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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended January 28, 1995.
OR
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
(Exact name of registrant as specified in its charter)
(Formerly Collins & Aikman Holdings Corporation)
Delaware 13-3489233
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 McCullough Drive
Charlotte, North Carolina 28262
(Address of principal executive offices)
Registrant's telephone number, including area code: (704) 547-8500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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. x Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [x]
The aggregate market value of voting stock held by non affiliates of the
registrant was $127,796,678 as of April 26, 1995.
As of April 26, 1995, the number of outstanding shares of the Registrant's
common stock, $.01 par value, was 70,520,900 shares.
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Annual Report to Stockholders for Fiscal Year Ended January 28, 1995 -
Items 1, 5, 6, 7, 8 and 14*
(2) Proxy Statement for 1995 Annual Meeting of Stockholders to be filed
within 120 days of January 28, 1995 - Items 10, 11, 12 and 13.*
*Only the portions of these documents expressly described in the items
listed are incorporated by reference herein.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
FORM 10-K Annual Report Index
Item 1. Business, page 1.
Item 2. Properties, page 8.
Item 3. Legal Proceedings, page 8.
Item 4. Submission of Matters to a Vote of Security Holders, page 12.
Executive Officers of the Registrant, page 12.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters,
page 14.
Item 6. Selected Financial Data, page 14.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations, page 14.
Item 8. Financial Statements and Supplementary Data, page 14.
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure, page 14.
Item 10. Directors and Executive Officers of the Registrant, page 15.
Item 11. Executive Compensation, page 15.
Item 12. Security Ownership of Certain Beneficial Owners and Management,
page 15.
Item 13. Certain Relationships and Related Transactions, page 15.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K,
page 16.
i
PART I
ITEM 1. BUSINESS
The Company is a leader in each of its three business segments:
Automotive Products, the largest supplier of interior trim products to
the North American automotive industry; Interior Furnishings, the
largest manufacturer of residential upholstery fabrics in the U.S.;
and Wallcoverings, the largest producer of residential wallpaper in
the U.S. For certain financial information regarding the Company's
business segments, see Note 20 to Consolidated Financial Statements
on page 49 of the Company s 1994 Annual Report to Stockholders
and Management's Discussion and Analysis of Financial Condition and
Results of Operations on page 17 of the Company's 1994 Annual Report
to Stockholders, which are incorporated herein by reference. For a
discussion of the organization of the Company, certain developments
in July 1994 resulting in a recapitalization of the Company and
certain related mergers, see Notes 1 and 2 of the Consolidated Financial
Statements on page 32 of the Company's 1994 Annual Report to
Stockholders and the information under the Caption "Initial Public
Offering and Recapitalization" on page 17 of the Company's 1994
Annual Report to Stockholders, which are incorporated herein by
reference. With respect to market or competitive information,
references to the Company as "a leader", "a leading" or "one of the
leading" manufacturers in that product category mean that the Company
is one of the principal manufacturers in that product category and
references to the Company as "the leader", "the largest" or "the
leading" manufacturer in a particular product category mean that the
Company has the largest product market share based on dollar sales
volume in that product category.
All references to a year with respect to the Company refer to the
fiscal year of the Company which ends on the last Saturday of
January of the following year.
AUTOMOTIVE PRODUCTS
General
The Company is a leading designer and manufacturer of automotive
products with 1994 net sales in this segment of $904.9 million.
Automotive Products supplies four major interior trim
products--automotive seat fabric ("bodycloth"), molded floor
carpets, accessory floor mats and luggage compartment
trim--and convertible top systems. Automotive Products had
1994 net sales in these product lines of $751.6 million.
Automotive Products has supplied interior trim products to the
automotive industry for over 60 years. While some interior
trim suppliers have sales volumes equivalent to or greater than
that of the Company in a single product line, management
believes that the Company sells a wider variety of interior
trim products, has products on more vehicle lines and has a
broader, more uniform sales penetration at U. S. automotive
equipment manufacturers and foreign owned North American
automotive production and assembly facilities ("Transplants"
and, collectively, "OEMs") than any of its competitors.
The Company's sales are dependent on certain significant
customers. In 1994, direct and indirect sales to each of General
Motors Corporation, Ford Motor Company and Chrysler Corporation
accounted for 10% or more of the Company's net sales. In 1993 and 1992,
direct and indirect sales to each of General Motors Corporation
and Chrysler Corporation accounted for 10% or more of the Company's
net sales.
Automotive industry demand historically has been influenced by both
cyclical factors and long-term growth trends in the driving age population
and real per capita income.
Annual new car and truck sales historically have been cyclical. In
the most recent cycle, U.S. light vehicle sales declined from an
average of 15.4 million units per year in 1986-1988 to a low of 12.3
million units in 1991. Since late 1993, however, U.S. light
vehicles sales have increased.
1
Products
Automotive Products manufactures five principal products:
automotive seat fabric, molded floor carpets, accessory floor mats,
luggage compartment trim and convertible top systems. Automotive
Products also produces a variety of other automotive and
nonautomotive products.
Automotive Seat Fabric. Automotive Products manufactures a
wide variety of bodycloth, including flat-wovens, velvets and knits.
Automotive Products also laminates foam to bodycloth. In 1994, 1993
and 1992, Automotive Products had net sales of bodycloth of $340.3
million, $221.2 million and $191.1 million, respectively.
Molded Floor Carpets. Molded floor carpets include polyethylene,
barrier-backed and molded urethane underlay carpet. In the Company's
automotive molded floor product line, it has developed a
"foam-in-place" process to provide floor carpeting with enhanced
acoustical and fit characteristics, resulting in a substantial gain
in unit selling prices. In 1994, 1993 and 1992 net sales of molded
floor carpets were $213.2 million, $181.1 million, and $173.1 million,
respectively.
Accessory Floor Mats. Automotive Products produces carpeted
automotive accessory floor mats for both North American produced
vehicles and imported vehicles. In 1994, management estimates that
approximately 63% of all vehicles produced in North America included
accessory mats as original equipment.
Luggage Compartment Trim. Luggage compartment trim includes
one-piece molded trunk systems and assemblies, wheelhouse covers,
seatbacks, tireboard covers, center pan mats and other trunk trim
products.
Convertible Top Systems. Automotive Products designs,
manufactures and distributes convertible top systems through its Dura
Convertible Systems subsidiary ("Dura"). In October 1993, Dura
began shipping its "Top-in-a-Box" system, in which it designs and
manufactures all aspects of a convertible top, including the
framework, trim set, backlight and actuating system.
Other. Automotive Products also produces a variety of other auto
products, including die cuts for automotive interior trim
applications, convertible power train units, headliner fabric, and
roll goods for export and domestic consumption. Small volumes of
certain products, such as residential floor mats, casket and tie linings
and sliver knits, are sold to other commercial and industrial markets.
