C&A probing transactions involving Joan Fabrics chief
Susan M. Andrews -- Furniture Today, September 14, 2003
Troy, Mich. — Auto component specialist Collins & Aikman is investigating allegations regarding transactions involving two of its directors, one of whom is Elkin McCallum, head of Joan Fabrics, the largest U.S. supplier of upholstery fabrics.
C&A said in a press release that former executives had made assertions about related-party transactions the company made involving McCallum and fellow director Charles Becker.
The company did not describe the assertions. One is believed to be related to previously disclosed transactions between the company and affiliates of McCallum, and a related potential accounting implication for one of these transactions. It said its auditors had retained independent counsel to investigate the claims, and that "the audit committee is expected to review the management environment, including that of the finance staff."
C&A also said that while its senior management believes all the assertions to be without merit, it cannot predict the outcome of the inquiry or its impact on financial results. It added that it can't be sure that further assertions will not be made and that the scope of the inquiry will not expand.
The transactions came into question a few days after Jerry Mosingo resigned as the company's chief executive officer last month. Mosingo, who had held the post only one year, was replaced by Chairman David Stockman.
McCallum did not respond to a Furniture/Today phone call seeking a comment. Joan Fabrics sold its automotive velvet business to C&A in 2001.
C&A's stock price was $3 per share at the close of business on Sept. 10, down from an average in June 2002 of $9.10 per share.
| Financial results | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines | |||
| Rent-Way | |||
| Quarter ended 6/30 | 2003 | 2002 | Change |
| (a) Includes non-rental revenues of $23.2 million in the 2003 quarter, $25 million in the 2002 quarter, $72 million in the 2003 nine months and $75.4 million in the 2002 nine months. (b) Revenues minus depreciation and amortization of rental merchandise, property and equipment, cost of prepaid phone service, salaries and wages, advertising, occupancy and other operating expenses. (c) After preferred dividend charges of $124,000 in both periods; includes pretax restructuring charges of $1.2 million in the 2003 quarter and $3.4 million in the 2003 nine months and net losses from discontinued operations of $1.4 million in the 2003 quarter and $15.6 million in the 2003 nine months. (d) Includes net income from discontinued operations of $308,000 in the 2002 quarter and $553,000 in the 2002 nine months. The 2002 nine months also includes a $41.5 million extraordinary loss, the cumulative effect of an accounting change |
|||
| Revenues (a) | $122,375,000 | $125,936,000 | (2.8%) |
| Operating income (b) | 16,671,000 | 7,466,000 | 123.3% |
| Net income | (c)4,359,000 | (d)(5,989,000) | — |
| Earnings per share | 0.17 | (0.24) | — |
| 9 months ended 6/30 | 2003 | 2002 | Change |
| Revenues (a) | $372,452,000 | $375,564,000 | (0.8%) |
| Operating income (b) | 31,854,000 | 20,305,000 | 56.9% |
| Net income | (c)(28,920,000) | (d)(68,614,000) | — |
| Earnings per share | (1.13) | (2.77) | — |
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