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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

WASHINGTON, D.C. 20549




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Form 10-K

|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31,
    2002                                                 
|          
|or        
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-10218



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Collins & Aikman Corporation

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 13-3489233                                 
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification Number)

250 Stephenson Highway

Troy, Michigan 48083


(Address of principal executive offices,
including zip code)


Registrants telephone number, including
area code:

(248) 824-2500


Securities registered pursuant to
Section 12(b) of the Act:

|                             |  |                                          
|---------------------------- |  | -----------------------------------------
|Title of each class          |  | Name of each exchange on which registered
|                             |  |                                          
|Common Stock, $.01 par value |  | 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. Yes þ  No o

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. þ

Indicate by check
mark whether the registrant is an accelerated filer (as defined
in Exchange Act
Rule 12b-2). Yes þ  No o.

The aggregate
market value of voting stock held by non-affiliates of the
Registrant was $168,443,079 as of March 18, 2003.

As of
February 28, 2003, the number of outstanding shares of the
Registrants common stock, $.01 par value, was 83,630,087
shares.

DOCUMENTS INCORPORATED BY REFERENCE:

The
information required by Part III (Items 10, 11, 12 and
13) is incorporated by reference to portions of the
registrants definitive Proxy Statement for the 2002 Annual
Meeting of Stockholders, which will be filed within
120 days of December 31, 2002.

WEBSITE ACCESS TO COMPANYS
REPORTS:

Collins
and Aikmans internet website address is
www.collinsaikman.com. The Companys annual report on
Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendment to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act are available free of charge through the
Companys website and as soon as reasonably practicable
after the reports are electronically filed with, or furnished to
the Securities and Exchange Commission.



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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Item 1. Business                                                                             
|Item 2. Properties                                                                           
|Item 3. Legal Proceedings                                                                    
|Item 4. Submission of Matters to a Vote of Security Holders                                  
|Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|Item 6. Selected Financial Data                                                              
|Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk                          
|Item 8. Financial Statements and Supplementary Data                                          
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|Item 10. Directors and Executive Officers of the Registrant                                  
|Item 11. Executive Compensation                                                              
|Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|Item 13. Certain Relationships and Related Transactions                                      
|Item 14. Controls and Procedures                                                             
|Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|SIGNATURES                                                                                   
|CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002                      
|REPORT OF INDEPENDENT ACCOUNTANTS                                                            
|CONSOLIDATED STATEMENTS OF OPERATIONS                                                        
|CONSOLIDATED BALANCE SHEETS                                                                  
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                        
|CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS EQUITY (DEFICIT)                             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                   
|SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS                          
|CONSOLIDATING STATEMENT OF INCOME                                                            
|CONSOLIDATING STATEMENT OF INCOME                                                            
|CONSOLIDATING BALANCE SHEET                                                                  
|CONSOLIDATING BALANCE SHEET                                                                  
|CONSOLIDATING STATEMENT OF CASH FLOWS                                                        
|CONSOLIDATING STATEMENT OF CASH FLOWS                                                        
|SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT                                  
|SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS                                             
|First Amendment to the Credit Agreement                                                      
|Computation of Earnings Per Share                                                            
|Computation of Ratio of Earnings to Fixed Charges                                            
|Subsidiaries of the Registrant                                                               
|Consent of PricewaterhouseCoopers LLP                                                        
|Powers of Attorney                                                                           
|906 Certification of CEO/CFO                                                                 



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES

FORM 10-K ANNUAL REPORT
INDEX

|         |  |                                                                                           |  |      |    | 
|-------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                           |  | Page |   
|         |  |                                                                                           |  |      |   
|Item 1.  |  | Business                                                                                  |  |      | 7  | 
|Item 2.  |  | Properties                                                                                |  |      | 16 | 
|Item 3.  |  | Legal Proceedings                                                                         |  |      | 16 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                   |  |      | 19 | 
|Item 5.  |  | Market for Registrants Common Equity and
    Related Stockholder Matters                 |  |      | 19 | 
|Item 6.  |  | Selected Financial Data                                                                   |  |      | 20 | 
|Item 7.  |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |      | 21 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures About
    Market Risk                            |  |      | 40 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                               |  |      | 41 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure  |  |      | 41 | 
|Item 10. |  | Directors and Executive Officers of the Registrant                                        |  |      | 42 | 
|Item 11. |  | Executive Compensation                                                                    |  |      | 42 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
    and Management                        |  |      | 42 | 
|Item 13. |  | Certain Relationships and Related Transactions                                            |  |      | 42 | 
|Item 14. |  | Controls and Procedures                                                                   |  |      | 42 | 
|Item 15. |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |  |      | 44 | 

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PART I

This Report on Form 10-K contains
forward-looking information, as that term is defined
by the federal securities laws, about our financial condition,
results of operations and business. You can find many of these
statements by looking for words such as may,
will, expect, anticipate,
believe, estimate, should,
continue, predict, and similar words
used in this Annual Report. The forward-looking statements in
this Form 10-K are intended to be subject to the safe
harbor protection provided by the federal securities laws.

These forward-looking statements are subject to
numerous assumptions, risks and uncertainties (including trade
relations and competition). Because the statements are subject
to risks and uncertainties, actual results may differ materially
from those expressed or implied by the forward-looking
statements. We caution readers not to place undue reliance on
the statements, which speak only as of the date of this Annual
Report.

The cautionary statements set forth above should
be considered in connection with any subsequent written or oral
forward-looking statements that Collins and Aikman, Corporation
(the Company) or persons acting on its behalf may issue. The
Company does not undertake any obligation to review or confirm
analysts expectations or estimates or to release publicly
any revisions to any forward-looking statements to reflect
events or circumstances after the date of this report or to
reflect the occurrence of unanticipated events.

This Annual Report contains forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results and events may
differ materially from those that are anticipated because of
certain risks and uncertainties, including but not limited to
general economic conditions in the markets in which the Company
operates and industry based factors such as:

Demand in the automotive industry is
significantly dependent on the U.S. and the global economies and
the Companys business and profitability are exposed to
current and future uncertainties.

The Companys financial performance depends,
in large part, on conditions in the global automotive markets
and, generally, on the U.S. and global economies. Demand in the
automotive industry fluctuates in response to overall economic
conditions and is particularly sensitive to changes in interest
rate levels, consumer confidence and fuel costs. The threat or
act of terrorism and war, the recession and other recent
developments adversely affected consumer confidence throughout
the U.S. and much of the world and exacerbated the uncertainty
in the Companys markets. The future impact on us is
difficult to predict. We would be harmed by any sustained
weakness in demand or continued downturn in the economy.

The Companys sales are impacted by retail
inventory levels and production schedules. In 2002, Original
Equipment Manufacturer (OEM) customers continued to
significantly reduce their production and inventory levels due
to the uncertain economic environment. In the current
environment, it is extremely difficult to predict future
production rates and inventory levels and the sustainability of
any recovery.

The base of customers which the Company serves
is concentrated, and the loss of business from a major customer
or the discontinuation of particular vehicle models could reduce
the Companys sales and harm the Companys
profitability.

Because of the relative importance of a few large
customers and the high degree of concentration of OEMs in the
automotive industry, the Companys business is exposed to a
high degree of risk related to customer concentration.
DaimlerChrysler AG, General Motors Corporation and Ford Motor
Company and their respective affiliates were the Companys
three largest customers and they directly or indirectly
accounted for approximately 31%, 23% and 23% of the
Companys 2002 net sales, respectively. A loss of
significant business from, or adverse performance by, any of
these customers would be harmful to the Companys
profitability. Although the Company receives purchase orders
from most of the Companys customers, these purchase orders
typically provide for the supply of a customers annual
requirements for a particular model or assembly plant, renewable
on a year-to-year basis, rather than for the purchase of a
specific quantity of products. It is difficult to accurately
predict the level of new production for 2003 car sales. The loss
of business with respect to significant vehicle models could
have a material adverse effect.

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In addition, there is substantial and continuing
pressure from automotive manufacturers to reduce costs,
including costs associated with outside suppliers like Collins
and Aikman. For example, OEM customers in the automotive
industry attempted to impose price decreases and givebacks
throughout 2002. Such attempted price decreases were generally
in the 3% to 8% range. Several reductions have been agreed to,
and others are currently being negotiated with OEMs and
pressures may increase if overall economic and industry
conditions do not improve. It is difficult for the Company to
offset downward pricing pressures through alternative, less
costly sources of raw materials. In addition, throughout 2002,
the Company has experienced pricing pressure from its suppliers.
The Company cannot assure that it will not be materially and
adversely affected by substantial and continuing pricing
pressures.

The prices that the Company can charge some of
the Companys customers are predetermined and the Company
bears the risk of costs in excess of its estimates.

Sales contracts with some of the Companys
customers require it to provide its products at predetermined
prices. In some cases, these prices decline over the course of
the contract. The costs that the Company incurs in fulfilling
these contracts may vary substantially from its initial
estimates. Unanticipated cost increases may occur as a result of
several factors, including increases in the costs of labor,
components or materials. In some cases, the Company may be
permitted to pass on cost increases associated with specific
materials to its customers. Cost overruns that the Company
cannot pass on to its customers could have a material adverse
effect.

The Company may not be able to successfully
integrate the Companys acquired operations or realize the
intended benefits of the Companys acquisitions.

The Companys future operations and cash
flow will depend largely upon its ability to integrate
acquisitions, achieve the strategic operating objectives for
these acquisitions and realize significant synergies and cost
savings as a result. Acquisitions since January 2001 account for
50 of the Companys 115 plants and facilities and
approximately 50% of the Companys approximately 25,000
employees. The Textron Automotive Companys Trim division
(TAC-Trim) acquisition in 2001 individually accounted for 41 of
the Companys plants and facilities and approximately
12,000 of the Companys employees located across seven
different countries, including two countries where the Company
did not previously operate. The Company has not previously
undertaken an integration process as large or complex as the
integration plans required by these recent acquisitions
collectively or by the TAC-Trim acquisition individually. In
order to succeed, the Company will need to realize projected
synergies and cost savings on a timely basis, consolidate
information technologies, capitalize on the Companys
increased purchasing power, effectively control the progress of
the Companys integration process and associated costs,
consolidate the Companys program management, research and
development and engineering operations; capitalize on the
Companys prime contractor strategy and the opportunities
afforded by the Companys broader products offering; and
maintain strong relationships with Tier I integrators and OEMs.

To the extent the Company has misjudged the
nature and extent of industry trends or its competition, it may
have difficulty in achieving its operating and strategic
objectives. In addition, the Companys integration
activities will place substantial demands on its management,
operational resources and financial and internal control
systems. The Companys future operating results will depend
upon the Companys ability to implement and improve its
operating and financial controls and to combine, train and
manage the Companys employee base. There is a risk that
the diversion of management attention, particularly in a
difficult operating environment, will affect sales and the
attention that management can devote to this and other
operational, financial and strategic issues. In addition, in
some of the Companys past non-U.S. acquisitions, the
Company has encountered integration and systems difficulties
typical of foreign transactions, which have given rise to
material weaknesses that had to be subsequently corrected. The
Company cannot assure you that it will not encounter similar
difficulties going forward. All statements concerning the
benefits, cost savings and synergies the Company expects to
realize from its acquisitions are forward-looking statements.

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The Company may pursue additional acquisitions
that further the Companys current strategies.

The Company may selectively identify and acquire
other businesses with complementary products, manufacturing
capabilities or geographic markets and the Company expects to
continually evaluate such opportunities. The Company cannot
assure you that any business acquired will be successfully
integrated with other operations or prove to be complementary in
the manner expected or profitable. The Company could incur
further indebtedness in connection with the Companys
acquisition strategy and increase the Companys leverage.
Acquisitions outside of North America may present unique
difficulties and increase the Companys exposure to the
risks attendant to international operations. The process of
integrating acquired companies and operations into the
Companys existing operations may result in unforeseen
operating difficulties and may require significant financial
resources that would otherwise be available for the ongoing
development or expansion of existing operations.

The Company may incur unanticipated contingent
liabilities as a result of acquisitions and may experience
unanticipated liabilities associated with former discontinued
operations.

The Company may incur unforeseen environmental,
tax, pension, litigation or other liabilities in connection with
the Companys recent or future acquisitions or the Company
may underestimate the known liabilities. If such liabilities
materialize or are greater than the Company estimates, they
could have a material adverse effect on us. In addition, the
Company has significant responsibilities related to some of its
formerly owned businesses, or discontinued operations, such as
those relating to post-retirement, casualty, environmental,
product liability, lease and other matters. Based upon the
information presently available and the Companys insurance
coverage, the Company does not believe that any of these
liabilities will have a material adverse effect upon the
Companys financial condition or results of operations,
however, the Company could be incorrect in its assumptions and
the extent of those contingent liabilities of which the Company
is aware may exceed its expectations and there may be other such
liabilities of which the Company presently has no knowledge.

If the Company is unable to meet future
capital requirements, the Companys competitive position
may be adversely affected.

In securing new business, the Company is
typically required to expend significant amounts of capital for
engineering, development, tooling and other costs. Generally,
the Company seeks to recoup these costs through pricing over
time, but the Company may be unsuccessful due to competitive
pressures and other market constraints or if a customer ceases
production of a particular vehicle. While the Company believes
that it will be able to fund capital expenditures through cash
flow from operations, borrowings under the Companys credit
facilities and sales of receivables under the Companys
receivables facility, there can be no assurance that it will
have adequate funds to make all the necessary capital
expenditures or that the amount of future capital expenditures
will not be materially in excess of its anticipated expenditures.

Recent trends among the Companys
customers will increase competitive pressures in the
Companys businesses.

In recent years, the competitive environment
among suppliers to the vehicle manufacturers in the automotive
industry has changed significantly as these manufacturers have
sought to outsource more vehicular components, modules and
systems and to use on-line auctions in order to obtain further
price reductions. In addition, these sectors have experienced
substantial consolidation as OEMs have sought to lower costs,
improve quality and increasingly purchase complete systems and
modules rather than separate components. This consolidation has
caused, and its continuation will continue to amplify, the
pricing pressures outlined above in the discussion of the
concentration of the Companys customers. The
Companys competitive strategy will be to position
ourselves as the prime contractor of choice to both Tier I
integrators and OEM assembly plants by supplying a full spectrum
of integrated interior trim components. This strategy presents
the risk that some of the Companys customers may be in
competition with the Company as well. Furthermore, the trend
toward consolidation among automotive parts suppliers is
resulting in a smaller number of large suppliers like us who
benefit from purchasing and distribution economies of scale. The
Company may be

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unable to achieve the cost savings and
operational improvements expected from the Companys prime
contractor business strategy, which could harm its ability to
compete favorably in the future with other larger, consolidated
companies.


The Companys strategy may not succeed if
anticipated outsourcing fails to occur due to union
considerations.

Because of the economic benefits inherent in
outsourcing to suppliers and the costs associated with reversing
a decision to purchase automotive interior systems and
components from an outside supplier, automotive
manufacturers commitments to purchasing automotive
interior systems and components from outside suppliers,
particularly on a just-in-time basis, are contemplated to
increase. However, under the contracts currently in effect in
the United States and Canada between each of Ford, General
Motors and DaimlerChrysler and the United Auto Workers
(UAW) and the Canadian Auto Workers
(CAW), in order for any of such automotive
manufacturers to obtain from external sources components that it
currently produces, it must first notify the UAW or the CAW of
such intention. If the UAW or the CAW objects to the proposed
outsourcing, some agreement will have to be reached between the
UAW or the CAW and the automotive manufacturer. Factors that
will normally be taken into account by the UAW, the CAW and the
automotive manufacturer include whether the proposed new
supplier is technologically more advanced than the automotive
manufacturer, whether the new supplier is unionized, whether
cost benefits exist, and whether the automotive manufacturer
will be able to reassign union members whose jobs are being
displaced to other jobs within the same factories.

The Companys products are subject to
changing technology, which could place us at a competitive
disadvantage relative to alternative products introduced by
competitors.

The Company believes that its customers
rigorously evaluate their suppliers on the basis of product
quality, price competitiveness, technical expertise and
development capability, new product innovation, reliability and
timeliness of delivery, product design capability, manufacturing
expertise, operational flexibility, customer service and overall
management. The Companys success will depend on its
ability to continue to meet customers changing
specifications with respect to these criteria. The Company may,
therefore, require significant ongoing and recurring additional
capital expenditures and investment in research and development,
manufacturing and other areas to remain competitive.

The Company may be subject to work stoppages
at its facilities or those of its principal customers, which
could seriously impact the profitability of the Companys
business.

As of December 31, 2002, approximately 57%
of the Companys global work force was unionized. If the
Companys unionized workers were to engage in a strike,
work stoppage or other slowdown in the future, the Company could
experience a significant disruption of the Companys
operations, which could have a material adverse effect on us.
Many OEMs and their suppliers have unionized work forces. Work
stoppages or slowdowns experienced by OEMs or their suppliers
could result in slowdowns or closures of assembly plants where
the Companys products are included in assembled vehicles.
Furthermore, organizations responsible for shipping the
Companys customers products may be impacted by
occasional strikes staged by the unions representing
transportation employees. Any interruption in the delivery of
the Companys customers products would reduce demand
for the Companys products.

A growing portion of the Companys
revenue may be derived from international sources, which exposes
us to additional uncertainty.

A significant portion of the Companys 2002
sales were derived from shipments to destinations outside of the
United States and Canada. As part of the Companys business
strategy, the Company intends to expand the Companys
international operations and customer base. Sales outside of the
U.S. and Canada, particularly sales to emerging markets, are
subject to other various risks, including: governmental
embargoes or foreign trade restrictions such as antidumping
duties; changes in U.S. and foreign governmental regulations;
tariffs; fuel duties; other trade barriers; political, economic
and social instability; and foreign exchange risk. In

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addition, there are tax inefficiencies in
repatriating funds from non-U.S. subsidiaries. To the extent
such repatriation is necessary for us to meet the Companys
debt service or other obligations, this will adversely affect
us. International operations are frequently conducted through
joint venture arrangements that can materially limit the
Companys operational and financial control of the business.


The Company may incur material losses and
costs as a result of product liability and warranty claims that
may be brought against us.

The Company faces an inherent business risk of
exposure to product liability claims in the event that the use
of its current and formerly manufactured or sold products
results, or is alleged to result, in bodily injury and/or
property damage. The Company may experience material product
liability losses in the future or incur significant costs to
defend such claims. The Companys product liability
insurance coverage will be inadequate for any liabilities that
may ultimately be incurred or may be unavailable on acceptable
terms in the future. In addition, if any of the Companys
products are or are alleged to be defective, the Company may be
required to participate in a government-required or
OEM-instituted recall involving such products. Each vehicle
manufacturer has its own policy regarding product recalls and
other product liability actions relating to its suppliers.

In addition, as suppliers become more integrally
involved in the vehicle design process and assume more of the
vehicle assembly functions, vehicle manufacturers are
increasingly looking to their suppliers for contribution when
faced with product liability claims. A successful claim brought
against us in excess of the Companys available insurance
coverage or a requirement to participate in a product recall may
have a material adverse effect.

In the ordinary course of the Companys
business, contractual disputes over warranties can arise. In the
past five years or more, the Company has not been required to
make any material payments in respect of warranty claims. In
most cases, financial responsibility for warranty costs are
contractually retained by the Companys customer so long as
the customers specifications are met, but the Company may
nonetheless be subjected to requests for cost sharing or pricing
adjustments as a part of the Companys commercial
relationship with the customer.

The Companys business may be materially
and adversely affected by compliance obligations and liabilities
under environmental laws and regulations.

The Company is subject to federal, state, local
and foreign environmental, and health and safety, laws and
regulations that affect ongoing operations and may increase
capital costs and operating expenses in order to maintain
compliance with such requirements; and impose liability relating
to contamination at the Companys facilities, and at other
locations such as former facilities, facilities where the
Company has sent wastes for treatment or disposal, and other
properties to which the Company (or a company or business for
which the Company is responsible) are linked. See Footnote 21
Commitments and Contingencies 
Environmental.

The Company may not be able to manage its
business as it might otherwise due to its high degree of
leverage.

The Company has indebtedness that is substantial
in relation to the Companys stockholders equity and
cash flow. At December 31, 2002, the Company had
$1,289.2 million of outstanding total debt and short-term
borrowings. The Companys percentage of total debt and
outstanding preferred stock of its subsidiary, Products
(Products Preferred Stock) to total capitalization
was 78% at December 31, 2002. The degree to which the
Company is leveraged will have important consequences, including
the following:



| |   |                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Companys ability to obtain additional
    financing in the future for working capital, capital
    expenditures, acquisitions, business development efforts or
    general corporate purposes may be impaired;

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a substantial portion of the Companys cash
    flow from operations will be dedicated to the payment of
    interest and principal on the Companys indebtedness,
    dividends on Products Preferred Stock, and capital and operating
    lease expense, thereby reducing the funds available to us for
    other purposes;                                                                   
|
| |  | the Companys operations are restricted by
    the Companys debt instruments and the terms of the
    Products Preferred Stock, which contain material financial and
    operating covenants, and those restrictions will limit, among
    other things, the Companys ability to borrow money in the
    future for working capital, capital expenditures, acquisitions
    or other purposes;
|
| |  | indebtedness under the Companys senior
    credit facilities and the financing cost associated with its
    receivables facility will be at variable rates of interest,
    which makes it vulnerable to increases in interest rates;                                                                                                                                                          
|
| |  | the Companys leverage may place us at a
    competitive disadvantage as compared with the Companys
    less leveraged competitors and the Companys leverage will
    make it more vulnerable in the event of a downturn in general
    economic conditions or in any of the Companys businesses;
    and                                                                                    
|
| |  | the Companys flexibility in planning for,
    or reacting to, changes in its business and the automotive
    industry may be limited.                                                                                                                                                                                                                                                          

The Companys ability to service or
refinance, when required, the Products Preferred Stock and the
Companys debt, lease and other obligations will depend
principally upon the Companys future operating
performance, which will be affected by prevailing economic
conditions and financial, business and other factors, many of
which are beyond the Companys control.

In addition, factors more specific to us could
cause actual results to vary materially from those anticipated
in the forward-looking statements included in this report such
as substantial leverage, limitations imposed by the
Companys debt instruments, the Companys ability to
successfully integrate acquired businesses including actions it
has identified as providing cost saving opportunities, and
pursue our prime contractor business strategy, the
Companys customer concentration and risks associated with
the formerly owned operations of the Company.

The Companys divisions may also be affected
by changes in the popularity of particular vehicle models or
particular interior trim packages or the loss of programs on
particular vehicle models.

For a discussion of certain of these and other
important factors which may affect our operations, products and
markets, see Item 1.  Business and
Item 7.  Managements Discussion and
Analysis of Financial Condition and Results of Operations
and also our other filings with the Securities and Exchange
Commission.






Item 1.     Business


The Company

The Company is a global leader in the design,
engineering and manufacturing of automotive interior components,
including instrument panels, fully assembled cockpit modules,
floor and acoustic systems, automotive fabric, interior trim and
convertible top systems and has the number one or two North
American market share position in seven out of ten major
automotive interior categories tracked by CSM Worldwide. The
Company is also the largest North American supplier of
convertible top systems. The Company expects the fully assembled
cockpit modules market to grow significantly over the next five
years and has positioned itself as a leading global supplier in
this market. Sales are diversified among all North American
OEMs, transplants such as Toyota, Honda and Nissan and major
Tier I integrators. In North America, the Company
manufactures components for approximately 90% of all light
vehicle production. The Company has approximately 25,000
employees and more than 115 plants and facilities worldwide. The
Company is a Delaware corporation formed on September 21,
1988. The Company conducts all of its operating activities
through its wholly owned subsidiary Collins & Aikman
Products Co. (Products). Predecessors of Products
have been in operation since 1843.

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In February 2001, Heartland Industrial Partners,
L.P. acquired a controlling interest in the Company. Since the
investment, the Company has pursued acquisitions that have
furthered a strategy of serving as a prime contractor to both
Tier I integrators, which are shifting capital and emphasis away
from interior components manufacturing and towards electronics
and the delivery of fully integrated interior modules, and to
OEMs, which continue to increase their outsourcing of complete
interior manufacturing. Significant acquisitions include:



| |   |                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On July 3, 2001, the Company acquired the
    Becker Group, a leading supplier of plastic components to the
    automotive industry.                                                                                                                                                                                                                                         
|
| |  | On September 21, 2001, the Company acquired
    Joan Automotive Industries, a leading supplier of bodycloth to
    the automotive industry, and the assets of Joans
    affiliated automotive yarn dyeing operation, Western Avenue
    Dyers, L.P.                                                                                                                         
|
| |  | On December 20, 2001, the Company acquired
    TAC-Trim, one of the largest suppliers of instrument panels and
    fully assembled cockpit modules and a major automotive plastics
    manufacturer of interior and exterior trim components in North
    America, Europe and South America.                                                                                 
|
| |  | On January 2, 2003, the Company acquired
    Delphi Corp.s plastic injection molding plant and related
    equipment in Logroño, Spain.                                                                                                                                                                                                                                     
|
| |  | On January 17, 2003, the Company acquired
    from Textron the remaining 50% interest in Textron Automotive
    Holdings (Italy) S.r.L., a joint venture that was formed as part
    of the TAC-Trim acquisition. The joint venture includes four
    facilities producing interior and exterior automotive trim
    components for strategic global customers in the region.

Collins & Aikman through its recent
acquisitions has created one of the industrys largest and
most broadly based manufacturers of automotive interior
components, systems and modules. The Company has the capability
to supply diverse combinations of stylistically matched,
functionally engineered and acoustically integrated interior
trim components, systems and modules and markets interior
products to customers through a single global commercial
operations group, which supplies products from three
primary categories: plastic components and cockpits, carpet and
acoustics and automotive fabrics. In addition, the Company
continues to market its convertible top systems through the Dura
convertible group.

Industry Trends

The Companys strategy is to capitalize on
several important automotive industry trends, which are expected
to drive demand for its products. These trends include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increasing OEM Demand for
    Modules, Systems and Complete
    Interiors.To reduce costs and
    simplify assembly processes and design, OEMs increasingly expect
    their large-scale suppliers to provide fully engineered systems,
    pre-assembled combinations of components (systems or modules)
    and complete automotive interiors rather than individual
    components. OEMs also continue to increase their need for
    multiple products on any given assembly line, further driving
    the need for suppliers to be able to handle extreme complexity.
|
| |  | Accelerating Manufacturing
    Outsourcing by Tier I Total Interior
    Integrators.The large total interior
    Tier I integrators are repositioning their assets and
    resources to focus on electronics design, assembly and
    just-in-time sequencing of modules, systems and
    complete interiors. As a result, they are seeking to divest or
    outsource the manufacturing of many component categories.                                                                                                                                                  
|
| |  | Growing Technological Content
    and Acoustical Performance
    Requirements.The electronic and
    technological content of vehicles continues to expand, largely
    driven by demand for greater functionality and convenience.
    Changes to vehicle interiors, including hands-free cell phone
    systems, entertainment and navigational systems and
    voice-activated dashboard functions, are expected to require
    enhanced acoustical properties and increased sound field
    engineering relative to todays light vehicles.                           

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| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Global Customer
    Requirements.Due to the opportunity
    for significant cost savings, reduced product development cycle
    times, common global platforms and improved product quality and
    consistency, automotive manufacturers favor suppliers with the
    capability to manufacture automotive interior systems and
    components in multiple geographic markets.

Corporate Strategy

The Companys goal is to become the leading
manufacturer of automotive interior trim components to OEMs and
Tier I integrators and to realize the integration, synergy
and cost savings opportunities created by the combination of
Collins & Aikman and its 2001 acquisitions. The Company
intends to leverage its product development, patented new
materials, continuous enhanced manufacturing capability, an
unwavering dedication to lean, error proofing and APQP (Advanced
Product Quality Planning) launch readiness systems to meet
customers demands. The following are the key elements of
the strategy:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Provide integrated product
    solutions that combine interior styling, component systems and
    acoustical technologies.The ability
    to bundle multiple components into integrated, custom packages
    distinguishes the Company from its competitors and provides an
    opportunity to increase content per vehicle. The Company is a
    leader in product innovation, design and styling in all of its
    business lines, producing components that cover substantially
    all of the non-glass interior surfaces of automobiles. This
    breadth of product offering affords the Company a significant
    advantage as OEMs increasingly view the vehicle interior as a
    major point of differentiation and rely upon automotive
    suppliers for research, engineering, design and styling
    capabilities. By employing a cross-disciplinary approach to
    acoustics, surface styling and product engineering that takes
    advantage of product development and technological capabilities,
    the Company can offer integrated product solutions to its
    customers.
|
| |  | Capitalize on position as
    prime contractor to OEMs and Tier I total interior
    integrators.The Company believes that
    OEMs will accelerate modular and system sourcing in order to
    lower costs, reduce time to market and accommodate global
    platforms and that Tier I total interior integrators will
    increase the redeployment of assets and capital into the
    integrated design, assembly and just in time
    sequenced delivery of complete interior systems. The Company is
    well positioned to capitalize on these opportunities.
    Furthermore, the Companys products are used in
    approximately 90% of all North American light vehicle platforms
    and are sold to all North American OEMs, transplants such as
    Toyota, Nissan and Honda, and major Tier I integrators. The
    Company is also well positioned with respect to its Tier II
    competitors that have comparatively narrower product lines and
    significantly less size, scale and technological capabilities.                                                              
|
| |  | Increase content per
    vehicle.The Company intends to take
    advantage of its current position to increase content per
    vehicle and has substantial new business awards from customers
    across all product categories, with the strongest growth in
    fully assembled cockpit modules. Projected sales growth is
    primarily attributable to TAC-Trims expanded book of full
    cockpit programs. By increasing content per vehicle, sales are
    expected to increase at a rate in excess of changes in industry
    production rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Leverage technology to improve
    manufacturing efficiency.The Company
    believes it has many opportunities to improve manufacturing
    efficiency and cost structure by rationalizing existing
    operations and incorporating manufacturing best
    practices, processes, procedures and technologies into its
    operations. For example, TAC- Trim is believed to be among the
    most efficient plastics suppliers in North America and Europe
    due to numerous proprietary manufacturing technologies, such as
    InvisitecTM and IntellimoldTM and
    EnvirosoftTM patented processes that allow the
    Company to manufacture and combine multiple products to produce
    complex integrated interiors products. The Company believes the
    application of technologies such as IntellimoldTM to
    the Companys other operations, as well as the continued
    roll-out of these technologies throughout TAC-Trims
    operations, will significantly improve plastics manufacturing
    cycle times, labor costs and scrap rates.                                 
|
| |  | Pursue cost savings
    opportunities.The Becker, Joan and
    TAC-Trim acquisitions created cost savings in the first full
    year of operation. The Company expects to continue to realize
    additional savings through a number of initiatives, including
    purchasing savings, in-sourcing the majority of our plastics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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| |  |                                                                                                                                                                                                                                                                                                                                                                              
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | tooling and yarn dyeing requirements,
    consolidating research and development and engineering
    functions, capacity rationalization and reducing global
    headquarters costs. In an effort to achieve cost savings,
    the Company may also elect to implement restructuring activities
    in future periods above and beyond activities initiated during
    2002.

Segment and Geographical
Information

For a discussion of the Companys operating
segments and the geographic regions in which the Company
operates, refer to Item 7 MD&A 
Results of Operations and to Footnote 20 
Information About the Companys Operations.

Products

The Company markets the majority of its products
to customers through a single global commercial
operations group, which supplies products from four
primary categories: plastic components and cockpits, carpet and
acoustics, automotive fabrics, and convertible top systems.

Plastic Components and
Cockpits

The Company manufactures substantially all of the
components of the plastic interior trim within a vehicle,
including automotive instrument panels, door panels, sidewall
trim, overhead systems, headrests and armrests, cupholders, air
registers and bezels, slush molded skins, pillar trim, floor
console systems, instrument panel components, and fully
assembled cockpit modules. This broad portfolio of plastic
components and cockpits products allows the Company to offer
customers modules and systems that incorporate individual
components. Some major products include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Instrument Panels
    (IP):As the most
    structurally important plastic component in the vehicle and as
    the plastic substrate directly in front of the driver, the IP
    occupies the most important piece of real estate in
    the interior. The Company believes that it is the number one IP
    supplier in North America. The advanced materials the Company
    employs include EnvirosoftTM castable thermoplastic
    materials, high performance PVC alloys, high-definition grain
    and texture formulation and vacuum forming. The Company also has
    the proprietary InvisitecTM invisible passenger air
    bag system, which provides improved appearance and craftsmanship
    at reduced cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Cockpits:The Company is a leading North American and European supplier of
    cockpits. The complete array and breadth of its plastic
    component offerings has enabled the Company to become a leader
    in offering customers a fully assembled IP system
    (cockpit) delivered on a just-in-time basis. As most
    of the ancillary interior trim components revolve around the IP
    placement, the Company believes that it will be able to
    penetrate effectively the customer base by offering the IP along
    with complementary plastic accoutrements and additional products
    from its other business units. The Company sources various other
    parts that make up a fully assembled modular cockpit from
    outside suppliers (including radios, wire harnesses,
    cross-vehicle beams and steering columns). The Company expects
    that its position as a cockpit integrator will provide
    significant opportunities to in-source more manufactured content
    in the future. Through the proprietary
    IntelliquenceTM software, finished cockpits can be
    delivered to the OEMs on a just-in-time basis and installed on
    the assembly line.
|
| |  | Door
    Panels:The Company believes that it
    is the second largest supplier of door panels in North America.
    This decorative plastic interior trim component is an important
    element to the overall styling theme of a vehicles
    interior.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Exteriors:Exterior trim components include plastic molded fascia systems,
    bodyside cladding, signal lamps, cowl grilles and wheel flares.
    The Company has taken advantage of the systems trend in the
    exterior trim product market by producing and assembling fascia
    with radiator grilles, energy absorbers, trim moldings and lamps
    to be delivered in sequence directly to the OEMs assembly
    line.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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Carpet and Acoustics

The Company evolved from a North American carpet
producer to become a market leader in a broad range of
automotive floor systems, luggage compartment trim, dash
insulators and other acoustic products with production
capabilities in both North America and Europe. While acoustical
products are often combined with molded floor carpet to provide
complete interior floor systems, it is useful to describe four
carpet and acoustics product categories:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Molded Floor
    Systems:Molded floor systems consist
    of thermoformed compression molded carpets. These carpets are
    provided in either a barrier or an absorptive NVH (noise,
    vibration and harshness) system. The barrier system includes
    polyethylene, barrier back, and a fiber underlay system or a
    foam-in-place system. Products include TuflorTM, the
    Companys proprietary thermoplastic flooring product, which
    is rugged, durable and washable. The products in molded floor
    systems are highly engineered, and their manufacture requires a
    high degree of precision and draws on the Companys
    robotics capabilities. The Company believes it is the number one
    producer of molded floor and acoustic systems in the North
    American market and manufactures molded floor systems for all of
    the North American and Japanese OEMs as well as a number of the
    European OEMs.
|
| |  | Luggage Compartment
    Trim:The other major carpeted area of
    the vehicle is the luggage compartment, which includes one-piece
    molded trunk systems and assemblies, wheelhouse covers and
    center pan mats, seatbacks, tireboard covers and other trunk
    trim products. The Company believes that it is the number two
    supplier of luggage compartment trim in the North American
    market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Accessory
    Floormats:The Company manufactures
    automotive accessory floormats by vulcanizing rubber backing to
    tufted carpet and also manufactures cargo mats with value-added
    distinctive aesthetic and practical features such as hand-sewn
    appearance of edges and moisture trapping construction with our
    patented Akro Edge® floormats. Largely due to this product
    differentiation, the Company has become the largest fully
    integrated auto floormat producer in North America.                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Acoustical
    Products:Acoustical products include
    interior dash insulators that insulate the passenger compartment
    from engine compartment noise and heat; damping materials that
    control noise in the floor, overhead system and sides of the
    vehicle; and engine compartment NVH systems. Changes to vehicle
    interiors, including hands-free cell phone systems, navigational
    systems, entertainment systems and voice-activated Internet
    access, will require enhanced acoustical properties and
    increased sound field engineering relative to todays light
    vehicles.                                                                                                                                                                                                                                                                                                                               

Automotive Fabrics

The Company is positioned as the market leader in
the North American automotive fabrics market, with the 2001
acquisition and the completed integration of Joan Fabrics
automotive business. The principal automotive products include
body cloth (woven or knitted fabrics for seating surfaces and
other interior applications) and headliner fabric. The Company
is able to offer virtually every major weave/knit technology
currently available in the marketplace including dobby velours,
jacquard velours, flat wovens, double-needlebar knits, circular
knits and tricot knits. This allows the Company to effectively
serve changing customer styling and cost directives.

In addition, Joan and other acquisitions have
allowed the Company to increase its backward and forward
integration levels by adding yarn dye and fabric lamination
operations. This additional value-add manufacturing and improved
control of the supply chain have contributed to improved
operational efficiencies and manufacturing performance.

Dura Convertible Top
Systems

Dura Convertible Systems (DCS) is the only
vertically integrated full service supplier of convertible roof
systems, which designs, engineers and manufactures all aspects
of a convertible top including the framework, trim set,
backlights, well slings, tonneau covers and power actuating
system. Recently, in order to differentiate products in the
marketplace, OEMs have been increasing the number of convertible
and open roof derivative

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vehicles on both existing and new platforms. The
Companys management believes that this trend will continue
to drive demand for convertibles and other innovative open roof
systems. DCS is well positioned to secure additional business
based upon demonstrated new innovative roof system concepts.


Top-in-a-BoxTM, a system pioneered by
DCS, is an assembly-line-ready module containing all of the
components of a convertible top that enables the OEM to install
a complete convertible top system on the production line. This
modular, bolt-on assembly significantly reduces the
time and labor traditionally required to manufacture a
convertible model, enabling OEMs to more profitably produce and
sell convertibles. DCS has the industrys most complete
line of fabric coverings for convertible and sport utility top
covers for OEMs globally. The Company maintains final assembly
and trim operations near the OEMs plants, and thereby
offers customers complete just-in-time delivery and sequencing
capabilities.

Customers

Customers include OEMs and Tier I total interior
integrators, both of which have been increasingly divesting
component manufacturing. OEMs have been typical direct customers
for the Companys plastic components, cockpits, carpet and
acoustic and convertible products, while Tier I total interior
integrators have typically been direct customers for fabrics and
carpet and acoustics.

Through strategic acquisitions, the Company has
broadened its customer base globally, with European and South
American sales representing 19% of total sales for 2002 versus
14% in 2001. DaimlerChrylser AG (including Mercedes, Chrysler,
Mitsubishi and Smart), General Motors Corporation (including
General Motors, Opel, Vauxhall and Saab) and Ford Motor Company
(including Ford, Jaguar, Land Rover, Aston Martin and Volvo)
directly and indirectly represented approximately 31%, 23% and
23% of 2002 sales, respectively. The following is a list of
customers:

|                                                                                                                             |  |                                                                                                                                        |  |                                                                                                                |  |                                                                                         
|---------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
| Alpha Romeo
     Audi
     BMW
     CAMMI
     DaimlerChrysler
     Faurecia
     Fiat
     Ford
     Freightliner |  |  General Motors
     Honda
     Intier
     Isuzu
     Jaguar
     Johnson Controls
     Lear Corporation
     Magna
     MAN |  |  Mazda
     Mitsubishi
     Nissan
     NUMMI
     Opel
     Porsche
     PSA
     Renault
     Rover |  |  Scania
     Seat
     Subaru
     Toyota
     Visteon
     Volkswagen
     Volvo

The Companys supply relationships are
typically sole-source and extend over the life of the model,
which is generally four to seven years, and do not normally
require the purchase by the customer of any minimum number of
products. The Company receives blanket purchase orders that
normally cover annual requirements for products to be supplied
for a particular vehicle model which may be terminated at any
time. In order to reduce reliance on any one model, the Company
produces automotive interior and exterior systems and components
for a broad cross-section of both new and more established
models.

Marketing, Engineering and
Development

As a global leader in automotive interior and
exterior components, the Company differentiates itself in the
marketplace by consistently providing high quality products,
outstanding customer service and program management, and cost
effective automotive solutions to global customers.
Historically, the Company marketed individual components,
modules and complete systems to customers. The Company has
realigned marketing efforts to sell integrated product
bundles to customers in an effort to increase growth
in sales and operating income while enhancing the value-add
provided to customers. Central to this marketing strategy has
been the development of products that enhance both the
vehicles interior aesthetics as well as its acoustic
performance. Equally important, and unlike many other
Tier I or Tier II automotive suppliers, is the
development of marketing and program management teams
specifically focused on supporting not only OEMs, but major
Tier I customers as well. These dedicated teams, consisting
of experienced automotive personnel

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who are able to meet a customers entire
needs, provide a single interface for our customers and help
avoid duplication of our sales and engineering efforts.


Products are sold directly to customers under
sales contracts that are obtained primarily through competitive
bidding. These sales are originated almost entirely by sales
staff. This marketing effort is augmented by design and
manufacturing engineers that work closely with automotive
manufacturers from the preliminary design to the manufacture and
supply of automotive modules, systems or components. A key
element employed to increase sales is to develop increasingly
higher value-added products through innovations in materials
construction, product design, engineering and styling. The
primary focus of the Global Product Development Division (GPDD),
therefore, is to work closely with customer engineering
personnel to develop new products, processes, innovations, etc.
that are central to winning new business from customers. The
Advanced Sales and Program Management Group serves as a
bridge between the GPDD and customer focused sales
groups who market the Companys products and are
responsible for ensuring that customers needs are being
met.

Through sales offices in North America, South
America, Europe and Asia-Pacific, the Companys marketing
personnel maintain regular contact with their various
customers engineers and purchasing agents. The Company
continually seeks new business from existing customers, as well
as developing relationships with new customers. The Company
markets its products by maintaining strong customer
relationships, developed over an 80-plus year history in the
automotive industry through:



| |   |                                                              
| | - | -------------------------------------------------------------
| |  | extensive technical and product development
    capabilities;
|
| |  | reliable just-in-time delivery of high-quality
    products; 
|
| |  | strong customer service;                                     
|
| |  | innovative new products; and                                 
|
| |  | a competitive cost structure.                                

The emergence of modular sourcing favors
suppliers with broad manufacturing capabilities and product
lines, experience with diverse materials and modular
coordination. Management believes that the Companys broad
base of manufacturing expertise with interior surface resins and
materials and its global leadership in delivering cockpits,
favorably positions the Company in the global automotive
interior industry. Automotive manufacturers have increasingly
looked to suppliers to assume responsibility for introducing
product innovations, shortening the development cycle of new
models, decreasing tooling investment and labor costs, reducing
the number of costly design changes in the early phases of
production and improving automotive interior acoustics, comfort
and functionality. Once the Company is engaged to develop the
design for the automotive interior system or component of a
specific vehicle model, it is also generally engaged to supply
these items when the vehicle goes into production. Substantial
resources have been dedicated toward improving engineering and
technical capabilities, establishing strong in-house tooling
capabilities and developing advanced technology centers in the
United States and in Europe. Similarly, research and development
are an integral part of the sales and marketing effort.
Especially noteworthy are the Companys proprietary
IntellimoldTM injection molding control process,
InvisitecTM invisible passenger air bag door system
and Envirosoft castable TPU (Thermal Plastic Polyurethane) and
TPO (Thermal Plastic Olefin) materials.

In order to effectively develop automotive
interior systems, it is necessary to have global capabilities in
the engineering, research, design, development and validation of
the interior components, systems and modules being produced. The
Company conducts research and development at design and
technology centers in Dearborn, Michigan; Dover, New Hampshire;
Auburn Hills, Michigan; Plymouth, Michigan; Heidelberg, Germany
and Tyngsboro, Massachusetts and at several worldwide product
engineering centers. At these centers, the Company designs,
develops and engineers products to comply with applicable safety
standards, meet quality and durability standards, respond to
environmental conditions and conform to customer aesthetic and
acoustic requirements. In particular, acoustic requirements and
cockpit aesthetics have become more important than ever with the
advent of in-vehicle telematics. Technologically advanced
acoustics testing

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centers are maintained in Plymouth, Michigan and
Heidelberg, Germany and cockpit development centers are located
in Auburn Hills and Dearborn, Michigan in order to capitalize on
both of these trends.


Manufacturing

The Company focuses on combining smaller
manufacturing plants into larger scale plants that have
efficient layouts and the ability to reduce fixed costs.

The Company possesses cross-disciplinary
manufacturing expertise, including an ability to form and
assemble multi-material combinations of hard-molded plastics,
slush-molded soft skins and surfaces, carpet, fabric, foam,
insulation, and other trim materials as well as stamping,
welding, machining and painting of metals and cutting and sewing
of fabric components. Management believes the sophistication of
the Companys carpet tufting and dying processes, the
foam-in-place process for molded floors and its small-part
plastic moldings and assemblies capabilities creates a
competitive advantage.

With the Joan acquisition, the Company gained a
scaleable, low-cost package automotive yarn dyeing facility
thereby bringing in-house an important source of supply for the
manufacture of our fabrics products.

The acquisition of Becker, originally established
as a tool shop, has supplemented existing operations with one of
the industrys leading tool developers allowing the
in-sourcing of a significant portion of the Companys
tooling requirements. The addition of Beckers tooling
expertise complemented the Companys manufacturing
capabilities for carpet and acoustics products and
TAC-Trims large part injection molding process.

The TAC-Trim acquisition added advanced process
technologies such as slush-molded skinning for high-end
instrument panels, thermoplastic casting, and
molded-in color and decoration insert capability and
overall manufacturing discipline and acumen. Specific product
and process additions brought on by TAC-Trim include: the
patented IntellimoldTM feedback control system for
injection molding control which dramatically reduces cycle
times, labor costs and scrap rates; and the proprietary
IntelliquenceTM software sequencing system which
should enable product delivery on a just-in-time basis to global
OEM customers. In addition, TAC-Trim significantly expands
plastic manufacturing capabilities allowing the Company to
provide substantially all of an automobiles interior
plastic components.

