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Table of Contents

 
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 quarterly period ended October 26, 2002
 
    ¨  Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Commission File Number 333-88212
 
COLLINS & AIKMAN FLOORCOVERINGS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
58-2151061
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
 
311 Smith Industrial Boulevard, Dalton, Georgia
 
30721
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number: (706) 259-9711
 
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 ¨        
 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x            
 
The Registrant has 1,000 shares of Common Stock, par value $.01 per share, issued and outstanding as of December 6, 2002.
 


Table of Contents
 
COLLINS & AIKMAN FLOORCOVERINGS, INC. AND SUBSIDIARIES
 
INDEX
 
 
         
Page No.

    
  Item 1.    Financial Statements
    
  
3
  
4
  
5
  
6
  
7
  
24
  
31
  
32
    
  
32
  
32
  
33
  
34
 

2


Table of Contents
 
PART 1 – FINANCIAL INFORMATION
Item 1.    Financial Statements
 
COLLINS & AIKMAN FLOORCOVERINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and In Thousands)
 
    
Thirteen Weeks Ended

    
Thirty-Nine Weeks Ended

 
    
October 27, 2001

    
October 26, 2002

    
October 27, 2001

  
October 26,
2002

 
NET SALES
  
$
82,433
 
  
$
84,282
 
  
$
260,291
  
$
250,597
 
    


  


  

  


COST OF GOODS SOLD
  
 
54,997
 
  
 
57,425
 
  
 
167,096
  
 
162,644
 
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
  
 
17,415
 
  
 
17,913
 
  
 
58,173
  
 
54,231
 
    


  


  

  


    
 
72,412
 
  
 
75,338
 
  
 
225,269
  
 
216,875
 
    


  


  

  


OPERATING INCOME
  
 
10,021
 
  
 
8,944
 
  
 
35,022
  
 
33,722
 
MINORITY INTEREST IN INCOME (LOSS) OF SUBSIDIARY
  
 
(23
)
  
 
(1
)
  
 
45
  
 
5
 
EQUITY IN EARNINGS OF AFFILIATE
  
 
367
 
  
 
484
 
  
 
1,314
  
 
1,493
 
NET INTEREST EXPENSE
  
 
8,598
 
  
 
5,464
 
  
 
20,403
  
 
18,751
 
    


  


  

  


INCOME BEFORE INCOME TAXES
  
 
1,813
 
  
 
3,965
 
  
 
15,888
  
 
16,459
 
INCOME TAX EXPENSE
  
 
738
 
  
 
1,775
 
  
 
7,041
  
 
6,585
 
    


  


  

  


INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE
  
 
1,075
 
  
 
2,190
 
  
 
8,847
  
 
9,874
 
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET OF TAX
  
 
—  
 
  
 
—  
 
  
 
—  
  
 
(2,009
)
    


  


  

  


NET INCOME
  
$
1,075
 
  
$
2,190
 
  
$
8,847
  
$
7,865
 
    


  


  

  


 
The accompanying notes are an integral part of these consolidated financial statements.

3


Table of Contents
COLLINS & AIKMAN FLOORCOVERINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
 
    
January 26,
2002

    
October 26,
2002

 
ASSETS
         
(Unaudited)
 
CURRENT ASSETS:
                 
Cash and cash equivalents
  
$
6,234
 
  
$
10,681
 
Accounts receivable, net of allowance of $745 and $737 in fiscal 2001 and 2002, respectively
  
 
33,524
 
  
 
44,475
 
Inventories
  
 
31,834
 
  
 
37,827
 
Deferred tax assets
  
 
3,955
 
  
 
2,104
 
Prepaid expenses and other
  
 
1,667
 
  
 
2,282
 
    


  


Total current assets
  
 
77,214
 
  
 
97,369
 
PROPERTY, PLANT, AND EQUIPMENT, net
  
 
45,390
 
  
 
65,369
 
DEFERRED TAX ASSETS
  
 
3,876
 
  
 
3,116
 
GOODWILL
  
 
95,987
 
  
 
106,341
 
OTHER INTANGIBLE ASSETS, net
  
 
40,560
 
  
 
37,615
 
OTHER ASSETS
  
 
7,406
 
  
 
10,464
 
    


  


TOTAL ASSETS
  
$
270,433
 
  
$
320,274
 
    