Competition
The automotive supply business is highly competitive. The
primary competitor in bodycloth is Milliken & Company. The primary
competitors in molded floor carpets are Masland Corporation and JPS
Automotive Products Corp. In accessory floor mats, the Company
competes primarily against Pretty Products Company. Automotive
Products' primary competitors in luggage compartment trim are Masland
Corporation and Gates Corporation. In convertible top stacks,
Automotive Products competes primarily against American Sunroof
Corporation and Best Top.
The Company principally competes for new business at the design
stage of new models and upon the redesign of existing models. The
Company is vulnerable to a decrease in demand for the models that
generate the most sales for the Company, a failure to obtain purchase
orders for new or redesigned models and pricing pressure from
the major automotive companies.
2
Facilities
Automotive Products has 34 manufacturing, warehouse and other
facilities located in the U.S., Canada and Mexico aggregating
approximately 5.9 million square feet. The majority of these
facilities are located in North Carolina, Ohio and Michigan and in
Ontario and Quebec, Canada. Approximately 90% of the total square
footage of these facilities is owned and the remainder is leased.
Many facilities are strategically located to provide just-in-time
("JIT") inventory delivery to the Company's customers. Capacity at
any plant depends, among other things, on the product being produced,
the processes and equipment used and tooling. This varies
periodically, depending on demand and shifts in production between
plants. The Company currently estimates that its Automotive
Products plants generally operate at between 50% and 100% of capacity on
a six- day basis. During the second half of 1994 the Company
experienced capacity constraints with respect to certain automotive
seat fabrics. To meet customer expectations, the Company utilized
outside weaving and redeployed certain manufacturing capacity from its
Decorative Fabrics velvet furniture products. Except for the foregoing
constraints, which the Company believes are short term, the Company's
capacity utilization in this segment is generally in line with its past
experience in similar economic situations, and the Company believes that
its existing facilities are sufficient to meet both this segment's
existing needs and its anticipated growth requirements. The
Company does not anticipate any circumstances that would render its
facilities inadequate for its projected needs.
INTERIOR FURNISHINGS
Interior Furnishings designs and manufactures residential and
commercial upholstery fabrics through its Decorative Fabrics
group and high-end specified contract floorcoverings through its
Floorcoverings group. In 1994, the Interior Furnishings segment
had net sales of $414.5 million.
Decorative Fabrics
General. Interior Furnishings' Decorative Fabrics group is the
largest designer and manufacturer of upholstery fabrics in the U.S.
The Decorative Fabrics group had 1994 net sales of $306.5 million.
Decorative Fabrics strives to be the preferred supplier of middle to
high-end flat-woven upholstery fabrics to furniture manufacturers and
fabric distributors. This group's primary division, Mastercraft, is
the leading manufacturer of flat-woven upholstery fabrics. Management
believes that Mastercraft has substantially more Jacquard looms and
styling capacity dedicated to upholstery fabrics, and offers more
patterns (approximately 13,000) in a greater range of price points
than any of its competitors. The breadth and size of Mastercraft's
manufacturing and design capabilities provide it with exceptional
flexibility to respond to changing customer demands and to develop
innovative product offerings. In order to accommodate anticipated
growth, the Company is in the initial phase of a four year, $85
million modernization program. Investment is targeted toward the
purchase of high-speed looms to increase capacity and productivity,
new electronic jacquard heads to reduce pattern changeover times,
and computer monitoring systems to provide information about the
manufacturing processes and to improve quality, productivity and
capacity.
The three primary types of upholstery fabric are flat-wovens,
velvets and prints. Flat-woven fabrics are made in two major styles:
Jacquard, which is produced on high- speed computerized looms capable
of weaving intricate designs into the fabric, and Dobby, a plain fabric
produced on standard looms. Demand for upholstery fabric generally
varies with economic conditions, particularly sales of new and
existing homes, and is directly associated with sales of upholstered
furniture at the retail level. Shifts in consumer taste can also
affect demand for upholstery fabric.
3
Products. Decorative Fabrics' two operating divisions are
Mastercraft and Cavel. Mastercraft and Cavel design and manufacture
jacquards, velvets and other woven fabrics for the furniture,
interior design, commercial, recreational vehicle and industrial
markets. During 1994, the Company sold the Greeff and Warner product
lines through which it had designed and distributed high-end fabrics
to interior designers and specialty retailers in the U.S. and U.K.,
respectively.
Decorative Fabrics had net sales of flat-woven products in 1994,
1993 and 1992 of $262.8 million, $268.9 million and $254.7 million,
respectively.
Customers. Decorative Fabrics is a primary supplier to virtually
all major furniture manufacturers in the U.S., including La-Z-Boy,
Ethan Allen, Thomasville, Flexsteel, Bassett, Broyhill, Baker,
Henredon, Rowe and Robert Allen. Due to the breadth of its product
offerings, strong design capabilities and superior customer service,
the Company has developed close relationships with many of Decorative
Fabrics' over 1,000 customers.
Nearly all of Decorative Fabrics' products are made to customer
order. This reduces the amount of raw material and finished goods
inventory required and greatly reduces product returns, all of which
improve profit margins.
Marketing and Sales. Fabrics are sold domestically by
commissioned sales representatives who exclusively represent the
Mastercraft and Cavel divisions of Decorative Fabrics. The
Mastercraft and Cavel divisions maintain showrooms in seven key
locations throughout the United States.
Competition. The U.S. upholstery fabrics market is highly
competitive. Manufacturers compete on the basis of design, quality,
price and customer service. Decorative Fabrics' primary competitors
include Quaker Fabric Corporation, Culp, Inc., Joan Fabrics Corp. and
the Burlington House Upholstery Division of Burlington Industries, Inc.
Facilities. Mastercraft operates four weaving plants and one
finishing plant in North Carolina aggregating 1.0 million square feet,
of which 89% is owned and the remainder leased. Cavel shares
manufacturing capacity with Automotive Products at three plants in
Roxboro, North Carolina. During the last three years, the Company's
capacity utilization in the Mastercraft division of the Decorative
Fabrics group has consistently averaged nearly 100% on a six-day
basis. The Company believes that its existing facilities are
sufficient to meet the Decorative Fabrics group's existing needs, and,
after taking into account Mastercraft's $85 million capital
investment plan (see page 22 of Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and
Capital Resources in the Company's 1994 Annual Report to
Stockholders which is incorporated herein by reference),
anticipated growth requirements. Assuming the completion of
Mastercraft's capital investment plan, the Company does not anticipate
any circumstances that would render its Decorative Fabrics
facilities inadequate for its projected needs.
Floorcoverings
General. The Floorcoverings group of the Interior Furnishings
segment is a leading producer of high-end specified contract
carpeting products for institutional and commercial customers. In
1994 Floorcoverings had net sales of $108.0 million. Its principal
products are six-foot wide rolls and modular carpet tiles.