Technology and Intellectual
Property

Significant resources are dedicated to research
and development in order to maintain the position as a leading
developer of technology innovations, some of which have been
patented or are in the process of being patented, in the
automotive interior industry. The Company has developed a number
of patented and proprietary designs for innovative interior
features, all focused on increasing value to the customer.
Examples include the Company developed proprietary slimline
cupholders, CavelflexTM (stretch woven) fabrics and
the AcTTM family of acoustically tunable
products.

Patents and patent applications exist in five
primary areas: automotive floor mats, automotive fabric
products, acoustics, interiors and convertible systems. With
respect to floormats, the Company holds several U.S. and foreign
patents relating to the Akro Edge® floormats. Akro
Edge® floormats are the industry standard for their
functional and aesthetic appeal to OEMs and their customers.
With respect to automotive fabric patents, the Company has
numerous patents on headliners, trunkliners and floor panels. In
the acoustics area, in addition to the proprietary Comet®
acoustics software, the Company is actively seeking protection
of various aspects of its AcTTM fiber technology and
various other means for improving sound deadening and sound
absorption in automotive interiors. The Company has various
patents and patent applications directed to cup holders, air
outlet assemblies, storage systems and convertible mechanisms.
The Company owns the patents relating to
IntellimoldTM injection molding control process for
use in its business. The IntellimoldTM patents are
related to methods and/or apparatus for injection molding. The
Company also holds technology relating to certain skin materials
and compounding solutions that provide the capability to design
cost-effective materials with outstanding performance and
aesthetic qualities. Examples of these materials include
EnvirosoftTM castable thermoplastic materials, high
performance PVC alloys, high-definition grain and texture
formulation and vacuum thermoplastic applications. The Company
also holds technology relating to the

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##### Table of Contents



InvisitecTM invisible passenger air
bag system, which provides improved appearance and craftsmanship
at reduced cost. InvisitecTM systems, which integrate
the air bag door with the panel and top cover, have been
commercialized for soft-cast and vacuum-formed panels and hard
injection molded instrument panels. In total, the Company holds
approximately 370 U.S. and approximately 1,400 foreign
active patents and has approximately 325 patents pending.
The intellectual property acquired in the TAC-Trim Acquisition
is subject to certain limitations on the Companys use and
creates continuing obligations to Textron.


As part of the TAC-Trim acquisition, the Company
entered into three intellectual property license agreements with
Textron. In two of these agreements, the Company licensed back
to Textron certain intellectual property that was acquired in
the transaction (the Intellimold Agreement and the
Licensed-Back IP Agreement). In the third agreement,
the Company licensed from Textron other intellectual property
that it did not acquire in the transaction (the Retained
IP Agreement). The Company is providing general
descriptions of these agreements although these descriptions do
not contain all the material terms in the contracts. In all
three agreements, the ability to use the intellectual property
is limited based on whether the proposed use falls inside or
outside a defined field of automotive products (the
Restricted Field).

In the Intellimold Agreement, the Company gave
Textron an exclusive worldwide, perpetual, irrevocable license
to use outside the Restricted Field its rights in the
Intellimold process and any enhancements developed by it.
Textron was also granted a royalty-free, worldwide, perpetual,
irrevocable license to use the Companys rights in the
Intellimold process and any enhancements developed by the
Company within the Restricted Field solely in connection with
its and certain affiliates manufacturing, sales and
development operations. The Intellimold Agreement also includes
an exclusive royalty-free, worldwide, perpetual, irrevocable
license for the Company to use within the Restricted Field any
enhancements to the Intellimold process developed by Textron. In
the Licensed-Back IP Agreement, the Company granted Textron a
non-exclusive, worldwide, royalty-free, perpetual and
irrevocable license to use solely outside the Restricted Field
certain intellectual property including over 50 U.S. patents on
air bag related products. In the Retained IP Agreement, Textron
granted to the Company a non-exclusive, worldwide, royalty-free,
perpetual and irrevocable license to use solely within the
Restricted Field certain intellectual property. These patents
could have applicability to the automotive industry but such use
is somewhat secondary to the use of such technology outside the
automotive field.

As described below under the heading
Managements Discussion and Analysis of Financial
Condition and Results of Operations 
Liquidity  Leases, the Company leases certain
equipment from Textron. When those leases terminate, if Textron
and its affiliates continue to own any interest in the
equipment, they will be allowed to use the equipment for certain
purposes and to use related intellectual property.

Raw Materials

Raw materials and other supplies used in our
continuing operations are normally available from a variety of
competing suppliers. With respect to most materials, the loss of
a single or even a few suppliers would not have a material
adverse effect on the Company. The Company is sensitive to price
movements in its raw materials supply base and has not hedged
against price fluctuations in commodity supplies, such as
plastics and resins. While the Company may not be able to pass
on any future raw materials price increases to customers, a
significant portion of increased cost may be offset through
volume purchase savings, value engineering/value analysis in
conjunction with our major customers and reductions in the cost
of off-quality products and processes. The Company may evaluate
commodities hedging opportunities from time to time.

Competition

The Company is a leading supplier in automotive
molded carpet and acoustics, auto fabrics, convertible top
systems and automotive plastics components and cockpits, within
each segment. Customers rigorously evaluate suppliers on the
basis of product, quality, price competitiveness, technical
expertise and development capability, new product innovation,
reliability and timeliness of delivery, product design
capability, leanness of facilities, operational flexibility,
customer service and overall management. Some competitors may
have greater financial resources than the Company or a
competitive advantage in the production of any given

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##### Table of Contents



product that the Company manufactures, and there
can be no assurance that the Company will be able to
successfully compete in the markets for the products it
currently provides.


Joint Ventures

In January 2003, the Company acquired from
Textron the remaining 50% interest in Textron Automotive
Holdings (Italy) S.r.L., a joint venture that was formed as part
of the TAC-Trim acquisition. Refer to Item 7.
Managements Discussion and Analysis of Financial
Condition and Results of Operations for additional
discussion regarding this acquisition of the remaining 50%
interest in the Italian joint venture.

Labor Matters and
Employees

As of December 31, 2002, the Companys
continuing operations employed approximately 25,000 persons on a
full-time or full-time equivalent basis. Approximately 57% of
such employees were represented by labor unions in the United
States, Canada and other countries. Each facility with
represented employees has its own collective bargaining unit and
management believes that its relations with employees
represented by labor unions and other employees are generally
good. From time to time in the ordinary course of our business,
grievances are filed against the Company by employees and unions.

Environmental
Matters

A discussion of environmental matters is included
in Item 3. Legal Proceedings and Item 7.
Managements Discussion and Analysis of Financial
Condition and Results of Operations and in Note 21
Commitments and Contingencies of this report.






Item 2.     Properties


The Company has over 115 plants and facilities in
North America, South America, Europe and Asia. Approximately 60%
of the over 14 million total square footage of these
facilities is owned and the remainder is leased. Many facilities
are strategically located to provide product delivery to our
customers on a just-in-time basis.

Facilities by Geographic Region

|                                                          |  |         |    |  |         |  |   |        |  |  |      |  |  |       |   |  |  |  |     | 
|--------------------------------------------------------- |  | ------- | -- |  | ------- |  | - | ------ |  |  | ---- |  |  | ----- | - |  |  |  | --- | 
|                                                          |  | North   |    |  | South   |  |   |        |  |  |      | 
|Type of Facility                                          |  | America |    |  | America |  |   | Europe |  |  | Asia |  |  | Total |  
|                                                          |  |         |    |  |         |  |   |        |  |  |      |  |  |       |  
|Manufacturing                                             |  |         | 52 |  |         |  | 4 |        |  |  | 29   |  |  |       |  |  |  |  | 85  | 
|Design, Research & Development, and Technical
    Centers |  |         | 19 |  |         |  |  |        |  |  | 7    |  |  |       |  |  |  |  | 26  | 
|Sales Branches, Offices, Other                            |  |         | 13 |  |         |  |  |        |  |  | 5    |  |  |       | 2 |  |  |  | 20  | 
|                                                          |  |         |    |  |         |  |   |        |  |  |      |  |  |       |  
|Total(1)                                                  |  |         | 84 |  |         |  | 4 |        |  |  | 41   |  |  |       | 2 |  |  |  | N/A | 



---



|    |                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Total facilities shown per the table exceeds the
    115 plants and facilities indicated above because certain
    facilities listed in the table serve in more than one of the
    indicated capacities.






Item 3.     Legal
Proceedings


Except as described below, the Company and its
subsidiaries are not party to any material pending legal
proceedings, but is involved in ordinary routine litigation
incidental to the business.

Environmental:The Company is subject to federal, state, local and foreign
environmental, and health and safety, laws and regulations that
(i) affect ongoing operations and may increase capital
costs and operating expenses in order to maintain compliance
with such requirements and (ii) impose liability relating
to contamination at facilities, and at other locations such as
former facilities, facilities where we have sent wastes for
treatment or disposal, and other properties to which the Company
may be linked. Such liability may include, for example,
investigation and clean-up of the contamination, personal injury
and property damage

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caused by the contamination, and damages to
natural resources. Some of these liabilities may be imposed
without regard to fault, and may also be joint and several
(which can result in a liable party being held responsible for
the entire obligation, even where other parties are also liable).


Management believes that it has obtained, and is
in material compliance with those material environmental permits
and approvals necessary to conduct its various businesses.
Environmental compliance costs for continuing businesses are
accounted for as normal operating expenses or capital
expenditures, except for certain costs incurred at acquired
locations. Environmental compliance costs relating to conditions
existing at the time of an acquisition are generally charged to
reserves established in purchase accounting. The Company accrues
for environmental remediation costs when such obligations are
known and reasonably estimable. In the opinion of management,
based on the facts presently known to it, such environmental
compliance and remediation costs will not have a material effect
on the business, consolidated financial condition, future
results of operations or cash flows.

The Company is legally or contractually
responsible or alleged to be responsible for the investigation
and remediation of contamination at various sites, and for
personal injury or property damages, if any, associated with
such contamination. At some of these sites the Company has been
notified that it is a potentially responsible party
(PRP) under the federal Superfund law or similar
state laws. Other sites at which the Company may be responsible
for contamination may be identified in the future, including
with respect to divested and acquired businesses.

The Company is currently engaged in investigating
or remediating certain sites as discussed in the paragraphs
below. In estimating the cost of investigation and remediation,
the Company considered, among other things, its prior experience
in remediating contaminated sites, remediation efforts by other
parties, data released by the United States Environmental
Protection Agency (USEPA), the professional judgment
of the Companys environmental experts, outside
environmental specialists and other experts, and the likelihood
that other identified PRPs will have the financial resources to
fulfill their obligations at sites where they and the Company
may be jointly and severally liable. It is difficult to estimate
the total cost of investigation and remediation due to various
factors including: incomplete information regarding particular
sites and other PRPs; uncertainty regarding the nature and
extent of environmental problems and the Companys share,
if any, of liability for such problems; the ultimate selection
among alternative approaches by governmental regulators; the
complexity and evolving nature of environmental laws,
regulations and governmental directives; and changes in cleanup
standards.

The Company has established accruals for certain
contingent environmental liabilities. The Company accrues for
environmental investigatory and non-capital remediation costs
when litigation has commenced or a claim or assessment has been
asserted or is imminent, the likelihood of an unfavorable
outcome is probable, and the financial impact of such outcome is
reasonably estimable. As of December 31, 2002 and 2001,
total reserves for those contingent environmental liabilities
are approximately $64.5 million and $59.6 million,
respectively.

The Company is a party to a Consent Decree with
the State of New Hampshire to remediate a former industrial
landfill known as the Cardinal Landfill in Farmington, New
Hampshire. Pursuant to that Consent Decree, the Company is
currently conducting a pilot test for a proposed remediation of
chlorinated compound contaminants in groundwater. The Consent
Decree calls for a remedy to be in place by 2004. The Company is
a defendant in two lawsuits filed by a total of 91 individual
plaintiffs for alleged personal injuries arising from Cardinal
Landfill conditions. The Company will vigorously contest these
allegations. As of December 31, 2002, the Company has
accrued $15.7 million for Cardinal Landfill.

The Company is a party, as a member of a PRP
workgroup, to a Consent Decree entered with the USEPA for the
remediation of a former municipal landfill in Dover, New
Hampshire. The town of Dover, New Hampshire is also a member of
the PRP group and a party to the Consent Decree. Pursuant to the
terms of the Consent Decree, the PRP group is currently engaged
in the preparation of a remediation design. The Consent Decree
requires that a remedy for the site be in place by 2004. As of
December 31, 2002, the Company has accrued
$9.6 million for Dover.

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Pursuant to a Consent Decree signed with the
USEPA, the Company is currently engaged in a full-scale
remediation for groundwater and soil contamination at the former
Stamina Mills manufacturing facility in North Smithfield, Rhode
Island. Remediation activities have been ongoing since 1998. The
Company is also in negotiation with the USEPA regarding a claim
for past oversight costs. A resolution of this matter is
anticipated in 2003. As of December 31, 2002, the Company
has accrued $14.1 million for Stamina Mills.

The Company is working with the Michigan
Department of Environmental Quality (MDEQ) to investigate
and remediate soil and groundwater contamination at a former
manufacturing plant in Mancelona, MI and at adjacent owned
property formerly used for the treatment and disposal of plating
waste. MDEQ is likely to require remediation of groundwater. In
addition, the Company is incurring costs in connection with the
provision of alternate water supplies to residences in the area.

The current owner of one of the Companys
former manufacturing plants located in Bowling Green, OH has
entered into an Administrative Order on Consent with the Ohio
Environmental Protection Agency (OEPA) requiring
investigation and remediation of contamination at the site. The
Company is reimbursing the current owner for costs associated
with ongoing groundwater monitoring and, following selection of
an appropriate remedy by OEPA, will assume 90% of future
remediation costs.

In the 1980s and 1990s, the
California Regional Water Quality Control Board
(CRWQCB) and other state agencies ordered a predecessor of
the Company to investigate and remediate soil and groundwater
contamination at a former lumber treatment plant in Elmira, Ca.
In 1996, the Company entered into an agreement with the State of
California to conduct long-term operation and maintenance of the
remedy implemented at the site.

In the opinion of management, based on
information presently known to it, identified environmental
costs and contingencies will not have a material effect on the
Companys consolidated financial condition, future results
of operations or cash flows. However, we can give no assurance
that we have identified or properly assessed all potential
environmental liability arising from the Companys business
or properties, and those of the Companys present and
former subsidiaries and their corporate predecessors.

During 2002, the Company received proceeds of
$15.8 million on environmental claims related to
discontinued operations. Of this amount, $9.5 million was
recorded as income from discontinued operations, net of income
taxes.

During 2001, the Company received proceeds of
$14.5 million on environmental claims related to
discontinued operations. Of this amount $8.8 million was
recorded as income from discontinued operations, net of income
taxes.

Other
Claims:As of December 31, 2002,
the Company is party to approximately 780 pending cases alleging
personal injury from exposure to asbestos containing materials
used in boilers manufactured before 1966 by former operations of
the Company which were sold in 1966. Asbestos-containing
refractory bricks lined the boilers and, in some instances, the
Companys former operations installed asbestos-containing
insulation around the boilers. These pending cases do not
include cases that have been dismissed or are subject to
agreements to dismiss due to the inability of the plaintiffs to
establish exposure to a relevant product and cases that have
been settled or are subject to settlement agreements. Total
settlement costs for these cases have been less than $617,750 or
an average of less than $10,127 per settled case. The defense
and settlement costs have been substantially covered by our
primary insurance carriers under a claims handling agreement
that expires in August 2006. The Company has primary, excess and
umbrella insurance coverage for various periods available for
asbestos-related boiler and other claims. The Companys
primary carriers have agreed to cover approximately 80% of
certain defense and settlement costs up to a limit of
approximately $70.5 million for all claims made, subject to
reservations of rights. The excess insurance coverage, which
varies in availability from year to year, is approximately
$620 million in aggregate for all claims made. Based on the
age of the boilers, the nature of the claims and settlements
made to date, and the insurance coverage, management does not
believe that these cases will have a material impact on the
Companys financial condition, results of operations or
cash flows. However, it cannot assure that the Company will not
be subjected to significant

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additional claims in the future, that insurance
will be available as expected or that unanticipated damages or
settlements in the future would not exceed insurance coverage.


A purported class action was filed on
March 24, 2003 in the United States District Court for the
Eastern District of Michigan (No. 03 CV 71173). The action
was purportedly filed on behalf of purchasers of the common
stock of the Company between August 7, 2001 and
August 2, 2002 against the Company, Heartland Industrial
Partners, L.P. and ten senior officers and/or directors of the
Company. The complaint alleges that the defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and Rule 10b-5 promulgated thereunder, by issuing a
series of materially false and misleading statements pertaining
to, among other things, the anticipated benefits of the TAC-Trim
acquisition. The Company believes that the claims are without
merit and intends to vigorously defend the lawsuit. The Company
does not believe that the suit will have a material impact on
the Companys financial condition, results of operations or
cash flow.






Item 4.     Submission
of Matters to a Vote of Security Holders


None during the fourth quarter of 2002.






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 7, 1994. At March 18, 2003, there were
approximately 120 holders of record. The following table lists
the high and low closing prices for the Common Stock for the
full quarterly periods during the two most recent years.

|               |  |      |        |     |      |  |        |      |  |  |        |     |  |  |        |    
|-------------- |  | ---- | ------ | --- | ---- |  | ------ | ---- |  |  | ------ | --- |  |  | ------ | ---
|               |  |      |        |    
|               |  | 2002 |        |     | 2001 | 
|               |  |      |        |     |      | 
|               |  | High |        |     | Low  |  |        | High |  |  | Low    |    
|               |  |      |        |     |      |  |        |      |  |  |        |    
|First Quarter  |  |      | 25.500 | (1) |      |  | 16.750 | (1)  |  |  | 14.218 | (1) |  |  | 8.950  | (1)
|Second Quarter |  |      | 28.375 | (1) |      |  | 9.000  | (1)  |  |  | 15.500 | (1) |  |  | 10.125 | (1)
|Third Quarter  |  |      | 9.000  |     |      |  | 2.810  |      |  |  | 21.425 | (1) |  |  | 9.875  | (1)
|Fourth Quarter |  |      | 4.450  |     |      |  | 2.450  |      |  |  | 25.750 | (1) |  |  | 11.900 | (1)



---



|    |                                                            
|--- | -----------------------------------------------------------
|(1) | Adjusted for May 28, 2002 2.5 to 1 reverse
    stock split.

On December 31, 2002, Heartland owned
approximately 36% of the outstanding shares; Blackstone Partners
and WP Partners owned approximately 11%; Joan Fabrics Corp.
and Mr. Elkin McCallum and associates owned approximately
7%; Mr. Charles E. Becker and Textron each owned
approximately 9%.

The Company has paid no dividends or made similar
distributions with respect to its common stock during 2002 or
2001. 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. Certain restrictive covenants
contained in the agreements governing the Companys credit
facilities and senior subordinated notes limit the
Companys ability to make dividend and other payments. See
ITEM 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations 
Liquidity and Capital Resources and Note 9 to the
Consolidated Financial Statements.

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##### Table of Contents








Item 6.     Selected
Financial Data


|                                        |                                                                                                        |               |   |                                      |              |  |   |              |   |  |              |         |   |              |   |         |   |  |   |         |  
|--------------------------------------- | ------------------------------------------------------------------------------------------------------ | ------------- | - | ------------------------------------ | ------------ |  | - | ------------ | - |  | ------------ | ------- | - | ------------ | - | ------- | - |  | - | ------- | -
|                                        |                                                                                                        |              
|                                        |                                                                                                        | Year Ended(1) |  
|                                        |                                                                                                        |               |  
|                                        |                                                                                                        | December 31,  |   |                                      | December 31, |  |   | December 31, |   |  | December 25, |         |   | December 26, |  
|                                        |                                                                                                        | 2002          |   |                                      | 2001         |  |   | 2000         |   |  | 1999         |         |   | 1998         |  
|                                        |                                                                                                        |               |   |                                      |              |  |   |              |   |  |              |         |   |              |  
|                                        |                                                                                                        |               |   |                                      |              | 
|                                        |                                                                                                        |               |   | (in millions, except per share data) |              |  |  
|Statement of Operations Data:           |                                                                                                        |               |   |                                      |              |  |   |              |   |  |              |         |   |              |   |         |   |  |   |        
|                                        | Net sales                                                                                              |               | $ | 3,885.8                              |              |  | $ | 1,823.3      |   |  | $            | 1,901.8 |   |              | $ | 1,898.6 |   |  | $ | 1,825.5 |  
|                                        | Gross profit                                                                                           |               |   | 518.1                                |              |  |   | 218.8        |   |  |              | 266.6   |   |              |   | 284.7   |   |  |   | 248.2   |  
|                                        | Selling, general and administrative expenses                                                           |               |   | 293.5                                |              |  |   | 157.3        |   |  |              | 151.4   |   |              |   | 145.8   |   |  |   | 142.7   |  
|                                        | Restructuring charge and impairment of long-lived
    assets(2)                                        |               |   | 56.9                                 |              |  |   | 18.8         |   |  |              |        |   |              |   | 33.4    |   |  |   |        |  
|                                        | Goodwill amortization                                                                                  |               |   |                                     |              |  |   | 7.1          |   |  |              | 7.1     |   |              |   | 7.0     |   |  |   | 7.0     |  
|                                        | Operating income                                                                                       |               |   | 167.7                                |              |  |   | 35.6         |   |  |              | 108.1   |   |              |   | 98.5    |   |  |   | 98.5    |  
|                                        | Interest expense, net                                                                                  |               |   | 148.9                                |              |  |   | 84.3         |   |  |              | 96.6    |   |              |   | 92.1    |   |  |   | 82.0    |  
|                                        | Subsidiary preferred stock requirements                                                                |               |   | 38.4                                 |              |  |   | 2.4          |   |  |              |        |   |              |   |        |   |  |   |        |  
|                                        | Loss on sale of receivables                                                                            |               |   | 4.2                                  |              |  |   | 10.8         |   |  |              | 9.2     |   |              |   | 5.4     |   |  |   | 6.1     |  
|                                        | Income (loss) from continuing operations
    before income taxes                                       |               |   | (33.8                                | )            |  |   | (68.3        | ) |  |              | 0.8     |   |              |   | (1.2    | ) |  |   | 5.2     |  
|                                        | Income tax expense (benefit)                                                                           |               |   | 17.5                                 |              |  |   | (18.6        | ) |  |              | 2.2     |   |              |   | 0.2     |   |  |   | 5.3     |  
|                                        | (Loss) from continuing operations                                                                      |               |   | (51.3                                | )            |  |   | (49.7        | ) |  |              | (1.4    | ) |              |   | (1.4    | ) |  |   | (0.1    | )
|                                        | Income from discontinued operations, including
    disposals, net of income taxes                      |               |   | 9.5                                  |              |  |   | 8.8          |   |  |              | 6.6     |   |              |   |        |   |  |   |        |  
|                                        | Income (loss) before extraordinary items and
    cumulative effect of a change in accounting principle |               |   | (41.8                                | )            |  |   | (40.9        | ) |  |              | 5.2     |   |              |   | (1.4    | ) |  |   | (0.1    | )
|                                        | Net income (loss)(3)                                                                                   |               |   | (53.5                                | )            |  |   | (46.2        | ) |  |              | 4.5     |   |              |   | (10.2   | ) |  |   | (3.8    | )
|Per Share Data(4):                      |                                                                                                        |               |   |                                      |              |  |   |              |   |  |              |         |   |              |   |         |   |  |   |        
|                                        | (Loss) from continuing operations per basic and
    diluted share                                      |               |   | (1.15                                | )            |  |   | (1.28        | ) |  |              | (0.06   | ) |              |   | (0.05   | ) |  |   |        |  
|                                        | Dividends per share                                                                                    |               |   |                                     |              |  |   |             |   |  |              |        |   |              |   | 0.32    |   |  |   |        |  
|Balance Sheet Data (at period
    end): |                                                                                                        |               |   |                                      |              |  |   |              |   |  |              |         |   |              |   |         |   |  |   |        
|                                        | Total assets                                                                                           |               | $ | 3,157.1                              |              |  | $ | 2,987.9      |   |  | $            | 1,280.3 |   |              | $ | 1,348.9 |   |  | $ | 1,382.2 |  
|                                        | Long-term debt, including current portion                                                              |               |   | 1,278.7                              |              |  |   | 1,302.5      |   |  |              | 884.0   |   |              |   | 912.5   |   |  |   | 866.0   |  
|                                        | Mandatorily redeemable preferred stock of
    subsidiary                                               |               |   | 123.9                                |              |  |   | 149.3        |   |  |              |        |   |              |   |        |   |  |   |        |  
|                                        | Common stockholders equity (deficit)                                                                  |               |   | 397.5                                |              |  |   | 374.7        |   |  |              | (154.9  | ) |              |   | (151.1  | ) |  |   | (79.8   | )
|Other Data:                             |                                                                                                        |               |   |                                      |              |  |   |              |   |  |              |         |   |              |   |         |   |  |   |        
|                                        | Capital expenditures                                                                                   |               | $ | 147.9                                |              |  | $ | 54.5         |   |  | $            | 69.0    |   |              | $ | 86.4    |   |  | $ | 95.8    |  
|                                        | Depreciation and amortization                                                                          |               |   | 117.0                                |              |  |   | 81.8         |   |  |              | 74.8    |   |              |   | 71.5    |   |  |   | 67.1    |  



---

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The years 2002 & 2001 were calendar years;
    fiscal year 2000 had 53 weeks; all other fiscal years had
    52 weeks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(2) | In 2002, the Company recorded a
    $56.9 million restructuring charge consisting of
    $18.0 million in asset impairments and $33.2 million
    primarily related to severance accruals and $5.7 million
    primarily related to other contractual obligations. In 2001, the
    Company recorded a restructuring charge consisting of
    $7.6 million in asset impairments and $11.2 million
    primarily related to severance accruals. In 1999, the Company
    recorded a restructuring charge consisting of $13.4 million
    in asset impairments and $20.0 million primarily related to
    severance accruals.
|   
|(3) | In 2002, the Company recorded an
    $11.7 million charge for the cumulative effect of a change
    in accounting principle related to an impairment loss. In 1999,
    the Company recorded an $8.8 million charge for the
    cumulative effect of a change in accounting principle related to
    start-up costs.                                                                                                                                                                                                                                                                                                       
|   
|(4) | On May 28, 2002, the Company effected a
    one-for-2.5 reverse stock split of the Companys common
    stock. All shares and per share data have been adjusted
    retroactively for all periods presented to reflect the stock
    split.                                                                                                                                                                                                                                                                                                                                                                                

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Item 7.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations


General

The Company is a global leader in the design,
engineering and manufacturing of automotive interior components,
including instrument panels, fully assembled cockpit modules,
floor and acoustic systems, automotive fabric, interior trim and
convertible top systems. The Company has the number one or two
North American market share position in seven out of ten major
automotive interior categories tracked by CSM Worldwide and is
also the largest North American supplier of convertible top
systems. Also, the Company is a leading global supplier of fully
assembled cockpit modules, a growing market segment.

Sales are primarily made to North American and
European automotive OEMs and Tier I total interior integrators.
In North America, the Company manufactures components for
approximately 90% of all light vehicle production platforms. The
automotive supply industry in which the Company competes is
cyclical and is influenced by the level of North American and
European vehicle production.

The Companys net sales in 2002 were
$3,885.8 million compared to $1,823.3 million in 2001.
Capitalized terms that are used in this discussion and not
defined herein have the meanings assigned to such terms in the
Notes to Consolidated Financial Statements.

Investors can obtain free access to the
Companys filings with the Securities and Exchange
Commission by accessing the Companys website at
http://www.collinsaikman.com/investor/docs.html.

Results of
Operations

2002
Compared to 2001

Net
Sales:Net sales for 2002 increased
113.1% to $3,885.8 million up $2,062.5 million from
2001. The increase in net sales was primarily driven by the
acquisitions of TAC-Trim, Becker, Joan and Southwest Laminates
(SWL), which contributed approximately $2,090 million.
Sales for 2002 increased approximately $400.6 million or
11.5% over pro forma 2001 sales of $3,485.2 million. New
programs, increased content, a higher North American build rate
and the 2002 acquisition of SWL drove this sales increase. In
North America the build rate increased about 6.0%. Pro forma
2001 sales are based on previous filings with the SEC and
include TAC-Trim, Becker and Joan for the full year.

Excluding the impact of the acquisitions, net
sales decreased 1.5% from last year. The decrease is due
primarily to $31 million of discontinued non-automotive and
low margin business and $42 million of customer price
reductions offset by a $35 million increase in new business
and a $10 million strengthening of foreign currencies.

Net sales for the North American Automotive
Interior Systems division (NAAIS) increased
$1,515.2 million to $2,613.4 million from 2001.
Excluding the impact of the TAC-Trim and Becker acquisitions
totaling approximately $1,526 million, net sales for NAAIS
decreased 1.0%. This reduction is primarily due to
$15 million of discontinued non-automotive mat business, a
$29 million decline in plastics sales (of which
$12 million was due to shutdowns of customer assembly
plants), $17 million of customer price reductions and
$3 million attributable to the weaker Canadian currency.
These decreases were offset by a $55 million increase in
Carpet and Acoustic volumes due to higher North American car
builds when compared to the prior year.

Net sales for the European and Rest of World
Automotive Interior Systems division (Europe and ROW), which
includes South America, increased 177.5% to $718.0 million
from 2001. Without the benefit of TAC-Trim sales totaling
approximately $460 million, sales were essentially
unchanged. Sales were impacted primarily by approximately
$9 million of reduced production volume, $4 million of
customer price reductions and $1 million of discontinued
low margin business offset by a $13 million impact from the
strengthening of European currencies.

Net sales for the Specialty Automotive Products
division increased 18.9% to $554.4 million compared to
2001. Excluding the acquisition of Joan and SWL, which
contributed approximately $103 million to net sales,

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sales decreased 3.3%. The decline is primarily
due to $15 million of customer price reductions and
$14 million of discontinued low margin business. These
decreases were partially offset by approximately
$18 million related to increased production volumes.


Gross
Profit:For 2002, gross profit
increased to 13.3% from 12.0% in 2001. The combined gross profit
of the NAAIS and of the Specialty Automotive Products divisions
increased from 13.2% to 15.7%. The increases at these divisions
resulted from approximately $62 million in manufacturing
efficiencies and purchasing savings, partially offset by
$32 million of customer price reductions net of commercial
recoveries and rebates and $11 million of product launch
and plant consolidation cost. The increase at these divisions
was offset by a decline in the gross profit of Europe and ROW
from 4.4% to 2.7%. This Europe and ROW decline was due primarily
to a change in sales mix resulting in higher sales of its lower
margin cockpit assembly business and operating inefficiencies.

Selling, General and
Administrative Expenses:Selling,
general and administrative expenses for 2002 were
$293.5 million compared to $164.4 million in 2001. The
increase is due to the additional costs assumed from the
acquisitions offset by $6.1 million of goodwill
amortization expensed in 2001. Due to the elimination of
duplicate efforts, reduced headcount and reduced discretionary
spending, selling, general and administrative expenses as a
percentage of sales declined from 9.0% in 2001 to 7.6% in 2002.

Restructuring
Charge:During 2002, the Company
undertook three restructuring programs resulting in charges
totaling $56.9 million. The goal of the first restructuring
program that resulted in a charge of $9.1 million in the
first quarter was to de-layer management in the North American,
European and Specialty operations. The objective of the second
program that resulted in a charge of $33.8 million in the
third quarter was to realign the operations in North America.
Included in the third quarter restructuring charge was
$8.9 million related to the separation agreement with
Thomas Evans, the former Chairman and CEO. The third program
resulted in a charge of $14.1 million in the fourth
quarter. The objective of this program was to consolidate plant
operations in Europe and to further de-layer management in North
America. The pre-tax fourth quarter charge includes
$4.8 million of severance cost and cost related to other
contractual obligations and $9.3 million of asset
impairment charges. The 2002 restructuring programs resulted in
the separation of over 1,100 personnel.

During 2001, the Company undertook two
restructuring programs resulting in charges totaling
$18.8 million. The goal of the first quarter 2001
restructuring program which, resulted in a charge of
$9.2 million, was to de-layer management in the North
American, European and Specialty operations. The second program
resulted in a fourth quarter charge of $9.6 million. The
objective of this program was to downsize three facilities in
North America via better utilization of manufacturing and
warehouse floor space (including associated headcount
reductions) and to reduce headcount in our Mexican operations.
The $18.8 million charge includes $11.2 million of
severance costs and $7.6 million of asset impairment
charges.

Operating Income Highlights by
Division:The NAAIS results reflect a
$42.4 million improvement in operating performance at the
Carpet & Acoustics business. The improvement was primarily
attributable to approximately $13 million of sales growth
resulting from an increase in light vehicle build and
$44 million of manufacturing improvements and purchasing
savings, offset by $12 million of customer price reductions
and $6 million of restructuring cost. After considering the
approximate $141 million impact of acquisitions, the
Plastic & Cockpit business operating income declined.
The decline was driven by a $8 million decrease in sales
volumes and resulting inefficiencies associated primarily with
certain GM models, $11 million of product launch and plant
consolidation costs, $2 million related to the decline in
plastic sales due to the shutdown of customer assembly plants
and $6 million of customer price reductions. These
decreases were offset by $10 million of purchasing and
spending savings and reductions in administrative expenses.

The Europe and ROW operating performance was
adversely impacted by approximately $30 million loss
related to locations acquired in 2001, $17 million of
customer price reductions and operating inefficiencies including
$10 million of launch costs associated with the BMW Mini
program. These reductions were offset by $8 million of new
business, spending and purchase savings and savings related to
restructuring plans.

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Specialty Automotive Products operating income
increased $37.8 million primarily the result of
$32 million of improved manufacturing performance,
purchasing savings, reductions in administrative expense and
savings related to restructuring plans, $4 million due to
increased build volumes, and approximately $19 million from
the impact of the acquisitions. These increases were partially
offset by $14 million of customer price reductions.

Interest
Expense:Net interest expense
increased $64.6 million to $148.9 million for 2002.
The increase in interest expense is primarily attributed to
higher average debt balances and increased amortization of debt
issue costs resulting from the TAC-Trim acquisition, partially
offset by the benefit of working capital reductions.

Loss on Sale of
Receivables:The Company has the
ability to sell, through its Carcorp subsidiary, interests in a
pool of accounts receivable. In connection with the receivable
sales, a loss of $4.2 million was recognized during 2002,
compared to a loss of $10.8 million for 2001. In December
2001, the Company entered into a new larger receivable facility
in connection with the TAC-Trim acquisition, resulting in
up-front fees of $5.6 million.

Subsidiary Preferred Stock
Accretion and Dividend:In connection
with the TAC-Trim acquisition on December 20, 2001,
Products issued to Textron preferred stock with a liquidation
preference of $326.4 million and an estimated fair market
value of $146.9 million. In June 2002, Products repurchased
$133.3 million of liquidation preference Series A
preferred stock that was initially valued at $56.8 million,
along with accrued dividends of $6.9 million. The
difference between the initial recorded value and the initial
liquidation preference will be accreted over the life of the
stock using the effective interest method. The 2002 preferred
stock accretion and dividend costs were $7.6 million and
$30.8 million. The 2001 preferred stock accretion and
dividend costs were $0.9 million and $1.5 million.

Other expense,
net:In 2002, other expenses, net
primarily included $12.6 million of losses related to
derivatives used in the Companys foreign currency hedging
strategy, $5.5 million of losses related to investments in
joint ventures and $1.9 million of losses from sale and
leaseback transactions offset by $5.9 million of foreign
currency transaction gains and minority interest share of losses
of a consolidated subsidiary of $6.5 million.

In 2001, other expenses, net
primarily included $7.8 million of foreign currency
transaction losses and $8.2 million of losses from sale and
leaseback transactions offset by $5.0 million of
derivatives gains and a $6.2 million gain related to a
stock demutualization.

Income
Taxes:The Company recognized an
income tax expense of $17.5 million for 2002 compared to an
income tax benefit of $18.6 million in 2001. Net cash taxes
paid during the period were $12.8 million. The primary
reasons for the Companys relatively high effective tax
rate are non-deductible preferred stock dividends and accretion,
foreign losses for which tax benefits are not recorded and
certain taxes that do not fluctuate directly with income.

Discontinued
Operations:During 2002 and 2001, the
Company received payment on environmental claims related to
discontinued operations, for which reserves were previously
charged, and received proceeds of $15.8 million and
$14.5 million, respectively. Of these amounts,
$9.5 million and $8.8 million were recorded as income
from discontinued operations in 2002 and 2001, respectively, net
of income taxes of $6.3 million and $5.7 million,
respectively.

Extraordinary
Charge:During 2001, the Company
recognized extraordinary charges of $5.3 million of which
$5.0 million represents a write-off of debt issue costs
associated with our old credit facility, which was replaced by a
new credit facility entered into in conjunction with the
Companys TAC-Trim acquisition. Also, during 2001 charges
were recorded in connection with the repurchase of JPS
Automotive Senior Notes at prices in excess of carrying values
of $0.3 million.

Cumulative Effect of Change in
Accounting Principle:During 2002, the
Company completed its implementation of SFAS 142, Goodwill
and Other Intangible Assets. Under SFAS 142 goodwill and
indefinite-lived assets are no longer amortized but are tested
for impairment. In accordance with SFAS 142,

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the Company employed a discounted cash flow
analysis in conducting its impairment test. As a result of the
test, the Company recorded an impairment loss of
$11.7 million relating to the UK Plastics business in the
European and ROW segment.


Net
Loss:The combined effect of the
foregoing resulted in net loss of $53.5 million for 2002,
compared to net loss of $46.2 million in 2001.

Net (Loss) Available to Common
Shareholders:In June 2002,
$100.0 million of proceeds from a 16 million share
common stock offering was used to repurchase Series A
preferred stock at a price of 75% of its liquidation preference
of $133.3 million. The redeemed Series A preferred
stock had a carrying value of $63.7 million. In accordance
with generally accepted accounting principles, the difference
between the $63.7 million in carrying value and the
$100.0 million cash payment was excluded from net income
and recorded directly to equity in the Companys
accumulated deficit account. Although this $36.3 million
equity charge is excluded from net income, the charge is
included in the computation of earnings/(loss) per share and is
included in the net loss available to common shareholders.

2001
Compared to 2000

Net
Sales:Net sales for 2001 decreased
4.1% to $1,823.3 million, down $78.5 million from
2000. Excluding the favorable impact of sales from acquired
businesses during 2001 of approximately $127.2 million, net
sales would have decreased 10.8%. The reduction in net sales,
excluding the effect of acquisitions, was primarily driven by a
decrease in North American vehicle production of 10% or
$135.0 million versus 2000. The Company was particularly
adversely impacted by the recession and declining consumer
confidence as well as by terrorist attacks in the United States.
These factors led to substantially reduced inventory levels at
the Companys customers in the fourth quarter as customers
sold vehicles in an uncertain and difficult economic
environment. Sales for the 2001 period were also impacted by
customer price reductions of $30.0 million, and weaker
Canadian and European currencies of $24.0 million, and a
reduction in headliner fabrics business of $20.0 million.

Net sales for NAAIS during 2001 were down 1.9% to
$1,098.2 million, a decrease of $21.2 million from
fiscal 2000. Excluding the favorable impact of sales from the
Tac-Trim and Becker acquisition during 2001 of approximately
$95.2 million, net sales would have decreased 10.4%. The
decline in net sales, excluding the effect of the Becker
acquisition, was primarily driven by a decrease in North
American vehicle production of $100.0 million and customer
price reductions of $24.0 million.

Net sales for Europe and ROW were down
$25.8 million to $258.7 million during 2001, a
decrease of 9.1% from fiscal 2000. The decrease in Europe was
primarily due to the negative impact caused by changes in
foreign currency exchange rates of $16.0 million and
customer price reductions of $6.0 million.

Net sales for the Specialty Automotive Products
division decreased 6.3% to $466.4 million in 2001, down
$31.5 million from 2000. Excluding the favorable impact of
sales from the Joan acquisition during 2001 of approximately
$31.4 million, net sales would have decreased 12.6%. The
decrease, excluding the impact of the Joan acquisition, was due
primarily to lower North American vehicle production
($35.0 million) and a reduction in headliner fabric
business ($20.0 million).

Gross
Profit:For 2001, gross profit was
12.0%, down from 14.0% in 2000. This decrease was primarily a
result of decreased operating leverage related to lower volumes
in both North America and Europe. Additionally, during 2001
gross profit was adversely impacted by the following items:



| |   |                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | TAC-Trim
    Acquisition:Due to the closing of the
    TAC-Trim acquisition on December 20, 2001, the Company
    incurred eleven days of fixed costs during a normal industry
    shutdown period with less than $6 million in sales. This
    resulted in a gross margin loss for the eleven days of
    $4.2 million.
|
| |  | Launch Costs:The
    Company incurred launch costs during the second and third
    quarters of 2001 related to the Ford Thunderbird convertible
    program in the Companys Specialty Automotive Products
    division. In Europe, the Companys plastics facility in the
    UK experienced difficulties principally  

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| |   |                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | related to an outside paint supplier on the
    launch of the new BMW R50 (Mini) program during the second
    half of 2001.                                                                                                                                                                                          
|
| |  | Integration Costs:The Company incurred $2.5 million of costs during the
    fourth quarter of 2001 related to acquisition integration. The
    majority of these costs related to the Becker and Joan
    acquisitions.                                                                                               
|
| |  | Facility Closure
    Costs:In addition, during 2001, we
    incurred $2.5 million of costs related to the sale of the
    retail/commercial floormat business in North America and the
    shutdown of a small accessory floormat facility.                                                                           
|
| |  | These unfavorable items were exacerbated by
    various customer price reductions of approximately
    $40.0 million but were partially offset by commercial
    recoveries of $6.9 million and improvements in operating
    performance at NAAIS of $10.3 million and at the fabrics
    operations of $5.5 million.

Selling, General and
Administrative Expenses:Selling,
general and administrative expenses for 2001 were
$164.4 million, compared to $158.5 million in 2000.
Relative to 2001, the comparable 2000 period included an extra
week of costs due to the fiscal year change mentioned earlier.
The increase is primarily due to additional costs assumed from
acquisitions of $7.4 million, credits in 2000 relating to a
pension related actuarial benefit and the sale of property
totaling $2.0 million and additional expense in 2001
related to management incentive compensation plans of
$3.0 million. These items more than offset the benefit in
2001 of cost reductions from earlier restructuring programs and
reduced spending. As a percentage of sales, selling, general and
administrative expenses were 9.0% and 8.3% for 2001 and 2000,
respectively.

Restructuring
Charge:During 2001, the Company
undertook two restructuring programs resulting in charges
totaling $18.8 million. The goal of the first quarter of
2001 restructuring program charge of $9.2 million was to
delayer management in the North American, European and Specialty
operations. The second program resulted in a fourth quarter
charge of $9.6 million. The objective of this program was
to downsize three facilities in North America via better
utilization of manufacturing and warehouse floor space
(including associated headcount reductions) and to reduce
headcount in our Mexican operations. The pre tax
$18.8 million charge includes $11.2 million of
severance costs and $7.6 million of asset impairment
charges.

Operating Income Highlights by
Division:Operating income at NAAIS
declined to $68.7 million for 2001 from $88.0 million
for the prior year. The decline in NAAIS operating income
primarily reflected the impact of lower North American
production volumes of $8.7 million as well as restructuring
charges of $8.2 million which were offset by improvements
in operating performance of $10.3 million. The results for
2001 also included costs of $3.2 million related to the
sale of the retail/commercial floormat business and the shutdown
of a small accessory floormat facility.

Operating income at Europe and ROW declined to a
loss of $24.9 million for 2001 from income of
$0.6 million for 2000. The decline in operating income
primarily reflected the impact of product mix and customer price
reductions along with the recognition of restructuring charges.
Additionally, Europe and ROW operating performance was adversely
impacted by launch costs associated with the BMW R50 (Mini)
during the second half of 2001 as well as a $1.1 million
loss on the sale of a small metal pressing operation in the UK
in the third quarter of 2001. Benefits from earlier
restructuring programs and purchasing savings reduced the
negative impact of these items.

Operating income at the Specialty Automotive
Products division declined to $10.6 million for 2001 from
$19.5 million for 2000. The decline in Specialty Automotive
Products division operating income primarily reflects expenses
incurred due to the ramp up of the Chrysler Sebring convertible
in the early part of 2001 of $6.1 million, the start up of
the new Ford Thunderbird convertible in mid-year 2001 of
$1.5 million and the impact of restructuring charges of
$1.7 million. Margins, as a percentage of sales, for the
fabrics business remained consistent with 2000, as better
operating performance and benefits of added volume from the Joan
acquisition offset the margin impact of lower net sales driven
by lower industry production and reduction in headliner fabric
business.

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Interest
Expense:Interest expense for 2001
decreased $12.3 million to $84.3 million as compared
to 2000. The decrease in interest expense is primarily
attributed to lower average debt balances resulting from the
Heartland Transaction, and lower borrowing rates in North
America partially offset by increased amortization of debt issue
costs resulting from the Heartland Transaction. The benefit of
working capital reductions and sale and leaseback transactions
also offset increased borrowings related to acquisitions.