  


LIABILITIES AND STOCKHOLDER’S EQUITY
                 
CURRENT LIABILITIES:
                 
Accounts payable
  
$
11,416
 
  
$
13,850
 
Accrued expenses
  
 
19,150
 
  
 
20,315
 
Current portion of long-term debt
  
 
4,787
 
  
 
1,194
 
    


  


Total current liabilities
  
 
35,353
 
  
 
35,359
 
OTHER LIABILITIES, including post-retirement benefit obligation
  
 
3,991
 
  
 
3,985
 
LONG-TERM DEBT, net of current portion
  
 
185,197
 
  
 
230,026
 
MINORITY INTEREST
  
 
310
 
  
 
315
 
COMMITMENTS AND CONTINGENCIES
                 
STOCKHOLDER’S EQUITY:
                 
Common stock; $.01 par value per share, 1,000 shares authorized, issued, and outstanding in fiscal 2001 and 2002
  
 
—  
 
  
 
—  
 
Paid-in capital
  
 
72,648
 
  
 
72,648
 
Retained deficit
  
 
(26,108
)
  
 
(20,836
)
Accumulated other comprehensive loss
  
 
(958
)
  
 
(1,223
)
    


  


    
 
45,582
 
  
 
50,589
 
    


  


TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY
  
$
270,433
 
  
$
320,274
 
    


  


 
The accompanying notes are an integral part of these consolidated financial statements.

4


Table of Contents
 
COLLINS & AIKMAN FLOORCOVERINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 26, 2002
(Unaudited and In Thousands, Except Share Amounts)
 
   
Common Stock

               
Accumulated Other
Comprehensive Income (Loss)

       
   
Shares

  
Amount

 
Paid-in
Capital

  
Retained Earnings (Deficit)

      
Foreign Currency Translation Adjustment

      
Minimum Pension Liability

   
Total

 
BALANCE, January 26, 2002
 
1,000
  
$
—  
 
$
72,648
  
$
(26,108
)
    
$
(519
)
    
$
(439
)
 
$
45,582
 
Net income
 
—  
  
 
—  
 
 
—  
  
 
7,865
 
    
 
—  
 
    
 
—  
 
 
 
7,865
 
Dividend to parent
 
—  
  
 
—  
 
 
—  
  
 
(2,593
)
    
 
—  
 
    
 
—  
 
 
 
(2,593
)
Foreign currency translation adjustment
 
—  
  
 
—  
 
 
—  
  
 
—  
 
    
 
(265
)
    
 
—  
 
 
 
(265
)
   
  

 

  


    


    


 


BALANCE, October 26, 2002
 
1,000
  
$
—  
 
$
72,648
  
$
(20,836
)
    
$
(784
)
    
$
(439
)
 
$
50,589
 
   
  

 

  


    


    


 


 
The accompanying notes are an integral part of these consolidated financial statements.
 
 

5


Table of Contents
 
COLLINS & AIKMAN FLOORCOVERINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and In Thousands)
 
    
Thirty-Nine Weeks Ended

 
    
October 27,
2001

    
October 26,
2002

 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net income
  
$
8,847
 
  
$
7,865
 
    


  


Adjustments to reconcile net income to net cash provided by operating activities:
                 
Depreciation and leasehold amortization
  
 
7,521
 
  
 
6,543
 
Amortization of other intangible assets
  
 
5,891
 
  
 
2,946
 
Amortization of deferred financing fees
  
 
819
 
  
 
3,757
 
Deferred income tax expense
  
 
1,958
 
  
 
3,842
 
Equity in earnings of affiliate
  
 
(1,314
)
  
 
(1,493
)
Minority interest in income of subsidiary
  
 
45
 
  
 
5
 
Cumulative effect of change in accounting principle, net of tax
  
 
—  
 
  
 
2,009
 
Changes in operating assets and liabilities, net of effects of acquisitions:
                 
Accounts receivable
  
 
3,734
 
  
 
(10,951
)
Inventories
  
 
(1,089
)
  
 
(4,562
)
Accounts payable
  
 
(4,225
)
  
 
2,434
 
Accrued expenses
  
 
5,326
 
  
 
1,165
 
Other, net
  
 
(1,052
)
  
 
(1,336
)
    


  


Total adjustments
  
 
17,614