Floorcoverings produces virtually no product for inventory or for
commodity markets.
Since 1990, Floorcoverings has repositioned its product
offerings, shedding those products in which it lacked either a
low-cost position or proprietary product advantage. By focusing on
areas of competitive advantage, Floorcoverings has prospered,
notwithstanding a significant downturn in commercial construction.
4
During 1994, Floorcoverings initiated its Source OneSM program to
sell its products directly to end users which provides them turnkey
full service project management.
Approximately 56% of Floorcoverings' 1994 net sales were to
institutional customers such as government, healthcare, and education
facilities. Management believes that government, healthcare and
educational customers are stable growth sectors.
Products. Floorcoverings' key competitive advantage in its
principal products, six- foot wide rolls and modular carpet tiles,
is its patented Powerbond RS(R) adhesive technology, which has 13
years of patent protection remaining. Because the Powerbond RS(R) system
does not use wet adhesives, it permits the installation of
floorcoverings directly on floor surfaces, including existing
carpeting, with substantially reduced labor costs and without the fumes
of conventional wet adhesives. This allows for less disruptive and
less time-consuming installation and, for this reason, is
particularly attractive to institutions such as schools and hospitals.
In addition to reducing installation downtime for customers to as
little as one day, management believes Floorcoverings' product
exhibits demonstrably superior durability and cleaning characteristics
ideally suited for high-traffic areas such as airline terminals and
customers such as Discovery Zone and Blockbuster.
Competition. The commercial carpet industry is highly competitive,
and several of Floorcoverings' competitors also have substantial
commercial carpet sales in the commodity segments of the industry,
segments in which Floorcoverings does not compete.
Floorcoverings' niche products have demanding specifications and
generally cannot be manufactured using the equipment that currently
supplies most of the industry's commodity products. The Company's
primary competitors are Interface, Milliken & Company, Mohawk
Industries and Shaw Industries, Inc.
Facilities. Floorcoverings owns and operates four facilities in
Dalton, Georgia aggregating approximately 630,000 square feet. The
Company currently estimates that Floorcoverings' plants operate at
between 35% and 85% of capacity on a six-day basis. The Company's
capacity utilization in the Floorcoverings group is generally in line
with its past experience in similar economic situations and the Company
believes that its existing facilities are sufficient to meet both this
group's existing needs and its anticipated growth requirements. The
Company does not anticipate any circumstances that would render its
Floorcoverings facilities inadequate for its projected needs.
WALLCOVERINGS
General
Wallcoverings, which operates under the name "Imperial", is a
leading manufacturer and distributor of a full range of wallpaper for
the residential and commercial sectors with 1994 net sales of $216.6
million. It is the only producer of wallpaper in the U.S. that is
fully integrated from paper production through design and
distribution. In addition, management believes that Imperial has a
competitive advantage due to its extensive in-house design expertise
and licensing arrangements, its low cost, vertically- integrated
manufacturing capability, and its advanced customer ordering and
service network.
The wallcoverings industry experienced significant and consistent
growth from the early 1980s through 1987. This growth resulted in part
from increases in new construction starts and existing home sales,
which peaked during 1986 and 1987. In addition, a one-time surge in
demand created a new industry-wide layer of inventory as a result of
the rapid growth of large in-stock retailers. Between 1983 and 1987,
the industry's physical shipment volume increased from 137 million to
200 million rolls of wallpaper per year, a 9.9% annual growth rate.
Between 1987 and 1990, the industry underwent a contraction, with
volume declining dramatically from 200 million rolls in 1987 to 174
million rolls in 1990, a 4.5% annual decline. This resulted from a
slowdown in the overall economy, particularly in the housing
5
market, coupled with a reduction in inventory by overstocked retailers.
From 1991 to 1994, the industry's physical shipment volume increased
at a modest rate.
The wallcoverings market can generally be divided into the
residential and commercial sectors with the residential sector being
the larger of the two sectors. Demand for wallpaper is primarily
influenced by levels of construction, renovation and remodeling. In
addition to these cyclical factors, shifts in consumer taste between
wallpaper and paint can be a factor. The two primary distribution
channels in the residential sector are independent retailers
("dealers") and retail chains.
The industry contraction of the late 1980s and early 1990s
left Imperial with unutilized manufacturing capacity, an oversized
distribution network and excess product offerings. Between 1989 and
1992, Imperial implemented a comprehensive downsizing program designed
to bring Imperial's high fixed-cost structure into better alignment
with the changed industry environment. Imperial closed 22 showrooms and
12 warehouses and reduced fixed costs by nearly 15%. Imperial also
substantially reduced the annual introduction rate of new collections
and virtually eliminated its use of independent distributors in favor
of exclusive captive distribution. This restructuring program
improved manufacturing efficiencies, but it adversely affected sales
and led to a reduction in shelf space and product market share. As a
result, Imperial's sales declined during 1992 and 1993, despite what
management now believes to have been a moderate upturn in industry
conditions.
A new management team installed in February 1993 determined that the
reduction in new collections had been too severe. Accordingly, in
late 1993, management instituted a second restructuring program to
bolster its new product introduction rate through aggressive
product design efforts. This product line renewal led to 57 and 62
collections being introduced in 1994 and 1993, respectively, compared
to 45 in 1992. Management is also broadening its selection of
in-stock programs and improving its order fulfillment capabilities.
Products
Management believes Imperial has maintained its leading
position in residential wallpaper due to its competitive edge in
color and design. Its in-house studio of approximately 35 artists
represents a major strategic investment by Imperial that is
supplemented by an active licensing program under which Imperial
licenses proven designs from well-known designers. Imperial is
continuously introducing new designs and color concepts that
supplement its already vast library.
Imperial offers a large number of well-known brand names, including
Imperial, United, Sterling Prints, Katzenbach & Warren, Albert Van
Luit and Plexus. In addition to these in-house brands, Imperial
licenses a number of well-known brand names, including Gear, Laura
Ashley, Pfaltzgraff, Croscill, Mario Buatta, David and Dash, Louis
Nichole, Clarence House and Carlton Varney, for which it converts home
furnishing designs into wallpaper designs. Imperial also distributes
the lines of John Wilman, Great Britain's largest wallpaper designer
and manufacturer.
In recent years, there has been increasing demand for wallcoverings
coordinated with decorative accessories such as window treatments,
bedding, upholstery fabric and other textile products. To satisfy
this demand from upscale home furnishings customers, Imperial
provides fabrics, which it generally purchases outside the Company,
that are coordinated with its wallpaper designs. Some of these
fabrics are supplied by the Mastercraft division of the Company.
In 1994, 1993 and 1992, net sales of residential wallpaper were
$191.7 million, $196.0 million and $214.0 million, respectively.