Loss on Sale of
Receivables:The Company has the
ability to sell, through its Carcorp subsidiary, interests in a
pool of accounts receivable. In connection with the receivable
sales, a loss of $10.8 million was recognized during 2001,
compared to a loss of $9.2 million for 2000. Included in
the 2001 and 2000 losses were up-front fees related to the new
accounts receivable facilities put in place during both periods.
In December 2001, the Company entered into a new larger facility
in connection with the TAC-Trim acquisition, resulting in
up-front fees of $5.6 million. During the first quarter of
2000, the Company incurred fees of $1.6 million associated
with a new accounts receivable securitization replacing one that
had expired. Excluding these expenses, the remaining decrease of
$2.4 million, is primarily due to lower interest rates
during 2001.

Subsidiary Preferred Stock
Accretion and Dividends:In connection
with the TAC-Trim acquisition on December 20, 2001,
Products issued to Textron preferred stock with a liquidation
preference of $326.4 million and an estimated fair market
value of $146.9 million. The 2001 charge represents
dividends accrued of $1.5 million and accretion of discount
of $0.9 million.

Other Expense,
net:The Company recognized other
expense of $6.4 million in 2001, compared to other expense
of $1.5 million in 2000. The increase in other expense
resulted primarily from an $8.1 million loss on the sale
and leaseback of real estate transactions completed during the
second and fourth quarters of 2001, offset by a gain of
$6.2 million on shares received as result of a stock
demutualization and initial public offering. The remaining
increase in expense is primarily due to higher foreign currency
transaction losses.

Income
Taxes:The Company recognized an
income tax benefit of $18.6 million in 2001 compared to an
income tax expense of $2.2 million in 2000. The overall
effective tax rate for 2001 was 27.2 percent compared to
276 percent for 2000. Certain state taxes and permanent
differences, that do not fluctuate with income, such as
non-deductible goodwill and dividends and accretion of preferred
stock impacted the effective rate by: (1) reducing the
effective tax rate when a loss exists and a tax benefit is
recorded, or (2) increasing the effective tax rate when we
have income and tax expense is recorded.

Discontinued
Operations:During 2001, the Company
received payments on environmental claims related to
discontinued operations of $14.5 million. During 2000, the
Company settled claims for certain other environmental matters
for $20.0 million. In fiscal 2001 and 2000,
$8.8 million and $6.6 million were recorded as income
from discontinued operations respectively, net of income taxes
of $5.7 million and $4.4 million, respectively.

Extraordinary
Charge:During 2001 and 2000, the
Company recognized extraordinary charges of $5.3 million
and $0.7 million, respectively. Of the 2001 charge,
$5.0 million represents a write-off of debt issue costs
associated with our old credit facility, which was replaced by a
new credit facility entered into in conjunction with the
Companys TAC-Trim acquisition. In addition, during 2001
and 2000 charges were recorded in connection with the repurchase
of JPS Automotive Senior Notes at prices in excess of carrying
values of $0.3 million and $0.7 million, respectively.

Net
Income:The combined effect of the
foregoing resulted in a net loss of $46.2 million for 2001,
compared to net income of $4.5 million in 2000.

Liquidity and Capital
Resources

The Company and its subsidiaries had cash and
cash equivalents totaling $81.3 million and
$73.9 million at December 31, 2002 and
December 31, 2001, respectively. Additionally, the Company
had $248.7 million of unutilized availability under its
credit arrangements and receivables facility as of
December 31, 2002. The total was comprised of
$93.2 million under the Companys receivables
facility, $129.5 million under the Companys revolving
credit facility, approximately $26.0 million under
uncommitted bank facilities in Canada

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and other foreign locations. Availability under
the revolving credit facility was reduced by outstanding letters
of credit of $45.5 million as of December 31, 2002.


The Companys principal sources of funds are
cash generated from operating activities and borrowings under
credit facilities. In addition, to facilitate the collection of
funds from operating activities, the Company has sold
receivables under its receivables facility and has also entered
into an accelerated payment collection program with two of its
larger customers. During 2002, the Company issued common stock,
although such issuances are not likely to be a consistent source
of financing in the near-term. The Company continues to seek
means to generate additional cash for debt reduction and its
growth strategy. Among other things, the Company seeks to
further improve working capital management and continue to
utilize a lease financing strategy.

Operating
Activities

Net cash provided by the continuing operating
activities of the Company was $189.5 million for the year
ended December 31, 2002, compared to $141.0 million
for the year ended December 31, 2001. The 2002 increase is
primarily the result of a decrease in working capital
attributable to increases in accounts payable from the timing of
payments.

Investing
Activities

Net cash used in investing activities of the
Company was $186.1 million for 2002, compared to net cash
used of $723.8 million for 2001. The decrease in cash used
in investing activities is primarily the result of the Company
spending $715.3 million less in the payment of acquisition
costs for acquiring businesses and receiving $74.8 million
less in proceeds from the sale of property, plant and equipment.
The decreased use of cash was offset by a $93.4 million
increase in capital expenditures which were the result of the
larger size of the Company in 2002 due to acquisitions, and an
additional investment in a joint venture of $5.9 million in
2002.

Financing
Activities

Net cash provided from financing activities for
2002 was $4.0 million compared to net cash from financing
activities for the 2001 of $635.8 million. This decrease in
cash provided from financing activities is the result of
$100.0 million used for the repurchase of preferred stock,
$413.9 million decrease in net borrowings, and
$117.9 million decrease in proceeds from the issuance of
stock.

At December 31, 2002, the Company had total
outstanding indebtedness of $1,278.7 million (excluding
short-term borrowings and approximately $45.5 million of
outstanding letters of credit) at a weighted average interest
rate of 9.9% per annum. Comparatively, at December 31,
2001, the Company had total indebtedness of
$1,302.5 million.

During 2001, Heartland, and certain other
investors, acquired 22.8 million shares of common stock
from the Company at a price of $12.50 per share,
representing a cash investment in the Company of
$285.0 million before fees and expenses. Net proceeds paid
to the Company from the equity transactions were
$264.3 million. A portion of the proceeds were used to pay
$10.7 million in transaction related costs to obtain;
change in control consents, fees related to term loan
facilities, and other amendments to credit agreement facilities.
The remaining proceeds of $253.6 million were used to pay
down a revolving credit facility and to fund part of the
TAC-Trim acquisition.

During 2001, Products used proceeds from an
amended and restated credit facility to retire all outstanding
JPS Automotive 11 1/8% Senior Notes. The notes which were
due June 2001, were repaid in full on March 28, 2001, at a
redemption price equal to their principal amount with interest
accrued to the redemption date. The Company recognized an
extraordinary charge of $0.3 million in connection with
this repurchase of the remaining outstanding JPS Automotive
Senior Notes at prices in excess of carrying values. Borrowings
under prior bank facilities were repaid during 2001 with
proceeds from various financing arrangements that the

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Company entered into as part of the TAC-Trim
acquisition. These financing arrangements included entering into
a new senior secured credit facility and a new receivables
facility along with the issuance of preferred stock of a
subsidiary and senior notes due in 2011.


The senior secured credit facility consists of a
revolving credit facility and tranche A and tranche B term loan
facilities. The revolving credit facility provides for revolving
loans and extensions of credit up to a maximum principal amount
of $175.0 million. A portion of the revolving credit
facility will be available to Canadian subsidiaries in Canadian
dollars and a portion of the revolving credit facility will be
available in the form of letters of credit. The revolving credit
facility, the tranche A term loan and the tranche B term loan
mature in December 2005. Borrowings under the senior credit
facilities bear interest at variable rates based on a spread to
the adjusted LIBOR or a base rate, at the Companys option.
The Company had $377.6 million and $400.0 million in
term loans outstanding under this facility at December 31,
2002 and 2001, respectively.

On an ongoing basis, the Company has entered into
an agreement to sell trade accounts receivable of certain
business operations to a bankruptcy-remote, special purpose
subsidiary, wholly owned by the Company. The Companys
receivables subsidiary will, subject to certain conditions, from
time to time, sell an undivided fractional ownership interest in
a pool of domestic and certain Canadian receivables, up to a
balance of $250 million, to bank-sponsored multi-seller
commercial paper conduits under a committed facility. As of
December 31, 2002, the Company had $93.2 million
undrawn under the receivables facility.

New receivables will be added to the pool as
collections reduce previously sold receivables. The Company
expects to service, administer and collect the receivables on
behalf of the receivables subsidiary and the conduits. The
proceeds of sale will be less than the face amount of accounts
receivable sold by an amount that approximates the
purchasers financing costs. In September 2002, the Company
amended the receivables facility lengthening its term to expire
in December 2004. The receivables facility is an important
source of ongoing liquidity to the Company.

In December 2001, Products issued 182,700 shares
of its Series A Redeemable Preferred Stock, 123,700 shares
of Series B Redeemable Preferred Stock and 20,000 shares of
Series C Redeemable Preferred Stock. The Preferred Stock
was recorded at estimated fair value of $146.9, which was less
than the liquidation value of $1,000 per share or
$326.4 million. The estimated fair value was based on
market prices for securities with similar terms, maturities and
risk characteristics, and included a liquidation discount to
reflect market conditions and was agreed to by the Company and
Textron as part of the TAC-Trim purchase agreement. The
difference between the initial recorded value and the
liquidation value is being accreted over the 11 year terms
of the securities. The results for 2002 and 2001, included
subsidiary preferred stock requirements calculated using the
effective interest method of $38.4 million and
$2.4 million, respectively. The preferred stock requirement
includes both accretion and dividend costs of $7.6 million
and $30.8 million, respectively, for 2002 and
$0.9 million and $1.5 million, respectively, for 2001.
The carrying value of the Redeemable Preferred Stock includes
accretion and accrued dividends.

Products issued $500 million of 10 3/4%
Senior Notes due in 2011 in connection with the TAC-Trim
acquisition. The Company also amended the existing
$400 million of 11 1/2% senior subordinated notes due
in 2006 to make each subsidiary guarantor of the Senior Notes a
senior subordinated guarantor of the existing notes.

The following table sets forth the ratings as of
December 31, 2002 for securities issued by the Company and
its subsidiaries:

|             |                                            |            |  |   |         |  |  |    | 
|------------ | ------------------------------------------ | ---------- |  | - | ------- |  |  | -- | 
|             |                                            | Standard & |  |   |        
|             |                                            | Poors      |  |   | Moodys | 
|             |                                            |            |  |   |         | 
|Public Debt: |                                            |            |  |   |         |  |  |   
|             | 11 1/2% Senior Subordinated Note, due 2006 |            |  | B |         |  |  | B2 | 
|             | 10 3/4% Senior Notes, due 2011             |            |  | B |         |  |  | B1 | 

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Outlook

To further enhance North American automotive
revenues, OEMs and transplants are continuing to offer
incentives in 2003 that should enable production schedules to
remain consistent with 2002 levels. The European market is
expected to remain relatively soft, and that market has the
potential for continuing declines in production compared to the
prior years levels. However, the Company remains
cautiously optimistic that North American vehicle production
will remain stable for 2003 as inventory levels at the
OEMs appear to be at higher levels than in comparable
periods.

The Companys principal uses of funds from
operating activities and borrowings for the next several years
are expected to fund interest and principal payments on its
indebtedness, growth related working capital increases, costs
associated with the Companys previously divested
businesses, capital expenditures and lease expense. In addition,
selective acquisitions to expand our geographic and customer
presence continue to be explored. The completion of the TAC-Trim
acquisition on December 20, 2001 significantly increased
the debt levels and has required significant additional
liquidity in order to launch part of the projected new book of
business and to finance capital expenditures related to those
operations. Management expects that the majority of additional
liquidity requirements will be funded from cash generated from
operating the acquired companies. These new capital requirements
will relate primarily to tooling and advanced engineering and
development. While the Company ultimately expects to be entitled
to receive these amounts from customers, it will need to finance
these requirements to achieve its revenue goals. Otherwise, much
of the increased capital expenditures relate to the
Companys larger size and are expected to be serviced by
the larger cash flow base. Management believes cash flow from
operations will provide adequate sources of liquidity for the
Company and could, if necessary, be supplemented with additional
proceeds from financing activities. However, the Companys
sources of liquidity may be inadequate if it is unable to
successfully integrate acquired businesses in accordance with
its expectations, economic conditions worsen, or the Company is
unable to meet financial or operating covenants as a result of
the foregoing. The Company continues to explore other sources of
liquidity, including additional debt, but existing debt
instruments may limit the Companys ability to incur
additional debt, and the Company may be unable to secure equity
or other financings. The Company also believes it could obtain
favorable modifications related to existing debt instruments and
related covenants.

Contractual
Obligations

Below is the table that identifies the
Companys significant contractual obligations. Following
the table is a more detailed description of these obligations.

|                                             |  |                       |         |           |        |   |       |           |  |   |           |  |  |               |       |  |  |   |       | 
|-------------------------------------------- |  | --------------------- | ------- | --------- | ------ | - | ----- | --------- |  | - | --------- |  |  | ------------- | ----- |  |  | - | ----- | 
|                                             |  |                      
|                                             |  | Payment due by Period |        
|                                             |  |                       |        
|                                             |  |                       |         | Less than |        |   |      
|                                             |  | Total                 |         |           | 1 year |   |       | 1-3 years |  |   | 4-5 years |  |  | After 5 Years |      
|                                             |  |                       |         |           |        |   |       |           |  |   |           |  |  |               |      
|                                             |  |                      
|                                             |  | (in millions)         |        
|Long-term debt and capital lease obligations |  | $                     | 1,278.7 |           |        | $ | 23.5  |           |  | $ | 355.2     |  |  | $             | 400.0 |  |  | $ | 500.0 | 
|Preferred stock*                             |  |                       | 123.9   |           |        |   |      |           |  |   |          |  |  |               |      |  |  |   | 123.9 | 
|Short-term borrowings                        |  |                       | 10.5    |           |        |   | 10.5  |           |  |   |          |  |  |               |      |  |  |   |      | 
|Operating leases                             |  |                       | 346.9   |           |        |   | 50.0  |           |  |   | 95.4      |  |  |               | 68.3  |  |  |   | 133.2 | 
|Capital expenditures                         |  |                       | 36.2    |           |        |   | 36.2  |           |  |   |          |  |  |               |      |  |  |   |      | 
|                                             |  |                       |         |           |        |   |       |           |  |   |           |  |  |               |      
|Total obligations                            |  | $                     | 1,796.2 |           |        | $ | 120.2 |           |  | $ | 450.6     |  |  | $             | 468.3 |  |  | $ | 757.1 | 
|                                             |  |                       |         |           |        |   |       |           |  |   |           |  |  |               |      



---



|  |                                                         
|- | --------------------------------------------------------
|* | Mandatorily Redeemable Preferred Stock of
    Subsidiary

Senior
Secured Credit Facilities

General:The Companys senior secured credit facility allowed
funding in the aggregate of up to $553 million at
December 31, 2002. Borrowings under the credit facility are
secured by all the assets of the

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Company and Products and certain of its
subsidiaries, and are unconditionally and irrevocably guaranteed
jointly and severally by the Company and each existing and
subsequently acquired or organized domestic subsidiaries (other
than by the Companys receivables subsidiary). Available
funding under this credit facility is reduced if the program
size or commitment level under the Companys receivable
facility (discussed below) exceeds $250.0 million.


Interest Rates and
Fees:Borrowings bear interest, at the
Companys option, at either (a) adjusted LIBOR plus a
3.75% margin in the case of the revolving credit and tranche A
term loan facilities and 4.00% margin in the case of the tranche
B term loan facilities, in all cases subject to a minimum LIBOR
of 3.00% or (b) the highest of (i) JPMorgan Chase
Banks prime rate, (ii) the federal funds effective
rate plus 1/2 of 1.00% and (iii) the base CD rate plus
1.00%. A commitment fee on any unused commitments under the
revolving portion of the credit facility equal to 1.00% per
annum is payable quarterly in arrears and is subject to
adjustment based on attaining certain performance targets.

Covenants:The credit facility requires that the Company meet certain
financial tests, including, without limitation, the following
tests: a maximum leverage ratio, a minimum interest coverage
ratio and certain prescribed limitations on capital expenditures
at levels to be agreed upon between the Company and the agents.
The credit facility also contains covenants and restrictions,
including, among others, limitations or prohibitions on
declaring dividends and other distributions, redeeming and
repurchasing capital stock, prepaying, redeeming and
repurchasing other indebtedness, loans and investments,
additional indebtedness, liens, sale-leaseback transactions,
preferred stock, capital expenditures, recapitalizations,
mergers, acquisitions and asset sales and transactions with
affiliates.

Events of
Default:The credit facility contains
certain customary events of default, including, among others
cross-default and cross-acceleration to other indebtedness
(including the receivables facility).

11 1/2%
Senior Subordinated Notes due 2006

Products has outstanding $400 million in
principal amount of 11 1/2% Senior Subordinated Notes due
2006. In connection with the TAC-Trim acquisition, the Company
amended the indenture governing these notes to make each
subsidiary guarantor of the 10 3/4% Senior Notes due in
2011 a guarantor of these notes on a senior subordinated basis.
The indenture governing these notes contains restrictive
covenants (including, among others, limitations on indebtedness,
restricted payments, liens, asset dispositions, change of
control and transactions with affiliates) that are customary for
such securities.

10 3/4%
Senior Notes due 2011

As discussed above, in connection with the
TAC-Trim acquisition, Products sold $500 million principal
amount of 10 3/4% senior notes due 2011. The indenture
governing these notes contains restrictive covenants (including,
among others, limitations on indebtedness, restricted payments,
liens, asset dispositions, change of control and transactions
with affiliates) that are customary for such securities.

Mandatorily
Redeemable Preferred Stock of Subsidiary

General:As discussed above, as part of the consideration paid to Textron
for the TAC-Trim acquisition, Products issued mandatorily
redeemable preferred stock to Textron with an estimated fair
market value of $146.9 million and a liquidation value of
$326.4 million.

Dividends:Holders of this preferred stock are entitled to receive
dividends accruing on the liquidation preference thereof at a
rate of 11% per annum, in respect of dividend periods
ending on or prior to July 1, 2003, and 15% per annum,
in respect of dividend periods ending after July 1, 2003,
in the case of the Series A Preferred Stock, 12% per
annum, in respect of dividend periods ending on or prior to
July 1, 2003, and 16% per annum, in respect of dividend
periods ending after July 1, 2003, in the case of the
Series B Preferred Stock, 12% per annum, in respect of
dividend periods ending on or prior to July 1, 2003, and
16% per annum, in respect of dividend periods ending after
July 1, 2003 and in the case of the Series C Preferred
Stock, in each case payable quarterly in arrears, commencing on
April 1, 2002 and accumulating from the date of issuance.

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Products may, at its option, elect to accrue up
to an amount equivalent to 7% per annum of the dividends on
the Series A Preferred Stock, an amount equivalent to
8% per annum of the dividends on the Series B
Preferred Stock and an amount equivalent to 8% per annum of
the dividends on the Series C Preferred Stock in lieu of
cash payment of such dividends and, in each case, any accrued
dividends will be added to the liquidation preference of the
applicable series of preferred stock. Products may at its option
through January 1, 2004 accrue up to the full amount of all
dividends in lieu of cash payment of such dividends. Thereafter,
Products may at its option elect to accrue dividends of up to 7%
of the liquidation value annually on Series A Preferred
Stock and up to 8% of the liquidation value on Series B and
C Preferred Stock. Accrued dividends will be added to the
liquidation preference of the applicable series of Preferred
Stock.


Repurchase:In June 2002, $100.0 million of proceeds from the
16 million share common stock offering was used to
repurchase preferred stock from Textron at a price of 75% of its
liquidation preference of 133.0 million. The redeemed
Series A Preferred Stock had a carrying value of
$63.7 million.

Liquidation
Preference:Upon any voluntary or
involuntary liquidation, dissolution or winding-up of Products,
holders of the preferred stock will be entitled to be paid out
of the assets of Products available for distribution to
stockholders in the amount of $1,000 per share plus the
aggregate amount of accrued dividends prior to any distribution
to any holders of equity securities which rank junior to the
preferred stock. In addition, upon any voluntary or involuntary
liquidation, dissolution or winding-up of Products, the holders
of Series C Preferred Stock will be entitled to a participation
in distributions to Products common equity tied to any
appreciation in the value of Products common equity
subsequent the issuance date, not to exceed an aggregate of
$2 million for all Series C Preferred Stock outstanding.

Mandatory
Redemption:Products is required to
redeem all of the Series A Preferred Stock and
Series B Preferred Stock outstanding on January 1,
2013 at a redemption price equal to 100% of the liquidation
preference thereof, plus accrued and unpaid dividends to the
date of redemption. Products is also required to redeem all of
the series C preferred stock outstanding on
February 1, 2022 at a redemption price equal to 100% of the
liquidation preference thereof, plus accrued and unpaid
dividends to the date of redemption, plus common equity
participation.

Operating
Leases

During 2002, the Company received net proceeds
(after fees) of approximately $14.8 million from sale and
leasebacks of real property and equipment. The aggregate lease
expenses associated with these leases will be
$18.8 million, $2.6 million of which relates to 2003.

During 2001, Products entered into sale and
leaseback transactions for certain manufacturing equipment and
non-manufacturing properties. The transactions resulted in the
recognition of a $4.4 million net deferred asset that is
being amortized over the lease term, and the recognition of an
$8.7 million loss.

During 2001, the Company received net proceeds
(after fees) of approximately $86.2 million from sale and
leasebacks of real property and equipment, which it used to
reduce outstanding debt. The aggregate lease expenses associated
with these leases will be $88.8 million, $12.5 million
of which relates to 2002. To the extent permitted by the credit
facility, the Company may enter into additional similar leasing
arrangements from time to time. As part of these sale-leaseback
transactions, Products sold and contemporaneously leased back
real property from unrelated third parties, and received net
proceeds (after fees) of $46.4 million.

In June 2001, the Company entered into
sale-leaseback transactions with each of New King, L.L.C.
(New King) and Anchor Court, L.L.C. (Anchor
Court), which are affiliates of Becker Ventures LLC.
Becker Ventures is controlled by Charles Becker, a Company
director. See the information under the heading
 Other Information  Effect of
Transactions with Related Parties.

In connection with these sale-leaseback
transactions, Products sold and contemporaneously leased back
real property located in Troy, Michigan and Plymouth, Michigan
from New King and Anchor Court, respectively, for net proceeds
of $15.1 million in aggregate. The initial lease term in
each transaction is 20 years and each lease has two
successive ten year renewal options. The basic rent for the
Troy, Michigan

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property is $1.3 million per year, and the
basic rent for the Plymouth, Michigan property is
$0.5 million per year. The rental rates in each case are
subject to adjustment after expiration of the initial term.


Prior to the TAC Trim acquisition, TAC-Trim
entered into an $86.9 million sale and leaseback
transaction (the Textron Leasing Transaction) with
two separate single purpose affiliates of Textron Financial
Corporation, as lessor and purchaser, with respect to a
portfolio of manufacturing equipment situated in different
locations throughout the United States and Canada. Payments
under the Textron leasing transaction are guaranteed by Products
and secured by a first perfected mortgage lien over certain real
property with a value equal to $25 million. Each lease is
for an initial term of three years with three one-year renewal
options. As is customary, the documentation for the Textron
leasing transaction incorporates covenants by reference, from
the Companys credit facility, that may be amended or
waived by the senior lenders, and also contain events of
default. See the information under the heading
 Other Information  Effect of
Transactions with Related Parties.

The Company also has other equipment lease
agreements with several lessors that, subject to specific
approval, provide availability of funding for operating leases
and sale and leasebacks as allowed in its other financing
agreements.

Refer to Note 12, Operating
Leases of the financial statements included in this report
for information regarding future minimum lease payments.

Capital
Expenditures

The Company makes capital expenditures on a
recurring basis for replacements and improvements. During 2002,
the Company had approximately $148 million in capital
expenditures for continuing operations. Capital expenditures
will materially increase with the expanded book of business in
2003, and in future years will depend upon demand for the
Companys products and changes in technology. Estimates for
capital expenditures in 2003 range from approximately $145 to
$165 million. A portion of capital expenditures may be
financed through leasing arrangements.

Sources
of Liquidity

The table below identifies the Companys
significant sources of liquidity:

|                             |  |               |       |  |                                    |   |      |           |  |       |           |  |         |   |   |  |  |   |   | 
|---------------------------- |  | ------------- | ----- |  | ---------------------------------- | - | ---- | --------- |  | ----- | --------- |  | ------- | - | - |  |  | - | - | 
|                             |  | December 31,  |       |  |                                    |   |      |           |  |       |          
|                             |  | 2002          |       |  |                                   
|                             |  |               |       |  | Availability Expiration Per Period
|                             |  | Maximum       |       |  |                                   
|                             |  | Amount        |       |  | Less than                          |   |      |           |  | After
|                             |  | Available     |       |  | 1 Year                             |   |      | 1-3 Years |  |       | 4-5 Years |  | 5 years
|                             |  |               |       |  |                                    |   |      |           |  |       |           |  |        
|                             |  |              
|                             |  | (in millions)
|Receivable Facility(1)       |  | $             | 93.2  |  |                                    | $ |     |           |  | $     | 93.2      |  |         | $ |  |  |  | $ |  | 
|Revolving Credit Facility(2) |  |               | 129.5 |  |                                    |   |     |           |  |       | 129.5     |  |         |   |  |  |  |   |  | 
|Short-term borrowings(3)     |  |               | 26.0  |  |                                    |   | 26.0 |           |  |       |          |  |         |   |  |  |  |   |  | 
|                             |  |               |       |  |                                    |   |      |           |  |       |           |  |         |   |  
|Total Available              |  | $             | 248.7 |  |                                    | $ | 26.0 |           |  | $     | 222.7     |  |         | $ |  |  |  | $ |  | 
|                             |  |               |       |  |                                    |   |      |           |  |       |           |  |         |   |  



---



|    |                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Total commitment under the facility is
    $250.0 million.                                                                                            
|   
|(2) | At December 31, 2002, $45.5 million of
    outstanding letters of credit reduced the maximum amount
    available under the Revolving Credit Facility.
|   
|(3) | Borrowings outstanding in addition to the amount
    available were $10.5 million.                                                                    

Receivables
Facility

General:The Company has an agreement to sell, on an ongoing basis, the
trade accounts receivable of certain business operations to a
bankruptcy-remote, special purpose subsidiary, wholly owned and
consolidated by the Company. The receivables subsidiary
(Carcorp) will, subject to certain conditions, from time to
time, sell an undivided fractional ownership interest in a pool
of domestic and certain Canadian receivables, up to

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$250 million, to various multi-seller
commercial paper conduits supported by a committed liquidity
facility. Upon sale to the conduit, Carcorp will hold a
subordinated retained interest in the receivables. Under the
terms of the agreement, new receivables are added to the pool as
collections reduce previously sold receivables. The Company
expects to service, administer and collect the receivables on
behalf of Carcorp and the conduit. The proceeds of sale will be
less than the face amount of accounts receivable sold by an
amount that approximates the purchasers financing costs.
In September 2002, the Company amended the receivables facility
lengthening its term to expire in December 2004.


Restrictions:This receivables facility contains certain restrictions on
Carcorp (including maintenance of $60.0 million net worth)
and on the sellers (including limitations on liens on
receivables, modifications of the terms of receivables, and
changes in credit and collection practices) customary for
facilities of this type. The commitments under the receivables
facility are subject to termination prior to their term upon the
occurrence of certain events, including payment defaults, breach
of covenants, including defined interest coverage and leverage
ratios, bankruptcy, default by the Company in servicing the
receivables and failure of the receivables to satisfy certain
performance criteria.

Commercial
Commitments

Put and Call
Arrangement:The Company entered into
a put and call arrangement with respect to the acquisition of
the initial 50% interest in the Italian joint venture. In
January 2003, the Company acquired the remaining 50% interest in
the Italian joint venture for $15 million, which also
terminated the put call arrangement. The arrangement, that was
exercisable in December 2004, permitted Textron to require the
Company to purchase Textrons interests in the joint
venture for an aggregate of approximately $28 million.

Stock
Options

As a result of repricing the Companys stock
options during 2002, the repriced options were treated as
variable-based awards in accordance with APB No. 25.
Subsequent to December 31, 2002, the Company approved the
repricing of approximately 3.6 million options with
exercise prices of $10.00 to a new exercise price of $8.00.
Since these options are considered to be variable-based awards,
the Company will incur future compensation expense if the stock
price exceeds the $8.00 exercise price to be established by
repricing.

Other Information

Effects of Certain
Transactions with Related Parties

Heartland
Transactions

The Company is a party to a services agreement
with Heartland under which Heartland provides it with advisory
and consulting services, including services with respect to
developments in the automotive industry and supply markets,
advice on financial and strategic plans and alternatives and
other matters as it may reasonably request and are within
Heartlands expertise. The services agreement terminates on
the earlier of its 10th anniversary or the date upon which
Heartland ceases to own Company shares equivalent to 25% of that
owned by them on February 23, 2001.

Under the services agreement, the Company is
obligated to pay to Heartland a $4.0 million annual
advisory fee on a quarterly basis and to reimburse its
out-of-pocket expenses related to the services it provides. The
Company has also agreed to pay a fee of 1% of the total
enterprise value of certain acquisitions and dispositions.

Charles
E. Becker Transactions

Subsequent to December 31, 2002, the Company
entered into a letter of intent with Charles E. Becker, a
member of the Companys Board of Directors, to buyout the
non-compete agreement effective in early 2003. The non-compete
agreement was entered into as part of the Becker acquisition.
The Company will make a one-time payment to Mr. Becker of
$11.3 million thereby terminating its remaining obligation
of approximately $12.6 million and eliminate
Mr. Beckers obligation not to compete. As a result of
this transaction the

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Company expects to record a loss of approximately
$10 million, which is primarily due to the resulting
write-off of the intangible assets initially recorded in
conjunction with the Becker acquisition.


In July 2001, the Company completed the
acquisition of Becker. As a result of the Becker acquisition and
a purchase of Company common stock immediately afterwards,
Charles Becker became one of the Companys principal
stockholders. Charles Becker became Vice Chairman and a member
of the Companys Board of Directors upon closing of the
Becker acquisition. The Company agreed to make
$18.0 million in non-compete payments over five years to
Mr. Becker at the time of the acquisition.

The Company entered into a lease agreement with
Becker Ventures, an entity controlled by one of the
Companys current directors and shareholders, for the
Companys headquarters at 250 Stephenson Highway, Troy,
Michigan with the effective date of the lease being
January 1, 2002. In March, 2002, the Company entered into
lease agreements with Becker Ventures, effective January 1,
2002, for 150 Stephenson Highway and 350 Stephenson Highway,
Troy, Michigan. The base rent for all three premises is $13.25
per sq. ft. Total square footage for all three locations is
approximately 286,000. The leases have 20-year terms, and the
Company has two five-year renewal options. The 2003 cost for the
facilities will be approximately $3.8 million. For the
years ended December 31, 2002 and 2001, the Company
recorded a total cost of $17.1 million and
$2.1 million, respectively, for rental expenses with
related parties. In addition, the Company is also party to a
lease with Becker Ventures for five manufacturing facilities
totaling 884,000 square feet. In 2002, the Company extended the
lease term an additional ten years to expire in 2021, with the
base rent for these facilities totaling $3.6 million per
year.

As discussed above under
 Operating Leases, the Company is a party
to certain sale-leaseback transactions with certain affiliates
of Becker Ventures LLC, an entity that is controlled by Charles
Becker, a director of the Company. The purpose of these
sale-leaseback transactions was to reduce the Companys
outstanding debt. The Company believes that the terms of the
sale-leaseback transactions with Becker Ventures are on terms
substantially similar to those which could have been negotiated
in arms-length transactions of the same type. These
sale-leaseback transactions were authorized by the independent
members of the Companys board of directors.

Elkin
McCallum Transactions

In January 2003, the Company purchased equipment
required to support an anticipated increase in the production of
furniture fabrics from Joan Fabrics for $4.7 million. The
Company also expects to spend another $4.7 million to
outside vendors to prepare existing facilities to accommodate
new furniture fabrics business. The Company also anticipates
that it will enter into a supply agreement with Joan Fabrics in
early 2003 to supply furniture fabrics. Elkin McCallum, a
director of the Company, controls Joan Fabrics. Joan Fabrics
would be responsible for all marketing, design, customer service
and distribution functions and will also assume marketing
responsibility for the Companys existing furniture fabrics
business.

On December 31, 2002, the Company acquired
certain assets from Dutton Yarns (an affiliate of
Mr. McCallum) for approximately $4.2 million. These
assets are used by the Company to texture yarn. As part of the
transaction, Dutton Yarns has agreed to provide the Company
transition services through December 31, 2003.

On April 12, 2002, the Company signed and
closed on a merger agreement with Mr. McCallum (a current
director and shareholder of the Company) and a lamination
company wholly owned by Mr. McCallum pursuant to which the
acquired company was merged into a wholly owned subsidiary of
the Company. As consideration in the transaction,
Mr. McCallum received 400,000 shares of Common Stock and
was repaid $2.5 million in cash as reimbursement for
amounts invested to fund the companys working capital
needs. Subsequent to the merger, debt owing to Mr. McCallum
of $6.7 million was repaid. The Company acquired the
lamination business to optimize the supply chain on certain of
its fabric products and provide low cost lamination products and
services to Tier-1 customers.

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In September 2001, the Company completed the
acquisition of Joan Automotive Industries, a leading supplier of
bodycloth to the automotive industry, and all of the operating
assets of Joans affiliated yarn dying operation, Western
Avenue Dyers, L.P. As a result of the Joan acquisition, Joan
Fabrics Corp., a company controlled by Elkin McCallum, became a
principal stockholder of the Company. Upon completion of the
Joan acquisition, Mr. McCallum became a member of the
Companys Board of Directors.

In connection with the Joan acquisition, the
Company entered into a Supply Agreement dated September 21,
2001 (the Supply Agreement) with Main Street
Textiles, L.P. (Main Street). Main Street is
controlled by Elkin McCallum, a director of the Company. Under
the Supply Agreement, the Company agreed to purchase all of its
requirements for flat woven automotive fabric from Main Street
for a five year period beginning on the date of the Supply
Agreement. The prices which the Company will pay for fabric
under the agreement will equal the costs of the raw materials
plus an amount which represents Main Streets standard
labor and overhead costs incurred in manufacturing fabric for
us. During the term of the Supply Agreement, Main Street is
prohibited from manufacturing automotive fabric products for
third parties without the Companys prior consent but may
sell seconds and close-out items in bona fide transactions. The
Supply Agreement is also terminable by mutual written consent,
upon the occurrence of certain events of bankruptcy, the
appointment of a receiver or trustee, an assignment for the
benefit of creditors, or in the event of a material breach. In
addition, either party may terminate the Supply Agreement upon
270 days prior notice to the other party in the event that
the parties are unable to agree on the pricing of fabric covered
by the Supply Agreement.

The Company is also a party to a Transition
Services Agreement dated September 21, 2001 with Joan
Fabrics Corporation (Joan Fabrics), another company
controlled by Mr. McCallum. Under this agreement Joan
Fabrics will provide Products with transitional and support
services for a period not to exceed twelve months in order to
support the continued and uninterrupted operation of the
businesses acquired by Products in the Joan acquisition. As a
part of these services, pending the Companys disassembly
and removal of machinery and equipment that we purchased from
Joan Fabrics, Joan Fabrics will use that machinery and equipment
to manufacture for us all of our requirements for some types of
knitted and woven automotive fabrics. The terms of the
Companys agreement with respect to this fabric production
are substantially similar to those under the Supply Agreement.

Mr. McCallum became a related party as a
result of the Joan acquisition. The terms of the Supply
Agreement and the Transition Agreement were reached through
arms-length negotiations prior to Mr. McCallum becoming a
related party.

Textron
Transactions

As discussed above under
 Operating Leases and Mandatorily Redeemable
Preferred Stock of Subsidiary, Business 
Technology and Intellectual Property, Business
 Joint Ventures and  Put and Call
Arrangement the Company is a party to various agreements
and transactions with Textron. Textron became a related party as
a result of its receipt of the consideration in the TAC-Trim
acquisition.

Discontinued
Operations

Proceeds from discontinued operations in 2002
were $15.8 million, representing recoveries, net of cash
outflows. However, the Company has significant obligations
related to post-retirement, casualty, environmental, product
liability, lease and other liabilities of discontinued
operations. The nature of many of these contingent liabilities
is such that they are difficult to quantify and uncertain in
terms of amount. The company has accrued $23.0 million for
post retirement costs and $53.4 million for environmental
and product liability costs. Based upon the information
available to management and the Companys experience to
date, the Company believes that these liabilities will not have
a material effect on its financial condition, results of
operations or cash flows. In addition, the Company has primary,
excess and umbrella insurance coverage for various periods that
the Company expects to cover certain of these liabilities.
However, there can be no assurances that contingent liabilities
will not arise or that known contingent liabilities or related
claims will not exceed the Companys expectations or that
insurance will be available to cover these liabilities. Because
the

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cash requirements of the Companys
operations are substantially a function of these contingencies,
it is possible that actual net cash requirements could differ
materially from the Companys estimates.


Recent and Future
Reorganization Plans

During the fourth quarter of 2002, the Company
undertook a restructuring program primarily to realign the
operations in Europe that resulted in a restructuring charge of
$14.1 million. This restructuring charge included
$4.0 million of severance costs, $0.8 million of costs
related to the establishment of reserves for lease commitments
and lease termination fees, and $9.3 million of costs
related to fixed asset impairments. The severance costs related
to over 300 personnel.

During the third quarter of 2002, the Company
undertook a restructuring program primarily to realign the
operations in North America that resulted in a restructuring
charge of $33.8 million. This restructuring charge included
$23.8 million of severance costs, $1.3 million of
costs related to the establishment of reserves for lease
commitments and lease termination fees, and $8.7 million of
costs related to fixed asset impairments. The severance costs
related to over 700 personnel.

Included in the third quarter 2002 restructuring
charge severance costs was $8.9 million related to the
separation agreement with Thomas Evans, the former Chairman and
Chief Executive Officer (CEO). In August 2002, the
Companys Board of Directors appointed Jerry L.
Mosingo as President, CEO and Director of the Company. Under the
terms of his separation agreement, Mr. Evans received
$5.5 million on August 15, and will receive quarterly
payments of $0.3 million through June 30, 2004.

During the first quarter of 2002, the Company
undertook a restructuring program to rationalize operations in
North America, Europe and Specialty operations that resulted in
a restructuring charge of $9.1 million. This restructuring
included $5.5 million of cash severance costs and
$3.6 million of costs related to the establishment of
reserves for lease commitments and lease termination fees. The
Company incurred severance costs for over 100 personnel
primarily at the Companys North America and European
headquarters and additional reductions at its Specialty
operations. The reserve for lease commitments relates to
contractual obligations for the Companys former
headquarters facility, while the termination fees relate to an
aircraft lease on an aircraft that the company discontinued
using. The Company relocated its headquarters to its current
location in order to optimize and consolidate corporate
operations.

During the first quarter of 2001, the Company
undertook a restructuring program resulting in a charge of
$9.2 million. The goal of this restructuring program was to
further de-layer management in the North American, European and
Specialty operations. The pre-tax $9.2 million charge
includes $8.4 million of severance costs and
$0.8 million of asset impairments.

During the fourth quarter of 2001, the Company
incurred charges totaling $9.6 million including
$2.8 million of severance costs and $6.8 million for
the write-off of long-lived assets.

The company is continually evaluating the
business and may elect to implement additional restructuring
activities as opportunities to achieve cost savings arise in
future periods.

Stock Repurchase
Plan

At December 31, 2002, approximately
$1.0 million remained authorized by the Companys
Board of Directors to repurchase shares of the Companys
common stock at managements discretion. The Company
believes it has sufficient liquidity under its existing credit
arrangements to effect the repurchase program. The Company made
no repurchases for the years ended 2002 and 2001.

Accounting Policies

The preparation of consolidated financial
statements in conformity with accounting principles generally
accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of

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the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
period. Considerable judgment is often involved in making these
determinations, the use of different assumptions could result in
significantly different results. Management believes its
assumptions and estimates are reasonable and appropriate,
however actual results could differ from those estimates.


Goodwill Impairment
Testing:During the second quarter of
2002, the Company completed the implementation of SFAS 142,
Goodwill and Other Intangible Assets. Under SFAS
142, goodwill is no longer amortized. Instead, goodwill and
indefinite-lived intangible assets are tested for impairment in
accordance with the provisions of SFAS 142. The Company employed
a discounted cash flow analysis and a market comparable approach
in conducting its impairment tests. The Company completed its
initial impairment test in the second quarter of 2002 and
recorded an impairment loss of $11.7 million (having no tax
impact), or $0.15 per average basic and diluted share relating
to the UK Plastics business in the European and Rest of World
Automotive Systems segment. The impairment loss was reported as
a cumulative effect of a change in accounting principle and,
therefore, is accounted for as if it occurred on January 1,
2002. The Company completed this test again as of
November 1, which indicated that the fair value of the
reporting units exceeded the carrying values. Fair value was
determined based upon the discounted cash flows of the reporting
units using discount rates ranging from 11.5% to 14.0% dependant
on the reporting unit and a residual growth rate of 2%. The
market comparable approach consisted of an earnings multiple of
5 times forecasted EBITDA (operating income less 
interest, taxes, depreciation and amortization) and a control
premium on equity. Future cash flows and EBITDA are affected by
future operating performance, which will be impacted by economic
conditions, car builds, financial, business and other factors,
many of which are beyond the Companies control. The North
American Plastics reporting unit can be significantly impacted
by an adverse change in assumptions.

Realization of Deferred Tax
Assets:Assessing the need for and
amount of a valuation allowance for deferred tax assets requires
significant judgment. The fact that a benefit may be expected
for a portion but not all of a deferred tax asset increases the
judgmental complexity. Future realization of deferred tax assets
ultimately depends on the existence of sufficient taxable income
of the appropriate character in either the carryback or
carryforward period under the tax law.

During 2001, Heartland acquired approximately
60 percent of the outstanding shares of the Company. This
constituted a change in control that results in
annual limitations on the Companys use of its NOLs and
unused tax credits. This annual limitation on the use of NOLs
and tax credits depends on the value of the equity of the
Company and the amount of built-in gain or
built-in loss in the Companys assets at the
date of the change in control. Based on the
expiration dates of the NOLs and tax credits as well as
anticipated levels of domestic income, management does not
believe that the transaction will have a material impact on
these deferred tax assets. Management has reviewed the
Companys operating results for recent years as well as the
outlook for its continuing operations and concluded that it is
more likely than not that the net deferred tax assets of
$190 million at December 31, 2002 will be realized.

Management took into consideration, among other
factors, the expected impact of acquisitions, the impact of
recent restructuring plans, and the infusion of cash from
Heartland. These factors along with the timing of the reversal
of its temporary differences, certain tax planning strategies
and the expiration date of its NOLs were also considered in
reaching this conclusion. The Companys ability to generate
future taxable income is dependent on numerous factors,
including general economic conditions, the state of the
automotive industry and other factors beyond managements
control. Therefore, there can be no assurance that the Company
will meet its expectation of future taxable income.

Pension and Postretirement
Benefits Other than Pensions:Annual
net periodic expense and benefit liabilities under our defined
benefit plans are determined on an actuarial basis. Assumptions
used in the actuarial calculations have a significant impact on
plan obligations and expense. Each September, the Company
reviews the actual experience compared to the more significant
assumptions used and make adjustments to the assumptions, if
warranted. The healthcare trend rates are reviewed with the
actuaries based upon the results of their review of claims
experience. Discount rates are based upon an expected benefit
payments duration analysis and the equivalent average yield rate
for high-quality fixed-income investments.

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Pension benefits are funded through deposits with
trustees and the expected long-term rate of return on fund
assets is based upon actual historical returns modified for
known changes in the market and any expected change in
investment policy. Postretirement benefits are not funded and
our policy is to pay these benefits as they become due.


Certain accounting guidance, including the
guidance applicable to pensions, does not require immediate
recognition of the effects of a deviation between actual and
assumed experience or the revision of an estimate. This approach
allows the favorable and unfavorable effects that fall within an
acceptable range to be netted. Although this netting occurs
outside the basic financial statements, disclosure of the net
amount is disclosed as an unrecognized gain or loss in the
footnotes to our financial statements. The Company expects to
incur approximately $19 million of pension expense in 2003.
See Note 13 Employee Benefit Plans for additional
discussion for the impact on income.

Environmental
Contingencies:The Company is subject
to federal, state, local and foreign environmental, and health
and safety, laws and regulations that (i) affect ongoing
operations and may increase capital costs and operating expenses
in order to maintain compliance with such requirements and
(ii) impose liability relating to contamination at
facilities, and at other locations such as former facilities,
facilities where the Company has sent wastes for treatment or
disposal, and other properties to which the Company may be
linked. Such liability may include, for example, investigation
and clean-up of the contamination, personal injury and property
damage caused by the contamination, and damages to natural
resources. Some of these liabilities may be imposed without
regard to fault, and may also be joint and several (which can
result in a liable party being held responsible for the entire
obligation, even where other parties are also liable).

Management believes that it has obtained, and is
in material compliance with, those material environmental
permits and approvals necessary to conduct the Companys
various businesses. Environmental compliance costs for
continuing businesses are accounted for as normal operating
expenses or capital expenditures, except for certain costs
incurred at acquired locations. Environmental compliance costs
relating to conditions existing at the time of an acquisition
are generally charged to reserves established in purchase
accounting. The Company accrues for environmental remediation
costs when such obligations are known and reasonably estimable.
In the opinion of management, based on the facts presently known
to it, such environmental compliance and remediation costs will
not have a material adverse effect on the Companys
business, consolidated financial condition or future results of
operations.

The Company is legally or contractually
responsible or alleged to be responsible for the investigation
and remediation of contamination at various sites, and for
personal injury or property damages, if any, associated with
such contamination. At some of these sites the Company has been
notified that it is a potentially responsible party
(PRP) under the federal Superfund law or similar
state laws. Other sites at which we may be responsible for
contamination may be identified in the future, including with
respect to divested and acquired businesses.

