NEW YORK -- Collins & Aikman Corp. announced on Thursday it has identified inaccurate accounting in its books and would delay the filing of its annual report.
The news tore into Collins' share price, which fell more than 20 percent to $1.30, a new low for the year.
The company also warned that there was a possibility of restating its 2003 results and sees restating for the nine months to Sept 30, 2004.
Collins said it was also reducing its goodwill attached to its U.S. and Mexico plastics reporting units by $300 million. The company was also doing the same for its global fabrics unit to the tune of $175 million.
The company said the goodwill impairment charge was necessary because tough business conditions, including the decline in the automotive industry, had reduced the fair value of those assets.
The company also announced its preliminary results although they were not yet audited by its external auditors. Its earnings before interest, taxes, depreciation and amortization before restructuring and impairment charges is expected to be between $72 million and $73 million for the fourth quarter of 2004, down from $91 million recorded in 2003.
Detailing its revenue recognition problems, the company said the heart of it was in the way it had treated rebates from its vendors. The manner in which they were reported led to premature or inappropriate income recognition.
Separately, diversified manufacturer Textron Inc. also said it had agreed to sell about 60 percent of its preferred stock in Collins to Heartland Industrial Partners LP for a mix of cash and other considerations for a total value of about $25 million.