6
Customers
Dealers and retail chains account for the largest portion of
Imperial's customer base. Management believes that the Company is the
leader in each of these distribution channels. Management believes
that Imperial has the most extensive dealer network in the U.S.,
selling to approximately 15,000 dealers. Imperial also sells to many of
the leading chains in the country, including Home Depot, Lowes, Sears,
Sherwin Williams and Target.
Competition
As a result of the recent economic turndown in the
wallcoverings industry, many weaker competitors withdrew from the
U.S. wallcoverings market. In addition, further contraction is
expected to occur as sales of wallcoverings shift to chain stores,
which along with other retailers prefer working with fewer,
larger suppliers. Management believes that Imperial is well positioned
to benefit from these developments.
Competition in the wallcoverings industry is based on design,
price and customer service. Imperial's principal competitors in
wallpaper are Borden, GenCorp, F.S. Schumacher and Seabrook
Wallcoverings.
Facilities
Imperial operates five manufacturing facilities in the United
States and three in Canada, as well as three distribution centers in
the United States aggregating 1.5 million square feet. Of this amount
approximately 82% is owned and the remainder is leased, including the
three U.S. distribution centers. The Company currently estimates that
its Wallcoverings facilities that produce surface print paper
generally operate at approximately 35% of capacity on a five-day basis
and its facilities that produce gravure paper generally operate
between approximately 80% and 100% of capacity on a five-day basis.
The Company's capacity utilization in this segment is generally in
line with its past experience in similar economic situations, and the
Company believes that its existing facilities are sufficient to meet
both this segment's existing needs and its anticipated growth
requirements. The Company does not anticipate any circumstances that
would render its Wallcoverings facilities inadequate for its projected
needs.
RAW MATERIALS
Raw materials and other supplies used in the Company's operations
are normally available from a variety of competing suppliers. The loss
of a single or few suppliers would not have a material adverse effect on
the Company. For a discussion of increasing raw material price trends,
see page 24 of Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources in
the Company's 1994 Annual Report to Stockholders which is incorporated
herein by reference.
ENVIRONMENTAL MATTERS
See "ITEM 3. LEGAL PROCEEDINGS - Environmental Proceedings"
and Management's Discussion and Analysis of Financial Condition and
Results of Operations - Environmental Matters on pages 25-26 of the
Company's 1994 Annual Report to Stockholders incorporated
herein by reference.
EMPLOYEES
As of January 28, 1995, the Company's subsidiaries employed
approximately 12,000 persons on a full-time or full-time equivalent
basis. Approximately 2,300 of such employees are represented by
labor unions. Management believes that the Company's relations
with its employees and with the unions that represent certain of them
are good.
7
ITEM 2. PROPERTIES
For information concerning the principal physical properties of the
Company and its various operating divisions, see "ITEM 1. BUSINESS".
ITEM 3. LEGAL PROCEEDINGS
Except as described below, the Company and its subsidiaries are
not a party to any material pending legal proceedings, other than
ordinary routine litigation incidental to their businesses.
Preferred Stock Redemption Litigation. On August 2, 1991, a
Fifth Consolidated Amended Complaint was filed in In re Ivan F.
Boesky Securities Litigation (the "Boesky action"), a multi-district
litigation pending for pre-trial purposes in the United States District
Court for the Southern District of New York. In essence, the
complaint is an amalgam of numerous class action and individual
claims against a variety of defendants relating principally to the
activities of, among others, Ivan F. Boesky, Drexel Burnham Lambert
Incorporated and Michael R. Milken. Among other things, the
complaint alleges that these defendants and various named associates,
along with Collins & Aikman Group, Inc. ("Group"), a former wholly
owned subsidiary of the Company, which was merged into Collins &
Aikman Products Co. ("Products"), a wholly owned subsidiary of the
Company, and certain former officers and directors of Group,
conspired to manipulate the price of Group's common stock in April
1986 for the purpose of triggering a redemption of outstanding
preferred stock of Group issued in an April 24, 1985 public offering
(the "Preferred Stock"). The complaint alleges claims for compensatory
and punitive damages in unspecified amounts against Group and the
individual Group-related defendants for fraud and deceit, breach of
fiduciary duty, unjust enrichment and violations of Section 25400 of the
California Corporations Code. It does so on behalf of a certified
class of persons and entities who, during the period of April 23,
1986 through June 2, 1986, redeemed, converted or sold shares of the
Preferred Stock. The complaint also alleges numerous other claims
not involving Group or its former officers and directors. The
factual allegations in the complaint involving Group are substantially
similar to the allegations set forth in Citron v. Wickes Companies,
Inc., et al., and Weinberger v. Wickes Companies, Inc., et al., two
actions previously filed in the Superior Court of the State of
California for the County of Los Angeles which have been stayed in
favor of the Boesky action. On February 27, 1995, plaintiffs made a
motion to "clarify or amend the Fifth Amended Complaint,
essentially seeking either (i) a declaration that the complaint
asserted claims against Group under Section 10(b) of the Securities
Exchange Act and the Racketeer Influenced Corrupt Organizations Act
(RICO); or (ii) the right to amend the complaint to assert those
claims. On April 24, 1995, the court granted plaintiffs motion to the
extent of permitting plaintiffs to amend the complaint to assert
Section 10(b) and RICO claims against Group and the individual
Group-related defendants.
POF Arbitration. On or about May 26, 1992, Advanced
Development & Engineering Centre ("ADEC"), a division of an indirect
subsidiary of Group, filed a request for arbitration with the
International Chamber of Commerce seeking a resolution of ADEC's
dispute with the Pakistan Ordnance Factories Board ("POF") concerning
ADEC's installation of a munitions facility in Pakistan for a purchase
price of $26.5 million. ADEC alleges that POF violated the contract,
among other things, by refusing to permit completion of a production
run, which would have entitled ADEC to receive $2.65 million, the
remaining unpaid portion of the purchase price under the contract. On
August 6, 1992, POF filed a reply and counterclaim alleging that as a
result of ADEC's alleged breach of the contract, POF's entire
investment in the munitions facility was a loss. POF claims
damages in excess of $30 million.
Insurance Coverage Litigation. On November 22, 1994, Products
was served with a complaint filed by National Union Fire Insurance
Company of Pittsburgh, PA ("National Union") in the United States
District Court for the Central District of California (the "California
8
action"). The complaint seeks declaratory relief and the
return of approximately $10 million paid by National Union in defense
costs and indemnity in respect of a class action, captioned Glass,
Molders, Pottery, Plastics and Allied Workers International Union,
AFL-CIO et al. v. Wickes Companies, Inc. (the "OCF Action"), which was
commenced against Wickes Companies, Inc. (the predecessor by merger to
Products) in or about July 1988 and settled pursuant to an order
entered in or about October 1993. The complaint by National Union
alleges, among other things, that National Union did not have a duty to
defend or indemnify Wickes and that Wickes was unjustly enriched. On
November 21, 1994, Products filed suit against National Union in the
United States District Court for the Southern District of New York (the
"New York action") seeking declaratory relief and damages relating to
the amounts paid by National Union in respect of the OCF Action. Both
the California action and the New York action have been withdrawn. In
accordance with a settlement agreement dated as of January 17, 1995, the
parties exchanged mutual releases of all claims related to either the
California or New York action, and Products agreed to pay National
Union a total of $2,510,000 of which $510,000 is due in 1995;
$1,000,000 is due in 1996; and the remaining $1,000,000 is due in
1997. The settlement is covered by established accruals.
In the opinion of the Company's management based on the facts
presently known to it, the ultimate outcome of any of these legal
proceedings will not have a material effect on the Company's
consolidated financial condition or future results of operations.