The Company is currently engaged in investigating
or remediating certain sites as discussed below. In estimating
the cost of investigation and remediation, the Company has
considered, among other things, prior experience in remediating
contaminated sites, remediation efforts by other parties, data
released by the United States Environmental Protection Agency
(USEPA), the professional judgment of the
Companys environmental experts, outside environmental
specialists and other experts, and the likelihood that other
identified PRPs will have the financial resources to fulfill
their obligations at sites where they and the Company may be
jointly and severally liable. It is difficult to estimate the
total cost of investigation and remediation due to various
factors including:



| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | incomplete information regarding particular sites
    and other PRPs;                                                                         
|
| |  | uncertainty regarding the nature and extent of
    environmental problems and the Companys share, if any, of
    liability for such problems;
|
| |  | the ultimate selection among alternative
    approaches by governmental regulators;                                                           

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| |   |                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------
| |  | the complexity and evolving nature of
    environmental laws, regulations and governmental directives; and
|
| |  | changes in cleanup standards.                                                                             

The Company is a party to a Consent Decree with
the State of New Hampshire to remediate a former industrial
landfill known as the Cardinal Landfill in Farmington, New
Hampshire. Pursuant to that Consent Decree, the Company is
currently conducting a pilot test for a proposed remediation of
chlorinated compound contaminants in groundwater. The Consent
Decree calls for a remedy to be in place by 2004. The Company is
a defendant in two lawsuits filed by a total of
91 individual plaintiffs for alleged personal injuries
arising from Cardinal Landfill conditions. The Company will
vigorously contest these allegations. As of December 31,
2002, the Company has accrued $15.7 million for Cardinal
Landfill.

The Company is a party, as a member of a PRP
workgroup, to a Consent Decree entered with the USEPA for the
remediation of a former municipal landfill in Dover, New
Hampshire. The town of Dover, New Hampshire is also a member of
the PRP group and a party to the Consent Decree. Pursuant to the
terms of the Consent Decree, the PRP group is currently engaged
in the preparation of a remediation design. The Consent Decree
requires that a remedy for the site be in place by 2004. As of
December 31, 2002, the Company has accrued
$9.6 million for Dover.

Pursuant to a Consent Decree signed with the
USEPA, the Company is currently engaged in a full-scale
remediation for groundwater and soil contamination at the former
Stamina Mills manufacturing facility in North Smithfield, Rhode
Island. Remediation activities have been ongoing since 1998. The
Company is also in negotiation with the USEPA regarding a claim
for past oversight costs. A resolution of this matter is
anticipated in 2003. As of December 31, 2002, the Company
has accrued $14.1 million for Stamina Mills.

The Company is working with the Michigan
Department of Environmental Quality (MDEQ) to investigate
and remediate soil and groundwater contamination at a former
manufacturing plant in Mancelona, MI and at adjacent owned
property formerly used for the treatment and disposal of plating
waste. MDEQ is likely to require remediation of groundwater. In
addition, the Company is incurring costs in connection with the
provision of alternate water supplies to residences in the area.

The current owner of one of the Companys
former manufacturing plants located in Bowling Green, OH has
entered into an Administrative Order on Consent with the Ohio
Environmental Protection Agency (OEPA) requiring
investigation and remediation of contamination at the site. The
Company is reimbursing the current owner for costs associated
with ongoing groundwater monitoring and, following selection of
an appropriate remedy by OEPA, will assume 90% of future
remediation costs.

In the 1980s and 1990s, the
California Regional Water Quality Control Board
(CRWQCB) and other state agencies ordered a predecessor of
the Company to investigate and remediate soil and groundwater
contamination at a former lumber treatment plant in Elmira, CA.
In 1996, the Company entered into an agreement with the State of
California to conduct long-term operation and maintenance of the
remedy implemented at the site.

The Company has established accruals for certain
contingent environmental liabilities and management believes
such reserves comply with generally accepted accounting
principles. The Company records reserves for environmental
investigatory and non-capital remediation costs when litigation
has commenced or a claim or assessment has been asserted or is
imminent, the likelihood of an unfavorable outcome is probable,
and the financial impact of such outcome is reasonably
estimable. As of December 31, 2002 and 2001, total reserves
for those contingent environmental liabilities are approximately
$64.5 million and $59.6 million, respectively.

In the opinion of management, based on
information presently known to it, identified environmental
costs and contingencies will not have a material adverse effect
on our consolidated financial condition, future results of
operations or cash flows. However, we can give no assurance that
we have identified or properly assessed all potential
environmental liability arising from our business or properties,
and those of our present and former subsidiaries and their
corporate predecessors.

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Allowance for uncollectible
accounts:The allowance for
uncollectibles provides for losses believed to be inherent
within the companys Accounts and Other
Receivables, (primarily trade receivables and the retained
interest in the receivables facility). Management evaluates both
the creditworthiness of specific customers and the overall
probability of losses based upon an analysis of the overall
aging of receivables, past collection trends and general
economic conditions. Management believes, based on its review,
that the allowance for uncollectibles is adequate to cover
potential losses. Actual results may vary as a result of
unforeseen economic events and the impact those events could
have on our customers.

Valuation of Mandatorily
Redeemable Preferred Stock of
Subsidiary:The Company issued
preferred stock as part of the consideration given to Textron in
the TAC-Trim acquisition. The preferred stock is recorded at
fair value, which is less than the liquidation value of $1,000
per share or $326.4 million. Since the preferred stock is
not publicly traded the use of an estimated fair value was
required. The Company estimated the fair value to be
$146.9 million based on market prices for securities with
similar terms, maturities and risk characteristics, and included
a liquidation discount to reflect market conditions. The
difference between the initial recorded value and the initial
liquidation preference will be accreted over the life of the
stock.






Item 7A.     Quantitative
and Qualitative Disclosures About Market Risk


Market Risk
Sensitivity

In the normal course of business, the Company is
exposed to market risk associated with fluctuations in foreign
exchange rates and interest rates. The Company manages these
risks through the use of derivative financial instruments in
accordance with managements guidelines. The Company enters
into all hedging transactions for periods consistent with the
underlying exposures. We do not enter into derivative
instruments for trading purposes.

Foreign Currency

Operating results may be impacted by the Company
buying, selling and financing in currencies other than the
functional currency of our operating companies
(transactional exposure). The Company mitigates this
risk by entering into foreign currency forward, swap and option
contracts. The foreign currency contracts are executed with
banks that the Company believes are creditworthy.

The Companys most significant foreign
currency transactional exposures relate to Mexico, Canada and
the European Monetary Union. As of December 31, 2002,
foreign currency contracts representing $97.4 million of
notional amount were outstanding with maturities of less than
one year. The fair value of these foreign exchange
contracts as of December 31, 2002 was approximately
$468,000. The table below provides a summary of the foreign
exchange contracts that are outstanding as of December 31,
2002. The instruments actual cash flows are denominated in
U.S. dollars (dollar amounts in millions).

|           |  |          |     |  |           |  |     |                   |  |   |                  |  |  |             |                    |  |  |   |     | 
|---------- |  | -------- | --- |  | --------- |  | --- | ----------------- |  | - | ---------------- |  |  | ----------- | ------------------ |  |  | - | --- | 
|           |  |          |     |  |           |  |     | Weighted Average  |  |   |                 
|Derivative |  | Currency |     |  | Currency  |  |     | USD Equivalent of |  |   | Contract Rate    |  |  | Unrealized  |                   
|Type       |  | Sold     |     |  | Purchased |  |     | Notional Amount   |  |   | (per Convention) |  |  | Gain/(Loss) |                   
|           |  |          |     |  |           |  |     |                   |  |   |                  |  |  |             |                   
|Forwards   |  |          | GBP |  |           |  | EUR |                   |  | $ | 3.4              |  |  |             | 0.6176 GBP per EUR |  |  | $ | 0.2 | 
|Forwards   |  |          | CAD |  |           |  | USD |                   |  |   | 2.0              |  |  |             | 1.5853 CAD per USD |  |  |   | 0.0 | 
|Spot       |  |          | USD |  |           |  | EUR |                   |  |   | 18.0             |  |  |             | 1.0478 USD per EUR |  |  |   |    | 
|Options    |  |          | CAD |  |           |  | USD |                   |  |   | 74.0             |  |  |             | 1.6420 CAD per USD |  |  |   | 0.3 | 
|           |  |          |     |  |           |  |     |                   |  |   |                  |  |  |             |                   
|           |  |          |     |  |           |  |     |                   |  | $ | 97.4             |  |  |             |                    |  |  | $ | 0.5 | 

In addition to the transactional exposures, our
operating results are impacted by the translation of our foreign
operating income into U.S. dollars (translation
exposure). We do not enter into foreign currency contracts
to mitigate this exposure.

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Interest Rate

As of December 31, 2002 approximately 70% of
the Companys borrowings were on a fixed rate basis. The
remainder of the Companys borrowings were on a variable
rate basis and sensitive to changes in interest rates. While the
Company has used interest rate swaps and other interest rate
protection agreements to modify its exposure to interest rate
movements and to reduce borrowing rates, no such agreements were
in place at December 31, 2002. Because approximately
$378 million of the Companys borrowings were subject
to a minimum LIBOR floor of 3.0%, a 0.5% unfavorable increase in
interest rates would not materially impact pre-tax earnings and
cash flow.






Item 8.     Financial
Statements and Supplementary Data


See the Consolidated Financial Statements of
Collins & Aikman Corporation and subsidiaries included
herein and listed on the Index to Financial Statements set forth
in Item 15 (a) of this Form 10-K report.






Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure


On April 10, 2001, the Company notified
Arthur Andersen LLP that it was changing its independent
accountants to PricewaterhouseCoopers LLP for the fiscal year
ending December 31, 2001. The Audit Committee of the Board
of Directors and the Board of Directors of the Company approved
the decision to replace Arthur Andersen LLP. The Companys
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 was filed on April 2, 2001. It
included financial statements as of December 31, 2000 and
December 25, 1999 and for each of the three periods ended
December 2000, 1999 and 1998, accompanied by the report of
Arthur Andersen LLP. Such report did not include any adverse
opinion or disclaimer of opinion, or any qualification as to
audit scope or accounting principles.

During the fiscal years ended December 31,
2000 and December 25, 1999, there were no disagreements
with Arthur Andersen LLP on any matter of accounting principles
or practices, financial statement disclosure or audit scope.
During this period, there were also no disagreements which, if
not resolved to the satisfaction of Arthur Andersen LLP, would
have caused them to make reference to the subject matter of such
disagreement in their reports on the financial statements for
such years.

During the fiscal year ended December 31,
2000, PricewaterhouseCoopers LLP had not been engaged as an
independent accountant to audit either the financial statements
of the Company or any of its subsidiaries, nor had it been
consulted regarding the application of our accounting principles
to a specified transaction, either completed or proposed, or the
type of audit opinion that might be rendered on our financial
statements.

As a result of its 1999 audit, Arthur Andersen
LLP reported material weaknesses in the Companys internal
control systems. The identified conditions specifically related
to four of our foreign locations, most of which were acquired in
2001. These weaknesses were primarily attributable to the
effects of implementing a new computer system as part of our
acquisition integration strategy and Year 2000 compliance
efforts. Issues at these locations primarily related to the
detail records supporting the general ledger and staff training
needs. As a result, in 2000, the Company committed significant
resources to addressing the issues, including the
re-implementation of certain systems, implementing an internal
audit function and replacing controllers at three of the
four locations. The Company made significant progress in
addressing these issues; however, Arthur Andersen LLP continued
to report material weaknesses following its 2000 audit because
two of these four foreign locations were assessed as continuing
to have similar material weaknesses as in 1999. Improvement
efforts at these locations were hampered by personnel turnover
and continuing acquisition integration efforts.

Arthur Andersen LLP did not modify its report on
the Companys 1999 and 2000 audited financial
statements as a consequence of these material weaknesses. The
Company is continuing its efforts to address these matters and
believes that it corrected all these matters during 2001.

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PART III






|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive
    Officers of the Registrant

There is incorporated herein by reference the
information required by this Item in the Companys
definitive proxy statement for the 2003 Annual Meeting of
Stockholders which will be filed with the Securities and
Exchange Commission no later than 120 days after the close
of the year ended December 31, 2002.






|         |                           
|-------- | --------------------------
|Item 11. | Executive
    Compensation

There is incorporated herein by reference the
information required by this Item in the Companys
definitive proxy statement for the 2003 Annual Meeting of
Stockholders which will be filed with the Securities and
Exchange Commission no later than 120 days after the close
of the year ended December 31, 2002.






|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of
    Certain Beneficial Owners and Management

There is incorporated herein by reference the
information required by this Item in the Companys
definitive proxy statement for the 2003 Annual Meeting of
Stockholders which will be filed with the Securities and
Exchange Commission no later than 120 days after the close
of the year ended December 31, 2002.






|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and
    Related Transactions

There is incorporated herein by reference the
information required by this Item in the Companys
definitive proxy statement for the 2003 Annual Meeting of
Stockholders which will be filed with the Securities and
Exchange Commission no later than 120 days after the close
of the year ended December 31, 2002.






|         |                            
|-------- | ---------------------------
|Item 14. | Controls and
    Procedures

a. Evaluation of disclosure
controls and procedures:

Within 90 days prior to the filing date of
this report, the Companys Chief Executive Officer and the
Companys Chief Financial Officer the Certifying
Officers evaluated the effectiveness of the design and
operation of the Companys disclosure controls and
procedures (as defined in the Securities Exchange Act of
1934). Based on that evaluation, the Certifying Officers have
concluded that the Companys disclosure controls and
procedures are effective to ensure that information required to
be disclosed by the Company in the reports that it files and
submits under the Exchange Act is recorded, processed,
summarized and reported as and when required, and are effective
to ensure that such information is accumulated and communicated
to the Companys management, including its Certifying
Officers, as appropriate to allow timely decisions regarding
required disclosure. In addition, the Certifying Officers also
disclosed to the Companys auditors and the audit committee
of the board of directors all significant deficiencies in the
design or operation of internal controls that could adversely
affect the Companys ability to record, process, summarize
and report financial data. A summary of the key items disclosed
and the changes in internal controls resulting from corrective
actions are discussed below.

b. Changes in internal
controls:

An evaluation of internal controls was conducted
for the year ended December 31, 2002. The following
paragraphs detail managements significant areas of focus
to further enhance internal controls:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company has implemented certain enhancements,
    or is in the process of enhancing, internal controls relating to
    data quality and process efficiency with respect to its current
    consolidation system and preparation of consolidated financial
    statements. Recent actions relate to improving the systematic
    roll-up of both financial and non-financial information that is
    reported in the Companys financial reports filed with the
    Securities & Exchange Commission. These actions have
    primarily focused on improving; (1) the entity structure
    utilized by the consolidation tool, (2) the collection and
    compilation of financial and non-financial data, and
    (3) the ability to identify and eliminate intercompany
    transactions and balances in a more efficient manner. The
    Company is currently making

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | these changes to its existing consolidation
    system and is in the process of implementing a new consolidation
    system. As part of the new system implementation process, the
    Company is examining additional means to improve its internal
    controls. The Company is also enhancing its procedures with
    respect to ensuring timely and adequate review of non-standard
    journal entries and account reconciliations, and adherence to
    existing corporate accounting policies and accounting principles
    generally accepted in the United States of America.                                                                                                                                                                                                                                      
|
| |  | Further, the Company is implementing controls to
    ensure that financial and non-financial information that is
    generated by accounting or other company functions is adequately
    reviewed prior to being recorded in the Companys books of
    record. As disclosed in Note 22 Quarterly Financial
    Data, an error in the mathematical computation of foreign
    currency exchange gains was discovered and was reflected as a
    prior period adjustment in the third quarter 2002 financial
    statements. The error was detected as the result of a change in
    the individuals responsible for computing and reviewing the
    foreign currency exchange gain/loss. The Company is implementing
    new controls that are designed to improve the existing approval
    and authorization processes.

Other than the above, there were no significant
changes in the Companys internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of the most recently completed
evaluation. The Company also intends to refine its internal
control procedures on an ongoing basis as deemed appropriate
with a view towards making improvements.

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PART IV






Item 15.     Exhibits,
Financial Statement Schedules and Reports on
Form 8-K


(a)(1) Financial Statements:

|                                                                                                                                                                              |  |        |     | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | --- | 
|                                                                                                                                                                              |  | Page   |    
|                                                                                                                                                                              |  | Number |    
|                                                                                                                                                                              |  |        |    
|Report of Independent Accountants                                                                                                                                             |  |        | F-1 | 
|Report of Independent Public Accountants                                                                                                                                      |  |        | F-2 | 
|Consolidated Statements of Operations for the
    years ended December 31, 2002, December 31, 2001 and
    fiscal year ended December 31, 2000                                |  |        | F-3 | 
|Consolidated Balance Sheets at December 31,
    2002 and December 31, 2001                                                                                                    |  |        | F-4 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, December 31, 2001 and
    fiscal year ended December 31, 2000                                |  |        | F-5 | 
|Consolidated Statements of Common
    Stockholders Equity (Deficit) for the years ended
    December 31, 2002, December 31, 2001 and fiscal year
    ended December 31, 2000 |  |        | F-6 | 
|Notes to Consolidated Financial Statements                                                                                                                                    |  |        | F-7 | 

(a)(2) Financial Schedules:

The following financial statement schedules of
Collins & Aikman Corporation for the year ended
December 31, 2002, December 31, 2001, and the fiscal
year ended December 31, 2000 are filed as part of this
Report and should be read in conjunction with the Consolidated
Financial Statements of Collins & Aikman Corporation.

|                                                                   |  |        |     | 
|------------------------------------------------------------------ |  | ------ | --- | 
|                                                                   |  | Page   |    
|                                                                   |  | Number |    
|                                                                   |  |        |    
|Schedule I  Condensed Financial
    Information of the Registrant |  |        | S-1 | 
|Schedule II  Valuation and
    Qualifying Accounts                |  |        | S-1 | 

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.

|        |     |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | --- |  | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |  |            
|Number  |     |  | Description
|        |     |  |            
|        | 2.1 |  |             | Agreement and Plan of Merger dated May 14,
    2001 by and among Collins & Aikman Corporation,
    Collins & Aikman Products Co., Becker Group, L.L.C.,
    CE Becker Inc., ME McInerney Inc., J Hoehnel Inc.
    and the individuals party thereto as sellers is hereby
    incorporated by reference to Exhibit 2.1 of
    Collins & Aikman Corporations Current Report on
    Form 8-K dated July 13, 2001.
|        | 2.2 |  |             | Agreement and Plan of Merger dated as of
    August 17, 2001 by and among Collins & Aikman
    Corporation, Collins & Aikman Products Co., JAII
    Acquisition Co., Elkin McCallum, Joan Fabrics Corporation and
    Joan Automotive Industries, Inc is hereby incorporated by
    reference to Exhibit 2.1 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    September 21, 2001.    

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|        |     |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | --- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | 2.3 |             |  | First Amendment to Agreement and Plan of Merger
    by and among Collins & Aikman Corporation,
    Collins & Aikman Products Co., JAII Acquisition Co.,
    Elkin McCallum, Joan Fabrics Corporation and Joan Automotive
    Industries, Inc dated as of September 21, 2001 is hereby
    incorporated by reference to Exhibit 2.2 of
    Collins & Aikman Corporations Current Report on
    Form 8-K dated September 21, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 2.4 |             |  | Purchase Agreement dated as of August 7,
    2001, as amended and restated as of November 30, 2001, by
    and among Textron Inc., Collins & Aikman Corporation
    and Collins & Aikman Products Co., including
    Exhibit 1 (Certificate of Designation of the 15%
    Series A Redeemable Preferred Stock, the 16% Series B
    Redeemable Preferred Stock and the 16% Series C Redeemable
    Preferred Stock) and Exhibit 7 (Asset Purchase Agreement
    dated as of August 7 by and between Textron Automotive
    Exteriors Inc. and JPS Automotive, Inc.), which is incorporated
    by reference to Collins and Aikman Corporation Current Report on
    Form 8-k dated December 20, 2001 and filed on
    January 4, 2002. The Table of Contents of the Purchase
    Agreement listed as Exhibit 2.4 contains a list briefly
    identifying the contents of all omitted schedules and exhibits.
    Collins & Aikman Corporation will supplementally
    furnish a copy of any omitted schedule or Exhibit to the
    Commission upon request.
|        | 2.5 |             |  | Asset Purchase Agreement dated as of
    August 7, 2001, as amended and restated as of
    November 30, 2001, by and between Textron Automotive
    Exteriors Inc. and JPS Automotive, Inc., which is incorporated
    herein by reference to Exhibit 2.2 of Collins &
    Aikman Corporations Current Report on Form 8-K dated
    December 20, 2001 and filed on January 4, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 2.6 |             |  | Asset Purchase Agreement dated as of
    August 17, 2001 by and among Collins & Aikman
    Products Co., Western Avenue Dyers, L.P., Elkin McCallum, Kerry
    McCallum, Penny Richards and Tyng Textiles LLC, which is
    incorporated by reference to Exhibit 2.3 to
    Collins & Aikman Corporations Current Report on
    Form 8-K filed on October 4, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 2.7 |             |  | First Amendment to Asset Purchase Agreement dated
    as of September 21, 2001, which is incorporated by
    reference to Exhibit 2.4 to Collins & Aikman
    Corporations Current Report on Form 8-K filed on
    October 4, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 3.1 |             |  | Restated Certificate of Incorporation of
    Collins & Aikman Corporation is hereby incorporated by
    reference to Exhibit 3.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended June 26, 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 3.2 |             |  | Certificate of Amendment to the Restated
    Certificate of Incorporation of Collins & Aikman
    Corporation, which is incorporated by reference to
    Exhibit 3.2 of Collins & Aikman Corporations
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 3.3 |             |  | Certificate of Amendment of Amended and Restated
    Certificate of Incorporation is hereby incorporated by reference
    to Exhibit 3.5 of Collins & Aikman
    Corporations Current Report on Form 8-K filed
    May 29, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 3.4 |             |  | By-laws of Collins & Aikman Corporation,
    as amended, are hereby incorporated by reference to
    Exhibit 3.2 of Collins & Aikman Corporations
    Report on Form 10-K for the fiscal year ended
    January 27, 1996.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 3.5 |             |  | Certificate of Elimination of Cumulative
    Exchangeable Redeemable Preferred Stock of Collins &
    Aikman Corporation is hereby incorporated by reference to
    Exhibit 3.3 of Collins & Aikman Corporations
    Report on Form 10-Q for the fiscal quarter ended
    October 28, 1995.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 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 June 1, 1996, between
    Collins & Aikman Products Co., Collins &
    Aikman Corporation and First Union National Bank of North
    Carolina, as Trustee, is hereby incorporated by reference to
    Exhibit 4.2 of Collins & Aikman Corporations
    Report on Form 10-Q for the fiscal quarter ended
    April 27, 1996.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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|        |      |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | ---- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 4.3  |             |  | First Supplemental Indenture dated as of
    June 1, 1996, between Collins & Aikman Products
    Co., Collins & Aikman Corporation and First Union
    National Bank of North Carolina, as Trustee, is hereby
    incorporated by reference to Exhibit 4.3 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the fiscal quarter ended April 27, 1996.                                                                                                                                                                                                                                                                                                               
|        | 4.4  |             |  | Waiver dated as of October 27, 1998 under
    the Credit Agreement dated as of May 28, 1998, among
    Collins & Aikman Products Co., Collins &
    Aikman Canada, Inc. and Collins & Aikman Plastics,
    Ltd., as Canadian Borrowers, Collins & Aikman
    Corporation, as Guarantor, the Lender Parties thereto, Bank of
    America, N.T.S.A., as Documentation Agent, The Chase Manhattan
    Bank, as Administrative Agent, and The Chase Manhattan Bank of
    Canada, as Canadian 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 September 26, 1998.
|        | 4.5  |             |  | Waiver dated as of December 22, 1998 under
    the Credit Agreement dated as of May 28, 1998, among
    Collins & Aikman Products Co., Collins &
    Aikman Canada, Inc. and Collins & Aikman Corporation,
    as Guarantor, the Lender Parties thereto, Bank of America,
    N.T.S.A., as Documentation Agent, The Chase Manhattan Bank, as
    Administrative Agent, and The Chase Manhattan Bank of Canada, as
    Canadian Administrative Agent is hereby incorporated by
    reference to Exhibit 4.6 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 26, 1998.                                                                      
|        | 4.6  |             |  | Amendment and Waiver dated as of March 8,
    1999, among Collins & Aikman Products Co.,
    Collins & Aikman Canada, Inc., Collins &
    Aikman Plastics Ltd., Collins & Aikman Corporation, as
    Guarantor, the Lender Parties thereto, Bank of America N.T.S.A.,
    as Documentation Agent, The Chase Manhattan Bank, as
    Administrative Agent, and The Chase Manhattan Bank of Canada, as
    Canadian Administrative Agent is hereby incorporated by
    reference to Exhibit 4.7 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 26, 1998.                                                                                    
|        | 4.7  |             |  | Tranche C Term Loan Supplement dated as of
    May 12, 1999 to the Credit Agreement dated as of
    May 28, 1998 among Collins & Aikman Products Co.,
    Collins & Aikman Canada, Inc., Collins &
    Aikman Plastics, Ltd., Collins & Aikman Corporation,
    the Financial Institutions parties thereto, Bank of America
    N.T.S.A., as Documentation Agent, The Chase Manhattan Bank, as
    Administrative Agent, and The Chase Manhattan Bank of Canada, as
    Canadian Administrative Agent is hereby incorporated by
    reference to Exhibit 4.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended June 26, 1999.              
|        | 4.8  |             |  | Indenture dated as of June 28, 1994, between
    JPS Automotive Products Corp., as Issuer, JPS Automotive L.P.,
    as Guarantor and Shawmut Bank Connecticut, N.A., as Trustee, is
    hereby incorporated by reference to Exhibit 4.2 of JPS
    Automotive Corp.s Registration Statement on Form S-1,
    Registration No. 33-75510.                                                                                                                                                                                                                                                                                                                                            
|        | 4.9  |             |  | First Supplemental Indenture, dated as of
    October 5, 1994, between JPS Automotive Products Corp. and
    JPS Automotive L.P., as Co-Obligors, and Shawmut Bank
    Connecticut, N.A., as Trustee is hereby incorporated by
    reference to Exhibit 4.48A of JPS Automotive L.P.s
    and JPS Automotive Products Corp.s Report on
    Form 10-Q for the fiscal quarter ended October 2, 1994.                                                                                                                                                                                                                                                                                
|        | 4.10 |             |  | Second Supplemental Indenture, dated as of
    February 8, 2001, by and among Collins & Aikman
    Products Co., as Issuer, Collins & Aikman Corporation,
    as Guarantor, and First Union National Bank, as Trustee, which
    is incorporated by reference to Exhibit 4.11 of
    Collins & Aikman Corporations Annual Report on
    Form 10-K for the fiscal year ended December 31, 2000.                                                                                                                                                                                                                                                                                     
|        | 4.11 |             |  | Form of Warrant is hereby incorporated by
    reference to Exhibit 4.1 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    July 13, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 4.12 |             |  | Certificate of Designation of Series A
    Redeemable Preferred Stock, Series B Redeemable Preferred
    Stock and Series C Redeemable Preferred Stock, which is
    incorporated herein by reference to Exhibit 4.1 of
    Collins & Aikman Corporations Current Report of
    Form 8-K dated December 20, 2001 and filed on
    January 4, 2002.                                                                                                                                                                                                                                                                                                                                 

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|        |      |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ---- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 4.13 |             |  | Indenture dated as of December 20, 2001 by
    and among Collins & Aikman Products Co., as Issuer, the
    Guarantors parties thereto, and BNY Midwest Trust Company, as
    Trustee, which is incorporated herein by reference to
    Exhibit 4.2 of Collins & Aikman Corporations
    Current Report on Form 8-K dated December 20, 2001 and
    filed on January 4, 2002.                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 4.14 |             |  | Receivables Transfer Agreement dated as of
    December 20, 2001 by and among Carcorp, Inc., as
    Transferor, Collins & Aikman Products Co., individually
    and as Collection Agent, the persons parties thereto, as CP
    Conduit Purchasers, Committed Purchasers and Funding Agents and
    JPMorgan Chase Bank, as Administrative Agent, which is
    incorporated herein by reference to Exhibit 4.3 of
    Collins & Aikman Corporations Current Report on
    Form 8-K dated December 20, 2001 and filed on
    January 4, 2002.                                                                                                                                                                                                                                   
|        | 4.15 |             |  | Amended and Restated Receivables Purchase
    Agreement dated as of December 20, 2001 among
    Collins & Aikman Products Co. and its wholly-owned
    direct and indirect subsidiaries named therein, as Sellers, and
    Carcorp, Inc., as Purchaser, and the other Sellers from time to
    time named therein, which is incorporated herein by reference to
    Exhibit 4.4 of Collins & Aikman Corporations
    Current Report on Form 8-K dated December 20, 2001 and
    filed on January 4, 2002.                                                                                                                                                                                                                                                                      
|        | 4.16 |             |  | Credit Agreement dated as of December 20,
    2001 among Collins & Aikman Products Co., as Borrower,
    Collins & Aikman Canada Inc., as a Canadian Borrower,
    Collins & Aikman Plastics, Ltd., as a Canadian
    Borrower, Collins & Aikman Corporation, the Lenders
    named therein, Deutsche Banc Alex. Brown Inc. and Merrill Lynch
    Capital Corporation, as Co-Documentation Agents, Credit Suisse
    First Boston Corporation, as Syndication Agent, JPMorgan Chase
    Bank, as Administrative Agent, and J.P.Morgan Bank Canada, as
    Canadian Administrative Agent, which is incorporated herein by
    reference to Exhibit 4.5 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 20, 2001 and filed on January 4, 2002.
|        | 4.17 |             |  | First Amendment dated as of December 13,
    2002, to the Credit Agreement dated as of December 20, 2001
    among Collins & Aikman Products Co., as Borrower,
    Collins & Aikman Canada Inc., as a Canadian Borrower,
    Collins & Aikman Plastics, Ltd., as a Canadian
    Borrower, Collins & Aikman Corporation, the Lenders
    named therein, Credit Suisse First Boston Corporation, as
    Syndication Agent, Deutsche Bank Securities Inc. (formerly known
    as Deutsche Banc Alex. Brown Inc.) and Merrill Lynch Capital
    Corporation, as Co-Documentation Agents, JPMorgan Chase Bank, as
    Administrative Agent, and J.P. Morgan Bank Canada, as Canadian
    Administrative Agent.*                                                                      
|        | 4.18 |             |  | Guarantee and Collateral Agreement dated as of
    December 20, 2001 by and among Collins & Aikman
    Corporation, Collins & Aikman Products Co. and certain
    of their subsidiaries and JPMorgan Chase Bank, as Collateral
    Agent, which is incorporated herein by reference to
    Exhibit 4.6 of Collins & Aikman Corporations
    Current Report on Form 8-K dated December 20, 2001 and
    filed on January 4, 2002.                                                                                                                                                                                                                                                                                                                                               
|        | 4.19 |             |  | Third Supplemental Indenture, dated as of
    December 20, 2001, among Collins & Aikman Products
    Co., Collins & Aikman Corporation, the Subsidiary
    Guarantors listed on the signature page thereto, and First Union
    National Bank (as successor in interest to First Union National
    Bank of North Carolina), which is incorporated herein by
    reference to Exhibit 4.7 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 20, 2001 and filed on January 4, 2002.                                                                                                                                                                                                                                                            
|        | 10.1 |             |  | Stockholders Agreement, dated February 23,
    2001, by and among Collins & Aikman Corporation,
    Heartland Industrial Partners, L.P. and other investor
    stockholders listed on Schedule 1 thereto, Blackstone
    Capital Company II, L.L.C., Blackstone Family Investment
    Partnership I L.P., Blackstone Advisory Directors
    Partnership L.P., Blackstone Capital Partners L.P., and
    Wasserstein/ C&A Holdings, L.L.C., incorporated by reference
    to Annex E to Exhibit 10.1 to Collins & Aikman
    Corporations Current Report on Form 8-K dated
    January 12, 2001.                                                                                                                                                                                
|        | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                    
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.3  |             |  | 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  |             |  | Second Amendment, dated as of October 3,
    1996, to the Employment Agreement, dated as of July 22,
    1992, as amended, between Collins & Aikman Products Co.
    and an executive officer is hereby incorporated by reference to
    Exhibit 10.26 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended October 26, 1996.
|        | 10.6  |             |  | Third Amendment dated as of August 1, 1997,
    to the Employment Agreement dated as of July 22, 1992, as
    amended, between the Corporation and an executive officer is
    hereby incorporated by reference to Exhibit 10.35 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the fiscal quarter ended September 27,
    1997.                
|        | 10.7  |             |  | Letter Agreement dated March 23, 1999 with
    an executive officer is hereby incorporated by reference to
    Exhibit 10.7 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 26, 1998.                                                                                                                             
|        | 10.8  |             |  | Amended and Restated Employment Agreement dated
    as of January 20, 1999 between Collins & Aikman
    Products Co. and an executive officer is hereby incorporated by
    reference to Collins & Aikman Corporations Report
    on Form 10-K for the fiscal year ended December 26,
    1998.                                                                   
|        | 10.9  |             |  | Employment Agreement dated as of January 20,
    1999 between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.9 of Collins & Aikman
    Corporations Form 10-K for the fiscal year ended
    December 26, 1998.                                                                                  
|        | 10.10 |             |  | Employment Agreement dated as of April 22,
    1999 between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.10 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended March 27, 1999.                                                                          
|        | 10.11 |             |  | Employment Agreement, dated as of March 29,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended April 1, 2000.                                                                         
|        | 10.12 |             |  | Employment Agreement, dated as of April 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.3 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 1, 2000.                                                                           
|        | 10.13 |             |  | Employment Agreement, dated as of August 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.6 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                                                    
|        | 10.14 |             |  | Employment Agreement, dated as of August 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.8 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                                                    
|        | 10.15 |             |  | Letter agreement, dated as of May 12, 1999,
    with an executive officer is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended June 26, 1999.                                                                                                                        
|        | 10.16 |             |  | Letter agreement, dated as of April 7, 2000,
    between Collins & Aikman Corporation and an executive
    officer is hereby incorporated by reference to
    Exhibit 10.12 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                                                         
|        | 10.17 |             |  | Letter agreement, dated as of July 13, 2000,
    between Collins & Aikman Corporation and an executive
    officer is hereby incorporated by reference to
    Exhibit 10.11 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                                                         

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|        |       |             |  |                                                                                                                                                                                                                                                                                                
|------- | ----- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.18 |             |  | Service contract between Collins &
    Aikman Products GmbH and an executive officer is hereby
    incorporated by reference to Exhibit 10.5 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the fiscal quarter ended September 30,
    2000.                                
|        | 10.19 |             |  | Settlement Agreement dated as of April 27,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.10 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.
|        | 10.20 |             |  | Collins & Aikman Corporation 1998
    Executive Incentive Compensation Plan is hereby incorporated by
    reference to Exhibit 10.10 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 26, 1998.                                                
|        | 10.21 |             |  | Collins & Aikman Products Co. 2000
    Executive Incentive Compensation Plan is hereby incorporated by
    reference to Exhibit 10.5 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 1, 2000.                                                  
|        | 10.22 |             |  | 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.     
|        | 10.23 |             |  | Amendment to Collins & Aikman
    Corporation Supplemental Retirement Income Plan is hereby
    incorporated by reference to Exhibit 10.12 of the
    Collins & Aikman Corporations Report on
    Form 10-K for the fiscal year ended December 26, 1998.                                      
|        | 10.24 |             |  | 1993 Employee Stock Option Plan, as amended and
    restated, is hereby incorporated by reference to
    Exhibit 10.13 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended April 29, 1995.                                                              
|        | 10.25 |             |  | 1994 Employee Stock Option Plan, as amended
    through February 7, 1997, is hereby incorporated by
    reference to Exhibit 10.12 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended March 29, 1997.                                                  
|        | 10.26 |             |  | 2000 Employee Stock Option Plan is hereby
    incorporated by reference to Exhibit 10.6 of Collins &
    Aikman Corporations Report on Form 10-Q for the
    fiscal quarter ended July 1, 2000.                                                                                               
|        | 10.27 |             |  | 1994 Directors Stock Option Plan as amended and
    restated is hereby incorporated by reference to
    Exhibit 10.15 to Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 26, 1998.                                                                      
|        | 10.28 |             |  | Excess Benefit Plan of Collins & Aikman
    Corporation is hereby incorporated by reference to
    Exhibit 10.25 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended January 28, 1995.                                                                     
|        | 10.29 |             |  | 1994 Employee Stock Option Plan, as amended and
    restated through June 3, 1999 is hereby incorporated by
    reference to Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended June 26, 1999.                                            
|        | 10.30 |             |  | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.17 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 27, 1997.   
|        | 10.31 |             |  | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.18 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 27, 1997.   
|        | 10.32 |             |  | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.19 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 27, 1997.   
|        | 10.33 |             |  | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.20 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 27, 1997.   
|        | 10.34 |             |  | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.22 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended March 28, 1998.   

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|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                              
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.35 |             |  | Change in Control Agreement, dated August 9,
    1999, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.25 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                 
|        | 10.36 |             |  | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.26 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                 
|        | 10.37 |             |  | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.27 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                 
|        | 10.38 |             |  | Change in Control Agreement, dated July 26,
    1999, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.28 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                  
|        | 10.39 |             |  | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.29 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                 
|        | 10.40 |             |  | Change in Control Agreement, dated as of April,
    2000, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 1, 2000.                                                                 
|        | 10.41 |             |  | Change in Control Agreement, dated as of
    April 1, 2000, between Collins & Aikman Products
    Co. and an executive officer is hereby incorporated by reference
    to Exhibit 10.4 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 1, 2000.                                                              
|        | 10.42 |             |  | Change in Control Agreement, dated as of
    August 1, 2000, between Collins & Aikman
    Corporation and an executive officer is hereby incorporated by
    reference to Exhibit 10.7 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                                        
|        | 10.43 |             |  | Change in Control Agreement, dated as of
    August 1, 2000, between Collins & Aikman
    Corporation and an executive officer is hereby incorporated by
    reference to Exhibit 10.9 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                                        
|        | 10.44 |             |  | 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.                                
|        | 10.45 |             |  | 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.               
|        | 10.46 |             |  | Equity Purchase Agreement by and among JPSGP,
    Inc., Foamex-JPS Automotive L.P. and Collins & Aikman
    Products Co. dated August 28, 1996 is hereby incorporated
    by reference to Exhibit 2.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 27, 1996.                                              
|        | 10.47 |             |  | Amendment No. 1 to Equity Purchase Agreement
    by and among JPSGP, Inc., Foamex-JPS Automotive L.P., Foamex
    International Inc. and Collins & Aikman Products Co.
    dated as of December 11, 1996 is hereby incorporated by
    reference to Exhibit 2.2 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 10, 1996.
|        | 10.48 |             |  | Equity Purchase Agreement by and among Seiren
    U.S.A. Corporation, Seiren Automotive Textile Corporation,
    Seiren Co., Ltd. and Collins & Aikman Products Co.
    dated December 11, 1996, is hereby incorporated by
    reference to Exhibit 2.3 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 10, 1996.        
|        | 10.49 |             |  | Acquisition Agreement between Perstorp A.B. and
    Collins & Aikman Products Co. dated December 11,
    1996 is hereby incorporated by reference to Exhibit 2.4 of
    Collins & Aikman Corporations Current Report on
    Form 8-K dated December 10, 1996.                                                                                               

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|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ----- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.50 |             |  | Agreement among Perstorp A.B., Perstorp GmbH,
    Perstorp Biotec A.B. and Collins & Aikman Products Co.
    dated December 11, 1996 is hereby incorporated by reference
    to Exhibit 2.5 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 10, 1996.                                                                                                                                                                                                                                                                                                                  
|        | 10.51 |             |  | Settlement and Amendment Agreement dated as of
    December 16, 1997 by and among Collins & Aikman
    Products Co., Perstorp A.B., Perstorp GmbH, Collins &
    Aikman Holding A.B., Collins & Aikman Automotive
    Systems GmbH, Collins & Aikman Automotive Systems N.V.,
    Collins & Aikman Automotive Systems A.B. and Perstorp
    Components GmbH and related Letter Amendment Agreement is hereby
    incorporated by reference to Exhibit 10.38 of
    Collins & Aikman Corporations Report or
    Form 10-Q for the fiscal quarter ended September 26,
    1998.                             
|        | 10.52 |             |  | Acquisition Agreement dated as of
    December 9, 1996 among Collins & Aikman Products
    Co., Collins & Aikman Floor Coverings Group, Inc.,
    Collins & Aikman Floor Coverings, Inc., CAF Holdings,
    Inc. and CAF Acquisition Corp. is hereby incorporated by
    reference to Exhibit 2.7 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 10, 1996.                                                                                                                                                                                                            
|        | 10.53 |             |  | Mastercraft Group Acquisition Agreement dated as
    of April 25, 1997 among Collins & Aikman Products
    Co., Joan Fabrics Corporation and MC Group Acquisition Company
    L.L.C., is hereby incorporated by reference to Exhibit 2.1
    of Collins & Aikman Corporations Report on
    Form 10-Q for the fiscal quarter ended March 29, 1997.                                                                                                                                                                                                                                                        
|        | 10.54 |             |  | Asset Purchase Agreement dated as of
    June 30, 1997 by and between JPS Automotive L.P. and Safety
    Components International, Inc. is hereby incorporated by
    reference to Exhibit 2.1 of JPS Automotive L.P.s and
    JPS Automotive Products Corp.s Current Report on
    Form 8-K dated July 24, 1997.                                                                                                                                                                                                                                                                                        
|        | 10.55 |             |  | Closing Agreement dated July 24, 1997
    between JPS Automotive L.P., Safety Components International,
    Inc. and Safety Components Fabric Technologies, Inc. is hereby
    incorporated by reference to Exhibit 2.2 of JPS Automotive
    L.P.s and JPS Automotive Products Corp.s Current
    Report on Form 8-K dated July 24, 1997.                                                                                                                                                                                                                                                               
|        | 10.56 |             |  | Amended and Restated Acquisition Agreement dated
    as of November 4, 1997 and amended and restated as of
    March 9, 1998, among Collins & Aikman Products
    Co., Imperial Wallcoverings Inc. and BDPI Holdings Corporation
    is hereby incorporated by reference to Exhibit 2.4 of
    Collins & Aikman Corporations Report on
    Form 10-K for the fiscal year ended December 27, 1997.                                                                                                                                                                                                         
|        | 10.57 |             |  | Share Purchase Agreement, dated as of
    January 12, 2001, between Collins & Aikman
    Corporation and Heartland Industrial Partners, L.P., is hereby
    incorporated by reference to Exhibit 10.1 of
    Collins & Aikman Corporations Report on
    Form 8-K dated January 12, 2001., incorporated by
    reference to Exhibit 10.1 to Collins & Aikman
    Corporations Current Report on Form 8-K dated
    January 12, 2001.                                                                                                                                                                     
|        | 10.58 |             |  | Registration Rights Agreement, dated
    February 23, 2001, by and among Collins & Aikman
    Corporation, Heartland Industrial Partners, L.P. and the other
    investor stockholders listed on Schedule 1 thereto,
    Blackstone Capital Company II, L.L.C., Blackstone Family
    Investment Partnership I L.P., Blackstone Advisory
    Directors Partnership L.P., Blackstone Capital Partners, L.P.
    and Wasserstein/ C&A Holdings, L.L.C., incorporated by
    reference to Annex D to Exhibit 10.1 to
    Collins & Aikman Corporations Current Report on
    Form 8-K dated January 12, 2001.
|        | 10.59 |             |  | Services Agreement, dated as of February 23,
    2001, by and among Collins & Aikman Corporation,
    Collins & Aikman Products Co. and Heartland Industrial
    Partners, L.P is hereby incorporated by reference to
    Exhibit 10.59 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                
|        | 10.60 |             |  | Profit Participation Interest Agreement, dated as
    of February 23, 2001, by and among Heartland Industrial
    Partners, L.P. and the other investor stockholders listed on
    Schedule 1 thereto and each of Collins & Aikman
    Corporation, Blackstone Capital Company II, L.L.C. and
    Wasserstein/ C&A Holdings, L.L.C., incorporated by reference
    to Annex B to Exhibit 10.1 to Collins & Aikman
    Corporations Current Report on Form 8-K dated
    January 12, 2001.                                                                                                                 

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|        |       |             |  |                                                                                                                                                                                                                                                                                                   
|------- | ----- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.61 |             |  | Employment Agreement dated October 1, 1999
    between Collins & Aikman Products Co. and an executive
    officer is hereby incorporated by reference to
    Exhibit 10.30 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.             
|        | 10.62 |             |  | Severance Benefit Agreement dated July 26,
    1999 between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.31 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.         
|        | 10.63 |             |  | Severance Benefit Agreement dated August 9,
    1999 between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.32 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.        
|        | 10.64 |             |  | Letter Agreement dated December 17, 1999
    between Collins & Aikman Corporation and an executive
    officer is hereby incorporated by reference to
    Exhibit 10.33 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                
|        | 10.65 |             |  | Employment Agreement dated December 1, 2000
    between Collins & Aikman Products Co. and an executive
    officer, which is incorporated by reference to
    Exhibit 10.75 of Collins & Aikman
    Corporations Annual Report on Form 10-K for the
    fiscal year ended December 31, 2000.     
|        | 10.66 |             |  | Separation Agreement dated as of March 12,
    2001 between Collins & Aikman Products Co. and an
    executive officer, which is incorporated by reference to
    Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended March 31, 2001.                           
|        | 10.67 |             |  | Employment Agreement dated as of March 29,
    2000 between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended April 1, 2000.                 
|        | 10.68 |             |  | Change in Control Agreement dated as of April
    2000, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended July 1, 2000.               
|        | 10.69 |             |  | Employment Agreement dated as of April 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.3 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended July 1, 2000.                  
|        | 10.70 |             |  | Change in Control Agreement dated as of
    April 1, 2000, between Collins & Aikman Products
    Co. and an executive officer is hereby incorporated by reference
    to Exhibit 10.4 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended July 1, 2000.           
|        | 10.71 |             |  | Service Contract between Collins &
    Aikman Products GmbH and an executive officer, which is
    incorporated by reference to Exhibit 10.5 of
    Collins & Aikman Corporations Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2001.                                         
|        | 10.72 |             |  | Employment Agreement dated as of August 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer, which is incorporated by reference to
    Exhibit 10.6 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.      
|        | 10.73 |             |  | Change in Control Agreement dated as of
    August 1, 2000, between Collins & Aikman
    Corporation and an executive officer, which is incorporated by
    reference to Exhibit 10.7 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.
|        | 10.74 |             |  | Employment Agreement dated as of August 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer, which is incorporated by reference to
    Exhibit 10.8 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.      
|        | 10.75 |             |  | Change in Control Agreement dated as of
    August 1, 2000, between Collins & Aikman
    Corporation and an executive officer, which is incorporated by
    reference to Exhibit 10.9 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.
|        | 10.76 |             |  | Settlement Agreement dated as of April 27,
    2000, between Collins & Aikman Products Co. and an
    executive officer, which is incorporated by reference to
    Exhibit 10.10 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.     

