Collins & Aikman Corp. reportedly said it has identified inaccurate accounting in its books and would delay the filing of its annual report.
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According to Reuters, the company also warned that there was a possibility of restating its 2003 results and restating for the nine months to Sept 30, 2004.
Collins reportedly said it was also reducing its goodwill attached to its US and Mexico plastics reporting units by $US300 million and the company was 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, Reuters said.
The news agency said 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 are expected to be between $72 million and $73 million for the fourth quarter of 2004, down from $91 million in 2003.
Detailing its revenue recognition problems, the company told Reuters 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.
