Date of Termination:
(a) to the extent not theretofore paid, Executive's base
salary through the Date of Termination;
(b) a pro rata bonus equal to (1) Executive's target bonus
immediately preceding the Change in Control Period multiplied by (2) a
fraction, the numerator of which is the number of whole months (rounded
for portions of months) elapsed in the relevant bonus year prior to the
Date of Termination, and the denominator of which is 12;
(c) twenty-four (24) months of base salary based on the
monthly rate of base salary in effect immediately preceding the Change
in Control Period, or if greater, the rate of Base Salary in effect
immediately preceding the Date of Termination; and
(d) Executive's target annual bonus in effect immediately
preceding the Change in Control Period multiplied by two (2).
In addition, (i) the Company shall offer Executive the opportunity to purchase
his Company automobile at its net book value as of the Date of Termination, (ii)
Executive shall be deemed to continue as an employee of the Company for 2 years
following the Date of Termination for purposes of eligibility and vesting (but
not benefit accrual), under any otherwise applicable retirement income plan or
arrangement, and (iii) Executive will be entitled to continue to participate in
all welfare benefit plans for such 2 year period or, if earlier, the period
ending on the date the Executive obtains new full-time employment. Subject to
the limitations of Section 3, the Company shall also reimburse Executive for the
cost of any continued coverage elected by Executive for himself and his eligible
dependents under the Company's group health plan(s) at the end of the welfare
benefit continuation period described in clause (iii) of the immediately
preceding sentence pursuant to Section 4980B of the Code and Section 601 et seq.
of ERISA.
3. Limitation on Benefits.
(a) General. Any benefits payable or to be provided to Executive,
whether pursuant to this Agreement or otherwise, which constitute Parachute
Payments (as defined below) shall be subject to the limitation of this Section 3
so that the benefits payable or to be provided to Executive under this
Agreement, as well as any payments or benefits provided outside of this
Agreement, shall not cause the Company to have paid an Excess Parachute Payment
(as defined below). Accordingly, anything in this Agreement to the contrary
notwithstanding, in the event that the certified public accountants regularly
employed by the Company immediately prior to a Change in Control (the
"Accounting Firm") shall determine that Executive's receipt of all Parachute
Payments would cause the Company to pay an Excess Parachute Payment, it shall
determine the Reduced Amount, and the aggregate Parachute Payments shall be
reduced to such Reduced Amount in accordance with the provisions of Section 3(c)
below.
(b) Definitions. For purposes of this Section 3:
(i) "Excess Parachute Payment" shall have the same meaning as
the term "excess parachute payment" defined in Section 280G(b)(1) of
the Code;
(ii) "Parachute Payment" shall mean any payment or
distribution in the nature of compensation to or for the benefit of
Executive which is contingent on a "change" under and within the
meaning of Section 280G(b)(2)(A)(i) of the Code, whether paid or
payable pursuant to this Agreement or otherwise;
<PAGE>
(iii) "Present Value" shall mean such value determined in
accordance with Section 280G(d)(4) of the Code; and
(iv) "Reduced Amount" shall mean the largest aggregate amount
of Parachute Payments Executive may receive without causing the Company
to have paid an Excess Parachute Payment.
(c) Limitation. If the Accounting Firm determines that Parachute
Payments should be limited to the Reduced Amount, the Company shall promptly
give Executive notice to that effect and a copy of the detailed calculation
thereof, and Executive may then elect, in Executive's sole discretion, which and
how much of the Parachute Payments, including without limitation Parachute
Payments made outside of this Agreement, shall be eliminated or reduced (as long
as after such election the Present Value of the aggregate Parachute Payments is
equal to the Reduced Amount), and shall advise the Company in writing of such
election within 10 days of Executive's receipt of notice. If no such election is
made by Executive within such 10 day period, the Company may elect which of
Parachute Payments, including without limitation Parachute Payments made outside
of this Agreement, shall be eliminated or reduced (as long as after such
election the Present Value of the aggregate Parachute Payments is equal to the
Reduced Amount) and shall notify Executive promptly of such election. All
determinations made by the Accounting Firm under this Section 3 shall be binding
upon the Company and Executive and shall be made within 45 days immediately
following the Date of Termination. As promptly as practicable following such
determination, the Company shall pay to or distribute for the benefit of
Executive such Parachute Payments as are then due to Executive under this
Agreement.
4. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future eligibility or participation in any
benefit, bonus, incentive or other plan provided by the Company and for which
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as Executive may have under any stock option or other agreements with the
Company. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan or program of the Company subsequent to the
Date of Termination shall be payable in accordance with such plan or program.
5. Full Settlement. The Company's obligation to make payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against Executive or other
parties. In no event shall Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to Executive
under any of the provisions of this Agreement. The Company agrees to pay, to the
full extent provided by law, all legal fees and expenses which Executive may
reasonably incur as a result of any contest by the Company or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or as a result of any contest by Executive about the amount of any
payment pursuant to this Agreement.