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|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- | ----- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.77 |             |  | Letter Agreement dated as of July 13, 2000,
    between Collins & Aikman Corporation and an executive
    officer, which is incorporated by reference to
    Exhibit 10.11 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                                                                                                                                                                                                                                 
|        | 10.78 |             |  | Letter Agreement dated as of April 7, 2000,
    between Collins & Aikman Corporation and an executive
    officer, which is incorporated by reference to
    Exhibit 10.12 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                                                                                                                                                                                                                                 
|        | 10.79 |             |  | Collins & Aikman Products Co. 2000
    Executive Incentive Compensation Plan is hereby incorporated by
    reference to Exhibit 10.5 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended July 1, 2000.                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.80 |             |  | Agreement of Sale and Purchase, dated as of
    June 22, 2001, by and among Collins & Aikman
    Products Co. and New King, L.L.C is hereby incorporated by
    reference to Exhibit 10.81 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                                                                                          
|        | 10.81 |             |  | Lease Agreement, dated as of June 29, 2001,
    between New King, L.L.C., as landlord, and Collins &
    Aikman Products Co., as tenant is hereby incorporated by
    reference to Exhibit 10.82 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                                                                                    
|        | 10.82 |             |  | Agreement of Sale and Purchase, dated as of
    June 22, 2001, by and among Collins & Aikman
    Products Co. and Anchor Court, L.L.C is hereby incorporated by
    reference to Exhibit 10.83 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                                                                                      
|        | 10.83 |             |  | Lease Agreement, dated as of June 29, 2001,
    between Anchor Court, L.L.C., as landlord and Collins &
    Aikman Products Co., as tenant is hereby incorporated by
    reference to Exhibit 10.84 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                                                                                 
|        | 10.84 |             |  | Stockholders Agreement dated July 3, 2001,
    by and among Collins & Aikman Corporation, Heartland
    Industrial Partners, L.P. and the other Heartland Entities named
    therein, the Becker Stockholders party thereto and the Joan
    Stockholders party thereto is hereby incorporated by reference
    to Exhibit 10.85 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                    
|        | 10.85 |             |  | Registration Rights Agreement, dated July 3,
    2001, by and among Collins & Aikman Corporation,
    Charles E. Becker, Michael E. McInerney and Jens
    Höhnel and, together with the Joan Investors (as defined
    therein) is hereby incorporated by reference to
    Exhibit 10.86 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                           
|        | 10.86 |             |  | First Amendment to Services Agreement, dated as
    of August 7, 2001, among Collins & Aikman
    Corporation, Collins & Aikman Products Co. and
    Heartland Industrial Partners, L.P is hereby incorporated by
    reference to Exhibit 10.87 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                                    
|        | 10.87 |             |  | Equipment Lease, dated as of December 18,
    2001, among Textron Automotive Exteriors Inc. and Textron
    Automotive Interiors Inc., collectively as lessee, and IAC TAX
    V, LLC, as lessor is hereby incorporated by reference to
    Exhibit 10.88 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                           
|        | 10.88 |             |  | Registration Rights Agreement, dated
    December 20, 2001, by and among Collins & Aikman
    Products Co., Collins & Aikman Corporation, and each of
    the subsidiaries listed on the signature pages thereof, and J.P.
    Morgan Securities Inc., Credit Suisse First Boston Corporation,
    Deutsche Banc Alex. Brown Inc. and Merrill Lynch, Pierce,
    Fenner & Smith Incorporated and the other several
    initial purchasers parties to the Purchase Agreement is hereby
    incorporated by reference to Exhibit 10.89 of
    Collins & Aikman Corporations Report on
    Form 10-K for the year ended December 31, 2001.
|        | 10.89 |             |  | Registration Rights Agreement dated as of
    December 20, 2001 by and among Becker Ventures, LLC,
    Dresdner Kleinwort Capital Partners 2001 LP, Masco Capital
    Corporation, ML IBK Positions, Inc. and Collins &
    Aikman Corporation is hereby incorporated by reference to
    Exhibit 10.90 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                             

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|        |        |             |  |                                                                                                                                                                                                                                                                                                                                                             
|------- | ------ | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 10.90  |             |  | Registration Rights Agreement, dated
    December 20, 2001, by and between Collins & Aikman
    Corporation, Textron Inc., and Textron Holdco Inc is hereby
    incorporated by reference to Exhibit 10.91 of
    Collins & Aikman Corporations Report on
    Form 10-K for the year ended December 31, 2001.                                              
|        | 10.91  |             |  | Preferred Stock Registration and Other Rights
    Agreement, dated as of December 20, 2001, by and among
    Collins & Aikman Products Co. and Textron Inc is hereby
    incorporated by reference to Exhibit 10.92 of
    Collins & Aikman Corporations Report on
    Form 10-K for the year ended December 31, 2001.                                     
|        | 10.92  |             |  | Intellimold Technology License and Support
    Agreement, dated as of December 20, 2001, by and between
    Textron, Inc. and Collins & Aikman Corporation and
    Collins & Aikman Products Co is hereby incorporated by
    reference to Exhibit 10.93 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.
|        | 10.93  |             |  | Technology License Agreement (Retained IP),
    dated as of December 20, 2001, by and between Textron, Inc.
    and Collins & Aikman Corporation and Collins &
    Aikman Products Co is hereby incorporated by reference to
    Exhibit 10.94 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.          
|        | 10.94  |             |  | Technology License Agreement (Licensed-Back IP),
    dated as of December 20, 2001, by and between Textron, Inc.
    and Collins & Aikman Corporation and Collins &
    Aikman Products Co is hereby incorporated by reference to
    Exhibit 10.95 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.     
|        | 10.95  |             |  | Severance Agreement between Collins &
    Aikman Automotive Holding GmbH and an executive officer of the
    Company dated as of March 6, 2002 is hereby incorporated by
    reference to Exhibit 10.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended March 31, 2002.                                                  
|        | 10.96  |             |  | Separation Agreement and General Release between
    Products and an executive officer of the Company dated as of
    March 5, 2002 is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended March 31, 2002.                                                             
|        | 10.97  |             |  | Employment Agreement between Products and an
    officer of the Company dated as of November 1, 2001 is
    hereby incorporated by reference to Exhibit 10.3 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                                                            
|        | 10.98  |             |  | Employment Agreement between Products and an
    officer of the Company dated as of November 1, 2001 is
    hereby incorporated by reference to Exhibit 10.4 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                                                            
|        | 10.99  |             |  | Employment Agreement between Products and an
    officer of the Company dated as of December 20, 2001 is
    hereby incorporated by reference to Exhibit 10.5 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                                                           
|        | 10.100 |             |  | Employment Agreement between Products and an
    officer of the Company dated as of December 20, 2001 is
    hereby incorporated by reference to Exhibit 10.6 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                                                           
|        | 10.101 |             |  | Employment Agreement between Products and an
    officer of the Company dated as of December 20, 2001 is
    hereby incorporated by reference to Exhibit 10.7 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                                                           
|        | 10.102 |             |  | Separation and Consultancy Agreement dated July
    31, 2002 is hereby incorporated by reference to
    Exhibit 10.1 to Collins & Aikman
    Corporations Current report on Form 8-K filed
    August 2, 2002.                                                                                                                                             
|        | 10.103 |             |  | Severance Benefit Agreement between Collins and
    Aikman Corporation and an officer of the Company dated
    April 5, 2002 is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended June 30, 2002.                                                                     
|        | 10.104 |             |  | Employment and Consulting Agreement between
    Collins and Aikman Corporation and an Employee dated July 2002
    is hereby incorporated by reference to Exhibit 10.1 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended September 30, 2002.                                                                              

54



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##### Table of Contents



|        |        |  |             |                                                                                                                                                                                                                                                                                                                         
|------- | ------ |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |  |            
|Number  |        |  | Description
|        |        |  |            
|        | 10.105 |  |             | Separation Agreement between Collins and Aikman
    Corporation and an officer of the Company dated September 2002
    is hereby incorporated by reference to Exhibit 10.2 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended September 30, 2002.                                      
|        | 10.106 |  |             | Separation Agreement between Collins and Aikman
    Corporation and an officer of the Company dated October 2002 is
    hereby incorporated by reference to Exhibit 10.3 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended September 30, 2002.                                        
|        | 11     |  |             | Computation of Earnings Per Share.*                                                                                                                                                                                                                                                                                     
|        | 12.1   |  |             | Computation of Ratio of Earnings to Fixed
    Charges.*                                                                                                                                                                                                                                                                 
|        | 21     |  |             | Subsidiaries of the Registrant.*                                                                                                                                                                                                                                                                                        
|        | 23.1   |  |             | Consent of PricewaterhouseCoopers LLP.*                                                                                                                                                                                                                                                                                 
|        | 24.1   |  |             | Powers of Attorney.*                                                                                                                                                                                                                                                                                                    
|        | 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.
|        | 99.1   |  |             | Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18
    U.S.C. 1350(a) and (b)).*                                                                                                                                                                                         



---



|  |                                   
|- | ----------------------------------
|* | Indicates document filed herewith.

(b) Reports on Form 8-K

The Company filed the following Reports on
Form 8-K covering the following items:

|                  |  |                                
|----------------- |  | -------------------------------
|November 21, 2002 |  | Item 5 (Other Events)          
|February 21, 2002 |  | Item 9 Regulation FD Disclosure

55



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##### Table of Contents








SIGNATURES


Pursuant to the requirements of Section 13
or 15(d) of the Securities and 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
24th day of March 2003.



| |                             
| | ----------------------------
| | COLLINS & AIKMAN CORPORATION



| |     |                     
| | --- | --------------------
| | BY: | /s/ JERRY L. MOSINGO

| |                                        
| | ---------------------------------------
| |                                        
| | Jerry L. Mosingo                       
| | President & Chief
    Executive Officer

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/ JERRY L. MOSINGOJerry L.
    Mosingo                  |  | President & Chief Executive Officer                                         |  | March 24, 2003
|*J. Michael
    Stepp                                     |  | Vice Chairman and Chief Financial Officer
    (Principal Financial Officer) |  | March 24, 2003
|*David A.
    Stockman                                    |  | Chairman of the Board of Directors                                          |  | March 24, 2003
|*Charles E.
    Becker                                    |  | Director                                                                    |  | March 24, 2003
|*Robert C.
    Clark                                      |  | Director                                                                    |  | March 24, 2003
|*Marshall A.
    Cohen                                    |  | Director                                                                    |  | March 24, 2003
|*David C. Dauch                                           |  | Director                                                                    |  | March 24, 2003
|*Cynthia Hess                                             |  | Director                                                                    |  | March 24, 2003
|*Timothy D.
    Leuliette                                 |  | Director                                                                    |  | March 24, 2003
|*Elkin McCallum                                           |  | Director                                                                    |  | March 24, 2003
|*W. Gerald
    McConnell                                  |  | Director                                                                    |  | March 24, 2003
|*Warren B.
    Rudman                                     |  | Director                                                                    |  | March 24, 2003
|*Daniel P.
    Tredwell                                   |  | Director                                                                    |  | March 24, 2003
|*Samuel Valenti                                           |  | Director                                                                    |  | March 24, 2003
|*By: /s/ JERRY L. MOSINGOJerry L. MosingoAttorney-in-Fact |  |                                                                             |  |               

56



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##### Table of Contents








CERTIFICATION PURSUANT TO
SECTION 302


OF THE SARBANES-OXLEY ACT OF
2002




| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | I, Jerry L. Mosingo, certify that:                                                                                                                                                                                                                                                                                                             
|
| | 1. I have reviewed this annual report on
    Form 10-K of Collins & Aikman Corporation;                                                                                                                                                                                                                                                        
|
| | 2. Based on my knowledge, this annual report
    does not contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements made,
    in light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. Based on my knowledge, the financial
    statements, and other financial information included in this
    annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this annual
    report;                   
|
| | 4. The registrants other certifying
    officer and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. Designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b. Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c. Presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. The registrants other certifying
    officer and I have disclosed, based on our most recent
    evaluation, to the registrants auditors and the audit
    committee of registrants board of directors:



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. All significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b. Any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. The registrants other certifying
    officer and I have indicated in this annual report whether or
    not there were significant changes in internal controls or in
    other factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant and material
    weaknesses.



|                                        | 
|--------------------------------------- | 
|Date: March 24, 2003                    | 
|                                       
|/s/ JERRY L. MOSINGO                    | 
|                                        | 
|Jerry L. Mosingo                        | 
|President & Chief
    Executive Officer | 

57



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##### Table of Contents



CERTIFICATION PURSUANT TO
SECTION 302

OF THE SARBANES-OXLEY ACT OF
2002


I, J. Michael Stepp, certify that:



| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. I have reviewed this annual report on
    Form 10-K of Collins & Aikman Corporation;                                                                                                                                                                                                                                                        
|
| | 2. Based on my knowledge, this annual report
    does not contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements made,
    in light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. Based on my knowledge, the financial
    statements, and other financial information included in this
    annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this annual
    report;                   
|
| | 4. The registrants other certifying
    officer and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. Designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b. Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c. Presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. The registrants other certifying
    officer and I have disclosed, based on our most recent
    evaluation, to the registrants auditors and the audit
    committee of registrants board of directors:



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. All significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b. Any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. The registrants other certifying
    officer and I have indicated in this annual report whether or
    not there were significant changes in internal controls or in
    other factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant and material
    weaknesses.

Date: March 24, 2003



|                                              | 
|--------------------------------------------- | 
|/s/ J. MICHAEL STEPP                          | 
|                                              | 
|J. Michael Stepp                              | 
|Vice Chairman and Chief
    Financial Officer | 
|(Principal Financial
    Officer)             | 

58



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##### Table of Contents








REPORT OF INDEPENDENT
ACCOUNTANTS


To the Board of Directors and Shareholders

of Collins & Aikman Corporation:


In our opinion, the 2002 and 2001 consolidated
financial statements listed in the index appearing under
Item 15(a)(1) present fairly, in all material respects, the
financial position of Collins & Aikman Corporation and its
subsidiaries at December 31, 2002 and 2001, and the results
of their operations and their cash flows for the years then
ended in conformity with accounting principles generally
accepted in the United States of America. In addition, in our
opinion, the financial statement schedules listed in the index
appearing under Item 15(a)(2) present fairly, in all
material respects, the 2002 and 2001 information set forth
therein when read in conjunction with the related consolidated
financial statements. These financial statements and financial
statement schedules are the responsibility of the Companys
management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on
our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion. The financial statements of Collins &
Aikman Corporation as of December 31, 2000, and for the
year then ended, were audited by other independent accountants
who have ceased operations. Those independent accountants
expressed an unqualified opinion on those financial statements
in their report dated February 14, 2001 (except with
respect to the matter discussed in Note 24 (which in the current
report on Form 10-K is Note 23), as to which the date
is March 28, 2002).

As discussed in Note 2 to the consolidated
financial statements, effective January 1, 2002, the
Company changed its method of accounting for goodwill in
accordance with the adoption of Statement of Financial
Accounting Standards No. 142, Goodwill and Other
Intangible Assets.



| |                               
| | ------------------------------
| | /s/ PRICEWATERHOUSECOOPERS LLP

Detroit, Michigan

February 18, 2003


F-1



---



##### Table of Contents



The following report is a copy of a report
previously issued by Arthur Andersen LLP, which has ceased
operations, and has not been reissued by Arthur Andersen LLP.
Note 24 referenced below is Note 23 and
Item 14(a)(2) referenced below is Item 15(a)(2) in the
current report on Form 10-K.

REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To Collins & Aikman Corporation:

We have audited the accompanying consolidated
balance sheet of Collins & Aikman Corporation (a Delaware
Corporation) and subsidiaries as of December 31, 2000 and
the related consolidated statements of operations, cash flows,
and common stockholders deficit for each of the two fiscal
years in the period ended December 31, 2000, as listed in
the index appearing under Item 15(a)(1). These financial
statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial
position of Collins & Aikman Corporation and subsidiaries as
of December 31, 2000 and the results of their operations
and their cash flows for each of the two fiscal years in the
period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.

Our audit was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The
schedule listed in the index appearing under item 14(a)(2) is
presented for purposes of complying with the Securities and
Exchange Commissions rules and is not part of the basic
financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



| |                        
| | -----------------------
| | /s/ ARTHUR ANDERSEN LLP

Charlotte, North Carolina,

February 14, 2001 (except with respect to
the matter discussed in Note 24,


as to which the date is March 28, 2002)


F-2



---



##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES






CONSOLIDATED STATEMENTS OF
OPERATIONS


(in millions, except per share
data)


|                                                                                                                            |                                                           |              |         |       |              |   |         |              |   |   |         |       |  
|--------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------ | ------- | ----- | ------------ | - | ------- | ------------ | - | - | ------- | ----- | -
|                                                                                                                            |                                                           |             
|                                                                                                                            |                                                           | Year Ended   |        
|                                                                                                                            |                                                           |              |        
|                                                                                                                            |                                                           | December 31, |         |       | December 31, |   |         | December 31, |  
|                                                                                                                            |                                                           | 2002         |         |       | 2001         |   |         | 2000         |  
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Net sales                                                                                                                   |                                                           | $            | 3,885.8 |       |              | $ | 1,823.3 |              |   | $ | 1,901.8 |      
|Cost of goods sold                                                                                                          |                                                           |              | 3,367.7 |       |              |   | 1,604.5 |              |   |   | 1,635.2 |      
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Gross profit                                                                                                                |                                                           |              | 518.1   |       |              |   | 218.8   |              |   |   | 266.6   |      
|Selling, general and administrative expenses                                                                                |                                                           |              | 293.5   |       |              |   | 164.4   |              |   |   | 158.5   |      
|Restructuring charge and impairment of long-lived
    assets                                                                |                                                           |              | 56.9    |       |              |   | 18.8    |              |   |   |        |      
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Operating income                                                                                                            |                                                           |              | 167.7   |       |              |   | 35.6    |              |   |   | 108.1   |      
|Interest expense, net of interest income of $1.4,
    $2.0 and $3.4                                                         |                                                           |              | 148.9   |       |              |   | 84.3    |              |   |   | 96.6    |      
|Loss on sale of receivables                                                                                                 |                                                           |              | 4.2     |       |              |   | 10.8    |              |   |   | 9.2     |      
|Subsidiary preferred stock dividends                                                                                        |                                                           |              | 30.8    |       |              |   | 1.5     |              |   |   |        |      
|Subsidiary preferred stock accretion                                                                                        |                                                           |              | 7.6     |       |              |   | 0.9     |              |   |   |        |      
|Other expense, net                                                                                                          |                                                           |              | 10.0    |       |              |   | 6.4     |              |   |   | 1.5     |      
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Income (loss) from continuing operations
    before income taxes                                                            |                                                           |              | (33.8   | )     |              |   | (68.3   | )            |   |   | 0.8     |      
|Income tax (benefit) expense                                                                                                |                                                           |              | 17.5    |       |              |   | (18.6   | )            |   |   | 2.2     |      
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Loss from continuing operations before
    extraordinary loss and cumulative effect of a change in
    accounting principle |                                                           |              | (51.3   | )     |              |   | (49.7   | )            |   |   | (1.4    | )    
|Income from discontinued operations, net of
    income taxes of $6.3, $5.7 and $4.4                                         |                                                           |              | 9.5     |       |              |   | 8.8     |              |   |   | 6.6     |      
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle                         |                                                           |              | (41.8   | )     |              |   | (40.9   | )            |   |   | 5.2     |      
|Extraordinary loss on retirement of debt, net of
    income taxes of $2.7 and $0.5                                          |                                                           |              |        |       |              |   | (5.3    | )            |   |   | (0.7    | )    
|Cumulative effect of a change in accounting
    principle, net of income taxes of $0                                        |                                                           |              | (11.7   | )     |              |   |        |              |   |   |        |      
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|                                                                                                                            | Net income (loss)                                         |              | $       | (53.5 | )            |   | $       | (46.2        | ) |   | $       | 4.5   |  
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Earnings per share data:                                                                                                    |                                                           |              |         |       |              |   |         |              |   |   |         |      
|                                                                                                                            | Net income (loss)                                         |              | $       | (53.5 | )            |   | $       | (46.2        | ) |   | $       | 4.5   |  
|                                                                                                                            | Loss on redemption of subsidiary preferred stock          |              |         | (36.3 | )            |   |         |             |   |   |         |      |  
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|                                                                                                                            | Net income (loss) available to common
    shareholders    |              | $       | (89.8 | )            |   | $       | (46.2        | ) |   | $       | 4.5   |  
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Net income (loss) per basic and diluted
    common share:                                                                   |                                                           |              |         |       |              |   |         |              |   |   |         |      
|                                                                                                                            | Continuing operations                                     |              | $       | (1.15 | )            |   | $       | (1.28        | ) |   | $       | (0.06 | )
|                                                                                                                            | Discontinued operations                                   |              |         | 0.12  |              |   |         | 0.23         |   |   |         | 0.27  |  
|                                                                                                                            | Extraordinary loss                                        |              |         |      |              |   |         | (0.14        | ) |   |         | (0.03 | )
|                                                                                                                            | Cumulative effect of a change in accounting
    principle |              |         | (0.15 | )            |   |         |             |   |   |         |      |  
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|                                                                                                                            | Net income (loss) available to common
    shareholders    |              | $       | (1.18 | )            |   | $       | (1.19        | ) |   | $       | 0.18  |  
|                                                                                                                            |                                                           |              |         |       |              |   |         |              |  
|Average common shares outstanding:                                                                                          |                                                           |              |         |       |              |   |         |              |   |   |         |      
|                                                                                                                            | Basic and diluted                                         |              |         | 76.3  |              |   |         | 38.9         |   |   |         | 24.8  |  

The Notes to Consolidated Financial Statements
are an integral

part of these consolidated financial statements.


F-3



---



##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES






CONSOLIDATED BALANCE
SHEETS


(in millions)


|                                                                                                                                                                                                                     |                                                                           |                           |         |              |       |   |         |       |       | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------- | ------- | ------------ | ----- | - | ------- | ----- | ----- | 
|                                                                                                                                                                                                                     |                                                                           | December 31,              |         | December 31,
|                                                                                                                                                                                                                     |                                                                           | 2002                      |         | 2001        
|                                                                                                                                                                                                                     |                                                                           |                           |         |             
|ASSETS                                                                                                                                                                                                               |                                                                           |                           |         |              |       |   |         |      
|Current Assets:                                                                                                                                                                                                      |                                                                           |                           |         |              |       |   |         |      
|                                                                                                                                                                                                                     | Cash and cash equivalents                                                 |                           | $       | 81.3         |       |   | $       | 73.9  |      
|                                                                                                                                                                                                                     | Accounts and other receivables, net of allowances
    of $18.6 and $14.6. |                           |         | 373.0        |       |   |         | 406.1 |      
|                                                                                                                                                                                                                     | Inventories                                                               |                           |         | 171.6        |       |   |         | 132.6 |      
|                                                                                                                                                                                                                     | Other                                                                     |                           |         | 177.4        |       |   |         | 131.9 |      
|                                                                                                                                                                                                                     |                                                                           |                           |         |              |       |   |         |      
|                                                                                                                                                                                                                     |                                                                           | Total current assets      |         |              | 803.3 |   |         |       | 744.5 | 
|Property, plant and equipment, net                                                                                                                                                                                   |                                                                           |                           | 737.8   |              |       |   | 612.6   |      
|Deferred tax assets                                                                                                                                                                                                  |                                                                           |                           | 165.0   |              |       |   | 136.5   |      
|Goodwill                                                                                                                                                                                                             |                                                                           |                           | 1,265.5 |              |       |   | 1,253.8 |      
|Intangible assets, net                                                                                                                                                                                               |                                                                           |                           | 85.3    |              |       |   | 23.6    |      
|Other assets                                                                                                                                                                                                         |                                                                           |                           | 100.2   |              |       |   | 216.9   |      
|                                                                                                                                                                                                                     |                                                                           |                           |         |              |       |   |         |      
|                                                                                                                                                                                                                     |                                                                           | $                         | 3,157.1 |              |       | $ | 2,987.9 |      
|                                                                                                                                                                                                                     |                                                                           |                           |         |              |       |   |         |      
|LIABILITIES AND COMMON
    STOCKHOLDERS EQUITY                                                                                                                                                                      |                                                                           |                           |         |              |       |   |         |      
|Current Liabilities:                                                                                                                                                                                                 |                                                                           |                           |         |              |       |   |         |      
|                                                                                                                                                                                                                     | Short-term borrowings                                                     |                           | $       | 10.5         |       |   | $       | 25.6  |      
|                                                                                                                                                                                                                     | Current maturities of long-term debt                                      |                           |         | 23.5         |       |   |         | 19.9  |      
|                                                                                                                                                                                                                     | Accounts payable                                                          |                           |         | 580.5        |       |   |         | 468.7 |      
|                                                                                                                                                                                                                     | Accrued expenses                                                          |                           |         | 314.9        |       |   |         | 249.4 |      
|                                                                                                                                                                                                                     |                                                                           |                           |         |              |       |   |         |      
|                                                                                                                                                                                                                     |                                                                           | Total current liabilities |         |              | 929.4 |   |         |       | 763.6 | 
|Long-term debt and capital lease obligations                                                                                                                                                                         |                                                                           |                           | 1,255.2 |              |       |   | 1,282.6 |      
|Other, including pensions and post-retirement
    benefit obligations                                                                                                                                                |                                                                           |                           | 438.4   |              |       |   | 402.5   |      
|Commitments and contingencies                                                                                                                                                                                        |                                                                           |                           |         |              |       |   |         |      
|Minority interest in consolidated subsidiary                                                                                                                                                                         |                                                                           |                           | 12.7    |              |       |   | 15.2    |      
|Mandatorily redeemable preferred stock of
    subsidiary                                                                                                                                                             |                                                                           |                           | 123.9   |              |       |   | 149.3   |      
|Common stock ($.01 par value, 300.0 shares
    authorized, 83.6 shares issued and outstanding at
    December 31, 2002 and 300.0 shares authorized,
    67.2 shares issued and outstanding at December 31,
    2001) |                                                                           |                           | 0.8     |              |       |   | 0.7     |      
|Other paid-in capital                                                                                                                                                                                                |                                                                           |                           | 1,282.3 |              |       |   | 1,124.1 |      
|Accumulated deficit                                                                                                                                                                                                  |                                                                           |                           | (772.6  | )            |       |   | (682.8  | )    
|Accumulated other comprehensive loss                                                                                                                                                                                 |                                                                           |                           | (113.0  | )            |       |   | (67.3   | )    
|                                                                                                                                                                                                                     |                                                                           |                           |         |              |       |   |         |      
|                                                                                                                                                                                                                     | Total common stockholders equity                                         |                           | $       | 397.5        |       |   | $       | 374.7 |      
|                                                                                                                                                                                                                     |                                                                           |                           |         |              |       |   |         |      
|                                                                                                                                                                                                                     |                                                                           | $                         | 3,157.1 |              |       | $ | 2,987.9 |      
|                                                                                                                                                                                                                     |                                                                           |                           |         |              |       |   |         |      

The Notes to Consolidated Financial Statements
are an integral

part of these consolidated financial statements.


F-4



---



##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES






CONSOLIDATED STATEMENTS OF
CASH FLOWS


(in millions)


|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |       |        |   |       |       |       |  
|-------------------------- | -------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ------ | ------------ | ------ | - | ------------ | ----- | ------ | - | ----- | ----- | ----- | -
|                           |                                                                |                                                                                                    
|                           |                                                                | Year Ended                                                                                          |                                                        
|                           |                                                                |                                                                                                     |                                                        
|                           |                                                                | December 31,                                                                                        |                                                         |        | December 31, |        |   | December 31, |      
|                           |                                                                | 2002                                                                                                |                                                         |        | 2001         |        |   | 2000         |      
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|OPERATING ACTIVITIES       |                                                                |                                                                                                     |                                                         |        |              |        |   |              |       |        |   |      
|                           | Net income (loss)                                              |                                                                                                     | $                                                       | (53.5  | )            |        | $ | (46.2        | )     |        | $ | 4.5   |      
|                           |                                                                | Adjustments to derive cash flow operating
    activities:                                           |                                                         |        |              |        |   |              |       |        |   |       |       |      
|                           |                                                                | Impairment of goodwill                                                                              |                                                         |        | 11.7         |        |   |              |      |        |   |       |      |      
|                           |                                                                | Impairment of long-lived assets                                                                     |                                                         |        | 19.3         |        |   |              | 7.6   |        |   |       |      |      
|                           |                                                                | Deferred income tax expense (benefit)                                                               |                                                         |        | (3.6         | )      |   |              | (26.0 | )      |   |       | (10.0 | )    
|                           |                                                                | Subsidiary preferred stock requirements                                                             |                                                         |        | 38.4         |        |   |              | 2.4   |        |   |       |      |      
|                           |                                                                | Depreciation                                                                                        |                                                         |        | 97.0         |        |   |              | 64.2  |        |   |       | 59.1  |      
|                           |                                                                | Goodwill amortization                                                                               |                                                         |        |             |        |   |              | 7.1   |        |   |       | 7.1   |      
|                           |                                                                | Amortization of other assets                                                                        |                                                         |        | 20.0         |        |   |              | 10.5  |        |   |       | 8.5   |      
|                           |                                                                | Loss (gain) on sale of property, plant and
    equipment                                            |                                                         |        | 3.4          |        |   |              | 8.7   |        |   |       | (1.0  | )    
|                           |                                                                | Decrease in accounts and other receivables                                                          |                                                         |        | 23.7         |        |   |              | 135.0 |        |   |       | 78.2  |      
|                           |                                                                | Proceeds from (reduction of) participating
    interests in accounts receivable, net of redemptions |                                                         |        | (13.9        | )      |   |              | (2.6  | )      |   |       | (34.0 | )    
|                           |                                                                | Decrease (increase) in inventories                                                                  |                                                         |        | (26.6        | )      |   |              | 53.4  |        |   |       | 0.9   |      
|                           |                                                                | Increase (decrease) in accounts payable                                                             |                                                         |        | 35.1         |        |   |              | (31.9 | )      |   |       | (20.0 | )    
|                           |                                                                | Undistributed equity in earnings of joint ventures                                                  |                                                         |        | 5.5          |        |   |              |      |        |   |       |      |      
|                           |                                                                | Increase (decrease) in interest payable                                                             |                                                         |        | (4.0         | )      |   |              | (4.1  | )      |   |       | 3.4   |      
|                           |                                                                | Changes in other assets                                                                             |                                                         |        | 62.4         |        |   |              | (6.5  | )      |   |       | 24.5  |      
|                           |                                                                | Changes in other liabilities                                                                        |                                                         |        | (25.4        | )      |   |              | (30.6 | )      |   |       | (23.9 | )    
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|                           |                                                                |                                                                                                     | Net cash provided by operating activities               |        |              | 189.5  |   |              |       | 141.0  |   |       |       | 97.3  |  
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|INVESTING ACTIVITIES       |                                                                |                                                                                                     |                                                         |        |              |        |   |              |       |        |   |      
|                           | Additions to property, plant and equipment                     |                                                                                                     |                                                         | (147.9 | )            |        |   | (54.5        | )     |        |   | (69.0 | )    
|                           | Sales of property, plant and equipment                         |                                                                                                     |                                                         | 13.3   |              |        |   | 88.1         |       |        |   | 5.6   |      
|                           | Additional investment in joint venture                         |                                                                                                     |                                                         | (5.9   | )            |        |   |             |       |        |   |      |      
|                           | Acquisitions of businesses, net of cash acquired               |                                                                                                     |                                                         | (6.8   | )            |        |   | (760.9       | )     |        |   |      |      
|                           | Payment of acquisition costs                                   |                                                                                                     |                                                         | (38.8  | )            |        |   |             |       |        |   |      |      
|                           | Sale of business                                               |                                                                                                     |                                                         |       |              |        |   | 3.5          |       |        |   |      |      
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|                           |                                                                |                                                                                                     | Net cash used in investing activities                   |        |              | (186.1 | ) |              |       | (723.8 | ) |       |       | (63.4 | )
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|FINANCING ACTIVITIES       |                                                                |                                                                                                     |                                                         |        |              |        |   |              |       |        |   |      
|                           | Issuance of long-term debt                                     |                                                                                                     |                                                         |       |              |        |   | 950.0        |       |        |   |      |      
|                           | Debt issuance costs                                            |                                                                                                     |                                                         |       |              |        |   | (59.4        | )     |        |   |      |      
|                           | Repayment of long-term debt                                    |                                                                                                     |                                                         | (23.9  | )            |        |   | (383.2       | )     |        |   | (66.6 | )    
|                           | Repurchase of preferred stock                                  |                                                                                                     |                                                         | (100.0 | )            |        |   |             |       |        |   |      |      
|                           | Increase (decrease) in short-term borrowings                   |                                                                                                     |                                                         | (16.0  | )            |        |   | 10.1         |       |        |   | 0.2   |      
|                           | Net borrowings (repayments) on revolving
    credit facilities |                                                                                                     |                                                         |       |              |        |   | (150.2       | )     |        |   | 39.0  |      
|                           | Net proceeds from issuance of common stock                     |                                                                                                     |                                                         | 150.6  |              |        |   | 207.2        |       |        |   |      |      
|                           | Reissue of treasury stock, net                                 |                                                                                                     |                                                         |       |              |        |   | 61.3         |       |        |   | 0.4   |      
|                           | Repayment of debt assumed in acquisition                       |                                                                                                     |                                                         | (6.7   | )            |        |   |             |       |        |   |      |      
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|                           |                                                                |                                                                                                     | Net cash provided by (used in) financing
    activities |        |              | 4.0    |   |              |       | 635.8  |   |       |       | (27.0 | )
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|                           | Increase in cash and cash equivalents                          |                                                                                                     |                                                         | 7.4    |              |        |   | 53.0         |       |        |   | 6.9   |      
|                           | Cash and cash equivalents at beginning of year                 |                                                                                                     |                                                         | 73.9   |              |        |   | 20.9         |       |        |   | 14.0  |      
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|                           | Cash and cash equivalents at end of year                       |                                                                                                     | $                                                       | 81.3   |              |        | $ | 73.9         |       |        | $ | 20.9  |      
|                           |                                                                |                                                                                                     |                                                         |        |              |        |   |              |      
|Supplementary information: |                                                                |                                                                                                     |                                                         |        |              |        |   |              |       |        |   |      
|                           | Debt assumed in acquisition                                    |                                                                                                     | $                                                       | 6.7    |              |        | $ |             |       |        | $ |      |      
|                           | Taxes paid                                                     |                                                                                                     | $                                                       | 12.8   |              |        | $ | 15.5         |       |        | $ | 4.8   |      
|                           | Interest paid                                                  |                                                                                                     | $                                                       | 139.9  |              |        | $ | 76.3         |       |        | $ | 94.8  |      

The Notes to Consolidated Financial Statements
are an integral

part of these consolidated financial statements.


F-5



---



##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES






CONSOLIDATED STATEMENTS OF
COMMON STOCKHOLDERS EQUITY (DEFICIT)


(in millions)


|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |   |   | 
|------------------------------------------------ | --------------------------------------- | ---------------------------------------- | ----- | ----- | ----- | - | ----------- | ------- | ----------- | ------------- | ------- | ----- | ------ | ----- | ------ | ------- | ------- | - | -------- | ----- | - | - | ------- | - | - | - | ----- | - | - | 
|                                                 |                                         | Current Year                             |       |       |       |   |             |         | Accumulated |               |         |       |        |       |        |        
|                                                 |                                         | Comprehensive                            |       |       |       |   |             |         | Other       |               |         |       |        | Other |        |         |        
|                                                 |                                         | Income                                   |       |       |       |   | Accumulated |         |             | Comprehensive |         |       | Common |       |        | Paid-in |         |   | Treasury |      
|                                                 |                                         | (Loss)                                   |       |       | Total |   |             | Deficit |             |               | Loss(a) |       |        | Stock |        |         | Capital |   |          | Stock |  
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|Balance at December 25, 1999                     |                                         |                                          |       |       |       | $ | (151.1      | )       |             | $             | (641.1  | )     |        | $     | (33.3  | )       |         | $ | 0.3      |       |   | $ | 585.9   |   |   | $ | (62.9 | )
|Comprehensive income:                            |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |  
|                                                 | Net Income                              |                                          | $     | 4.5   |       |   |             | 4.5     |             |               |         | 4.5   |        |       |        |        |         |   |          |      |   |   |         |  |   |   |       |  |  
|                                                 | Other comprehensive income, net of tax: |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |   |  
|                                                 |                                         | Foreign currency translation adjustments |       |       | (10.4 | ) |             |         | (10.4       | )             |         |       |       |       |        |         | (10.4   | ) |          |       |  |   |         |   |  |   |       |   |  | 
|                                                 |                                         | Pension equity adjustment(b)             |       |       | 0.8   |   |             |         | 0.8         |               |         |       |       |       |        |         | 0.8     |   |          |       |  |   |         |   |  |   |       |   |  | 
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|                                                 |                                         | $                                        | (5.1  | )     |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |  
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|Compensation expense                             |                                         |                                          |       |       |       |   | 0.9         |         |             |               |        |       |        |       |       |         |         |   |         |       |   |   | 0.9     |   |   |   |      |  
|Purchase of treasury stock (0.4 shares)          |                                         |                                          |       |       |       |   | (0.5        | )       |             |               |        |       |        |       |       |         |         |   |         |       |   |   |        |   |   |   | (0.5  | )
|Exercise of stock options (0.2 shares)           |                                         |                                          |       |       |       |   | 0.9         |         |             |               |        |       |        |       |       |         |         |   |         |       |   |   | (0.9    | ) |   |   | 1.8   |  
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|Balance at December 31, 2000                     |                                         |                                          |       |       |       |   | (154.9      | )       |             |               | (636.6  | )     |        |       | (42.9  | )       |         |   | 0.3      |       |   |   | 585.9   |   |   |   | (61.6 | )
|Comprehensive income:                            |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |  
|                                                 | Net loss                                |                                          | $     | (46.2 | )     |   |             | (46.2   | )           |               |         | (46.2 | )      |       |        |        |         |   |          |      |   |   |         |  |   |   |       |  |  
|                                                 | Other comprehensive income:             |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |   |  
|                                                 |                                         | Foreign currency translation adjustments |       |       | (9.0  | ) |             |         | (9.0        | )             |         |       |       |       |        |         | (9.0    | ) |          |       |  |   |         |   |  |   |       |   |  | 
|                                                 |                                         | Pension equity adjustment, net of tax(b) |       |       | (15.4 | ) |             |         | (15.4       | )             |         |       |       |       |        |         | (15.4   | ) |          |       |  |   |         |   |  |   |       |   |  | 
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|                                                 |                                         | $                                        | (70.6 | )     |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |  
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|Compensation expense                             |                                         |                                          |       |       |       |   | 1.2         |         |             |               |        |       |        |       |       |         |         |   |         |       |   |   | 1.2     |   |   |   |      |  
|Issuance of common stock                         |                                         |                                          |       |       |       |   | 533.0       |         |             |               |        |       |        |       |       |         |         |   | 0.4      |       |   |   | 532.6   |   |   |   |      |  
|Reissue of treasury stock (8.5 shares)           |                                         |                                          |       |       |       |   | 61.3        |         |             |               |        |       |        |       |       |         |         |   |         |       |   |   | (0.3    | ) |   |   | 61.6  |  
|Exercise of stock options (1.1 shares)           |                                         |                                          |       |       |       |   | 4.7         |         |             |               |        |       |        |       |       |         |         |   |         |       |   |   | 4.7     |   |   |   |      |  
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|Balance at December 31, 2001                     |                                         |                                          |       |       |       |   | 374.7       |         |             |               | (682.8  | )     |        |       | (67.3  | )       |         |   | 0.7      |       |   |   | 1,124.1 |   |   |   |      |  
|Comprehensive income:                            |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |  
|                                                 | Net loss                                |                                          | $     | (53.5 | )     |   |             | (53.5   | )           |               |         | (53.5 | )      |       |        |        |         |   |          |      |   |   |         |  |   |   |       |  |  
|                                                 | Other comprehensive income:             |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |   |  
|                                                 |                                         | Foreign currency translation adjustments |       |       | 10.7  |   |             |         | 10.7        |               |         |       |       |       |        |         | 10.7    |   |          |       |  |   |         |   |  |   |       |   |  | 
|                                                 |                                         | Pension equity adjustment, net of tax(b) |       |       | (56.4 | ) |             |         | (56.4       | )             |         |       |       |       |        |         | (56.4   | ) |          |       |  |   |         |   |  |   |       |   |  | 
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|                                                 |                                         | $                                        | (99.2 | )     |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |   |   |         |   |   |   |       |  
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|Loss on redemption of subsidiary preferred stock |                                         |                                          |       |       |       |   | (36.3       | )       |             |               | (36.3   | )     |        |       |       |         |         |   |         |       |   |   |        |   |   |   |      |  
|Issuance of common stock                         |                                         |                                          |       |       |       |   | 157.2       |         |             |               |        |       |        |       |       |         |         |   | 0.1      |       |   |   | 157.1   |   |   |   |      |  
|Exercise of stock options (0.1 shares)           |                                         |                                          |       |       |       |   | 1.1         |         |             |               |        |       |        |       |       |         |         |   |         |       |   |   | 1.1     |   |   |   |      |  
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  
|Balance at December 31,
    2002                 |                                         |                                          |       |       |       | $ | 397.5       |         |             | $             | (772.6  | )     |        | $     | (113.0 | )       |         | $ | 0.8      |       |   | $ | 1,282.3 |   |   | $ |      |  
|                                                 |                                         |                                          |       |       |       |   |             |         |             |               |         |       |        |       |        |         |         |   |          |       |  



---



|    |                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The components of Accumulated Other Comprehensive
    Loss are $40.9 million of foreign currency translation
    adjustment and $72.1 million of pension equity adjustment
    as of December 31, 2002.



|    |                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------
|(b) | For 2002, 2001 and 2000 the tax effect of the
    pension equity adjustment is $42.6 million,
    $3.2 million, and $0.4 million, respectively.

The Notes to Consolidated Financial Statements
are an integral part

of these consolidated financial statements.


F-6



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES






NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


1.     Organization

Collins & Aikman Corporation (the
Company) is a Delaware corporation, headquartered in
Troy, Michigan. The Company conducts all of its operating
activities through its wholly owned Collins & Aikman
Products Co. (Products) subsidiary. The Company is a
global leader in design, engineering and manufacturing of
automotive interior components, including instrument panels,
fully assembled cockpit modules, floor and acoustic systems,
automotive fabric, interior trim and convertible top systems.
The Company operates through three divisions: North American
Automotive Interior Systems, European and Rest of World
Automotive Interior Systems and Specialty Automotive Products.

During February 2001, Heartland Industrial
Partners, L.P. and its affiliates (Heartland)
acquired a controlling interest equal to approximately 60% of
the Company through a purchase of 25 million shares of
common stock from the Company and a purchase of 27 million
shares from Blackstone Partners and WP Partners. As a result of
the sale of shares, the Company received gross proceeds of
$125.0 million, or approximately $94.6 million after
fees and expenses associated with the transactions. The Company
also received a profit participation right that it shares with
Blackstone Partners and WP Partners on future common stock sales
by Heartland to non-permitted transferees subject to a limit, in
the case of the Company, of approximately $6.25 million. As
a result of the above transactions (Heartland
Transaction), Heartland is entitled to designate a
majority of the Companys Board of Directors.

The Company completed its acquisition of Becker
Group, LLC, a supplier of plastic components to the automotive
industry and the automotive fabric operations of Joan Fabrics
and an affiliate in July and September 2001, respectively. The
acquisitions included the issuance of approximately
30 million shares of common stock with a market value of
$169.3 million.

In December 2001, the Company completed its
acquisition of Textron Automotive Companys
(Textrons) automotive trim division
(TAC-Trim) for $940 million. The purchase price
consisted primarily of: $632.2 million in cash and assumed
debt; 18 million shares of common stock, with a market
value of $160.9 million; and preferred stock of Products
with an aggregate liquidation preference of $326.4 million,
valued at $146.9 million. The cash purchase price was
financed through a combination of the sale of an additional
12.8 million shares of common stock, valued at
$160.0 million, to Heartland and debt financing.

