Collins & Aikman Corp. said an internal review of vendor-rebate accounting has delayed detailed financial reporting of its fourth-quarter and full-year results.
The Troy auto supplier said March 17 that the issue came up just before C&A was to release results, on March 15. Recently, Delphi Corp. and Visteon Corp. have had to restate earnings in part because of how vendor rebates were handled.
Vendors to some large auto suppliers sometimes pay rebates when awarded new business. In essence, it avoids price cuts down the line by paying for them upfront.
C&A reviewed 350 supplier-rebate entries representing about $85 million from 2002-04. Though most of the entries were recorded properly, the firm said, some were not. C&A estimates operating income through the first nine months of last year was overstated by $10 million to $20 million.
A restatement of financial results may be necessary for the first nine months of last year, but no decision has been made.
``We wanted to see whether the magnitude of the issue was a dump truck or a breadbox, and we believe it's modest,'' said Chairman and Chief Executive Officer David Stockman.
C&A released preliminary 2004 profit before interest, taxes, depreciation and amortization of $73 million on sales of $3.9 billion, vs. $90.5 million on sales of $4 billion in 2003.
High raw-material prices and low production on some models hurt results, Stockman said.