Environmental Proceedings
Douglas, Michigan. On January 4, 1991, a complaint was filed in
the Circuit Court for Allegan County, Michigan, captioned Haworth,
Inc. v. Wickes Manufacturing Company (the "Haworth action"), in
which Haworth, Inc. ("Haworth") alleges that predecessors of Wickes
Manufacturing Company ("Wickes Manufacturing"), an indirect wholly owned
subsidiary of the Company, released environmental contaminants on
property, now owned by Haworth, located in the Village of Douglas,
Michigan. Haworth seeks a declaratory judgment that Wickes
Manufacturing is liable for the alleged contamination of the site,
indemnification for any costs incurred or to be incurred in connection
with the alleged contamination, an affirmative injunction requiring
Wickes Manufacturing to implement response actions at the site, damages
in connection with alleged diminution in value of the subject property,
and other damages, interest, and costs, all in unspecified amounts.
Wickes Manufacturing has filed counterclaims against Haworth. On
June 28, 1993, the Court entered an order granting Wickes
Manufacturing's motion for summary disposition dismissing all of
Haworth's claims against Wickes Manufacturing. On July 19, 1993,
Haworth appealed the Court's order. On April 21, 1995, the Court of
Appeals for the State of Michigan affirmed the Trial Court s order
granting Wickes Manufacturing's motion for summary disposition. On
October 22, 1993, Haworth filed a complaint in the United States
District Court for the Western District of Michigan, captioned Haworth,
Inc. v. Wickes Manufacturing Company and Paramount Communications,
Inc. (the "Second Haworth action"). In the Second Haworth action,
Haworth alleges federal and state law claims with respect to Wickes
Manufacturing and Paramount Communications Inc. that are factually
similar to the state law claims alleged in the Haworth action, and
Haworth seeks relief similar to the relief it seeks in the Haworth
action. The Michigan Department of Natural Resources, by letter
dated December 20, 1989, notified Wickes Manufacturing pursuant to
the Michigan Environmental Response Act that Wickes Manufacturing
is potentially responsible for undertaking investigation and
response actions to address contamination at the site involved in the
Haworth action and its possible effect on the water supply of the
Village of Douglas.
North Smithfield, Rhode Island. On May 23, 1988, a complaint
was filed in the United States District Court for the District of
Rhode Island, captioned United States v. Kayser-Roth Corporation and
Hydro-Manufacturing, Inc. (the "Stamina Mills action"), in which the
United States sought to recover response costs under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") from Group's former Kayser-Roth Corporation subsidiary
("Kayser-Roth") and others in connection with a site formerly
operated
9
by Stamina Mills, Inc., a former subsidiary of Kayser-Roth,
in North Smithfield, Rhode Island. In January 1990, the District
Court held Kayser-Roth liable under CERCLA for all past and future
response costs. By Amended Administrative Order issued June 4,
1991, the United States Environmental Protection Agency (the "EPA")
directed Kayser-Roth to implement the remedies set forth in its Record
of Decision issued September 18, 1990. Since the beginning of
fiscal 1991 to date, Kayser-Roth has paid approximately $3.6 million
for past response costs, prejudgment interest and remediation.
Kayser-Roth is in the process of complying with the remainder of the
order. The Company has agreed to indemnify Kayser-Roth with respect to
this matter.
Miscellaneous Environmental Matters. In addition to the judicial
and administrative proceedings listed above, the Company also is
legally or contractually responsible or alleged to be responsible
for the investigation and remediation of contamination at various
other sites. It also has received notices that it is a potentially
responsible party ("PRP") in a number of proceedings. It is a
normal risk of operating a manufacturing business that liability
may be incurred for investigating and remediating on-site and off-site
contamination. The Company is currently engaged in or alleged to be
responsible for investigation or remediation at certain sites. These
sites include, among others, the following: a site adjacent to a
facility formerly operated by Wickes Manufacturing's former Bohn Heat
Transfer division located at Beardstown, Illinois; a site formerly
owned and operated by Wickes Manufacturing's alleged former
Daybrook Ottawa division located at Bowling Green, Ohio; a site owned
and formerly operated by the Company located at Elmira, California;
the Beaunit Corporation Superfund Site located near Fountain Inn,
South Carolina; the Butterworth Landfill Superfund Site located at
Grand Rapids, Michigan; a site owned and formerly operated by Wickes
Manufacturing's former Mechanical Components division located at
Mancelona, Michigan; the former Albert Van Luit plant site owned by a
Company subsidiary located in North Hollywood, California; the
Hartley & Hartley landfill site located at Kawkawlin, Michigan; and
the Stringfellow Superfund Site located at Riverside County, California.
In addition to the environmental sites and proceedings listed above,
the Company is and has been a party or PRP at other sites and involved
in other proceedings from time to time. In the last three fiscal
years, the Company has paid approximately $6.3 million in the aggregate
(excluding amounts paid in connection with the Stamina Mills action
disclosed above) in connection with its various environmental sites.
The majority of such costs have been incurred in connection with the
Elmira, California and North Hollywood, California sites.
In estimating the total future 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 EPA, 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 scheme 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 PRP's, 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. The Company
records its best estimate when it believes it is probable that an
environmental liability has been incurred and the amount of loss can be
reasonably estimated. The Company also considers estimates of certain
reasonably possible environmental liabilities in determining the
aggregate amount of environmental reserves. As of January 28, 1995,
the Company has established reserves of approximately $31.7 million for
the estimated future
10
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
results of operations. However, there can be no assurance that the
Company has identified or properly assessed all potential environmental
liability arising from the activities or properties of the Company, its
present and former subsidiaries and their corporate predecessors.
The Company is seeking insurance coverage for a portion of the
defense costs and liability it has incurred and may incur in
connection with the environmental proceedings described above.
Coverage issues have not been resolved. There can be no assurance that
any coverage will be provided.
11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
(Pursuant to Instruction G(3) of the General Instructions to Form
10-K, the following information is included herein as an unnumbered
item in lieu of being included in the Company's definitive Proxy
Statement).
The following is a list of the names and ages (as of April 28, 1995) of
all the executive officers of the Company and a description of all
positions and offices with the Company held by each such person and
each such person's principal occupations and employment during the
past five years. All executive officers hold office at the pleasure
of the Company's Board of Directors.