On December 31, 2002, Heartland owned
approximately 36% of the outstanding shares; Blackstone
Partners and WP Partners owned approximately 11%;
Joan Fabrics Corp., Mr. Elkin McCallum and associates owned
approximately 7%; Mr. Charles E. Becker and Textron,
Inc. each owned approximately 9%.

2.     Summary
of Significant Accounting Policies

Basis of
Presentation:The consolidated financial
statements include the accounts of the Company and its
consolidated subsidiaries and in the opinion of management,
contain all adjustments, including adjustments of a normal and
recurring nature, necessary for a fair presentation of financial
position and results of operations. All significant intercompany
items have been eliminated in the preparation of the
consolidated financial statements. Certain prior year items have
been reclassified to conform with the fiscal 2002 presentation.

Investments in entities in which the Company has
control are consolidated. Investments in 50% or less owned
entities in which the Company has significant influence have
been accounted for under the equity method. In connection with
the 2001 TAC-Trim acquisition, the Company acquired a 50%
interest in Textron Automotive Holdings (Italy) S.r.L., an
Italian joint venture, of which Textron indirectly owned the
other 50% interest. The Company accounted for this investment
under the equity method, the Company did not control the joint
venture prior to December 31, 2002 but was required to
provide certain administrative, technical and engineering
services and to license certain patents and other know how to
the Italian joint venture. The Company recorded certain fees and
reimbursement of certain expenses in providing these services and

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

licensing these rights. In December 2002, the
Company signed a letter-of-intent to purchase the remaining 50%
and began consolidating the joint venture as of
December 31, 2002. In January 2003, the Company acquired
from Textron the remaining 50% interest in the Italian joint
venture.

Reverse Stock
Split:On May 28, 2002, the Company
effected a one-for-2.5 reverse stock split of the Companys
common stock. All shares and per share data have been adjusted
retroactively for all periods presented to reflect the stock
split.

Use of
Estimates:The preparation of consolidated
financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
period. Management believes its assumptions and estimates are
reasonable and appropriate, however actual results could differ
from those estimates.

Fiscal
Year:During fiscal 2000, the Company
changed its fiscal year-end to a calendar year-end. The 2000
fiscal year-end consisted of 53 weeks, which ended on
December 31, 2000.

Employee Stock
Options:SFAS No. 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure amended SFAS No. 123,
Accounting for Stock-Based Compensation to provide
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock based employee
compensation and amended the required disclosures. SFAS
No. 123 encourages companies to adopt the fair value method
for compensation expense recognition related to employee stock
options. The accounting requirements of Accounting Principles
Board Opinion (APB) No. 25 use the intrinsic value method
in determining compensation expense, which represents the excess
of the market price of the stock over the exercise price on the
measurement date. The Company has elected to continue to utilize
the accounting provisions of APB No. 25 for stock options,
and is required to provide pro forma disclosures of net income
and earnings per share had the Company adopted the fair value
method for recognition purposes. The following tabular
information is presented as if the Company had adopted SFAS
No. 123 and restated its results: (in millions, except per
share amounts).

|                                             |                                                                                                                             |                              |   |       |              |   |   |              |       |   |   |      |     | 
|-------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | - | ----- | ------------ | - | - | ------------ | ----- | - | - | ---- | --- | 
|                                             |                                                                                                                             |                             
|                                             |                                                                                                                             | Fiscal Year Ended            |  
|                                             |                                                                                                                             |                              |  
|                                             |                                                                                                                             | December 31,                 |   |       | December 31, |   |   | December 31, |      
|                                             |                                                                                                                             | 2002                         |   |       | 2001         |   |   | 2000         |      
|                                             |                                                                                                                             |                              |   |       |              |   |   |              |      
|Net income (loss) available to shareholders: |                                                                                                                             |                              |   |       |              |   |   |              |       |   |   |     
|                                             | As reported                                                                                                                 |                              | $ | (89.8 | )            |   | $ | (46.2        | )     |   | $ | 4.5  |    
|                                             | Total employee stock based compensation expense
    determined under fair value based method for all awards, net of
    tax |                              |   | (3.4  | )            |   |   | (2.4         | )     |   |   | (2.4 | )  
|                                             |                                                                                                                             |                              |   |       |              |   |   |              |      
|                                             |                                                                                                                             | Pro forma, net income (loss) |   |       | (93.2        | ) |   |              | (48.6 | ) |   |      | 2.1 | 
|                                             |                                                                                                                             |                              |   |       |              |   |   |              |      
|Basic and Diluted EPS(a):                    |                                                                                                                             |                              |   |       |              |   |   |              |       |   |   |     
|                                             | As reported                                                                                                                 |                              | $ | (1.18 | )            |   | $ | (1.19        | )     |   | $ | 0.18 |    
|                                             | Pro forma                                                                                                                   |                              |   | (1.22 | )            |   |   | (1.25        | )     |   |   | 0.08 |    



---



|    |                                                               
|--- | --------------------------------------------------------------
|(a) | Adjusted to reflect the impact of the reverse
    stock split.

Earnings Per
Share:Basic earnings per share is based
on income available to common shareholders divided by the
weighted average number of common shares outstanding. Diluted
earnings per share is based on income available to common
shareholders divided by the sum of the weighted average number
of common shares outstanding and all potentially dilutive common
shares. Potentially dilutive common shares include

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

shares which may be issued upon the assumed
exercise of employee stock options less the number of treasury
shares assumed to be purchased from the proceeds, including
applicable compensation expense (Note 16).

Cash and Cash
Equivalents:Cash and cash equivalents
include all cash balances and highly liquid investments with an
original maturity of three months or less.

Accounts and Other
Receivables:Accounts and other
receivables consist primarily of the Companys trade
receivables and the retained interest in the Receivables
Facility (See Note 11). The Company has provided an
allowance against uncollectible accounts.

Inventories:Inventories are valued at the lower of cost or market, but not
in excess of net realizable value. Cost is determined on the
first-in, first-out basis.

Property, Plant and
Equipment:Property, plant and equipment
are stated at cost. Normal repairs and maintenance are expensed
as incurred. Provisions for depreciation are primarily computed
on a straight-line basis over the estimated useful lives as
follows: 10-20 years for land improvements,
20-40 years for buildings, and 3-11 years for
machinery and equipment. Leasehold improvements are amortized
over the lesser of the lease term or the estimated useful lives
of the improvements.

Long-Lived
Assets:Statement of Financial Accounting
Standards (SFAS) No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of, established accounting standards for the
impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and
used and for long-lived assets and certain identifiable
intangibles to be disposed. SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable, and that certain
long-lived assets and identifiable intangibles to be disposed of
be reported at the lower of carrying amount or fair value less
cost to sell. In August 2001, this statement was superseded by
the issuance of SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. The statement
retains the previously existing accounting requirements related
to the recognition and measurement of the impairment of
long-lived assets to be held and used while expanding the
measurement requirements of long-lived assets to be disposed of
by sale to include discontinued operations. It also expands the
previously existing reporting requirements for discontinued
operations to include a component of an entity that either has
been disposed of or is classified as held for sale. The Company
implemented SFAS No. 144 on January 1, 2002. This
statement did not have a material impact on the Companys
consolidated financial position or results of operations. During
2002, the Company incurred asset impairment charges of
$18.0 million recognized as part of restructuring programs
(Note 15). In addition, during fiscal 2001, the Company
incurred a charge of $7.6 million relating to asset
impairments recognized in the Reorganization (See Note 15).

Goodwill and
Intangibles:During the second quarter of
2002, the Company completed the implementation of SFAS 142,
Goodwill and Other Intangible Assets. Under
SFAS 142, goodwill is no longer amortized. Instead,
goodwill and indefinite-lived intangible assets are tested for
impairment in accordance with the provisions of SFAS 142.
The Company employed a discounted cash flow analysis and a
market comparable approach in conducting its impairment tests.
The Company completed its initial impairment test in the second
quarter of 2002 and recorded an impairment loss of
$11.7 million (having no tax impact), or $0.15 per
average basic and diluted share relating to the UK Plastics
business in the European and Rest of World Automotive Systems
segment. The impairment loss was reported as a cumulative effect
of a change in accounting principle and, therefore, is accounted
for as if it occurred on January 1, 2002. The Company
completed this test again as of November 1, which indicated
that the fair value of the reporting units exceeded the carrying
values. Fair value was determined based upon the discounted cash
flows of the reporting units using discount rates ranging from
11.5% to 14.0% dependant on the reporting unit and a residual
growth rate of 2%. The market comparable approach consisted of
an earnings multiple of 5 times forecasted EBITDA
(operating income less  interest, taxes, depreciation
and amortization) and a control premium on equity.

F-9



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Future cash flows and EBITDA are affected by
future operating performance, which will be impacted by economic
conditions, car builds, financial, business and other factors,
many of which are beyond the Companys control. The North
American Plastics reporting unit can be significantly impacted
by an adverse change in assumptions. Considerable judgment is
often involved in making these determinations, the use of
different assumptions could result in significantly different
results. Management believes its assumptions and estimates are
reasonable and appropriate, however actual results could differ
from those estimates.

Pension and Postretirement
Benefits Other than Pensions:Annual net
periodic expense and benefit liabilities under our defined
benefit plans are determined on an actuarial basis. Assumptions
used in the actuarial calculations have a significant impact on
plan obligations and expense. Each September, the Company
reviews the actual experience compared to the more significant
assumptions used and make adjustments to the assumptions, if
warranted. The healthcare trend rates are reviewed with the
actuaries based upon the results of their review of claims
experience. Discount rates are based upon an expected benefit
payments duration analysis and the equivalent average yield rate
for high-quality fixed-income investments. Pension benefits are
funded through deposits with trustees and the expected long-term
rate of return on fund assets is based upon actual historical
returns modified for known changes in the market and any
expected change in investment policy. Postretirement benefits
are not funded and our policy is to pay these benefits as they
become due.

Certain accounting guidance, including the
guidance applicable to pensions, does not require immediate
recognition of the effects of a deviation between actual and
assumed experience or the revision of an estimate. This approach
allows the favorable and unfavorable effects that fall within an
acceptable range to be netted. Although this netting occurs
outside the basic financial statements, disclosure of the net
amount is disclosed as an unrecognized gain or loss in the
footnotes to our financial statements. Considerable judgment is
often involved in making these determinations, the use of
different assumptions could result in significantly different
results. Management believes its assumptions and estimates are
reasonable and appropriate, however actual results could differ
from those estimates.

Revenue
Recognition:The Company recognizes
revenue from product sales when it has shipped the goods.
Products are shipped FOB supplier using customer designated
transportation companies with title passing at that time. The
Company generally allows its customers the right of return only
in the case of defective products. The Company provides a
reserve for estimated defective product costs at the time of the
sale of the products.

Cost of Goods Sold and Selling,
General and Administrative Costs:Cost of
goods sold is comprised of direct material, direct labor and
manufacturing overhead. Manufacturing overhead consists of
indirect labor, depreciation, amortization and other
manufacturing expenses. Selling, general and administrative
costs consist of selling, research and development, engineering
and administrative expenses.

Other Expense,
net:In 2002, other expenses,
net primarily included $12.6 million of losses related to
derivatives used in the Companys foreign currency hedging
strategy, $5.5 million of losses related to investments in
joint ventures and $1.9 million of losses from sale and
leaseback transactions offset by $5.9 million of foreign
currency transaction gains and minority interest share of losses
of a consolidated subsidiary of $6.5 million. In 2001,
other expenses, net primarily included
$7.8 million of foreign currency transaction losses and
$8.2 million of losses from sale and leaseback transactions
offset by $5.0 million of derivatives gains and
$6.2 million related to a stock demutualization. In 2000,
other expenses, net included primarily a
$1.0 million derivative loss.

Customer Engineering and
Tooling:Engineering and tooling balances
represent tools, dies and other items used in the manufacture of
customer components. Amounts included in the consolidated
balance sheets include Company-owned tools and costs incurred on
customer-owned tools which are subject to reimbursement,
pursuant to the terms of a customer contract. Company-owned
tools balances are amortized over the

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

tools expected life or the life of the
related vehicle program, whichever is shorter. Engineering,
testing and other costs incurred in the design and development
of production parts are expensed as incurred, unless the costs
are reimbursable, as specified in a customer contract.

Emerging Issue Task Force EITF Issue
No. 99-5, Accounting for Pre-Production Costs Related
to Long-Term Supply Arrangements (EITF No. 99-5)
requires that design and development costs for products to be
sold under long-term supply arrangements be expensed as
incurred, and costs incurred for molds, dies and other tools
that will be used in producing the products under long-term
supply arrangements be capitalized and amortized over the
shorter of the expected useful life of the assets or the term of
the supply arrangement. The Company adopted the provisions of
EITF No. 99-5 on a prospective basis on December 26,
1999.

The Company had assets of approximately
$8.4 million and $22.7 million recognized pursuant to
agreements that provide for contractual reimbursement of
pre-production design and development costs, at
December 31, 2002 and 2001, respectively. The Company also
capitalized $77.1 million and $90.2 million in costs
for molds, dies and other tools, at December 31, 2002 and
2001, respectively, that are reimbursable by customers. In
addition, the Company had $11.0 million and
$9.1 million at December 31, 2002 and 2001,
respectively, for molds, dies and other tools that the Company
owns.

Derivative Financial
Instruments:All derivatives are
recognized on the consolidated balance sheet at fair value as
required by SFAS 133 Accounting for Derivative
Instruments and Hedging Activities. Gains and losses on
the changes in fair value of the derivatives that qualify as
hedges under SFAS No. 133, are recorded on the Balance
Sheet as a component of Other comprehensive income
to the extent that the hedges are effective and documented,
until the underlying transactions are recognized in earnings. As
of December 31, 2002, the Company had no derivatives
designated as hedges under SFAS No. 133. The Company uses
derivatives to hedge economic risks even though these
derivatives may not be designated as hedges in accordance with
SFAS No. 133. These derivative instruments are marked to
fair market value and reported on the balance sheet. Gains and
losses on these instruments are reported in Other
Income or Other Expense on the Consolidated
Statements of Operations. The gains and losses are intended to
offset economic risk of foreign currency transaction losses or
gains. The Company does not enter into derivative transactions
for speculative purposes.

Foreign Currency
Translation:Assets and liabilities of the
Companys non-U.S. businesses generally are translated
to U.S. Dollars at end-of-period exchange rates. The
effects of the translations are reported as a component of
Other comprehensive income. Remeasurement of assets
and liabilities of the Companys non-U.S. businesses that
use the U.S. Dollar as functional currency are included in the
Consolidated Statements of Operations as Other
income or Other expense. The Statement of
Operations of the Companys non-U.S. businesses are
translated to U.S. dollars at average exchange rates and are
recognized as part of revenues, costs and expenses. Also
included in Other income or Other
expense, are gains and losses arising from transactions
denominated in a currency other than the functional currency of
the business involved. Gains and losses resulting from foreign
currency transactions are recognized in Other income
or Other expense.

Environmental:The Company records an estimated loss when it is probable that
an environmental liability has been incurred and the amount of
the loss can be reasonably estimated. The Company also considers
estimates of certain reasonably possible environmental
liabilities in determining the aggregate amount of environmental
reserves. The Company reviews all environmental claims from time
to time and adjusts the reserves accordingly. Accruals for
environmental liabilities are generally included in the
consolidated balance sheet as other non-current liabilities at
undiscounted amounts and exclude claims for recoveries from
insurance or other third parties. Accruals for insurance or
other third party recoveries for environmental liabilities are
recorded when it is probable that the claim will be realized.

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

New Accounting
Pronouncements:In June 2002, the FASB
issued SFAS No. 146 Accounting for Costs Associated
with Exit or Disposal Activities. This statement nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). This statement
requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred
rather than the date of an entitys commitment to an exit
plan. The Company is required to implement SFAS No. 146 on
January 1, 2003. Management has not determined the impact,
if any, that this statement will have on its consolidated
financial position or results of operations.

In November 2002, the FASB issued FASB
Interpretation (FIN) No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN
No. 45 requires a guarantor to recognize, at the inception
of a qualified guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The Company is
currently reviewing these recognition and measurement
provisions, which are effective on a prospective basis for
qualified guarantees issued or modified after December 31,
2002, to determine whether they will have a material impact on
its consolidated financial statements. The disclosure
requirements of FIN No. 45, which are effective for this
quarter, are presented in the following paragraph.

In conjunction with divestitures and other
transactions, the Company has provided indemnifications relating
to legal and environmental issues, including products. The
Company does not believe that any pending or threatened
litigation or claims related to any such retained liabilities of
discontinued operations are likely to result in any material
loss.

In January 2003, the FASB issued FASB
Interpretation No. 46 (FIN 46), Consolidation of
Variable Interest Entities, an interpretation of Accounting
Research Bulletin No. 51, Consolidated Financial
Statements. This interpretation provides guidance on the
identification of variable interest entities, some of which may
require consolidation based on factors beyond a majority voting
interest. A variable interest entity is defined in FIN 46 as an
entity in which either the equity investors (if any) do not have
a controlling financial interest or the equity investment at
risk is insufficient to finance that entitys activities
without receiving additional subordinated financial support from
other parties. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and in the first
fiscal year or interim period beginning after June 15,
2003, to variable interest entities in which an enterprise holds
a variable interest that it acquired before February 1,
2003. The company is currently unaware of any entities that
exist that would qualify as a variable interest entity.

3.     Acquisitions
and Goodwill

a.     Acquisitions

The Company completed its acquisitions of Textron
Automotive Companys automotive trim division
(TAC-Trim) in December 2001, the automotive fabric
operations of Joan Fabrics and all of the operating assets in
Joan Fabrics affiliated yarn dying operation Western
Avenue Dyers (collectively Joan) in September 2001,
and Becker Group, LLC (Becker) a supplier of plastic
components to the automotive industry in July 2001. The results
of operations of the acquired companies are included in the
Companys consolidated statements of operations from the
dates of acquisition.

Appraisals for Becker and Joan were performed
during 2001 and the related allocation of purchase price was
completed. In the second quarter 2002, the Companys
external consultants completed the valuations of all TAC-Trim
acquired intangible and fixed assets. Based upon these
valuations: 1) an intangible asset of $51.0 million for
customer contracts was recorded based on the value of individual
customer contracts  this intangible asset is being
amortized over the contracts performance period, which
extends through 2012; 2) the Company revised its first quarter
estimate for patents and other specifically identifiable
intangible assets

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

acquired as part of the TAC-Trim purchase from
$40.0 to $24.0 million (the weighted average lives
increased from 7 to 10 years); and 3) in June 2002, the
valuations resulted in a $30.1 million increase in fixed
assets and adjustment of their useful lives. In September 2002,
the Company revised its valuation resulting in a
$27.7 million increase in fixed assets and adjustment of
their useful lives, based upon revised information from external
consultants. The allocation of the purchase price for the
TAC-Trim acquisition was completed in 2002. The Becker, Joan and
TAC-Trim acquisitions are intended to solidify the
Companys position as a premier supplier of interior
components and automotive fabrics.

b.     Goodwill

During the second quarter of 2002, the Company
completed the implementation of SFAS 142, Goodwill and
Other Intangible Assets. Under SFAS 142, goodwill is no
longer amortized. Instead, goodwill and indefinite-lived
intangible assets are tested for impairment in accordance with
the provisions of SFAS 142. In accordance with its impairment
policy, the Company employed a discounted cash flow analysis in
conducting its impairment tests. As required, the Company
completed its initial impairment test for goodwill recorded as
of December 31, 2001, in the second quarter 2002 and
recorded an impairment loss of $11.7 million (having no tax
impact), or $0.15 per average basic and diluted share relating
to the UK Plastics business in the European and Rest of World
Automotive Interior Systems segment. The impairment loss was
reported as a cumulative effect of a change in accounting
principle and, therefore, was accounted for as if it occurred on
January 1, 2002. In addition, as required under SFAS 142
the Company subsequently completed an annual impairment test of
goodwill and recorded no additional impairment.

In accordance with the provisions of SFAS 142,
the Company did not amortize goodwill during 2002. If goodwill
amortization had not been recorded during 2001, net loss would
have decreased $6.1 million to an adjusted net loss of
$40.1 million. The related loss per share for fiscal 2001
would have decreased $0.14 per share resulting in adjusted loss
per share of $1.05. If goodwill amortization had not been
recorded during 2000, net income would have increased
$6.1 million to an adjusted net income of
$10.6 million. The related income per share for fiscal 2000
would have increased $0.25 per share resulting in adjusted
income per share of $0.43.

The changes in the carrying amounts of goodwill
for the year ended December 31, 2002 were as follows (in
millions):

|                                |                                                                              |                  |         |              |                  |   |      |            |   |   |       |       |  |   |         |         |  
|------------------------------- | ---------------------------------------------------------------------------- | ---------------- | ------- | ------------ | ---------------- | - | ---- | ---------- | - | - | ----- | ----- |  | - | ------- | ------- | -
|                                |                                                                              |                  |         | European and |                  |   |      |            |  
|                                |                                                                              | North American   |         |              | Rest of World    |   |      | Specialty  |   |   |      
|                                |                                                                              | Automotive       |         |              | Automotive       |   |      | Automotive |   |   |      
|                                |                                                                              | Interior Systems |         |              | Interior Systems |   |      | Products   |   |   | Total |      
|                                |                                                                              |                  |         |              |                  |   |      |            |   |   |       |      
|Balance as of December 31, 2001 |                                                                              | $                | 1,037.4 |              |                  | $ | 23.3 |            |   | $ | 193.1 |       |  | $ | 1,253.8 |        
|                                | Goodwill acquired during the period                                          |                  |         |             |                  |   |      |           |   |   |       | 11.0  |  |   |         | 11.0    |  
|                                | FAS 142 Impairment                                                           |                  |         |             |                  |   |      | (11.7      | ) |   |       |      |  |   |         | (11.7   | )
|                                | Purchase accounting adjustments, related to fixed
    assets and intangibles |                  |         | (75.0        | )                |   |      |           |   |   |       |      |  |   |         | (75.0   | )
|                                | Other adjustments, net(A)                                                    |                  |         | 79.0         |                  |   |      | 3.5        |   |   |       | 4.9   |  |   |         | 87.4    |  
|                                |                                                                              |                  |         |              |                  |   |      |            |   |   |       |      
|                                | Balance as of December 31, 2002                                              |                  | $       | 1,041.4      |                  |   | $    | 15.1       |   |   | $     | 209.0 |  |   | $       | 1,265.5 |  
|                                |                                                                              |                  |         |              |                  |   |      |            |   |   |       |      



|    |                                                 
|--- | ------------------------------------------------
|(A) | Includes effect of foreign currency translation.

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

c.     Intangible
Assets

The components of the Companys acquired and
other amortizable intangible assets as of December 31, 2002
were as follows (in millions):

|                      |  |      |       |              |  |              |      |  |  |   |      | 
|--------------------- |  | ---- | ----- | ------------ |  | ------------ | ---- |  |  | - | ---- | 
|                      |  |      |       | Accumulated  |  | Net Carrying
|                      |  | Cost |       | Amortization |  | Amount      
|                      |  |      |       |              |  |             
|Customer contracts    |  | $    | 51.0  |              |  | $            | 6.3  |  |  | $ | 44.7 | 
|Patents and other     |  |      | 31.5  |              |  |              | 3.5  |  |  |   | 28.0 | 
|Non-compete agreement |  |      | 18.0  |              |  |              | 5.4  |  |  |   | 12.6 | 
|                      |  |      |       |              |  |              |      |  |  |   |      | 
|                      |  | $    | 100.5 |              |  | $            | 15.2 |  |  | $ | 85.3 | 
|                      |  |      |       |              |  |              |      |  |  |   |      | 

Amortization expense for intangible assets for
the periods ending December 31, 2003, 2004, 2005, 2006, and
thereafter will be $14.1, $15.5, $15.6, $13.1, and $27.1,
respectively.

4.     Inventories

Inventory balances are summarized below (in
millions):

|                |  |              |       |              |  |   |       | 
|--------------- |  | ------------ | ----- | ------------ |  | - | ----- | 
|                |  | December 31, |       | December 31,
|                |  | 2002         |       | 2001        
|                |  |              |       |             
|Raw materials   |  | $            | 90.3  |              |  | $ | 73.8  | 
|Work in process |  |              | 33.7  |              |  |   | 25.6  | 
|Finished goods  |  |              | 47.6  |              |  |   | 33.2  | 
|                |  |              |       |              |  |   |       | 
|                |  | $            | 171.6 |              |  | $ | 132.6 | 
|                |  |              |       |              |  |   |       | 

5.     Other
Current Assets

Other current asset balances are summarized below
(in millions):

|                                                                  |  |              |       |              |  |   |       | 
|----------------------------------------------------------------- |  | ------------ | ----- | ------------ |  | - | ----- | 
|                                                                  |  | December 31, |       | December 31,
|                                                                  |  | 2002         |       | 2001        
|                                                                  |  |              |       |             
|Deferred tax asset                                                |  | $            | 25.3  |              |  | $ | 25.3  | 
|Reimbursable tooling and preproduction design and
    development |  |              | 83.0  |              |  |   | 53.7  | 
|Other                                                             |  |              | 69.1  |              |  |   | 52.9  | 
|                                                                  |  |              |       |              |  |   |       | 
|                                                                  |  | $            | 177.4 |              |  | $ | 131.9 | 
|                                                                  |  |              |       |              |  |   |       | 

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

6.     Property,
Plant and Equipment, Net

Property, plant and equipment, net, are
summarized below (in millions):

|                              |  |              |         |   |              |   |         |  
|----------------------------- |  | ------------ | ------- | - | ------------ | - | ------- | -
|                              |  | December 31, |         |   | December 31, |  
|                              |  | 2002         |         |   | 2001         |  
|                              |  |              |         |   |              |  
|Land and improvements         |  | $            | 26.1    |   |              | $ | 25.5    |  
|Buildings                     |  |              | 177.8   |   |              |   | 168.8   |  
|Machinery and equipment       |  |              | 959.6   |   |              |   | 823.3   |  
|Leasehold improvements        |  |              | 27.4    |   |              |   | 11.7    |  
|Construction in progress      |  |              | 106.2   |   |              |   | 45.0    |  
|                              |  |              |         |   |              |  
|                              |  |              | 1,297.1 |   |              |   | 1,074.3 |  
|Less accumulated depreciation |  |              | (559.3  | ) |              |   | (461.7  | )
|                              |  |              |         |   |              |  
|                              |  | $            | 737.8   |   |              | $ | 612.6   |  
|                              |  |              |         |   |              |  

7.     Accrued
Expenses

Accrued expenses are summarized below (in
millions):

|                              |  |              |       |  |              |   |       | 
|----------------------------- |  | ------------ | ----- |  | ------------ | - | ----- | 
|                              |  | December 31, |       |  | December 31, |  
|                              |  | 2002         |       |  | 2001         |  
|                              |  |              |       |  |              |  
|Payroll and employee benefits |  | $            | 52.9  |  |              | $ | 48.4  | 
|Interest                      |  |              | 10.8  |  |              |   | 14.8  | 
|Insurance                     |  |              | 16.9  |  |              |   | 39.0  | 
|Restructuring reserves        |  |              | 28.2  |  |              |   | 8.0   | 
|Taxes payable                 |  |              | 12.0  |  |              |   | 4.6   | 
|Other                         |  |              | 194.1 |  |              |   | 134.6 | 
|                              |  |              |       |  |              |  
|                              |  | $            | 314.9 |  |              | $ | 249.4 | 
|                              |  |              |       |  |              |  

8.     Short-Term
Borrowings

The Company utilizes uncommitted lines of credit
to satisfy a portion of its short-term working capital
requirements of certain of its foreign affiliates. As of
December 31, 2002, the Company had unsecured lines of
credit from financial institutions of $36.5 million, of
which $10.5 million was outstanding with $26.0 million
available. The weighted average interest rate on the outstanding
borrowings at December 31, 2002 was approximately 8.3%.

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

9.     Long-Term
Debt and Capital Lease Obligations

Long-term debt and capital lease obligations are
summarized below (in millions):

|                                                                                     |                                             |              |         |       |              |   |         |       | 
|------------------------------------------------------------------------------------ | ------------------------------------------- | ------------ | ------- | ----- | ------------ | - | ------- | ----- | 
|                                                                                     |                                             | December 31, |         |       | December 31, |  
|                                                                                     |                                             | 2002         |         |       | 2001         |  
|                                                                                     |                                             |              |         |       |              |  
|Senior Secured Credit Facilities:                                                    |                                             |              |         |       |              |   |         |      
|                                                                                     | Tranche A Term Loan Facility                |              | $       | 83.8  |              |   | $       | 100.0 | 
|                                                                                     | Tranche B Term Loan Facility                |              |         | 293.8 |              |   |         | 300.0 | 
|                                                                                     | Revolving Credit Facility                   |              |         |      |              |   |         |      | 
|Public Debt:                                                                         |                                             |              |         |       |              |   |         |      
|                                                                                     | 11 1/2% Senior Subordinated Notes, due 2006 |              |         | 400.0 |              |   |         | 400.0 | 
|                                                                                     | 10 3/4% Senior Notes, due 2011              |              |         | 500.0 |              |   |         | 500.0 | 
|Other (including capital lease obligations)                                          |                                             |              | 1.1     |       |              |   | 2.5     |      
|                                                                                     |                                             |              |         |       |              |  
|Total debt                                                                           |                                             |              | 1,278.7 |       |              |   | 1,302.5 |      
|Less current maturities (including current
    portion of capital lease obligations) |                                             |              | (23.5   | )     |              |   | (19.9   | )    
|                                                                                     |                                             |              |         |       |              |  
|Total Long-term debt and capital lease obligations                                   |                                             | $            | 1,255.2 |       |              | $ | 1,282.6 |      
|                                                                                     |                                             |              |         |       |              |  

Senior
Secured Credit Facilities

In December 2001, in conjunction with the
TAC-Trim acquisition, the Company entered into new Senior
Secured Credit Facilities, which refinanced its prior bank
credit facilities. The principal and interest on the prior bank
credit facilities totaled $362.5 million. The cost and
expenses associated with the refinancing of the prior bank
credit facilities totaling $25.7 million were deferred and
will be amortized over the four-year life of the term loans
described below. In addition, the Company incurred a
$5.0 million, net of tax, extraordinary charge in
connection with the retirement of the prior bank credit
facilities.

The Senior Secured Credit Facilities include a
floating rate Revolving Facility and two floating rate Term Loan
Facilities that mature on December 31, 2005. The Revolving
Facility allows the Company to borrow revolving loans up to
$175.0 million including Canadian dollars up to
$75.0 million. The facility can be utilized for letters of
credit. The Term Loan Facilities consist of a Tranche A Term
Loan with an original principal balance of $100.0 million
and a Tranche B Term Loan with an original principal balance of
$300.0 million. As required by the credit agreement, the
full amounts of the Term Loan Facilities were drawn down on the
closing date. As of December 31, 2002 the Tranche A Term
Loan and Tranche B Term Loan had principal balances of
$83.8 million and $293.8 million, respectively.
Amounts borrowed under the Term Loan Facilities that are repaid
or prepaid cannot be reborrowed. The Tranche A Term Loan
Facility is payable in quarterly installments that increase in
amounts each year until maturity. The Tranche B Term Loan
Facility is payable in quarterly installments of
$0.8 million for the first three years and quarterly
installments of $72.7 million during the final year.

Under the Senior Secured Credit Facilities, the
interest rate on the Revolving Facility is, at the
Companys option, London Inter-Bank Offer Rate
(LIBOR) plus 3.75% or the Alternate Base Rate
(ABR) plus 2.75%. The ABR is the highest of The JP
Morgan Chase (Chases) announced prime rate,
the Federal Funds Rate plus 0.5% and Chases base
certificate of deposit rate plus 1%. A per annum fee equal to
the spread over the LIBOR accrue on the face amount of letters
of credit. Also, there is a 1.00% commitment fee on the unused
portion of the facility. The interest rates on the
Canadian-dollar denominated debt is at the Companys option
(the Canadian Prime Rate) plus 3.75% or the bill of
exchange rate (Bankers Acceptance or
BA) denominated in Canadian dollars for one, two,
three or six months plus

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

2.75%. The interest rate on the Tranche A Term
Loan Facility is, at the Companys option, LIBOR plus 3.75%
or the ABR plus 2.75%, subject to adjustment quarterly, based on
performance targets. The interest rate on the Tranche B Term
Loan Facility is, at the Companys option, either LIBOR
plus 4.00% or ABR plus 3.00%. On any Tranche B Term Loans repaid
whether voluntary or mandatory, there is a prepayment premium of
3.00% the first year, 2.00% the second year and 1.00% the third
year. The LIBOR rate shall not be less than 3.00% per annum. The
weighted average rate of interest on the Senior Secured Credit
Facilities at December 31, 2002 and 2001 was 6.94% and
7.67%, respectively.

Borrowings under the Senior Secured Credit
Facility are secured by a first priority lien on the assets of
the Company, Products and its U.S. and Canadian subsidiaries
with certain exceptions including assets included in the
Companys receivables facility, certain scheduled assets,
and certain assets whose value relative to cost of lien
perfection was deemed too low to include, as well as a pledge of
stock of Products and its significant subsidiaries and certain
intercompany debt and guarantees from the Company and its U.S.
subsidiaries (subject to certain exceptions).

The Senior Secured Credit Facilities contain
restrictive covenants including maintenance of interest coverage
and leverage ratios and various other restrictive covenants that
are customary for such facilities. The covenants of the Senior
Credit Facilities limit investments, dividends or other
distributions of capital stock, capital expenditures, the
purchase of Preferred Stock of subsidiary, the prepayment of
debt other than loans under the senior credit facilities, liens
and certain lease transactions. Should the Company sell assets
or incur debt over $20.0 million, proceeds must be used to
pre-pay the term loans in an amount based on excess cash flow as
measured by the leverage ratio performance. The covenants permit
the payment of dividends on the Preferred Stock not to exceed 8%
per annum unless at least 50% of the Senior Secured Term Loan
Facilities are repaid or the proforma total Leverage Ratio is
less than 2.5 to 1. The covenants require; that the interest
coverage ratio be less than 2.35 to 1.00 for the quarter ended
December 31, 2002, increasing each quarter with an ultimate
ratio of 3.25 to 1.00 on December 31, 2005, and that the
leverage ratio be no greater than 4.25 to 1.00 on
December 31, 2002 decreasing each quarter with an ultimate
ratio of 3.00 to 1.00 on December 31, 2005. The
Companys sources of liquidity may be inadequate if it is
unable to successfully integrate acquired businesses in
accordance with its expectations, economic conditions worsen, or
the Company is unable to meet financial or operating covenants
as a result of the foregoing. The Company continues to explore
other sources of liquidity, including additional debt, but
existing debt instruments may limit the Companys ability
to incur additional debt, and the Company may be unable to
secure equity or other financings. The Company also believes it
could obtain favorable modifications related to existing debt
instruments and related covenants.

Effective December 2002, the Company amended its
Senior Credit Facilities to provide for the purchase of certain
assets in Spain and Portugal as well as the remaining 50%
interest in the Companys joint venture in Italy.

Public
Debt

In December 2001, Products issued 10 3/4%
Senior Notes due 2011 in a total principal amount of
$500.0 million. The notes were not registered under the
Securities Act of 1933 and were offered only to qualified
institutional buyers. In June 2002, the Company effected and
registered an exchange offer of a new and identical issue of
10 3/4% Senior Notes due 2011 of Products in exchange for
the outstanding Senior Notes of Products. The exchange offer
raised no new proceeds for the Company and was made in
accordance with contractual commitments arising from the
December 2001 issuance. The cost of issuing the notes totaling
about $23.1 million was deferred and will be amortized over
10 years.

The notes are unconditionally guaranteed on an
unsecured senior basis by the parent and by each wholly owned
domestic subsidiary that is a guarantor of the Bank Credit
Facilities as of the issue date. This is all of the
Companys wholly owned domestic subsidiaries other than its
receivable and insurance subsidiaries. The Debt evidenced by the
Notes and Parent and Subsidiary Guarantees are unsecured senior
obligations of the

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Company ranking senior in right of payment to all
existing and future Subordinated Debt including the Existing
Notes and related Guarantees and future unsecured and
unsubordinated Debt. The Notes are redeemable prior to
December 31, 2004 only in the event the Company receives
cash proceeds from one or more equity offerings in which case
the Company may at its option use all or a portion of such cash
proceeds to redeem up to 35% of the principal amount of the
notes. The Notes will be subject to redemption at the option of
the Company, in whole or in part at any time after
December 31, 2006 at a stated premium redemption price
expressed as a percentage in excess of the principal amount.
After December 31, 2008, the redemption price is 100%.
Within 30 days of the occurrence of a change of ownership
control, unless the Company has mailed a redemption notice with
respect to all outstanding Notes, the Company will be required
to make an offer to purchase all outstanding Notes at a purchase
price equal to 101% of their principal amount. The indenture
governing the notes limits the Companys ability to issue
more debt, pay dividends and make distributions, repurchase
stock, make investments, merge or consolidate, transfer assets,
enter into transactions with affiliates and issue stock of
subsidiaries. These restrictive covenants are customary for such
securities and are subject to a number of exceptions.

In June 1996, Products, issued at face value
$400 million principal amount of 11 1/2% Senior
Subordinated Notes due 2006 which are guaranteed by the Company.
The indenture governing the 11 1/2% Senior Subordinated
Notes generally prohibits the Company, Products and any
Restricted Subsidiary (as defined) from making certain payments
and investments unless a certain financial test is satisfied and
the aggregate amount of such payments and investments since the
issue date is less than a specified amount. The prohibition is
subject to a number of significant exceptions, including
dividends to stockholders of the Company or stock repurchases
not exceeding $10 million in any fiscal year or $20 million
in the aggregate, dividends to stockholders of the Company or
stock repurchases in the amount of the net proceeds from the
sale of the Companys Imperial Wallcoverings, Inc.
subsidiary (Wallcoverings) and dividends to the
Company to permit it to pay its operating and administrative
expenses. The indenture also contains other restrictive
covenants (including, among others, limitations on the
incurrence of debt, asset dispositions and transactions with
affiliates), which are customary for such securities. These
covenants are also subject to a number of significant exceptions.

The Company solicited and received consent from
holders of a sufficient amount of the outstanding principal of
the 11 1/2% Senior Subordinated Notes allowing the Change
of Control precipitated by the Heartland Transaction. A Second
Supplemental Indenture dated February 8, 2001 amended the
Senior Subordinated Notes indenture to reflect this and certain
other changes, including allowance for the incurrence of debt in
the form of the Term Loan D Facility. In connection with the
TAC-Trim acquisition, the Company further amended the indenture
governing these notes to make each subsidiary guarantor of the
new 10 3/4% Senior Notes a guarantor of these existing
notes on a senior subordinated basis.

At December 31, 2002, the scheduled annual
maturities of long-term debt and capital lease obligations are
as follows (in millions):

|            |  |   |         | 
|----------- |  | - | ------- | 
|Year Ending |  |  
|            |  |  
|2003        |  | $ | 23.5    | 
|2004        |  |   | 27.8    | 
|2005        |  |   | 327.4   | 
|2006        |  |   | 400.0   | 
|2007        |  |   |        | 
|Later years |  |   | 500.0   | 
|            |  |   |        
|            |  | $ | 1,278.7 | 
|            |  |   |        

Total interest paid by the Company on all debt
was $139.9 million, $76.3 million, and $94.8 million
for 2002, 2001, and 2000, respectively.

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

10.     Mandatorily
Redeemable Preferred Stock of Subsidiary

In December 2001, Products issued 182,700 shares
of its Series A Redeemable Preferred Stock, 123,700 shares
of Series B Redeemable Preferred Stock and 20,000 shares of
Series C Redeemable Preferred Stock. The Preferred Stock
was recorded at fair value of $146.9 million, which was
less than the liquidation value of $1,000 per share or
$326.4 million. The estimated fair value was based on
market prices for securities with similar terms, maturities and
risk characteristics, and included a liquidation discount to
reflect market conditions and was agreed to by the Company and
Textron as part of the TAC-Trim purchase agreement. The
difference between the initial recorded value and the
liquidation value is being accreted over the 11 year terms
of the securities. The 2002 and 2001 results included subsidiary
preferred stock requirements calculated using the effective
interest method of $38.4 million and $2.4 million,
respectively. The preferred stock requirement includes both
accretion and dividend costs of $7.6 million and
$30.8 million, respectively for 2002 compared to
$0.9 million and $1.5 million, respectively for 2001.
The carrying value of the Redeemable Preferred Stock includes
accretion and accrued dividends.

In June 2002, $100.0 million of proceeds
from the 16 million share common stock offering was used to
repurchase Series A preferred stock at a price of 75% of
its liquidation preference of $133.3 million. The redeemed
Series A preferred stock had a carrying value of
$63.7 million. In accordance with generally accepted
accounting principles, the difference between the
$63.7 million in carrying value and the $100.0 million
cash payment was excluded from net income and recorded as a
charge to equity in the Companys accumulated deficit
account. This $36.3 million equity charge is included in
the computation of earnings/(loss) per share and is included in
the net loss available to common shareholders.

Products is required to redeem all Series A
and B Preferred Stock outstanding on January 1, 2013 and
Series C Preferred Stock outstanding on February 1,
2022. The redemption price is equal to 100% of the liquidation
preference plus accrued and unpaid dividends plus common equity
participation for the Series C Preferred Stock. The
Series A and Series B Preferred Stock are redeemable
at Products option, in whole or in part, on or after
January 1, 2007 at a stated percent in excess of the
liquidation preference plus accrued and unpaid dividends. The
Series C Preferred stock is not optionally redeemable.
However, at Products option or the holders of a majority
of outstanding shares of Series C Preferred Stock, the
Series C Preferred Stock is exchangeable for Series B
Preferred Stock at any time following the second anniversary of
its issuance date but prior to the third anniversary of its
issuance date.

Shareholders of Series A Preferred Stock are
entitled to receive dividends accruing annually on the
liquidation preference at a rate of 11% for dividend periods
ending on or prior to July 1, 2003, and 15% thereafter.
Holders of Series B and C Preferred Stock are entitled to
receive dividends accruing annually on the liquidation
preference at a rate of 12% for dividend periods ending on or
prior to July 1, 2003, and 16% thereafter.

Products may at its option through
January 1, 2004 accrue up to the full amount of all
dividends in lieu of cash payment of such dividends. Thereafter,
Products may at its option elect to accrue dividends of up to 7%
of the liquidation value annually on Series A Preferred
Stock and up to 8% of the liquidation value on Series B and
C Preferred Stock. Accrued dividends will be added to the
liquidation preference of the applicable series of Preferred
Stock. The Company uses the effective interest method in
calculating accretion.

Upon voluntary or involuntary liquidation,
dissolution or winding-up of Products, holders of the Preferred
Stock are entitled to be paid out of the assets of Products
available for distribution to stockholders in the amount of
$1,000 per share plus the total accrued dividends prior to any
distribution to holders of equity securities which ranks junior
to the Preferred Stock. In addition, the holders of
Series C Preferred Stock are entitled to a participation in
distributions to Products common equity tied to appreciation in
the value of Products common equity subsequent to the issuance
date, not to exceed $2.0 million for all Series C
Preferred Stock outstanding.

F-19



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

If Products experiences a change of ownership
control, the holders of the Preferred Stock must be given the
opportunity to sell to Products their Preferred Stock at 100% of
the liquidation preference plus accrued and unpaid dividends,
plus, in the case of Series C Preferred Stock, common
equity participation. In the event that Products does not meet
or exceed certain financial criteria based on interest coverage,
the dividend rate applicable solely to Series A Preferred
Stock will increase by 1.00% for the next full dividend period
and by an additional 0.50% for each dividend period thereafter
provided that the dividend rate does not exceed 20%. The
provision of the certificate of designation limits Products
ability to issue more debt, pay dividends and make
distributions, repurchase stock, make investments, merge or
consolidate, transfer assets, enter into transactions with
affiliates and issue stock of subsidiaries. These covenants are
subject to a number of important exceptions.

11.     Receivables
Facility

The Company has an agreement to sell, on an
ongoing basis, the trade accounts receivable of certain business
operations to a bankruptcy-remote, special purpose subsidiary,
wholly owned and consolidated by the Company. The receivables
subsidiary (Carcorp) will, subject to certain conditions, from
time to time, sell an undivided fractional ownership interest in
a pool of domestic and certain Canadian receivables, up to
$250 million, to various multi-seller commercial paper
conduits supported by a committed liquidity facility. Upon sale
to the conduit, Carcorp will hold a subordinated retained
interest in the receivables. Under the terms of the agreement,
new receivables are added to the pool as collections reduce
previously sold receivables. The Company expects to service,
administer and collect the receivables on behalf of Carcorp and
the conduit. The proceeds of sale will be less than the face
amount of accounts receivable sold by an amount that
approximates the purchasers financing costs. In September
2002, the Company amended the receivables facility lengthening
its term to expire in December 2004.

Restrictions:This receivables facility contains certain restrictions on
Carcorp (including maintenance of $60.0 million net worth)
and on the sellers (including limitations on liens on
receivables, modifications of the terms of receivables, and
changes in credit and collection practices) customary for
facilities of this type. The commitments under the receivables
facility are subject to termination prior to their term upon the
occurrence of certain events, including payment defaults, breach
of covenants, including defined interest coverage and leverage
ratios, bankruptcy, default by the Company in servicing the
receivables and failure of the receivables to satisfy certain
performance criteria.

As of December 31, 2002 and 2001,
Carcorps total receivables pool was $253.3 million
and $334.6 million, respectively. When the Company sells
receivables to Carcorp, it retains a subordinated interest in
the receivables sold. As of December 31, 2002, the
utilization of the Receivables Facility was $66.0 million
but there was approximately $93.2 million of available but
unutilized funding. At December 31, 2001, utilization of
the Receivables Facility was $79.9 million and an
additional $118.6 million of funding was available but
unutilized.