6. No Duplication of Benefits. Notwithstanding anything to the contrary
herein, the lump sum payment due to Executive under Section 2 hereof shall be
reduced by the amount of cash severance or salary continuation benefits paid to
Executive pursuant to any other plan or policy of the Company or a written
employment agreement between the Company (or one of its affiliates) and
Executive, it being the intent of the parties that Executive shall not receive
post-employment benefits hereunder and under such other plan, policy or written
employment agreement.
7. Succession. This Agreement shall inure to the benefit of and shall
be binding upon the Company and its successors and assignees, but, without the
prior written consent of Executive, this Agreement may not be assigned other
than in connection with a merger, sale, consolidation or similar transaction of
all or substantially all of the business and/or assets of the Company in which
the successor or assignee assumes (whether by operation of law or express
assumption) all obligations of the Company hereunder. The Company shall require
any successor to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such
<PAGE>
succession had taken place. The obligations and duties of Executive
hereunder shall be personal and not assignable otherwise than by the laws of
descent and distribution.
8. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of North Carolina.
(b) Notices. All notices and communications hereunder shall be in
writing and shall be given by hand delivery to the other party by registered or
certified mail, return receipt requested, postage prepaid, or by overnight mail,
addressed as follows:
If to Executive:
D. Michael Weston
820 Hazelwood
Birmingham, Michigan 48009
If to the Company:
Collins & Aikman Products Co.
701 McCullough Drive
P.O. Box 32665
Charlotte, North Carolina 28232
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) Validity. The invalidity or unenforceability of any provision of
this contract shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) Tax Withholding. The Company may withhold from any amounts payable
under this Agreement such federal, state and local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) Waiver. The waiver of the breach of any term or of any condition of
this Agreement shall not be deemed to constitute the waiver of any other breach
of the same or any other term or condition hereof.
(f) Entire Agreement. This instrument contains the entire agreement of
the parties relating to the subject matter hereof, and it replaces and
supersedes any prior agreements between the parties relating to said subject
matter. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
(g) No Right of Employment. Executive and the Company acknowledge that
the employment of Executive by the Company is "at will," and prior to the date
of a Change in Control, may be terminated by either Executive or the Company at
any time. Upon a termination of Executive's employment prior to the date of a
Change in Control, there shall be no further rights under this Agreement and
this Agreement shall terminate and be of no further force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE:
/s/ D. Michael Weston
----------------------
D. Michael Weston
COMPANY:
COLLINS & AIKMAN CORPORATION
By: /s/ Thomas E. Hannah
----------------------
Thomas E. Hannah
President & Chief Executive Officer
Exhibit 11
Collins & Aikman Corporation
Computation of Earnings Per Share
In thousands, except per share data
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Quarter Ended
-------------------------------
Marcy 28, March 27,
1998 1997
--------- ----------
Average shares outstanding during the period...................................... 65,701 67,125
--------------- ---------------
Incremental shares under stock options computed under the
treasury stock method using the average market price of
issuer's stock during the period............................................... 870 1,036
---------------- ---------------
Total shares for diluted EPS................................................. 66,571 68,161
================ ================
Income applicable to common shareholders:
Continuing operations........................................................ $ 8,678 $ 11,265
Discontinued operations...................................................... - 921
Gain on sale of discontinued operations - 85,292
---------------- ----------------
Net income................................................................... $ 8,678 $ 97,478
================ ================
Income per basic common share:
Continuing operations........................................................ $ 0.13 $ 0.17
Discontinued operations...................................................... - 0.01
Gain on sale of discontinued operations - 1.27
------------- -------------
Net income .................................................................. $ 0.13 $ 1.45
============= =============
Income per diluted common share:
Continuing operations........................................................ $ 0.13 $ 0.17
Discontinued operations...................................................... - 0.01
Gain on sale of discontinued operations...................................... - 1.25
------------ -------------
Net income (loss)............................................................ $ 0.13 $ 1.43
============= =============
</TABLE>
<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 THREE MONTHS ENDED MARCH 28, 1998 AND SUCH IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000846815
<NAME> COLLINS & AIKMAN CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> MAR-28-1998
<CASH> 14,866
<SECURITIES> 0
<RECEIVABLES> 231,403
<ALLOWANCES> 9,593
<INVENTORY> 154,176
<CURRENT-ASSETS> 495,136
<PP&E> 635,822
<DEPRECIATION> 227,592
<TOTAL-ASSETS> 1,322,207
<CURRENT-LIABILITIES> 363,606
<BONDS> 728,932
0
0
<COMMON> 705
<OTHER-SE> (56,657)
<TOTAL-LIABILITY-AND-EQUITY> 1,322,207
<SALES> 478,140
<TOTAL-REVENUES> 478,140
<CGS> 400,918
<TOTAL-COSTS> 400,918
<OTHER-EXPENSES> 37,116
<LOSS-PROVISION> 593
<INTEREST-EXPENSE> 20,479
<INCOME-PRETAX> 17,170
<INCOME-TAX> 8,492
<INCOME-CONTINUING> 8,678
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,678
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