Name Age Position
David A. Stockman 48 Co-Chairman of the Board
Bruce Wasserstein 47 Co-Chairman of the Board
Randall J. Weisenburger 36 Vice Chairman
John P. McNicholas 32 Vice Chairman
Thomas E. Hannah 56 Chief Executive Officer
William J. Brucchieri 52 President of Imperial Wallcoverings
John D. Moose 58 President of Automotive Bodycloth
Division
Harry F. Schoen III 59 President of Mastercraft Division
Elizabeth R. Philipp 38 Executive Vice President, General
Counsel and Secretary
J. Michael Stepp 51 Executive Vice President and Chief
Financial Officer
David A. Stockman has been Co-Chairman of the Board of the Company
since July 1993. Mr. Stockman has been a General Partner of The
Blackstone Group Holdings L.P. (the "Blackstone Group") since 1988.
Mr. Stockman is also a director of Edward J. DeBartolo Corporation.
Bruce Wasserstein has been Co-Chairman of the Board of the Company
since June 1992. Mr. Wasserstein has been Chairman and Chief
Executive Officer of Wasserstein Perella Management Partners, Inc.
("WP Management") since June 1992 and Chief Executive Officer and
Chairman or President, Wasserstein Perella Group, Inc. ("WP Group")
since 1988. Mr. Wasserstein is Chairman of the Board of Maybelline,
Inc.
12
Randall J. Weisenburger has been a director of the Company since
August 1989 and Vice Chairman of the Company since April 1994. Mr.
Weisenburger was Deputy Chairman of the Company from July 1992 to
April 1994 and Vice President from August 1989 to July 1992. Mr.
Weisenburger has been Managing Director of Wasserstein Perella & Co.,
Inc. ("WP & Co.") since December 1993. Mr. Weisenburger was a Director
of WP & Co. from December 1992 to December 1993 and a Vice President
of WP & Co. from December 1989 to December 1992. Mr. Weisenburger is
also Vice Chairman of the Board of Maybelline, Inc. and Chairman of
the Yardley Lentheric Group.
John P. McNicholas has been Vice Chairman of the Company since
April 1994. Mr. McNicholas was Deputy Chairman of the Company from
July 1992 to April 1994. Mr. McNicholas has been Vice President of the
Blackstone Group since January 1992 and was an Associate of the
Blackstone Group from November 1990 to December 1991 and an Associate,
Merchant Banking Group - Merrill Lynch Capital Markets from August 1989 to
November 1990.
Thomas E. Hannah, has been a director of the Company and Chief
Executive Officer of the Company since July 1994. Mr. Hannah was
President and Chief Executive Officer of Collins & Aikman Textile and
Wallcoverings Group, a division of a wholly owned subsidiary of the
Company, from November 1991 until July 1994 and was named an executive
officer of the Company for purposes hereof in April 1993. Mr.
Hannah was President and Chief Executive Officer of the Collins &
Aikman Textile Group from February 1989 to November 1991 and President
of Milliken & Company's Finished Apparel Division prior to that.
William J. Brucchieri has been President of Imperial
Wallcoverings since February 1993 and was named an executive officer of
the Company for purposes hereof in April 1994. Mr. Brucchieri was
Executive Vice President of Imperial from March 1992 to January 1993
and Executive Vice President of the Mastercraft division from January
1990 to February 1992. Mr. Brucchieri was Vice President, Operations
of the Mastercraft division from August 1989 to January 1990. Mr.
Brucchieri joined a wholly owned subsidiary of the Company in 1988.
John D. Moose has been President of the Automotive Bodycloth
division since October 1994 and was President of the North American Auto
Group from June 1989 until October 1994. Mr. Moose was named an
executive officer of the Company for purposes hereof in April 1994. Mr.
Moose joined a wholly owned subsidiary of the Company in 1960.
Harry F. Schoen III has been President of the Mastercraft division
since January 1993 and was named an executive officer of the Company for
purposes hereof in April 1994. Mr. Schoen was Executive Vice
President and Chief Operating Officer of the Mastercraft division
from April 1992 to December 1992. Mr. Schoen was General Manager of
Milliken & Company's Greige Fine Goods Group prior to that.
Elizabeth R. Philipp has been Executive Vice President, General
Counsel and Secretary of the Company since April 1994. Ms. Philipp
was Vice President, General Counsel and Secretary of the Company
from April 1993 to April 1994 and Vice President and General Counsel
from September 1990 to April 1993. Prior to that, Ms. Philipp was
associated with the law firm of Cravath, Swaine and Moore.
J. Michael Stepp has been Executive Vice President and Chief
Financial Officer since April 1995. Mr. Stepp was Executive Vice
President, Chief Financial Officer of Purolator Products Company from
December 1992 to March 1995. Prior to that, Mr. Stepp was President of
American Corporate Finance Group, Inc.
13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock has been traded on the New York Stock
Exchange under the symbol "CKC" since July 13, 1994. At April 26, 1995,
there were approximately 125 holders of record. The following table
lists the high and low sales prices for the common stock for the full
quarterly periods since trading commenced.
Fiscal 1994
High Low
Third Quarter 10-7/8 8-5/8
Fourth Quarter 9-1/4 7-7/8
No dividend or other distribution with respect to the Common Stock
has been paid by the Company since its incorporation in 1988. Any
payment of future dividends and the amounts thereof will be dependent
upon the Company's earnings, financial requirements and other factors
deemed relevant by the Company's Board of Directors. The Company
currently does not intend to pay any cash dividends in the foreseeable
future; rather, the Company intends to retain earnings to provide for
the operation and expansion of its business. Certain restrictive
covenants contained in the agreement governing the Company's credit
facilities limit the Company's ability to make dividend and other
payments. See Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources
on pages 22-23 of the Company's 1994 Annual Report to Stockholders
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference
to page 16 of the Company's 1994 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this Item is incorporated by
reference to pages 17 through 26 of the Company's 1994 Annual Report
to Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by
reference to pages 27 through 54 of the Company's 1994 Annual Report
to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 401 of Regulation S-K regarding
executive officers is set forth in Part I hereof under the caption
"Executive Officers of the Registrant" and the information required by
Item 401 of Regulation S-K regarding directors is incorporated herein by
reference to that portion of the Registrant's definitive Proxy
Statement to be used in connection with its 1995 Annual Meeting of
Stockholders, which will be filed in final form with the Commission
not later than 120 days after January 28, 1995 (the "Proxy Statement"),
captioned "Election of Directors--Information as to Nominees and
Other Directors". Disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained,
to the best of the Company's knowledge, in the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by
reference to that portion of the Proxy Statement captioned "Executive
Compensation".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by
reference to those portions of the Proxy Statement captioned "Voting
Securities and Principal Stockholders" and "Election of
Directors--Information as to Nominees and Other Directors".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by
reference to that portion of the Proxy Statement captioned
"Compensation Committee Interlocks and Insider Participation".