During 2002, the loss on the sale of the
receivables totaled $4.2 million. During 2001 and 2000 the
losses on the sale of receivables totaled $10.8 million and
$9.2 million, respectively. The 2001 and 2000 loss included
$5.6 million and $1.6 million in expenses and fees to
replace the prior facility. The usage fee under the facility is
1.50%. In addition, the Company is required to pay a fee of
0.50% on the unused portion of the facility and a discount. The
discount on sold interests is approximately equal to the
interest rate paid by the conduits to the holders of the
commercial paper plus a usage fee. The discount rate at
December 31, 2002 was 1.45% compared to 3.53% at
December 31, 2001.

In December 2001, as part of the refinancing
completed in connection with the TAC-Trim acquisition, Products
entered into a new receivables facility and repaid the
outstanding balance of $128.7 million of the Companys
previous receivables facility entered into in December 1999,
which was not renewed. The maximum funding available to the
Company on a revolving basis under the Old Receivables Facility
was $171.6 million.

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The Company estimates the fair value of its
retained interest by considering two key assumptions: the
payment rate, which is derived from the average life of the
accounts receivable, which is less than 60 days, and the
rate of expected credit losses. Based on the Companys
favorable collection experience and the short-term nature of its
receivables, both assumptions are highly predictable. Therefore,
the Companys estimated fair value of its retained
interests in the pool of eligible receivables is approximately
equal to the previous cost, less the associated allowance for
doubtful accounts.

The proceeds received by Carcorp from collections
on receivables, after the payment of expenses and amounts due,
are used to purchase new receivables from the Sellers. During
2002 and 2001, Carcorp had net cash collections of approximately
$2.9 billion and $1.6 billion, respectively. These
funds were used to purchase new receivables from the Sellers,
under the Receivables Facility.

12.     Operating
Leases

The Company has operating leases for land and
buildings for periods up to twenty years and transportation,
operating and administrative equipment for periods ranging from
one to twelve years. The majority of these leases contain
renewal provisions.

The Company has equipment lease agreements and
building lease agreements with several lessors which, subject to
specific approval, provide availability of funding for operating
leases and sale-leasebacks as allowed in its other financing
agreements. The Company has a purchase option on certain
equipment at the end of the lease term based on the fair market
value of the equipment or to purchase some or all of the
equipment at prices determined under the agreement. The Company
has classified the leases as operating.

At December 31, 2002, future minimum lease
payments under operating leases for continuing operations are as
follows (in millions):

|            |  |   |       | 
|----------- |  | - | ----- | 
|Year Ending |  |  
|            |  |  
|2003.       |  | $ | 50.0  | 
|2004        |  |   | 57.3  | 
|2005        |  |   | 38.1  | 
|2006        |  |   | 34.7  | 
|2007        |  |   | 33.6  | 
|Later Years |  |   | 133.2 | 
|            |  |   |      
|            |  | $ | 346.9 | 
|            |  |   |      

Rental expense of continuing operations under
operating leases was $57.1 million, $29.2 million, and
$20.8 million, for fiscal 2002, 2001, and 2000,
respectively.

During 2002, the Company received net proceeds
(after fees) of approximately $14.8 million from sale and
leasebacks of real property and equipment. The aggregate lease
expenses associated with these leases will be
$18.8 million, $2.6 million of which relates to 2003.

During 2001, Products entered into sale and
leaseback transactions for certain manufacturing equipment and
non-manufacturing properties. The transactions resulted in the
recognition of a $4.4 million net deferred asset that is
being amortized over the lease term, and the recognition of an
$8.7 million loss.

During 2001, the Company received net proceeds
(after fees) of approximately $86.2 million from sale and
leasebacks of real property and equipment, which it used to
reduce outstanding debt. The aggregate lease expenses associated
with these leases will be $88.8 million, $12.5 million
of which related to 2002. To the extent permitted by the credit
facility, the Company may enter into additional similar leasing
arrangements

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

from time to time. As part of these
sale-leaseback transactions, Products sold and contemporaneously
leased back real property from unrelated third parties, and
received net proceeds (after fees) of $46.4 million. Refer
to Note 19 for a discussion regarding certain sale and leaseback
transactions that were entered into with related parties.

13.     Employee
Benefit Plans

A.     Defined
Benefit Pension and Postretirement Benefit
Plans

Subsidiaries of the Company have defined benefit
pension plans covering substantially all employees who meet
eligibility requirements. Plan benefits are generally based on
years of service and employees compensation during their
years of employment. Funding of retirement costs for these plans
complies with the minimum funding requirements specified by the
Employee Retirement Income Security Act. Assets of the pension
plans are invested primarily in equity and fixed income
securities.

Subsidiaries of the Company have also provided
postretirement life and health coverage for certain retirees
under plans currently in effect. Many of the subsidiaries
domestic and Canadian employees may be eligible for coverage if
they reach retirement age while still employed by the Company.
Most of these plans are contributory. In general, future
increases in costs are passed on fully to the retiree. However,
future increases in costs for the Canadian divisions and limited
domestic operations are shared between the Company and the
retiree.

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The following tables provide a reconciliation of
the projected benefit obligation, a reconciliation of plan
assets, the funded status of the plans, and amounts recognized
in the Companys consolidated balance sheets at
December 31, 2002 and December 31, 2001 (in millions).

|                                                              |                                                |                                          |              |       |                         |  |              |              |       |  |              |       |        |   |              |        |        |  
|------------------------------------------------------------- | ---------------------------------------------- | ---------------------------------------- | ------------ | ----- | ----------------------- |  | ------------ | ------------ | ----- |  | ------------ | ----- | ------ | - | ------------ | ------ | ------ | -
|                                                              |                                                |                                          |              |      
|                                                              |                                                | Pension Benefits                         |              |       | Postretirement Benefits | 
|                                                              |                                                | Fiscal Year Ended                        |              |       | Fiscal Year Ended       | 
|                                                              |                                                |                                          |              |       |                         | 
|                                                              |                                                | December 31,                             |              |       | December 31,            |  |              | December 31, |       |  | December 31, |      
|                                                              |                                                | 2002                                     |              |       | 2001                    |  |              | 2002         |       |  | 2001         |      
|                                                              |                                                |                                          |              |       |                         |  |              |              |       |  |              |      
|Measurement Date                                              |                                                |                                          | September 30 |       |                         |  | September 30 |              |       |  | September 30 |       |        |   | September 30 |       
|Change in benefit obligation:                                 |                                                |                                          |              |       |                         |  |              |              |       |  |              |       |        |   |              |       
|                                                              | Benefit obligation at beginning of year        |                                          | $            | 372.2 |                         |  | $            | 175.0        |       |  | $            | 151.2 |        |   | $            | 52.6   |       
|                                                              | Service cost                                   |                                          |              | 11.3  |                         |  |              | 6.8          |       |  |              | 1.7   |        |   |              | 1.0    |       
|                                                              | Interest cost                                  |                                          |              | 23.9  |                         |  |              | 12.7         |       |  |              | 6.9   |        |   |              | 3.8    |       
|                                                              | Employee contributions                         |                                          |              | 0.6   |                         |  |              |             |       |  |              | 0.9   |        |   |              | 0.9    |       
|                                                              | Amendments                                     |                                          |              | 2.3   |                         |  |              | 1.0          |       |  |              | (62.6 | )      |   |              |       |       
|                                                              | Actuarial gain                                 |                                          |              | 16.9  |                         |  |              | 2.3          |       |  |              | 15.0  |        |   |              | (1.3   | )     
|                                                              | Purchase Accounting Adjustments/ Acquisitions  |                                          |              | (26.4 | )                       |  |              | 190.2        |       |  |              | (12.4 | )      |   |              | 99.4   |       
|                                                              | Benefits paid                                  |                                          |              | (19.4 | )                       |  |              | (14.1        | )     |  |              | (6.4  | )      |   |              | (4.7   | )     
|                                                              | Currency adjustment                            |                                          |              | 2.0   |                         |  |              | (1.7         | )     |  |              |      |        |   |              | (0.5   | )     
|                                                              | Other                                          |                                          |              | 0.8   |                         |  |              |             |       |  |              | (0.5  | )      |   |              |       |       
|                                                              |                                                |                                          |              |       |                         |  |              |              |       |  |              |      
|                                                              |                                                | Benefit obligation at end of year        |              | $     | 384.2                   |  |              | $            | 372.2 |  |              | $     | 93.8   |   |              | $      | 151.2  |  
|                                                              |                                                |                                          |              |       |                         |  |              |              |       |  |              |      
|Change in plan assets:                                        |                                                |                                          |              |       |                         |  |              |              |       |  |              |       |        |   |              |       
|                                                              | Fair value of plan assets at beginning of year |                                          | $            | 338.0 |                         |  | $            | 164.2        |       |  | $            |      |        |   | $            |       |       
|                                                              | Actual return on plan assets                   |                                          |              | (34.4 | )                       |  |              | (24.1        | )     |  |              |      |        |   |              |       |       
|                                                              | Employer contributions                         |                                          |              | 6.6   |                         |  |              | 4.3          |       |  |              | 5.5   |        |   |              | 3.8    |       
|                                                              | Employee contributions                         |                                          |              | 0.6   |                         |  |              |             |       |  |              | 0.9   |        |   |              | 0.9    |       
|                                                              | Benefits paid                                  |                                          |              | (19.4 | )                       |  |              | (14.1        | )     |  |              | (6.4  | )      |   |              | (4.7   | )     
|                                                              | Purchase Accounting Adjustments/ Acquisitions  |                                          |              | 11.3  |                         |  |              | 209.3        |       |  |              |      |        |   |              |       |       
|                                                              | Currency adjustment                            |                                          |              | 0.3   |                         |  |              | (1.6         | )     |  |              |      |        |   |              |       |       
|                                                              |                                                |                                          |              |       |                         |  |              |              |       |  |              |      
|                                                              |                                                | Fair value of plan assets at end of year |              | $     | 303.0                   |  |              | $            | 338.0 |  |              | $     |       |   |              | $      |       |  
|                                                              |                                                |                                          |              |       |                         |  |              |              |       |  |              |      
|Reconciliation of funded status
    to net amount recognized: |                                                |                                          |              |       |                         |  |              |              |       |  |              |       |        |   |              |       
|                                                              | Funded status                                  |                                          | $            | (81.2 | )                       |  | $            | (34.2        | )     |  | $            | (93.8 | )      |   | $            | (151.2 | )     
|                                                              | Unrecognized net loss (gain)                   |                                          |              | 131.7 |                         |  |              | 48.1         |       |  |              | (5.0  | )      |   |              | (21.5  | )     
|                                                              | Unrecognized prior service cost (gain)         |                                          |              | 5.0   |                         |  |              | 4.0          |       |  |              | (63.4 | )      |   |              | (6.4   | )     
|                                                              |                                                |                                          |              |       |                         |  |              |              |       |  |              |      
|                                                              |                                                | Net amount recognized                    |              | $     | 55.5                    |  |              | $            | 17.9  |  |              | $     | (162.2 | ) |              | $      | (179.1 | )
|                                                              |                                                |                                          |              |       |                         |  |              |              |       |  |              |      

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

|                                                                     |                                      |                       |   |       |                         |  |   |              |      |  |              |        |        |   |   |        |        |  
|-------------------------------------------------------------------- | ------------------------------------ | --------------------- | - | ----- | ----------------------- |  | - | ------------ | ---- |  | ------------ | ------ | ------ | - | - | ------ | ------ | -
|                                                                     |                                      |                       |   |      
|                                                                     |                                      | Pension Benefits      |   |       | Postretirement Benefits | 
|                                                                     |                                      | Fiscal Year Ended     |   |       | Fiscal Year Ended       | 
|                                                                     |                                      |                       |   |       |                         | 
|                                                                     |                                      | December 31,          |   |       | December 31,            |  |   | December 31, |      |  | December 31, |       
|                                                                     |                                      | 2002                  |   |       | 2001                    |  |   | 2002         |      |  | 2001         |       
|                                                                     |                                      |                       |   |       |                         |  |   |              |      |  |              |       
|Amounts recognized in the
    consolidated balance sheet consist of: |                                      |                       |   |       |                         |  |   |              |      |  |              |        |        |   |   |       
|                                                                     | Prepaid benefit cost                 |                       | $ | 2.1   |                         |  | $ | 18.7         |      |  | $            |       |        |   | $ |       |       
|                                                                     | Accrued benefit liability            |                       |   | (67.6 | )                       |  |   | (25.6        | )    |  |              | (162.2 | )      |   |   | (179.1 | )     
|                                                                     | Intangible asset                     |                       |   | 6.3   |                         |  |   | 5.8          |      |  |              |       |        |   |   |       |       
|                                                                     | Accumulated other comprehensive loss |                       |   | 114.7 |                         |  |   | 19.0         |      |  |              |       |        |   |   |       |       
|                                                                     |                                      |                       |   |       |                         |  |   |              |      |  |              |       
|                                                                     |                                      | Net amount recognized |   |       | $ 55.5                  |  |   | $            | 17.9 |  |              | $      | (162.2 | ) |   | $      | (179.1 | )
|                                                                     |                                      |                       |   |       |                         |  |   |              |      |  |              |       

The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for the pension
plans with accumulated benefit obligations in excess of plan
assets were $374.2 million, $363.9 million and
$291.1 million, respectively, as of December 31, 2002
and $175.2 million, $165.9 million and
$121.7 million, respectively, as of December 31, 2001.

The net periodic benefit cost of continuing
operations for fiscal 2002, 2001, and 2000 includes the
following components (in millions):

|                                             |                                    |                           |   |       |              |  |   |              |     |  |   |       |     | 
|-------------------------------------------- | ---------------------------------- | ------------------------- | - | ----- | ------------ |  | - | ------------ | --- |  | - | ----- | --- | 
|                                             |                                    |                          
|                                             |                                    | Pension Benefits          |  
|                                             |                                    | Fiscal Year Ended         |  
|                                             |                                    |                           |  
|                                             |                                    | December 31,              |   |       | December 31, |  |   | December 31, |    
|                                             |                                    | 2002                      |   |       | 2001         |  |   | 2000         |    
|                                             |                                    |                           |   |       |              |  |   |              |    
|Components of net periodic
    benefit cost: |                                    |                           |   |       |              |  |   |              |     |  |   |      
|                                             | Service cost                       |                           | $ | 11.3  |              |  | $ | 6.8          |     |  | $ | 6.7   |    
|                                             | Interest cost                      |                           |   | 23.9  |              |  |   | 12.7         |     |  |   | 12.8  |    
|                                             | Expected return on plan assets     |                           |   | (31.6 | )            |  |   | (14.6        | )   |  |   | (14.6 | )  
|                                             | Amortization of prior service cost |                           |   | 0.2   |              |  |   | 0.2          |     |  |   | 0.1   |    
|                                             | Settlement loss (gain)             |                           |   |      |              |  |   | (0.1         | )   |  |   |      |    
|                                             | Curtailment loss (gain)(A)         |                           |   | 2.0   |              |  |   |             |     |  |   | (1.0  | )  
|                                             | Recognized net actuarial loss      |                           |   | 0.6   |              |  |   | 0.1          |     |  |   | 0.1   |    
|                                             |                                    |                           |   |       |              |  |   |              |    
|                                             |                                    | Net periodic benefit cost |   | $     | 6.4          |  |   | $            | 5.1 |  |   | $     | 4.1 | 
|                                             |                                    |                           |   |       |              |  |   |              |    



---



|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(A) | Curtailment loss resulted from termination of
    employees that were covered under a Canadian plan.

|                                             |                                    |                           |   |      |              |  |   |              |     |  |   |      |     | 
|-------------------------------------------- | ---------------------------------- | ------------------------- | - | ---- | ------------ |  | - | ------------ | --- |  | - | ---- | --- | 
|                                             |                                    |                          
|                                             |                                    | Postretirement Benefits   |  
|                                             |                                    | Fiscal Year Ended         |  
|                                             |                                    |                           |  
|                                             |                                    | December 31,              |   |      | December 31, |  |   | December 31, |    
|                                             |                                    | 2002                      |   |      | 2001         |  |   | 2000         |    
|                                             |                                    |                           |   |      |              |  |   |              |    
|Components of net periodic
    benefit cost: |                                    |                           |   |      |              |  |   |              |     |  |   |     
|                                             | Service cost                       |                           | $ | 1.7  |              |  | $ | 1.0          |     |  | $ | 0.9  |    
|                                             | Interest cost                      |                           |   | 6.9  |              |  |   | 3.8          |     |  |   | 3.6  |    
|                                             | Amortization of prior service cost |                           |   | (5.6 | )            |  |   | (1.4         | )   |  |   | (1.4 | )  
|                                             | Recognized net actuarial gain      |                           |   | (1.4 | )            |  |   | (1.7         | )   |  |   | (2.0 | )  
|                                             | Curtailment loss (gain)            |                           |   | (0.6 | )            |  |   |             |     |  |   |     |    
|                                             |                                    |                           |   |      |              |  |   |              |    
|                                             |                                    | Net periodic benefit cost |   | $    | 1.0          |  |   | $            | 1.7 |  |   | $    | 1.1 | 
|                                             |                                    |                           |   |      |              |  |   |              |    

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Weighted average fiscal year-end assumptions are
summarized as follows(a):

|                               |  |          |      |  |                |  |      |      |  |  |      |   |  |  |     |  
|------------------------------ |  | -------- | ---- |  | -------------- |  | ---- | ---- |  |  | ---- | - |  |  | --- | -
|                               |  |          |      | 
|                               |  | Pension  |      |  | Postretirement | 
|                               |  | Benefits |      |  | Benefits       | 
|                               |  |          |      |  |                | 
|                               |  | 2002     |      |  | 2001           |  |      | 2002 |  |  | 2001 |  
|                               |  |          |      |  |                |  |      |      |  |  |      |  
|Discount rate                  |  |          | 6.7% |  |                |  | 7.2% |      |  |  | 7.0  | % |  |  | 7.5 | %
|Expected return on plan assets |  |          | 8.5% |  |                |  | 9.3% |      |  |  | N/A  |   |  |  | N/A |  
|Rate of compensation increase  |  |          | 3.1% |  |                |  | 3.1% |      |  |  | N/A  |   |  |  | N/A |  



| | 
| | 
| | 



| |     |                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------
| | (a) | These rates are used to compute the balances as
    of the end of the year and the expense for the following year.

Health care costs for domestic plans:
(1) Dura Convertible was assumed to increase 10.5% during
2003; the rates were assumed to grade down by 0.5% per year to
an ultimate rate of 6% and remain at that level thereafter.
(2) Wickes Engineering Materials was assumed to increase 6%
during 2003 and remain at that level thereafter.
(3) TAC-Trim was assumed to increase 11.5% during 2003; the
rates were assumed to grade down by 0.5% per year to an
ultimate rate of 6% and remain at that level thereafter. Health
care trend rates for Canadian Plans were assumed to increase
approximately 8% during 2003 grading down by 0.5% per year
to a constant level of 5% annual increase.

Assumed health care cost trend rates may have a
significant effect on the amounts reported for postretirement
benefits. A one-percentage-point change in assumed health care
cost trend rates would have the following effects:

|                                                            |  |               |     |  |               |   |      |  
|----------------------------------------------------------- |  | ------------- | --- |  | ------------- | - | ---- | -
|                                                            |  | 1-Percentage- |     |  | 1-Percentage- |  
|                                                            |  | Point         |     |  | Point         |  
|                                                            |  | Increase      |     |  | Decrease      |  
|                                                            |  |               |     |  |               |  
|Effect on total of service and interest cost
    components |  | $             | 0.4 |  |               | $ | (0.3 | )
|Effect on postretirement benefit obligation                 |  | $             | 4.8 |  |               | $ | (4.1 | )

B.     Defined
Contribution Plans

Subsidiaries of the Company sponsor defined
contribution plans covering employees who meet eligibility
requirements. Subsidiary contributions are based on formulas or
are at the Companys discretion as specified in the plan
documents. Contributions were $6.2 million,
$3.2 million, and $4.0 million in fiscal 2002, 2001,
and 2000, respectively.

14.     Discontinued
Operations

During the second quarters of 2002 and 2001, the
Company received proceeds of $15.8 million and
$12.2 million, respectively, on environmental claims
related to discontinued operations, for which reserves were
previously charged. Of these amounts, $9.5 million and
$7.4 million were recorded as income from discontinued
operations in the second quarter of 2002 and 2001, respectively,
net of income taxes of $6.3 million and $4.8 million,
respectively.

In addition, during the third quarter of 2001,
the Company received payment of $2.3 million on
environmental claims related to discontinued operations. Of this
amount $1.4 million, net of taxes of $0.9 million, was
recorded as income from discontinued operations in the quarter
ended September 30, 2001.

During fiscal 2000, the Company settled claims
for certain environmental matters related to discontinued
operations for a total of $20 million. Settlement proceeds
will be paid to the Company in three installments. The first and
second installments of $7.5 million and $7.5 million
were received in June 2000 and June 2001, respectively with the
third installment of $5.0 million received in June 2002. Of
the total $20 million settlement, the Company recorded the
present value of the settlement as $7.0 million of
additional

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

environmental reserves, based on its assessment
of potential environmental exposures, and $6.6 million, net of
income taxes, as income from discontinued operations.

The Company has significant obligations related
to post-retirement, casualty, environmental, product liability,
lease and other liabilities of discontinued operations. The
nature of many of these contingent liabilities is such that they
are difficult to quantify and uncertain in terms of amount. The
company has accrued $23.0 million for postretirement costs
and $53.4 million for environmental and product liability
costs.

In connection with retained operating leases of
certain discontinued operations, the Company believes that
future sublease rental receipts will equal or exceed future
minimum lease payments and accordingly has not recorded any
liability for these leases.

15.     Restructuring

In the fourth quarter of 2002, the Company
undertook a restructuring program primarily to European
operations that resulted in a restructuring charge of
$14.1 million. This restructuring charge included
$4.0 million of severance costs, $0.8 million of costs
related to other contractual obligations, and $9.3 million of
costs related to fixed asset impairments. The severance costs
related to over 300 personnel.

In the third quarter of 2002, the Company
undertook a restructuring program primarily to realign the
operations in North America that resulted in a restructuring
charge of $33.8 million. This restructuring charge included
$23.8 million of severance costs, $1.3 million of costs
related to the establishment of reserves for lease commitments
and lease termination fees, and $8.7 million of costs
related to fixed asset impairments. The severance costs related
to over 700 personnel.

Included in the third quarter 2002 restructuring
charge severance costs was $8.9 million related to the
separation agreement with Thomas Evans the former Chairman and
CEO. In August 2002, the Companys Board of Directors
appointed Jerry L. Mosingo as President, Chief Executive Officer
(CEO) and Director of the Company. Mr. Mosingo
replaced Thomas E. Evans, the Companys previous Chairman
and CEO, as CEO. Under the terms of his separation agreement,
Mr. Evans received $5.5 million on August 15, and
will receive quarterly payments of $0.3 million through
June 30, 2004.

In the first quarter of 2002, the Company
undertook a restructuring program to rationalize operations in
North America, Europe and Specialty operations that resulted in
a restructuring charge of $9.1 million. This restructuring
included $5.5 million of cash severance costs and
$3.6 million of costs related to the establishment of
reserves for lease commitments and lease termination fees. The
Company incurred severance costs for over 100 personnel
primarily at the Companys North America and European
headquarters and additional reductions at its Specialty
operations. The reserve for lease commitments relates to
contractual obligations for the Companys former
headquarters facility, while the termination fees relate to an
aircraft lease on an aircraft that the company is no longer
using. The Company relocated its headquarters to its new
resource center in order to optimize and consolidate corporate
operations.

In 2002, the Company also reserved for
restructuring costs incurred as a result of acquisitions. The
balance reserved totaled $15.2 million for lease costs and
employee severance costs.

During 2001, the Company undertook restructuring
programs to rationalize operations in North American, European
and Specialty operations resulting in a restructuring charge
aggregating $18.8 million. The charge included $11.2
million of severance costs and $7.6 million of asset
impairments. The Company recognized severance costs for over 900
operating personnel at the Companys convertible tops,
fabrics, carpet and acoustics locations in North America and
Specialty operations. The asset impairments, primarily related
to machinery and equipment located at North American, European
and Specialty operations sites, are based on managements
estimates of values to be realized upon disposition of the
assets.

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

In addition, the Company recorded a restructuring
reserve in connection with the Becker acquisition aggregating
$5.3 million of which $1.6 million was severance and
$3.7 million for lease termination and other exit costs.
Following is the rollforward of the restructuring accruals for
2002 (in millions):

|                                                 |      |           |   |           |                 |  |            |          |  |               |             |      |  |               |   |       |             |  |   |       |   |  |   |      | 
|------------------------------------------------ | ---- | --------- | - | --------- | --------------- |  | ---------- | -------- |  | ------------- | ----------- | ---- |  | ------------- | - | ----- | ----------- |  | - | ----- | - |  | - | ---- | 
|                                                 |      |           |   |           |                 |  |            | Charged  |  |               |             |      | 
|                                                 |      |           |   | Additions |                 |  | Charged to |          |  | (credited) to |             |      |  |               |  
|                                                 |      | Beginning |   |           | Resulting from  |  |            | Cost and |  |               | Other       |      |  |               |   |      
|Description                                      |      | of Year   |   |           | Acquisitions(a) |  |            | Expenses |  |               | Accounts(b) |      |  | Deductions(c) |   |       | End of Year | 
|                                                 |      |           |   |           |                 |  |            |          |  |               |             |      |  |               |   |       |             | 
|Restructuring Reserves in the balance sheet for: |      |           |   |           |                 |  |            |          |  |               |             |      |  |               |   |       |             |  |   |       |   |  |   |     
|                                                 | 2002 |           | $ | 8.0       |                 |  | $          | 15.2     |  |               | $           | 56.9 |  |               | $ | (18.0 | )           |  | $ | (33.9 | ) |  | $ | 28.2 | 



|    |                                                  
|--- | -------------------------------------------------
|(a) | Restructuring costs for acquired companies.      
|   
|(b) | Asset impairments                                
|   
|(c) | Deductions, primarily representing cash utilized.

Of the $28.2 million remaining reserve,
$7.8 million relates to long-term leases expiring through
2004 and $20.4 million related to severance costs of which
$18.7 million will be paid in 2003.

16.     Common
Stockholders Equity and Earnings Per Share

A.     Common
Stock

In April 2002, the Company issued 400,000 shares
of common stock as part of the purchase of a lamination company
wholly owned by a current director and shareholder of the
Company. In June, the Company issued 16 million shares of
common stock for $160 million before expenses. The Company
used $100 million of the $152 million in net proceeds
to redeem $133 million of face value Series A
Redeemable Preferred Stock and the remainder for general
corporate purposes.

B.     Stock
Option Plans

The 1994 Employee Stock Option Plan (1994
Plan) was adopted as a successor to the 1993 Employee
Stock Option Plan to facilitate awards to certain key employees
and consultants. The 1994 Plan was amended in 1999 primarily to
increase the number of shares available for issuance under the
Plan from 2,980,534 to 3,980,534. The 1994 Plan provides that no
options may be granted after 10 years from the effective
date of this plan. Options vest, in each case, as specified by
the Companys compensation committee, generally over three
years after issuance. The Company also adopted the 1994
Directors Stock Option Plan, which provides for the issuance of
options to acquire a maximum of 600,000 shares of common stock
to directors who are not part of management and are not
affiliated with a major stockholder. As of December 31,
2002, 170,000 options had been granted. The Company adopted the
1997 United Kingdom Scheme, which provides for the issuance of
options to key employees under the 1994 Plan. The Company
adopted the 2000 Employee Stock Option Plan, effective
January 1, 2000, which provided for the issuance of up to
6,000,000 shares to key employees and consultants. The
Company adopted the 2002 Employee Stock Option Plan, effective
January 1, 2002, which provided for the issuance of up to
6,600,000 shares to key employees and consultants. Under
the 2002 plan 60% of the issued options vest and become
exercisable in 20% increments on January 1, 2003,
January 1, 2004 and January 1, 2005. The remaining 40%
vest subject to performance targets and become exercisable on
January 1, 2012 or on an accelerated basis if performance
targets are met.

The Company issued 5,182,929 options during the
year and repriced 854,000 options that had an original average
exercise price of $14.05 to an exercise price of $10.00. The
impact of the reverse stock split reduced the beginning balance
by 1,698,553 shares. At December 31, 2002, options
representing 3,921,330 shares of common stock were
available for grants.

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Stock option activity under the plans is as
follows:

|                              |                            |                   |            |           |                   |   |       |                   |          |  |            |   |  |           |      |   |          |  |           |   |  |   |      |   | 
|----------------------------- | -------------------------- | ----------------- | ---------- | --------- | ----------------- | - | ----- | ----------------- | -------- |  | ---------- | - |  | --------- | ---- | - | -------- |  | --------- | - |  | - | ---- | - | 
|                              |                            |                   |            |           |                   |  
|                              |                            | December 31, 2002 |            |           | December 31, 2001 |   |       | December 31, 2000 |         
|                              |                            |                   |            |           |                   |   |       |                   |         
|                              |                            |                   |            | Weighted  |                   |   |       |                   | Weighted |  |            |   |  | Weighted  |     
|                              |                            |                   |            | Average   |                   |   |       |                   | Average  |  |            |   |  | Average   |     
|                              |                            | Number of         |            |           | Exercise          |   |       | Number of         |          |  | Exercise   |   |  | Number of |      |   | Exercise | 
|                              |                            | shares            |            |           | Price             |   |       | shares            |          |  | Price      |   |  | shares    |      |   | Price    | 
|                              |                            |                   |            |           |                   |   |       |                   |          |  |            |   |  |           |      |   |          | 
|Outstanding beginning of year |                            |                   | 2,830,920  |           |                   | $ | 5.59  |                   |          |  | 4,344,432  |   |  | $         | 5.47 |   |          |  | 4,720,955 |   |  | $ | 5.70 |  
|Impact of 2002 Stock Split    |                            |                   | (1,698,553 | )         |                   |   |       |                   |          |  |           |   |  |           |     |   |          |  |          |   |  |   |     |  
|                              |                            |                   |            |           |                   |   |       |                   |          |  |            |   |  |           |      |   |          | 
|                              | Adjusted Beginning Balance |                   |            | 1,132,367 |                   |   |       | 13.98             |          |  |            |  |  |           |      |  |          |  |           |  |  |   |      |  | 
|Awarded                       |                            |                   | 5,182,929  |           |                   |   | 10.00 |                   |          |  | 40,000     |   |  |           | 5.76 |   |          |  | 827,500   |   |  |   | 5.65 |  
|Cancelled                     |                            |                   | (1,819,634 | )         |                   |   | 10.14 |                   |          |  | (458,090   | ) |  |           | 7.48 |   |          |  | (983,732  | ) |  |   | 7.07 |  
|Exercised                     |                            |                   | (68,414    | )         |                   |   | 12.79 |                   |          |  | (1,095,422 | ) |  |           | 4.31 |   |          |  | (220,291  | ) |  |   | 3.99 |  
|                              |                            |                   |            |           |                   |   |       |                   |          |  |            |   |  |           |      |   |          | 
|Outstanding at end of year    |                            |                   | 4,427,248  |           |                   | $ | 10.12 |                   |          |  | 2,830,920  |   |  | $         | 5.59 |   |          |  | 4,344,432 |   |  | $ | 5.47 |  
|                              |                            |                   |            |           |                   |   |       |                   |          |  |            |   |  |           |      |   |          | 



---



|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(a) | Weighted average exercise price is $10.86 after
    repricing 854,000 stock options.

The following table summarizes information about
stock options outstanding at December 31, 2002:

|                        |  |                  |           |  |                  |  |     |                  |  |   |       | 
|----------------------- |  | ---------------- | --------- |  | ---------------- |  | --- | ---------------- |  | - | ----- | 
|                        |  | Number of Shares |           |  | Weighted Average |  |     | Weighted Average | 
|Range of Exercise Price |  | Outstanding      |           |  | Remaining Life   |  |     | Exercise Price   | 
|                        |  |                  |           |  |                  |  |     |                  | 
|$ 9.98  $12.60         |  |                  | 4,363,248 |  |                  |  | 8.7 |                  |  | $ | 10.01 | 
|$10.92  $25.00         |  |                  | 64,000    |  |                  |  | 9.1 |                  |  | $ | 17.10 | 

SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and
Disclosure amended SFAS No. 123, Accounting for
Stock-Based Compensation to provide alternative methods of
transition for a voluntary change to the fair value based method
of accounting for stock based employee compensation and amended
the required disclosures. SFAS No. 123 encourages companies
to adopt the fair value method for compensation expense
recognition related to employee stock options. The accounting
requirements of APB No. 25 use the intrinsic value method
in determining compensation expense, which represents the excess
of the market price of the stock over the exercise price on the
measurement date. The Company has elected to continue to utilize
the accounting provisions of APB No. 25 for stock options, and
is required to provide pro forma disclosures of net income and
earnings per share had the Company adopted the fair value method
for recognition purposes. See Note 2, Summary of
Significant Accounting Policies  Employee Stock
Options for the tabular presentation as if the Company had
adopted SFAS No. 123 and restated its results.

For the above information, the fair value of each
option grant was estimated on the date of grant using the
Black-Scholes option pricing model with the following
assumptions used for grants in fiscal 2002, 2001, and 2000:
weighted average expected volatility was 72%, 99%, and 53%;
expected lives of 6 years, 10 years and 10 years
in 2002, 2001 and 2000, respectively; a weighted average risk
free interest rate of 4.72% in 2002 and ranging from 4.24% to
7.32% in 2001 and 2002 and a zero expected dividend rate. The
weighted average grant-date fair value of an option granted
during fiscal 2002, 2001, and 2000 was $6.71, $5.22, and $4.11,
respectively.

In accordance with SFAS No. 123, the
854,000 repriced options were revalued during 2002 to
determine additional compensation cost that resulted from the
difference in the fair value of the options prior to repricing
and subsequent to repricing. As a result of the repricing
$336,000 of additional compensation cost, net of tax, was
incurred on a proforma basis. These options have a weighted
average expected life of approximately

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

4 years. The assumptions used in valuing the
repriced options are as follows: expected volatility ranged from
74% to 109%; expected lives ranged from 1 year to
5 1/2 years; the risk free interest rate ranged from
2.14% to 4.40% in 2002; and a zero expected dividend rate. Refer
to Note 2, Summary of Significant Accounting
Policies  Employee Stock Options for discussion
related to the 2002 proforma cost related to options.

Additionally, as a result of repricing the
Companys stock options, the options are treated as
variable-based awards in accordance with APB No. 25. Since
these options are considered to be variable-based awards, the
Company will incur future compensation expense if the stock
price exceeds the $10 exercise price established by repricing.

C.     Earnings
Per Share

The Company adopted SFAS No. 128,
Earnings Per Share, in December 1997. Basic earnings
per common share were computed by dividing net income
(loss) by the weighted average number of shares of common
stock outstanding during the year. Diluted earnings per common
share were determined assuming the exercise of the stock options
issued under the Companys stock option plans. There were
no reconciling items between basic earnings per common share and
diluted earnings per common share for 2002, 2001, and 2000.

In 2002, 2001, and 2000, potentially dilutive
securities have been excluded from the diluted earnings per
share calculation since their inclusion would have been
antidilutive. At December 31, 2002, the Companys
potentially dilutive securities included 4.4 million stock
options with a weighted average exercise price of $10.12 and
0.5 million warrants with an exercise price of $10.00. At
December 31, 2001, the Companys potentially dilutive
securities included 2.8 million stock options, respectively,
with weighted average exercise prices of $5.59 and
0.5 million warrants with an exercise price of $5.00. At
December 31, 2000, the Companys potentially dilutive
securities included 4.3 million stock options with weighted
average exercise prices of $5.47.

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

17.     Income
Taxes

The provisions for income taxes applicable to
continuing operations for fiscal 2002, 2001, and 2000 are
summarized as follows (in millions):

|                             |         |                   |      |       |              |   |       |              |   |   |       |      |  
|---------------------------- | ------- | ----------------- | ---- | ----- | ------------ | - | ----- | ------------ | - | - | ----- | ---- | -
|                             |         |                  
|                             |         | Fiscal Year Ended |     
|                             |         |                   |     
|                             |         | December 31,      |      |       | December 31, |   |       | December 31, |  
|                             |         | 2002              |      |       | 2001         |   |       | 2000         |  
|                             |         |                   |      |       |              |   |       |              |  
|Current:                     |         |                   |      |       |              |   |       |              |   |   |       |     
|                             | Federal |                   | $    |      |              |   | $     |             |   |   | $     |     |  
|                             | State   |                   |      | 5.8   |              |   |       | 2.6          |   |   |       | 1.5  |  
|                             | Foreign |                   |      | 15.3  |              |   |       | 4.8          |   |   |       | 10.7 |  
|                             |         |                   |      |       |              |   |       |              |  
|                             |         |                   | 21.1 |       |              |   | 7.4   |              |   |   | 12.2  |     
|Deferred:                    |         |                   |      |       |              |   |       |              |   |   |       |     
|                             | Federal |                   |      | 19.6  |              |   |       | (19.0        | ) |   |       | (3.5 | )
|                             | State   |                   |      | 2.1   |              |   |       | (1.3         | ) |   |       | (0.2 | )
|                             | Foreign |                   |      | (25.3 | )            |   |       | (5.7         | ) |   |       | (6.3 | )
|                             |         |                   |      |       |              |   |       |              |  
|                             |         |                   | (3.6 | )     |              |   | (26.0 | )            |   |   | (10.0 | )   
|                             |         |                   |      |       |              |   |       |              |  
|Income tax expense (benefit) |         | $                 | 17.5 |       |              | $ | (18.6 | )            |   | $ | 2.2   |     
|                             |         |                   |      |       |              |   |       |              |  

Domestic and foreign components of income
(loss) from continuing operations before income taxes are
summarized as follows (in millions):

|         |  |                   |       |   |              |   |       |              |  |   |       |  
|-------- |  | ----------------- | ----- | - | ------------ | - | ----- | ------------ |  | - | ----- | -
|         |  |                  
|         |  | Fiscal Year Ended |      
|         |  |                   |      
|         |  | December 31,      |       |   | December 31, |   |       | December 31, | 
|         |  | 2002              |       |   | 2001         |   |       | 2000         | 
|         |  |                   |       |   |              |   |       |              | 
|Domestic |  | $                 | 45.4  |   |              | $ | (35.8 | )            |  | $ | (11.9 | )
|Foreign  |  |                   | (79.2 | ) |              |   | (32.5 | )            |  |   | 12.7  |  
|         |  |                   |       |   |              |   |       |              | 
|         |  | $                 | (33.8 | ) |              | $ | (68.3 | )            |  | $ | 0.8   |  
|         |  |                   |       |   |              |   |       |              | 

A reconciliation between income taxes computed at
the statutory U.S. Federal rate of 35% and the provisions for
income taxes applicable to continuing operations is as follows
(in millions):

|                                                   |  |                   |       |   |              |   |       |              |  |   |      |  
|-------------------------------------------------- |  | ----------------- | ----- | - | ------------ | - | ----- | ------------ |  | - | ---- | -
|                                                   |  |                  
|                                                   |  | Fiscal Year Ended |      
|                                                   |  |                   |      
|                                                   |  | December 31,      |       |   | December 31, |   |       | December 31, | 
|                                                   |  | 2002              |       |   | 2001         |   |       | 2000         | 
|                                                   |  |                   |       |   |              |   |       |              | 
|Amount at statutory Federal rate                   |  | $                 | (11.8 | ) |              | $ | (23.9 | )            |  | $ | 0.3  |  
|State taxes, net of Federal income tax             |  |                   | 5.1   |   |              |   | 0.9   |              |  |   | 0.8  |  
|Tax differential on foreign earnings               |  |                   | (0.7  | ) |              |   | 2.9   |              |  |   | (0.3 | )
|Nontaxable interest income                         |  |                   | (3.9  | ) |              |   |      |              |  |   |     |  
|Amortization of goodwill                           |  |                   |      |   |              |   | 1.5   |              |  |   | 1.5  |  
|Subsidiary preferred stock dividends and accretion |  |                   | 13.4  |   |              |   | 0.8   |              |  |   |     |  
|Change in valuation allowance                      |  |                   | 15.9  |   |              |   | (1.2  | )            |  |   | 0.4  |  
|General business tax credits                       |  |                   | (1.5  | ) |              |   | (0.5  | )            |  |   | (1.1 | )
|Other                                              |  |                   | 1.0   |   |              |   | 0.9   |              |  |   | 0.6  |  
|                                                   |  |                   |       |   |              |   |       |              | 
|Income tax expense                                 |  | $                 | 17.5  |   |              | $ | (18.6 | )            |  | $ | 2.2  |  
|                                                   |  |                   |       |   |              |   |       |              | 

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Deferred income taxes are provided for the
temporary differences between the financial reporting and tax
basis of the Companys assets and liabilities. The
components of the net deferred tax assets as of
December 31, 2002 and 2001 were as follows (in millions):

|                          |                                                          |                                |   |       |              |   |   |       |       |  
|------------------------- | -------------------------------------------------------- | ------------------------------ | - | ----- | ------------ | - | - | ----- | ----- | -
|                          |                                                          | December 31,                   |   |       | December 31, |  
|                          |                                                          | 2002                           |   |       | 2001         |  
|                          |                                                          |                                |   |       |              |  
|Deferred tax assets:      |                                                          |                                |   |       |              |   |   |      
|                          | Employee benefits, including postretirement
    benefits |                                | $ | 124.9 |              |   | $ | 78.5  |      
|                          | Net operating loss carryforwards (NOLs)                  |                                |   | 162.5 |              |   |   | 134.6 |      
|                          | General business tax credit carryforwards                |                                |   | 10.7  |              |   |   | 11.4  |      
|                          | Alternative minimum tax credit carryforwards             |                                |   | 12.2  |              |   |   | 12.2  |      
|                          | Other liabilities and reserves                           |                                |   | 33.7  |              |   |   | 36.1  |      
|                          | Valuation allowance                                      |                                |   | (78.4 | )            |   |   | (49.2 | )    
|                          |                                                          |                                |   |       |              |  
|                          |                                                          | Total deferred tax assets      |   |       | 265.6        |   |   |       | 223.6 |  
|                          |                                                          |                                |   |       |              |  
|Deferred tax liabilities: |                                                          |                                |   |       |              |   |   |      
|                          | Property, plant and equipment                            |                                |   | (68.1 | )            |   |   | (74.7 | )    
|                          | Undistributed earnings of foreign subsidiaries           |                                |   | (7.2  | )            |   |   | (7.2  | )    
|                          |                                                          |                                |   |       |              |  
|                          |                                                          | Total deferred tax liabilities |   |       | (75.3        | ) |   |       | (81.9 | )
|                          |                                                          |                                |   |       |              |  
|                          |                                                          | Net deferred tax asset         |   | $     | 190.3        |   |   | $     | 141.7 |  
|                          |                                                          |                                |   |       |              |  

The company has net operating losses in its
foreign jurisdictions of $76 million. These losses will
begin expiring in 2003 through 2011. Additionally, the company
has foreign net operating losses of $244 million which have
no expiration date.

The valuation allowance at December 31, 2002
and December 31, 2001 provides for certain deferred tax
assets that in managements assessment may not be realized
due to tax limitations on the use of such amounts, due to
expiration prior to utilization or that relate to tax attributes
that are subject to uncertainty due to the long-term nature of
their realization. During 2002, the valuation allowance
increased $29.2 million from 2001. This increase resulted
primarily from $19.8 million for current year net operating
losses and $3.9 million release of valuation allowances.

The above amounts have been classified in the
consolidated balance sheets as follows (in millions):

|                                   |                                                                    |              |       |       |              |   |       |       |  
|---------------------------------- | ------------------------------------------------------------------ | ------------ | ----- | ----- | ------------ | - | ----- | ----- | -
|                                   |                                                                    | December 31, |       |       | December 31, |  
|                                   |                                                                    | 2002         |       |       | 2001         |  
|                                   |                                                                    |              |       |       |              |  
|Deferred tax assets (liabilities): |                                                                    |              |       |       |              |   |       |      
|                                   | Current domestic and foreign, included in other
    current assets |              | $     | 25.3  |              |   | $     | 25.3  |  
|                                   | Current foreign, included in accrued expenses                      |              |       |      |              |   |       | (2.1  | )
|                                   | Noncurrent domestic and foreign                                    |              |       | 165.0 |              |   |       | 136.5 |  
|                                   | Noncurrent foreign, included in other noncurrent
    liabilities   |              |       |      |              |   |       | (18.0 | )
|                                   |                                                                    |              |       |       |              |  
|                                   |                                                                    | $            | 190.3 |       |              | $ | 141.7 |      
|                                   |                                                                    |              |       |       |              |  

Management has reviewed the Companys
operating results for recent years as well as the outlook for
its continuing operations and concluded that it is more likely
than not that the net deferred tax assets of $190.3 million
at December 31, 2002 will be realized. Management took into
consideration, among other factors, the expected impact of
current year acquisitions, the impact of recent restructuring
plans, and the infusion of cash from Heartland. These factors
along with the timing of the reversal of its temporary
differences, certain tax planning strategies and the expiration
date of its NOLs were also considered in

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COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

reaching this conclusion. The Companys
ability to generate future taxable income is dependent on
numerous factors, including general economic conditions, the
state of the automotive industry and other factors beyond
managements control. Therefore, there can be no assurance
that the Company will meet its expectation of future taxable
income.

