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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 July 27, 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 ¨.
 
The Registrant has 1,000 shares of Common Stock, par value $.01 per share, issued and outstanding as of September 25, 2002.
 


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

 
Financial Information
      
          
        
3
        
4
        
5
        
6
        
7
        
23
        
30
        
30
 
Other Information
      
        
31
        
31
        
31
        
31
        
31
        
32
    
33

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

    
Twenty-Six Weeks Ended

    
July 28, 2001

  
July 27, 2002

    
July 28, 2001

  
July 27, 2002

NET SALES
  
$
100,566
  
$
99,899
 
  
$
177,858
  
$
166,316
    

  


  

  

COST OF GOODS SOLD
  
 
62,511
  
 
62,118
 
  
 
112,099
  
 
105,219
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
  
 
20,460
  
 
18,962
 
  
 
40,758
  
 
36,317
    

  


  

  

    
 
82,971
  
 
81,080
 
  
 
152,857
  
 
141,536
    

  


  

  

OPERATING INCOME
  
 
17,595
  
 
18,819
 
  
 
25,001
  
 
24,780
MINORITY INTEREST IN INCOME (LOSS) OF SUBSIDIARY
  
 
53
  
 
(10
)
  
 
68
  
 
6
EQUITY IN EARNINGS OF AFFILIATE
  
 
466
  
 
533
 
  
 
947
  
 
1,009
NET INTEREST EXPENSE
  
 
5,927
  
 
4,788
 
  
 
11,805
  
 
13,287
    

  


  

  

INCOME BEFORE INCOME TAXES
  
 
12,081
  
 
14,574
 
  
 
14,075
  
 
12,496
INCOME TAX EXPENSE
  
 
5,177
  
 
5,540
 
  
 
6,303
  
 
4,810
    

  


  

  

NET INCOME
  
$
6,904
  
$
9,034
 
  
$
7,772
  
$
7,686
    

  


  

  

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

3


Table of Contents
COLLINS & AIKMAN FLOORCOVERINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited and In Thousands)
 
    
Thirteen Weeks Ended

      
Twenty-Six Weeks Ended

 
    
July 28, 2001

  
July 27, 2002

      
July 28, 2001

      
July 27, 2002

 
NET INCOME
  
$
6,904
  
$
9,034
 
    
$
7,772
 
    
$
7,686
 
OTHER COMPREHENSIVE INCOME (LOSS):
                                     
Foreign Currency Translation Adjustments
  
 
22
  
 
(474
)
    
 
(144
)
    
 
(330
)
    

  


    


    


COMPREHENSIVE INCOME
  
$
6,926
  
$
8,560
 
    
$
7,628
 
    
$
7,356
 
    

  


    


    


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

4


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

    
July 27,
2002

 
ASSETS
           
 
(Unaudited)
 
CURRENT ASSETS:
                 
Cash and cash equivalents
  
$
6,234
 
  
$
3,836
 
Accounts receivable, net of allowances of $745 and $787 in fiscal 2001 and 2002, respectively
  
 
33,524
 
  
 
55,309
 
Inventories
  
 
31,834
 
  
 
41,860
 
Deferred tax assets
  
 
3,955
 
  
 
2,277
 
Prepaid expenses and other
  
 
1,667
 
  
 
2,657
 
    


  


Total current assets
  
 
77,214
 
  
 
105,939
 
PROPERTY, PLANT, AND EQUIPMENT, net
  
 
45,390
 
  
 
65,299
 
DEFERRED TAX ASSETS
  
 
3,876
 
  
 
2,553
 
GOODWILL
  
 
95,987
 
  
 
109,621
 
OTHER INTANGIBLE ASSETS, net
  
 
40,560
 
  
 
38,602
 
OTHER ASSETS
  
 
7,406
 
  
 
10,994
 
    


  


TOTAL ASSETS
  
$
270,433
 
  
$
333,008
 
    


  


LIABILITIES AND STOCKHOLDER’S EQUITY
                 
CURRENT LIABILITIES:
                 
Accounts payable
  
$
11,416
 
  
$
18,551
 
Accrued expenses
  
 
19,150
 
  
 
26,007
 
Current portion of long-term debt
  
 
4,787
 
  
 
1,099
 
    


  


Total current liabilities
  
 
35,353
 
  
 
45,657
 
OTHER LIABILITIES, including postretirement benefit obligation
  
 
3,991
 
  
 
3,993
 
LONG-TERM DEBT, net of current portion
  
 
185,197
 
  
 
232,243
 
MINORITY INTEREST
  
 
310
 
  
 
316
 
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
)
  
 
(20,561
)
Accumulated other comprehensive loss
  
 
(958
)
  
 
(1,288
)
    


  


    
 
45,582
 
  
 
50,799
 
    


  


TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY
  
$
270,433
 
  
$
333,008
 
    


  


 
The accompanying notes are an integral part of these consolidated balance sheets.

5


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

 
    
July 28, 2001

    
July 27, 2002

 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net income
  
$
7,772
 
  
$
7,686
 
    


  


Adjustments to reconcile net income to net cash provided by operating activities:
                 
Depreciation and leasehold amortization
  
 
4,997
 
  
 
4,122
 
Amortization of other intangible assets
  
 
3,928
 
  
 
1,958
 
Amortization of deferred financing fees
  
 
461
 
  
 
3,324
 
Deferred income tax expense
  
 
218
 
  
 
3,001
 
Equity in earnings of affiliate
  
 
(949
)
  
 
(1,009
)
Minority interest in income of subsidiary
  
 
68
 
  
 
6
 
Changes in operating assets and liabilities, net of effects of acquisitions:
                 
Accounts receivable
  
 
(13,099
)
  
 
(21,785
)
Inventories
  
 
(8,191
)
  
 
(8,595
)
Accounts payable
  
 
(1,628
)
  
 
7,135
 
Accrued expenses
  
 
9,679
 
  
 
6,857
 
Other, net
  
 
(445
)
  
 
(1,887
)
    


  


Total adjustments
  
 
(4,961
)
  
 
(6,873
)
    


  


Net cash provided by operating activities
  
 
2,811
 
  
 
813
 
    


  


CASH FLOWS FROM INVESTING ACTIVITIES:
                 
Acquisition of business
  
 
—  
 
  
 
(35,127
)
Equity distribution from affiliate
  
 
787
 
  
 
971
 
Additions to property, plant, and equipment
  
 
(4,627
)
  
 
(3,522
)
    


  


Net cash used in investing activities
  
 
(3,840
)
  
 
(37,678
)
    


  


CASH FLOWS FROM FINANCING ACTIVITIES:
                 
Net proceeds from revolving credit facilities
  
 
7,000
 
  
 
—  
 
Proceeds from issuance of long-term debt
  
 
31
 
  
 
175,000
 
Repayments of long-term debt
  
 
(3,769
)
  
 
(131,767
)
Cash dividends to parent
  
 
—  
 
  
 
(2,139
)
Financing costs
  
 
—  
 
  
 
(6,627
)
    


  


Net cash provided by financing activities
  
 
3,262
 
  
 
34,467