15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements:
The following Consolidated Financial Statements of Collins & Aikman
Corporation and Report of Independent Public Accountants are
incorporated by reference to pages 27 through 54 of the Registrant's
1994 Annual Report to Stockholders:
Report of Independent Public Accountants
Consolidated Statements of Operations for the fiscal years ended
January 28, 1995, January 29, 1994 and January 30, 1993
Consolidated Balance Sheets at January 28, 1995 and January 29, 1994
Consolidated Statements of Cash Flows for the fiscal years ended
January 28, 1995, January 29, 1994 and January 30, 1993
Consolidated Statements of Common Stockholders' Deficit for the fiscal
years ended January 28, 1995, January 29, 1994 and January 30, 1993
Notes to Consolidated Financial Statements
(a) (2) Financial Schedules:
The following financial statement schedules of Collins & Aikman
Corporation for the fiscal years ended January 28, 1995, January 29,
1994 and January 30, 1993 are filed as part of this Report and should
be read in conjunction with the Consolidated Financial Statements of
Collins & Aikman Corporation.
Page
Number
Report of Independent Public Accountants on Schedules . . . . . . . . S-1
Schedule I-Condensed Financial Information of the Registrant . . . . S-2
Schedule II-Valuation and Qualifying Accounts . . . . . . . . . . . S-5
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
omitted because they are not required, are inapplicable, or the
information is included in the Consolidated Financial Statements or
Notes thereto.
(a) (3) 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
documents and filings were made prior to July 7, 1994.
16
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 4.2 of Collins
& Aikman Corporation's Report on Form 10-Q for the fiscal
quarter ended July 30, 1994.
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 May 1, 1985, pursuant to which 11
3/8% Usable Subordinated Debentures due 1997 of Collins &
Aikman Products Co. (the successor by merger to Collins &
Aikman Group, Inc. and Wickes Companies, Inc.) were issued is
hereby incorporated by reference to Exhibit 4(f) of Wickes
Companies, Inc.'s Current Report on Form 8-K dated May 21,
1985 (SEC File No. 1-6761).
4.3- Credit Agreement dated as of June 22, 1994 between
Collins & Aikman Products Co. (formerly Collins & Aikman
Corporation) as Borrower, WCA Canada Inc., as Canadian
Borrower, the Company, as Guarantor, the lenders named
therein, Continental Bank, N.A., and NationsBank, N.A. as
Managing Agents, and Chemical 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 July 30, 1994.
4.4- First Amendment dated as of January 30, 1995 to the Credit
Agreement dated as of June 22, 1994 among Collins & Aikman
Products Co., WCA Canada Inc., Collins & Aikman Corporation,
the financial institutions party thereto and Chemical Bank, as
administrative agent.
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.
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.*
* Management contract or compensatory plan or arrangement required to
be filed as an exhibit to this form pursuant to Item 14 (c) of this
report.
17
Exhibit
Number Description
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 - 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.*
10.6 - Employment Agreement dated as of March 23, 1992 between
Collins & Aikman Group, Inc. and a former executive
officer is hereby incorporated by reference to
Exhibit 10.6 of Collins & Aikman Holdings
Corporation's Report on Form 10-K for the fiscal year
ended January 30, 1993.*
10.7 - First Amendment dated as of April 4, 1994 to Agreement
dated as of March 23, 1992 between Collins & Aikman
Group, Inc. and a former executive officer is hereby
incorporated by reference to Exhibit 10.14 of Collins &
Aikman Holdings Corporation's Report on Form 10-K for
the fiscal year ended January 29, 1994.*
10.8 - 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.
10.9 - Agreement dated as of October 17, 1994 among Collins &
Aikman Products Co. and a former executive officer is
hereby incorporated by reference to Exhibit 10.29 of
Collins & Aikman Corporation's Report on Form 10-Q for
the fiscal quarter ended October 29, 1994.*
10.10 - The Wickes Equity Share Plan is hereby incorporated
by reference to Exhibit 10.11 of Collins & Aikman
Holdings Corporation's Report on Form 10-K for the
fiscal year ended January 30, 1993.*
10.11 - Collins & Aikman Corporation 1994 Executive Incentive
Compensation Plan is hereby incorporated by reference to
Exhibit 10.22 of Amendment No. 4 to Collins & Aikman
Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed June 27, 1994.*
10.12 - 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.*
* Management contract or compensatory plan or arrangement required
to be filed as an exhibit to this form pursuant to Item 14 (c) of
this report.
18
Exhibit
Number Description
10.13 - 1993 Employee Stock Option Plan is hereby incorporated
by reference to Exhibit 10.12 of the Registration
Statement on Form S-2 of Collins & Aikman Holdings
Corporation (File No. 33-53179) filed April 19, 1994.*
10.14 - 1994 Employee Stock Option Plan is hereby incorporated
by reference to Exhibit 10.13 of the Registration
Statement on Form S-2 of Collins & Aikman Holdings
Corporation (File No. 33-53179) filed April 19, 1994.*
10.15 - 1994 Directors Stock Option Plan.*
10.16 - Acquisition Agreement dated as of November 22, 1993
as amended and restated as of January 28, 1994,
among Collins & Aikman Group, Inc., Kayser-Roth
Corporation and Legwear Acquisition Corporation is
hereby incorporated by reference to Exhibit 2.1 of
Collins & Aikman Holdings Corporation's Current Report
on Form 8-K dated February 10, 1994.
10.17 - Warrant Agreement dated as of January 28, 1994 by and
between Collins & Aikman Group, Inc. and Legwear
Acquisition Corporation is hereby incorporated by
reference to Exhibit 10.20 of Collins & Aikman Holdings
Corporation's Report on Form 10-K for the fiscal year
ended January 29, 1994.
10.18 - 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.
10.19 - 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.
10.20 - Pooling Agreement, dated as of March 30, 1995, among
Carcorp, Inc., Collins & Aikman Products Co., as
Master Servicer and Chemical Bank, as Trustee.
10.21 - 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.
10.22 - 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.
10.23 - 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.
* Management contract or compensatory plan or arrangement required
to be filed as an exhibit to this form pursuant to Item 14 (c) of
this report.
19
Exhibit
Number Description
10.24 - Employment Agreement dated as of April 6, 1995 between
Collins & Aikman Products Co. and an executive officer.*
10.25 - Excess Benefit Plan of Collins & Aikman Corporation.*
11 - Computation of Earnings Per Share.
13 - Pages 16-54 of Collins and Aikman Corporation s 1994
Annual Report to Stockholders.
21 - List of subsidiaries of Collins & Aikman Corporation.
23 - Consent of Arthur Andersen LLP.
27 - Financial Data Schedule.
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.
* Management contract or compensatory plan or arrangement required
to be filed as an exhibit to this form pursuant to Item 14 (c) of
this report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the
fiscal year for which this report on Form 10-K was filed.
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 28th day of April, 1995.
COLLINS & AIKMAN CORPORATION
By: /s/ David A. Stockman By: /s/ Bruce Wasserstein
David A. Stockman Bruce Wasserstein
Co-Chairman of the Board of Directors Co-Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Signature Title Date
/s/ David A. Stockman Co-Chairman of the April 28, 1995
David A. Stockman Board of Directors
/s/ Bruce Wasserstein Co-Chairman of the April 28, 1995
Bruce Wasserstein Board of Directors
/s/ Thomas E. Hannah Director and Chief Executive April 28, 1995
Thomas E. Hannah Officer (Principal Executive
Officer)
/s/ Randall J. Weisenburger Vice Chairman and Director April 28, 1995
Randall J. Weisenburger
/s/ J. Michael Stepp Executive Vice President and April 28, 1995
J. Michael Stepp Chief Financial Officer
(Principal Financial Officer)
/s/ Anthony Hardwick Vice President and Controller April 28, 1995
Anthony Hardwick (Principal Accounting Officer)
/s/ Robert C. Clark Director April 28, 1995
Robert C. Clark
/s/ James J. Mossman Director April 28, 1995
James J. Mossman
/s/ Stephen A. Schwarzman Director April 28, 1995
Stephen A. Schwarzman
/s/ W. Townsend Ziebold, Jr. Director April 28, 1995
W. Townsend Ziebold, Jr.
21
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Collins & Aikman Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Collins &
Aikman Corporation's annual report to stockholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
March 23, 1995, except with respect to the refinancing of the
receivables facility discussed in Note 23 to the consolidated
financial statements, as to which the date is March 31, 1995. Our
audits were made for the purpose of forming an opinion on those
statements taken as a whole. The schedules listed in Item 14 of this
Form 10-K are the responsibility of the Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial
data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ANDERSEN ARTHUR LLP
Charlotte, North Carolina,
March 23, 1995.
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COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Balance Sheets
(in thousands)
January 28, January 29,
ASSETS 1995 1994
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . $ 875 $ 3,010
Total current assets . . . . . . . . . . . . . . . . 875 3,010
Other assets . . . . . . . . . . . . . . . . . . . . . 18 1,300
$ 893 $ 4,310
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities:
Accounts payable and accrued expenses . . . . . . . $ - $ 130
Other current liabilities . . . . . . . . . . . . . - 5,000
Total current liabilities . . . . . . . . . . . . . - 5,130
Long-term debt . . . . . . . . . . . . . . . . . . . . - 191,861
Share of accumulated losses in excess ofinvestments in
subsidiaries. . . . . . . . . . . . . . . . . . . . . 410,933 380,772
Other noncurrent liabilities . . . . . . . . . . . . . 2,582 6,399
Commitments and contingencies (Note 1) . . . . . . . .
Redeemable preferred stock . . . . . . . . . . . . . . - 122,368
Common stock . . . . . . . . . . . . . . . . . . . . . 705 350
Other stockholder's equity . . . . . . . . . . . . . . (413,327) (702,570)
Total stockholder's equity . . . . . . . . . . . . . (412,622) (702,220)
$ 893 $ 4,310
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COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Statements of Operations
(in thousands)
Fiscal Year Ended
January 28, January 29, January 30,
1995 1994 1993
Other expenses . . . . . . . . . . . . . . . . $ (349) $ (71) $ (651)
Interest expense . . . . . . . . . . . . . . . (12,549) (25,079) (22,203)
Loss from operations before income taxes and
equity in loss of subsidiaries . . . . . . . (12,898) (25,150) (22,854)
Income tax benefit . . . . . . . . . . . . . . - 468 1,432
Equity in loss of subsidiaries . . . . . . . . (17,884) (252,982) (242,236)
Net loss . . . . . . . . . . . . . . . . . . . $ (30,782) $ (277,664) $(263,658)
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COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Statements of Cash Flows
(in thousands)
Fiscal Year Ended
January 28, January 29, January 30,
1995 1994 1993
OPERATING ACTIVITIES
Net cash provided by (used in) operating
activities . . . . . . . . . . . . . . . . . $ (405) $ (537) $ 1,535
INVESTING ACTIVITIES
Investment in subsidiary . . . . . . . . . . . (52,351) - -
Other, net . . . . . . . . . . . . . . . . . . 1,309 - (55)
Net cash used in investing activities . . . . . (51,042) - (55)
FINANCING ACTIVITIES
Issuance of common stock . . . . . . . . . . . 232,436 - -
Redemption of preferred stock . . . . . . . . . (173,367) - -
Repayment of long-term debt . . . . . . . . . . (9,757) - -
Net cash provided by in financing activities . 49,312 - -
Net increase (decrease) in cash . . . . . . . . (2,135) (537) 1,480
Cash and cash equivalents at beginning of year 3,010 3,547 2,067
Cash and cash equivalents at end of year . . . $875 $ 3,010 $ 3,547
Notes to Condensed Financial Statements
1. Presentation:
These condensed financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and notedisclosures normally
included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to those rules and regulations, although the Company
believes that the disclosures made are adequate to make the
information presented not misleading. For disclosures regarding
redeemable preferred stock and commitments and contingencies, see
Notes 15 and 21, respectively, to Consolidated Financial Statements
incorporated by reference to pages 27 through 54 of the Registrant's
1994 Annual Report to Stockholders.
2. Long-Term Debt:
Long-term debt as of January 29, 1994 consisted of Subordinated PIK
Bridge Notes. For additional disclosures regarding long-term debt,
see Note 9 to Consolidated Financial Statements incorporated by
reference to pages 27 through 54 of the Registrant's 1994 Annual
Report to Stockholders
3. See Notes to Consolidated Financial Statements for additional
disclosures.
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COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (a)
For the Fiscal Years Ended January 28, 1995, January 29, 1994, and January 30, 1993
(in thousands)
Charge
Balance at to Costs Charged Balance at
Beginning and to Other End of
Description of Year Expenses Accounts Deductions Year
Fiscal Year Ended
January 28, 1995
Allowance for doubtful
accounts . . . . . . . $ 7,071 $ 1,132 $115(b) $ (1,918) (c) $ 6,400
Fiscal Year Ended
January 29, 1994
Allowance for doubtful
accounts . . . . . . . $ 6,748 $ 2,521 $720(b) $ (2,918) (c) $ 7,071
Fiscal Year Ended
January 30, 1993
Allowance for doubtful
accounts . . . . . . . $ 6,401 $ 3,700 $765(b) $ (4,118) (c) $ 6,748
(a) The fiscal year ended January 30, 1993 has been restated to
exclude amounts related to discontinued operations.
(b) Reclassification and collection of accounts previously written off.
(c) Reclassifications and uncollectible amounts written off.
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