Deferred income taxes and withholding taxes have
been provided on earnings of the Companys foreign
subsidiaries to the extent it is anticipated that the earnings
will be remitted in the future as dividends. Deferred income
taxes and withholding taxes have not been provided on the
remaining undistributed earnings of foreign subsidiaries as such
amounts are deemed to be permanently reinvested. The cumulative
undistributed earnings as of December 31, 2002 on which the
Company has not provided deferred income taxes and withholding
taxes is approximately $101.8 million.

At December 31, 2002, the Company had the
following tax attribute carryforwards available for
U.S. Federal income tax purposes (in millions):

|                                                    |                                         |        |       |            |       |  |          
|--------------------------------------------------- | --------------------------------------- | ------ | ----- | ---------- | ----- |  | ---------
|                                                    |                                         |        |       | Expiration
|                                                    |                                         | Amount |       |            | Dates
|                                                    |                                         |        |       |            |      
|Net operating losses 
    regular tax:             |                                         |        |       |            |       | 
|                                                    | Preacquisition, subject to limitations  |        | $     | 2.8        |       |  | 2005-2009
|                                                    | Subject to change in control provisions |        |       | 82.6       |       |  | 2008-2012
|                                                    | Subject to change in control provisions |        |       | 200.2      |       |  | 2018-2021
|                                                    |                                         |        |       |            |      
|                                                    |                                         | $      | 285.6 |            |       | 
|                                                    |                                         |        |       |            |      
|Net operating losses 
    alternative minimum tax: |                                         |        |       |            |       | 
|                                                    | Preacquisition, subject to limitations  |        | $     | 1.4        |       |  | 2005-2009
|                                                    | Subject to change in control provisions |        |       | 48.5       |       |  | 2008-2012
|                                                    | Subject to change in control provisions |        |       | 206.8      |       |  | 2018-2021
|                                                    |                                         |        |       |            |      
|                                                    |                                         | $      | 256.7 |            |       | 
|                                                    |                                         |        |       |            |      
|General business tax credits:                       |                                         |        |       |            |       | 
|                                                    | Preacquisition, subject to limitations  |        | $     | 0.6        |       |  | 2003     
|                                                    | Subject to change in control provisions |        |       | 10.1       |       |  | 2004-2021
|                                                    |                                         |        |       |            |      
|                                                    |                                         | $      | 10.7  |            |       | 
|                                                    |                                         |        |       |            |      
|Alternative minimum tax credits                     |                                         | $      | 12.2  |            |       | 
|                                                    |                                         |        |       |            |      

As a result of the Heartland Transaction, a
change in control occurred which results in annual limitations
on the Companys use of its NOLs and unused tax credits.
This annual limitation on the use of NOLs and tax credits
depends on the value of the equity of the Company and the amount
of built-in gain or built-in loss in the
Companys assets at the date of the change in control.
Based on the expiration dates of the NOLs and tax credits as
well as anticipated levels of domestic income, management does
not believe that the transaction will have a material impact on
these deferred tax assets.

Future sales of common stock by the Company or
its principal stockholders, or changes in the composition of its
principal stockholders, could constitute a change in control
that would result in additional annual limitations on the
Companys use of its NOLs and unused tax credits.
Management cannot predict whether such a change in control will
occur.

Income taxes paid, net of refunds received, were
$12.8 million, $15.5 million, and $4.8 million
for fiscal 2002, 2001, and 2000, respectively.

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

18. Risk Management and
Financial Instruments

Foreign
Currency and Interest Rate Risk Management

The company operates on a global basis and is
exposed to the risk that its earnings, cash flows and
stockholders equity could be adversely impacted by
fluctuations in currency exchange rates and interest rates. To
manage the volatility relating to these exposures, the Company
aggregates the exposures on a consolidated basis to take
advantage of natural offsets. For exposures that are not offset
within its operations, the Company may enter into various
derivatives transactions pursuant to the its risk management
policies. The primary purpose of the Companys foreign
currency and interest rate risk management policies and
activities is to manage these risks to acceptable levels.

To manage its risks, the Company primarily
utilizes forward exchange contracts and purchased options with
durations of generally less than 12 months. The Company has
in place forward exchange contracts and purchased options with
third parties, denominated in multiple currencies, which will
mature during fiscal 2003. The details are as follows:

|           |  |          |     |  |           |  |     |                   |  |   |                  |  |  |             |                    |  |  |   |     | 
|---------- |  | -------- | --- |  | --------- |  | --- | ----------------- |  | - | ---------------- |  |  | ----------- | ------------------ |  |  | - | --- | 
|           |  |          |     |  |           |  |     | Weighted Average  |  |   |                 
|Derivative |  | Currency |     |  | Currency  |  |     | USD Equivalent of |  |   | Contract Rate    |  |  | Unrealized  |                   
|Type       |  | Sold     |     |  | Purchased |  |     | Notional Amount   |  |   | (per Convention) |  |  | Gain/(Loss) |                   
|           |  |          |     |  |           |  |     |                   |  |   |                  |  |  |             |                   
|Forwards   |  |          | GBP |  |           |  | EUR |                   |  | $ | 3.4              |  |  |             | 0.6176 GBP per EUR |  |  | $ | 0.2 | 
|Forwards   |  |          | CAD |  |           |  | USD |                   |  |   | 2.0              |  |  |             | 1.5853 CAD per USD |  |  |   |    | 
|Spot       |  |          | USD |  |           |  | EUR |                   |  |   | 18.0             |  |  |             | 1.0478 USD per EUR |  |  |   |    | 
|Options    |  |          | CAD |  |           |  | USD |                   |  |   | 74.0             |  |  |             | 1.6420 CAD per USD |  |  |   | 0.3 | 
|           |  |          |     |  |           |  |     |                   |  |   |                  |  |  |             |                   
|           |  |          |     |  |           |  |     |                   |  | $ | 97.4             |  |  |             |                    |  |  | $ | 0.5 | 

In order to manage the interest rate risk
associated with our debt portfolio, the Company may enter into
derivative transactions to manage its exposures to changes in
global interest rates, although the Company did not have in
place any interest rate derivatives in 2001 or 2002.

Gains and losses on derivatives qualifying as
hedges under SFAS No. 133 Accounting for Derivative
Instruments and Hedging Activities, are recorded on the
balance sheet as a component of Other comprehensive
income to the extent that the hedges are effective until
the underlying transactions are recognized in earnings. As of
December 31, 2002, the Company had no derivatives
designated as hedges under SFAS No. 133. Gains and losses
from all derivatives that do not qualify as hedges under SFAS
No. 133, are recorded in the income statement as required
by SFAS No. 133 and the fair value is recorded in the
balance sheet.

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Fair
Value of Financial Instruments, Derivatives and Hedging
Activities

The estimated fair values of the Companys
continuing operations financial instruments are summarized as
follows (in millions):

|                                                                  |  |                   |         |  |                   |   |         |          |  |   |            |  |  |   |         | 
|----------------------------------------------------------------- |  | ----------------- | ------- |  | ----------------- | - | ------- | -------- |  | - | ---------- |  |  | - | ------- | 
|                                                                  |  |                   |         | 
|                                                                  |  | December 31, 2002 |         |  | December 31, 2001 |  
|                                                                  |  |                   |         |  |                   |  
|                                                                  |  | Carrying          |         |  | Estimated         |   |         | Carrying |  |   | Estimated  | 
|                                                                  |  | Amount            |         |  | Fair Value        |   |         | Amount   |  |   | Fair Value | 
|                                                                  |  |                   |         |  |                   |   |         |          |  |   |            | 
|Short-term debt, long-term debt and capital lease
    obligations |  | $                 | 1,289.2 |  |                   | $ | 1,200.2 |          |  | $ | 1,328.1    |  |  | $ | 1,258.6 | 
|Mandatorily redeemable preferred stock of
    subsidiary          |  | $                 | 123.9   |  |                   | $ | 123.9   |          |  | $ | 149.3      |  |  | $ | 149.3   | 
|Forwards                                                          |  | $                 | 0.2     |  |                   | $ | 0.2     |          |  | $ | 0.6        |  |  | $ | 0.6     | 
|Options                                                           |  | $                 | 0.3     |  |                   | $ | 0.3     |          |  | $ | 1.6        |  |  | $ | 1.6     | 

The following methods and assumptions were used
to estimate these fair values:

The fair value of the Public Debt notes are based
upon quoted market prices. The fair value of the other
short-term and long-term debt of the Company approximates the
carrying value due to the frequent resetting of interest rates.

The fair value of the forward contracts and
purchase options are based upon quoted market prices and the
aggregated notional amount outstanding in U.S. dollar
equivalent of $97.4 million at December 31, 2002.

Carrying amounts reported in the consolidated
balance sheets for cash and cash equivalents, accounts and other
receivables, accounts payable and accrued expenses approximate
fair value due to the short-term nature of these instruments.

Concentration
of credit risk

In the normal course of business, the Company
provides credit to customers in the automotive industry,
performs credit evaluations of these customers and maintains
reserves for potential credit losses. When realized, the losses
have been within the range of managements allowance for
doubtful accounts.

Other
Concentrations of Risk

The Company invests the majority of its excess
cash in money market accounts, where appropriate, diversifies
the concentration of cash among financial institutions. With
respect to financial institutions, the company has diversified
its selection of counterparties and has arranged master-netting
agreements, where allowed by law and the Companys
policies, to minimize the risk of loss.

19.     Related
Party Transactions

On December 31, 2002, the Company acquired
certain assets from Dutton Yarns (an affiliate of
Mr. McCallum) for approximately $4.2 million. These
assets are used by the Company to texture yarn. As part of the
transaction, Dutton Yarns has agreed to provide the Company
transition services through December 31, 2003.

In January 2003, the Company purchased equipment
required to support an anticipated increase in the production of
Furniture Fabrics from Joan Fabrics for $4.7 million. Elkin
McCallum, a director of the Company, controls Joan Fabrics.

The Company entered into a lease agreement with
Becker Ventures, an entity controlled by one of the
Companys current directors and shareholders, for the
Companys headquarters at 250 Stephenson Highway,

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Troy, Michigan with the effective date of the
lease being January 1, 2002. In March, 2002, the Company
entered into lease agreements with Becker Ventures, effective
January 1, 2002, for 150 Stephenson Highway and
350 Stephenson Highway, Troy, Michigan. The base rent for
all three premises is $13.25 per sq. ft. Total square
footage for all three locations is approximately 286,000. The
leases have 20-year terms, and the Company has two five-year
renewal options. The 2003 cost for the facilities will be
approximately $3.8 million. For the years ended
December 31, 2002 and 2001, the Company recorded a total
cost of $17.1 million and $2.1 million, for rental
expenses with related parties. In addition, the Company is also
party to a lease with Becker Ventures for
five manufacturing facilities totaling 884,000 square
feet. In 2002, the Company extended the lease term an additional
ten years to expire in 2021, with the base rent for these
facilities totaling $3.6 million per year.

On April 12, 2002, the Company signed and
closed on a merger agreement with Mr. McCallum (a current
director and shareholder of the Company) and a lamination
company wholly owned by Mr. McCallum pursuant to which the
acquired company was merged into a wholly owned subsidiary of
the Company. As consideration in the transaction,
Mr. McCallum received 400,000 shares of Common Stock
and was repaid $2.5 million in cash as reimbursement for
amounts invested to fund the companys working capital
needs. Subsequent to the merger, debt owing to Mr. McCallum
of $6.7 million was repaid. The Company acquired the
lamination business to optimize the supply chain on certain of
its fabric products and provide low cost lamination products and
services to Tier-1 customers.

In June 2002, the Company repurchased
Series A preferred stock from Textron at a price of 75% of
its liquidation preference of 133.3 million, which had a
carrying value of $63.7 million (see Note 10). In
addition, in May 2002, the Company and Textron finalized the
purchase price and related working capital adjustments of
TAC-Trim and paid Textron $15.5 million in cash.

During the first quarter of 2001, Heartland
acquired a controlling interest equal to approximately 60% of
the Company through a purchase of 25 million shares of
common stock from the Company and a purchase of 27 million
shares from Blackstone Partners and WP Partners. In the sale,
the Company received gross proceeds of $125.0 million, or
approximately $95.0 million after fees and expenses
associated with the transactions. The purchase price also gave
the Company a profit participation right on certain future
common stock sales by Heartland. As a result of the transaction,
Heartland is entitled to designate a majority of the
Companys Board of Directors. Prior to the transaction, as
of December 31, 2000, Blackstone Partners and WP Partners
collectively owned approximately 87% of the Common Stock of the
Company. In connection with the Heartland transaction, the
Company paid Heartland a transaction fee of $12.0 million
and paid WP Partners an investment banking fee of
$2.0 million.

During the first quarter of 2001, the Amended and
Restated Stockholders Agreement was terminated and a new,
10 year Services Agreement was entered into between the
Company, Products and Heartland. Under this Services Agreement,
the Company will pay Heartland an annual advisory fee of
$4.0 million. The Services Agreement also provides for the
Company to pay a 1% transaction fee on certain acquisitions and
divestitures commencing on or after February 23, 2002.
Under the former Amended and Restated Stockholders
Agreement among the Company, Products, Blackstone Partners and
WP Partners, the Company paid each of Blackstone Partners and WP
Partners, or their respective affiliates, an annual monitoring
fee of $1.0 million.

In December 2001, Heartland, and certain
co-investors that include a director of the Company, purchased
an additional 12.8 million shares of common stock at a
price of $12.50 per share, as part of the financing for the
TAC-Trim acquisition. The average closing price of the stock
three days before and three day after the definitive agreement
announcement date was $22.35. Additionally, the Company paid
Heartland transaction fees of $12.5 million in connection
with the TAC-Trim acquisition. The Company also reimbursed
Heartland for $1.5 million of expenses that Heartland
incurred on behalf of the Company in relation to the Becker
acquisition.

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

As part of the TAC-Trim acquisition, the Company
entered into three intellectual property license agreements with
Textron. In two of these agreements, the Company licenses back
to Textron certain intellectual property that was acquired in
the transaction. In the third agreement, the Company licenses
from Textron other intellectual property that was not acquired
in the transaction. In addition, under the TAC-Trim acquisition
agreement, the Company is permitted to use the
Textron name for 18 months in exchange for
payments of $13.0 million on December 15, 2002 and
$6.5 million on December 15, 2003.

Prior to the TAC-Trim acquisition, TAC-Trim
entered into an $86.9 million sale and leaseback
transaction (the Textron Leasing Transaction) with
two separate single purpose affiliates of Textron Financial
Corporation, as lessor and purchaser, with respect to a
portfolio of manufacturing equipment situated in different
locations throughout the United States and Canada. Payments
under the Textron Leasing Transaction are guaranteed by Products
and secured by a first perfected mortgage lien over certain real
property with a value equal to $25 million. Each lease is
for an initial term of three (3) years with three one
(1) year renewal options. As is customary, the
documentation for the Textron Leasing Transaction incorporates
covenants by reference, from the Senior Secured Credit Facility,
that may be amended or waived by the senior lenders, and also
contain events of default.

During 2001, the Company entered into sale and
leaseback transactions for certain non-manufacturing properties
with entities that are controlled by one of the Companys
current directors and shareholders. In connection with these
sale-leaseback transactions, Products sold and contemporaneously
leased back real property located in Troy, Michigan and
Plymouth, Michigan for net proceeds of $15.1 million in
aggregate. The initial lease term in each transaction is 20
years and each lease has two successive ten year renewal
options. The basic rent for the Troy, Michigan property is
$1.3 million per year, and the basic rent for the Plymouth,
Michigan property is $0.5 million per year. The rental
rates in each case are subject to adjustment after expiration of
the initial term.

Additionally, in connection with the Joan
acquisition, the Company entered into a Supply Agreement and a
Transition Service Agreement with entities controlled by the
former owner of Joan who is currently a director and shareholder
of the Company. Under the Supply Agreement, the Company has
agreed to purchase all of its requirements for flat woven
automotive fabric from the controlled entities for a five-year
period beginning on the date of the Supply Agreement. The prices
for fabric under the agreement will equal the costs of the raw
materials plus an amount that represents the entities
standard labor and overhead costs incurred in manufacturing
fabric. Under Transition Service Agreement an entity controlled
by the director will provide Products with transitional and
support services for a period not to exceed twelve months in
order to support the continued and uninterrupted operation of
the businesses acquired by Products in the Joan acquisition. As
a part of these services, pending disassembly and removal of
machinery and equipment purchased as part of the acquisition,
the controlled entity will use that machinery and equipment to
manufacture all of the Companys requirements for some
types of knitted and woven automotive fabrics.

On December 31, 2002, Heartland owned
approximately 36% of the outstanding shares of the Company;
Blackstone Partners and WP Partners owned
approximately 11%; Joan Fabrics Corp., Mr. Elkin McCallum
and associates owned approximately 7%; Mr. Charles E.
Becker and Textron, Inc. each owned approximately 9%.

20.     Information
About the Companys Operations

The Company primarily supplies automotive
interior systems  textile and plastic products,
acoustics and convertible top systems to the global automotive
industry.

North American Automotive Interior Systems
(NAAIS) and European and Rest of World Automotive Interior
Systems (Europe and ROW) include the following product groups:
molded floor carpet, luggage compartment trim, acoustical
products, accessory floormats and plastic-based interior trim
modules, systems

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

and components. The Specialty Automotive Products
(Specialty) division includes automotive fabrics and convertible
top systems. The three divisions also produce other automotive
and non-automotive products.

The Company evaluates performance based on
operating profit or loss. Information about the Companys
divisions is presented below (in millions):

|                              |  |                              |         |              |                  |   |       |            |  |   |          |  |  |       |        |   |  |   |         | 
|----------------------------- |  | ---------------------------- | ------- | ------------ | ---------------- | - | ----- | ---------- |  | - | -------- |  |  | ----- | ------ | - |  | - | ------- | 
|                              |  |                             
|                              |  | Year Ended December 31, 2002 |        
|                              |  |                              |        
|                              |  |                              |         | European and |                  |   |      
|                              |  | North American               |         |              | Rest of World    |   |       | Specialty  |  |   |         
|                              |  | Automotive                   |         |              | Automotive       |   |       | Automotive |  |   |         
|                              |  | Interior Systems             |         |              | Interior Systems |   |       | Products   |  |   | Other(A) |  |  | Total |       
|                              |  |                              |         |              |                  |   |       |            |  |   |          |  |  |       |       
|External revenues             |  | $                            | 2,613.4 |              |                  | $ | 718.0 |            |  | $ | 554.4    |  |  | $     |       |   |  | $ | 3,885.8 | 
|Inter-segment revenues        |  |                              | 15.8    |              |                  |   | 193.5 |            |  |   | 41.8     |  |  |       | (251.1 | ) |  |   |        | 
|Preferred Stock Requirement   |  |                              | 38.4    |              |                  |   |      |            |  |   |         |  |  |       |       |   |  |   | 38.4    | 
|Depreciation and amortization |  |                              | 65.3    |              |                  |   | 30.1  |            |  |   | 16.9     |  |  |       | 4.7    |   |  |   | 117.0   | 
|Operating income (loss)       |  |                              | 236.0   |              |                  |   | (59.8 | )          |  |   | 48.4     |  |  |       | (56.9  | ) |  |   | 167.7   | 
|Total assets                  |  |                              | 1,872.2 |              |                  |   | 553.9 |            |  |   | 449.6    |  |  |       | 281.4  |   |  |   | 3,157.1 | 
|Capital expenditures          |  |                              | 85.5    |              |                  |   | 24.0  |            |  |   | 12.2     |  |  |       | 26.2   |   |  |   | 147.9   | 

|                              |  |                              |         |              |                  |   |       |            |  |   |          |  |  |       |       |   |  |   |         | 
|----------------------------- |  | ---------------------------- | ------- | ------------ | ---------------- | - | ----- | ---------- |  | - | -------- |  |  | ----- | ----- | - |  | - | ------- | 
|                              |  |                             
|                              |  | Year Ended December 31, 2001 |        
|                              |  |                              |        
|                              |  |                              |         | European and |                  |   |      
|                              |  | North American               |         |              | Rest of World    |   |       | Specialty  |  |   |         
|                              |  | Automotive                   |         |              | Automotive       |   |       | Automotive |  |   |         
|                              |  | Interior Systems             |         |              | Interior Systems |   |       | Products   |  |   | Other(A) |  |  | Total |      
|                              |  |                              |         |              |                  |   |       |            |  |   |          |  |  |       |      
|External revenues             |  | $                            | 1,098.2 |              |                  | $ | 258.7 |            |  | $ | 466.4    |  |  | $     |      |   |  | $ | 1,823.3 | 
|Inter-segment revenues        |  |                              | 12.0    |              |                  |   | 30.2  |            |  |   | 0.2      |  |  |       | (42.4 | ) |  |   |        | 
|Preferred Stock Requirement   |  |                              | 2.4     |              |                  |   |      |            |  |   |         |  |  |       |      |   |  |   | 2.4     | 
|Depreciation and amortization |  |                              | 40.6    |              |                  |   | 21.4  |            |  |   | 17.9     |  |  |       | 1.9   |   |  |   | 81.8    | 
|Operating income (loss)       |  |                              | 68.7    |              |                  |   | (24.9 | )          |  |   | 10.6     |  |  |       | (18.8 | ) |  |   | 35.6    | 
|Total assets                  |  |                              | 1,861.3 |              |                  |   | 308.2 |            |  |   | 484.5    |  |  |       | 333.9 |   |  |   | 2,987.9 | 
|Capital expenditures          |  |                              | 25.6    |              |                  |   | 12.1  |            |  |   | 14.5     |  |  |       | 2.3   |   |  |   | 54.5    | 

|                              |  |                              |         |              |                  |   |       |            |  |   |          |  |  |       |       |   |  |   |         | 
|----------------------------- |  | ---------------------------- | ------- | ------------ | ---------------- | - | ----- | ---------- |  | - | -------- |  |  | ----- | ----- | - |  | - | ------- | 
|                              |  |                             
|                              |  | Year Ended December 31, 2000 |        
|                              |  |                              |        
|                              |  |                              |         | European and |                  |   |      
|                              |  | North American               |         |              | Rest of World    |   |       | Specialty  |  |   |         
|                              |  | Automotive                   |         |              | Automotive       |   |       | Automotive |  |   |         
|                              |  | Interior Systems             |         |              | Interior Systems |   |       | Products   |  |   | Other(A) |  |  | Total |      
|                              |  |                              |         |              |                  |   |       |            |  |   |          |  |  |       |      
|External revenues             |  | $                            | 1,119.4 |              |                  | $ | 284.5 |            |  | $ | 497.9    |  |  | $     |      |   |  | $ | 1,901.8 | 
|Inter-segment revenues        |  |                              | 22.1    |              |                  |   | 34.7  |            |  |   | 34.0     |  |  |       | (90.8 | ) |  |   |        | 
|Preferred Stock Requirement   |  |                              |        |              |                  |   |      |            |  |   |         |  |  |       |      |   |  |   |        | 
|Depreciation and amortization |  |                              | 41.3    |              |                  |   | 16.6  |            |  |   | 15.4     |  |  |       | 1.4   |   |  |   | 74.7    | 
|Operating income (loss)       |  |                              | 88.0    |              |                  |   | 0.6   |            |  |   | 19.5     |  |  |       |      |   |  |   | 108.1   | 
|Total assets                  |  |                              | 664.3   |              |                  |   | 228.6 |            |  |   | 267.1    |  |  |       | 120.3 |   |  |   | 1,280.3 | 
|Capital expenditures          |  |                              | 31.5    |              |                  |   | 18.3  |            |  |   | 18.4     |  |  |       | 0.8   |   |  |   | 69.0    | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) | Other includes the Companys non-operating
    units (See Note 14), the effect of eliminating entries and
    restructuring charges (See Note 15). During 2002, certain
    costs that were previously included at the divisional units were
    included as non-operating costs. In order for the information to
    be comparable, all non-operating costs have been allocated back
    to the segments based on sales and assets. For 2002,
    $134.6 million, $9.4 million and $29.7 million of
    costs were allocated back to NAAIS, Europe and ROW and
    Specialty, respectively.

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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Sales by product groups follow (in millions):

|                                                 |  |                   |         |  |              |   |         |              |  |   |         | 
|------------------------------------------------ |  | ----------------- | ------- |  | ------------ | - | ------- | ------------ |  | - | ------- | 
|                                                 |  |                  
|                                                 |  | Fiscal Year Ended |        
|                                                 |  |                   |        
|                                                 |  | December 31,      |         |  | December 31, |   |         | December 31, | 
|                                                 |  | 2002              |         |  | 2001         |   |         | 2000         | 
|                                                 |  |                   |         |  |              |   |         |              | 
|Plastic-based interior and exterior trim systems |  | $                 | 2,328.6 |  |              | $ | 403.6   |              |  | $ | 452.1   | 
|Molded floor carpet                              |  |                   | 481.6   |  |              |   | 476.6   |              |  |   | 458.2   | 
|Automotive fabrics                               |  |                   | 377.0   |  |              |   | 278.5   |              |  |   | 290.5   | 
|Acoustical products                              |  |                   | 266.8   |  |              |   | 222.9   |              |  |   | 231.4   | 
|Accessory floormats                              |  |                   | 156.2   |  |              |   | 148.7   |              |  |   | 160.4   | 
|Convertible top systems                          |  |                   | 129.3   |  |              |   | 118.4   |              |  |   | 105.2   | 
|Luggage compartment trim                         |  |                   | 70.1    |  |              |   | 61.4    |              |  |   | 71.0    | 
|Other                                            |  |                   | 76.2    |  |              |   | 113.2   |              |  |   | 133.0   | 
|                                                 |  |                   |         |  |              |   |         |              | 
|Total                                            |  | $                 | 3,885.8 |  |              | $ | 1,823.3 |              |  | $ | 1,901.8 | 
|                                                 |  |                   |         |  |              |   |         |              | 

Direct and indirect sales to significant
customers in excess of ten percent of consolidated net sales
from continuing operations follow:

|                           |  |                   |       |  |      |  |       |      |  |  |       | 
|-------------------------- |  | ----------------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                           |  |                  
|                           |  | Fiscal Year Ended |      
|                           |  |                   |      
|                           |  | 2002              |       |  | 2001 |  |       | 2000 | 
|                           |  |                   |       |  |      |  |       |      | 
|DaimlerChrysler AG         |  |                   | 31.0% |  |      |  | 18.7% |      |  |  | 16.8% | 
|General Motors Corporation |  |                   | 23.0% |  |      |  | 29.0% |      |  |  | 31.4% | 
|Ford Motor Company         |  |                   | 23.0% |  |      |  | 21.5% |      |  |  | 20.6% | 

Information about the Companys continuing
operations in different geographic areas for fiscal 2002, 2001,
and 2000 is presented below (in millions):

|               |  |                   |         |            |                   |   |         |                   |            |   |         |  |  |            |         |  |        |   |         |  |  |   |       | 
|-------------- |  | ----------------- | ------- | ---------- | ----------------- | - | ------- | ----------------- | ---------- | - | ------- |  |  | ---------- | ------- |  | ------ | - | ------- |  |  | - | ----- | 
|               |  |                   |         |            |                   |  
|               |  | Year Ended        |         |            | Fiscal Year Ended |   |         | Fiscal Year Ended |           
|               |  | December 31, 2002 |         |            | December 31, 2001 |   |         | December 31, 2000 |           
|               |  |                   |         |            |                   |   |         |                   |           
|               |  |                   |         | Long-Lived |                   |   |         |                   | Long-Lived |   |         |  |  | Long-Lived |        
|               |  | Net Sales         |         |            | Assets            |   |         | Net Sales         |            |   | Assets  |  |  | Net Sales  |         |  | Assets |  
|               |  |                   |         |            |                   |   |         |                   |            |   |         |  |  |            |         |  |        |  
|United States  |  | $                 | 2,412.0 |            |                   | $ | 1,445.3 |                   |            | $ | 1,346.0 |  |  | $          | 1,548.0 |  |        | $ | 1,123.6 |  |  | $ | 518.5 | 
|Canada         |  |                   | 488.2   |            |                   |   | 343.4   |                   |            |   | 168.5   |  |  |            | 101.9   |  |        |   | 407.6   |  |  |   | 85.1  | 
|Mexico         |  |                   | 230.7   |            |                   |   | 96.8    |                   |            |   | 50.5    |  |  |            | 52.9    |  |        |   | 86.1    |  |  |   | 26.2  | 
|United Kingdom |  |                   | 660.5   |            |                   |   | 63.2    |                   |            |   | 117.3   |  |  |            | 71.8    |  |        |   | 117.2   |  |  |   | 54.3  | 
|Other          |  |                   | 94.4    |            |                   |   | 240.1   |                   |            |   | 141.0   |  |  |            | 337.8   |  |        |   | 167.3   |  |  |   | 73.9  | 
|               |  |                   |         |            |                   |   |         |                   |            |   |         |  |  |            |         |  |        |  
|Consolidated   |  | $                 | 3,885.8 |            |                   | $ | 2,188.8 |                   |            | $ | 1,823.3 |  |  | $          | 2,112.4 |  |        | $ | 1,901.8 |  |  | $ | 758.0 | 
|               |  |                   |         |            |                   |   |         |                   |            |   |         |  |  |            |         |  |        |  

Intersegment sales between geographic areas are
not material. For fiscal years 2002, 2001, and 2000, export
sales from the United States to foreign countries were
$429.5 million, $146.2 million, and
$87.2 million, respectively.

F-38



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

21. Commitments and
Contingencies

Environmental

The Company is subject to federal, state, local
and foreign environmental, and health and safety, laws and
regulations that (i) affect ongoing operations and may
increase capital costs and operating expenses in order to
maintain compliance with such requirements and (ii) impose
liability relating to contamination at facilities, and at other
locations such as former facilities, facilities where we have
sent wastes for treatment or disposal, and other properties to
which the Company may be linked. Such liability may include, for
example, investigation and clean-up of the contamination,
personal injury and property damage caused by the contamination,
and damages to natural resources. Some of these liabilities may
be imposed without regard to fault, and may also be joint and
several (which can result in a liable party being held
responsible for the entire obligation, even where other parties
are also liable).

Management believes that it has obtained, and is
in material compliance with, those material environmental
permits and approvals necessary to conduct the Companys
various businesses. Environmental compliance costs for
continuing businesses are accounted for as normal operating
expenses or capital expenditures, except for certain costs
incurred at acquired locations. Environmental compliance costs
relating to conditions existing at the time of an acquisition
are generally charged to reserves established in purchase
accounting. The Company accrues for environmental remediation
costs when such obligations are known and reasonably estimable.
In the opinion of management, based on the facts presently known
to it, such environmental compliance and remediation costs will
not have a material effect on the Companys business,
consolidated financial condition, future results of operations
or cash flows.

The Company is legally or contractually
responsible or alleged to be responsible for the investigation
and remediation of contamination at various sites, and for
personal injury or property damages, if any, associated with
such contamination. At some of these sites the Company has been
notified that it is a potentially responsible party
(PRP) under the federal Superfund law or similar
state laws. Other sites at which the Company may be responsible
for contamination may be identified in the future, including
with respect to divested and acquired businesses.

The Company is currently engaged in investigating
or remediating certain sites as discussed in the paragraphs
below. In estimating the cost of investigation and remediation,
the Company considered, among other things, its prior experience
in remediating contaminated sites, remediation efforts by other
parties, data released by the United States Environmental
Protection Agency (USEPA), the professional judgment
of the Companys environmental experts, outside
environmental specialists and other experts, and the likelihood
that other identified PRPs will have the financial resources to
fulfill their obligations at sites where they and the Company
may be jointly and severally liable. It is difficult to estimate
the total cost of investigation and remediation due to various
factors including: incomplete information regarding particular
sites and other PRPs; uncertainty regarding the nature and
extent of environmental problems and the Companys share,
if any, of liability for such problems; the ultimate selection
among alternative approaches by governmental regulators; the
complexity and evolving nature of environmental laws,
regulations and governmental directives; and changes in cleanup
standards.

The Company is a party to a Consent Decree with
the State of New Hampshire to remediate a former industrial
landfill known as the Cardinal Landfill in Farmington, New
Hampshire. Pursuant to that Consent Decree, the Company is
currently conducting a pilot test for a proposed remediation of
chlorinated compound contaminants in groundwater. The Consent
Decree calls for a remedy to be in place by 2004. The Company is
a defendant in two lawsuits filed by a total of 91 individual
plaintiffs for alleged personal injuries arising from Cardinal
Landfill conditions. The Company will vigorously contest these
allegations. As of December 31, 2002, the Company has
accrued $15.7 million for Cardinal Landfill.

F-39



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The Company is a party, as a member of a PRP
workgroup, to a Consent Decree entered with the USEPA for the
remediation of a former municipal landfill in Dover, New
Hampshire. The town of Dover, New Hampshire is also a member of
the PRP group and a party to the Consent Decree. Pursuant to the
terms of the Consent Decree, the PRP group is currently engaged
in the preparation of a remediation design. The Consent Decree
requires that a remedy for the site be in place by 2004. As of
December 31, 2002, the Company has accrued
$9.6 million for Dover.

Pursuant to a Consent Decree signed with the
USEPA, the Company is currently engaged in a full-scale
remediation for groundwater and soil contamination at the former
Stamina Mills manufacturing facility in North Smithfield, Rhode
Island. Remediation activities have been ongoing since 1998. The
Company is also in negotiation with the USEPA regarding a claim
for past oversight costs. A resolution of this matter is
anticipated in 2003. As of December 31, 2002, the Company
has accrued $14.1 million for Stamina Mills.

The Company is working with the Michigan
Department of Environmental Quality (MDEQ) to investigate and
remediate soil and groundwater contamination at a former
manufacturing plant in Mancelona, MI and at adjacent owned
property formerly used for the treatment and disposal of plating
waste. MDEQ is likely to require remediation of groundwater. In
addition, the Company is incurring costs in connection with the
provision of alternate water supplies to residences in the area.

The current owner of one of the Companys
former manufacturing plants located in Bowling Green, OH has
entered into an Administrative Order on Consent with the Ohio
Environmental Protection Agency (OEPA) requiring investigation
and remediation of contamination at the site. The Company is
reimbursing the current owner for costs associated with ongoing
groundwater monitoring and, following selection of an
appropriate remedy by OEPA, will assume 90% of future
remediation costs.

In the 1980s and 1990s, the
California Regional Water Quality Control Board (CRWQCB) and
other state agencies ordered a predecessor of the Company to
investigate and remediate soil and groundwater contamination at
a former lumber treatment plant in Elmira, CA. In 1996, the
Company entered into an agreement with the State of California
to conduct long-term operation and maintenance of the remedy
implemented at the site.

The Company has established accruals for certain
contingent environmental liabilities and management believes
such reserves comply with generally accepted accounting
principles. The Company accrues for environmental investigatory
and non-capital remediation costs when litigation has commenced
or a claim or assessment has been asserted or is imminent, the
likelihood of an unfavorable outcome is probable, and the
financial impact of such outcome is reasonably estimable. As of
December 31, 2002 and 2001, total reserves for these
environmental costs are approximately $64.5 million and
$59.6 million, respectively.

In the opinion of management, based on
information presently known to it, identified environmental
costs and contingencies will not have a material effect on the
Companys consolidated financial condition, future results
of operations or cash flows. However, we can give no assurance
that we have identified or properly assessed all potential
environmental liabilities arising from our business or
properties, and those of our present and former subsidiaries and
their corporate predecessors.

Litigation

The Company and its subsidiaries have lawsuits
and claims pending against them and have certain guarantees
outstanding which were made in the ordinary course of business.

The ultimate outcome of the legal proceedings to
which the Company is a party will not, in the opinion of the
Companys management based on the facts presently known to
it, have a material effect on the Companys consolidated
financial condition, future results of operations or cash flows.

F-40



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Other
Commitments

As of December 31, 2002, the Companys
continuing operations had approximately $36.2 million in
outstanding capital expenditure commitments. The majority of the
leased properties of the Companys previously divested
businesses have been assigned to third parties. Although
releases have been obtained from the lessors of certain
properties, Products remains contingently liable under most of
the leases. Products future liability for these leases, in
managements opinion, based on the facts presently known to
it, will not have a material effect on the Companys
consolidated financial condition, future results of operations
or cash flows.

Refer to Note 2, New Accounting
Pronouncements regarding certain indemnifications and
guarantees as required by FIN No. 45.

F-41



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

22.     Quarterly
Financial Data (Unaudited)

The quarterly financial data is summarized below
(in millions, except per share amounts).

|                                                                      |                                                         |         |       |         |   |         |         |         |   |   |       |       |   |   |       |       |  
|--------------------------------------------------------------------- | ------------------------------------------------------- | ------- | ----- | ------- | - | ------- | ------- | ------- | - | - | ----- | ----- | - | - | ----- | ----- | -
|                                                                      |                                                         |        
|                                                                      |                                                         | 2002   
|                                                                      |                                                         |        
|                                                                      |                                                         | First   |       | Second  |   | Third   |         | Fourth 
|                                                                      |                                                         | Quarter |       | Quarter |   | Quarter |         | Quarter
|                                                                      |                                                         |         |       |         |   |         |         |        
|Net sales                                                             |                                                         | $       | 914.8 |         |   | $       | 1,085.3 |         |   | $ | 922.5 |       |   | $ | 963.2 |      
|Gross profit                                                          |                                                         |         | 131.1 |         |   |         | 158.5   |         |   |   | 100.7 |       |   |   | 127.8 |      
|Income (loss) from continuing operations                              |                                                         |         | (6.7  | )       |   |         | 3.7     |         |   |   | (45.2 | )     |   |   | (3.1  | )    
|Income (loss) before extraordinary items                              |                                                         |         | (6.7  | )       |   |         | 3.7     |         |   |   | (45.2 | )     |   |   | (3.1  | )    
|Net income (loss)                                                     |                                                         |         | (18.4 | )       |   |         | 13.2    |         |   |   | (45.2 | )     |   |   | (3.1  | )    
|Basic and diluted earnings (loss) per share
    Continuing operations |                                                         |         | (0.11 | )       |   |         | (0.46   | )       |   |   | (0.54 | )     |   |   | (0.04 | )    
|                                                                      | Discontinued operations                                 |         |       |        |   |         |         | 0.12    |   |   |       |      |   |   |       |      |  
|                                                                      | Cumulative effect of change in accounting
    principle |         |       | (0.17   | ) |         |         |        |   |   |       |      |   |   |       |      |  
|                                                                      | Extraordinary loss                                      |         |       |        |   |         |         |        |   |   |       |      |   |   |       |      |  
|                                                                      | Net income available to common shareholders             |         |       | (0.27   | ) |         |         | (0.33   | ) |   |       | (0.54 | ) |   |       | (0.04 | )
|Common stock prices:                                                  |                                                         |         |       |         |   |         |         |         |   |   |       |       |   |   |       |      
|                                                                      | High                                                    |         |       | 25.500  |   |         |         | 28.375  |   |   |       | 9.000 |   |   |       | 4.450 |  
|                                                                      | Low                                                     |         |       | 16.750  |   |         |         | 9.000   |   |   |       | 2.810 |   |   |       | 2.450 |  

|                                                                      |                                                         |         |        |         |   |         |        |         |  |   |        |       |   |   |        |       |  
|--------------------------------------------------------------------- | ------------------------------------------------------- | ------- | ------ | ------- | - | ------- | ------ | ------- |  | - | ------ | ----- | - | - | ------ | ----- | -
|                                                                      |                                                         |        
|                                                                      |                                                         | 2001   
|                                                                      |                                                         |        
|                                                                      |                                                         | First   |        | Second  |   | Third   |        | Fourth 
|                                                                      |                                                         | Quarter |        | Quarter |   | Quarter |        | Quarter
|                                                                      |                                                         |         |        |         |   |         |        |        
|Net sales                                                             |                                                         | $       | 453.1  |         |   | $       | 457.6  |         |  | $ | 430.5  |       |   | $ | 482.1  |      
|Gross profit                                                          |                                                         |         | 58.8   |         |   |         | 64.3   |         |  |   | 53.4   |       |   |   | 42.3   |      
|Income (loss) from continuing operations                              |                                                         |         | (7.1   | )       |   |         | 1.8    |         |  |   | (13.8  | )     |   |   | (30.6  | )    
|Income (loss) before extraordinary items                              |                                                         |         | (7.1   | )       |   |         | 9.2    |         |  |   | (12.4  | )     |   |   | (30.6  | )    
|Net income (loss)                                                     |                                                         |         | (7.4   | )       |   |         | 9.2    |         |  |   | (12.4  | )     |   |   | (35.6  | )    
|Basic and diluted earnings (loss) per share
    Continuing operations |                                                         |         | (0.26  | )       |   |         | 0.05   |         |  |   | (0.32  | )     |   |   | (0.62  | )    
|                                                                      | Discontinued operations                                 |         |        |        |   |         |        | 0.21    |  |   |        | 0.03  |   |   |        |      |  
|                                                                      | Cumulative effect of change in accounting
    principle |         |        |        |   |         |        |        |  |   |        |      |   |   |        |      |  
|                                                                      | Extraordinary loss                                      |         |        |        |   |         |        |        |  |   |        |      |   |   |        | (0.10 | )
|                                                                      | Net income available to common shareholders             |         |        | (0.26   | ) |         |        | 0.26    |  |   |        | (0.29 | ) |   |        | (0.72 | )
|Common stock prices:                                                  |                                                         |         |        |         |   |         |        |         |  |   |        |       |   |   |        |      
|High                                                                  |                                                         |         | 14.218 |         |   |         | 15.500 |         |  |   | 21.425 |       |   |   | 25.750 |      
|Low                                                                   |                                                         |         | 8.950  |         |   |         | 10.125 |         |  |   | 9.875  |       |   |   | 11.900 |      

The Companys operations are not subject to
significant seasonal influences.

Impact of Prior Period Adjustment
During the Companys
review of its financial information, an error in the
mathematical computation of foreign currency exchange gains was
discovered. The third quarter 2002

F-42



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

financial statements reflect the correction of
the error as a prior period adjustment. The impact of the
adjustment on the prior period financial statements follows:

|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |   |         |   |  |   |         |  
|------------------------------------------------------------------------------- |  | ------------------------------------ | ----- | - | ---------------- | - | ----- | ------------- |  | - | ---------- | - |  | ------------- | ------- | - | ---------- | - | ------- | - |  | - | ------- | -
|                                                                                |  |                                      |       |  
|                                                                                |  | Three Months Ended                   |       |   | Six Months Ended |  
|                                                                                |  |                                      |       |   |                  |  
|                                                                                |  | March 31,                            |       |   | March 31,        |   |       | June 30,      |  |   | June 30,   |   |  | June 30,      |         |   | June 30,   |  
|                                                                                |  | 2002                                 |       |   | 2002             |   |       | 2002          |  |   | 2002       |   |  | 2002          |         |   | 2002       |  
|                                                                                |  | (As Reported)                        |       |   | (Adjusted)       |   |       | (As Reported) |  |   | (Adjusted) |   |  | (As Reported) |         |   | (Adjusted) |  
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|                                                                                |  |                                     
|                                                                                |  | (in millions, except per share data) |      
|Net sales                                                                       |  | $                                    | 914.8 |   |                  | $ | 914.8 |               |  | $ | 1,085.3    |   |  | $             | 1,085.3 |   |            | $ | 2,000.1 |   |  | $ | 2,000.1 |  
|Cost of goods sold                                                              |  |                                      | 783.7 |   |                  |   | 783.7 |               |  |   | 926.8      |   |  |               | 926.8   |   |            |   | 1,710.5 |   |  |   | 1,710.5 |  
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Gross profit                                                                    |  |                                      | 131.1 |   |                  |   | 131.1 |               |  |   | 158.5      |   |  |               | 158.5   |   |            |   | 289.6   |   |  |   | 289.6   |  
|Selling, general and administrative expenses                                    |  |                                      | 67.6  |   |                  |   | 67.6  |               |  |   | 77.0       |   |  |               | 77.0    |   |            |   | 144.6   |   |  |   | 144.6   |  
|Restructuring charges and impairment of long
    lived assets                   |  |                                      | 9.1   |   |                  |   | 9.1   |               |  |   |           |   |  |               |        |   |            |   | 9.1     |   |  |   | 9.1     |  
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Operating income                                                                |  |                                      | 54.4  |   |                  |   | 54.4  |               |  |   | 81.5       |   |  |               | 81.5    |   |            |   | 135.9   |   |  |   | 135.9   |  
|Other, net                                                                      |  |                                      | 55.9  |   |                  |   | 54.2  |               |  |   | 51.8       |   |  |               | 57.0    |   |            |   | 107.7   |   |  |   | 111.2   |  
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Income (loss) from continuing operations
    before income taxes                |  |                                      | (1.5  | ) |                  |   | 0.2   |               |  |   | 29.7       |   |  |               | 24.5    |   |            |   | 28.2    |   |  |   | 24.7    |  
|Income tax expense                                                              |  |                                      | 5.9   |   |                  |   | 6.9   |               |  |   | 23.2       |   |  |               | 20.8    |   |            |   | 29.1    |   |  |   | 27.7    |  
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Income (loss) from continuing operations
    before extraordinary items         |  |                                      | (7.4  | ) |                  |   | (6.7  | )             |  |   | 6.5        |   |  |               | 3.7     |   |            |   | (0.9    | ) |  |   | (3.0    | )
|Income from discontinued operations, net of
    income taxes                    |  |                                      |      |   |                  |   |      |               |  |   | 9.5        |   |  |               | 9.5     |   |            |   | 9.5     |   |  |   | 9.5     |  
|Cumulative effect of change in accounting
    principle, net of income taxes(A) |  |                                      | (11.7 | ) |                  |   | (11.7 | )             |  |   |           |   |  |               |        |   |            |   | (11.7   | ) |  |   | (11.7   | )
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Net income (loss)                                                               |  | $                                    | (19.1 | ) |                  |   | (18.4 | )             |  |   | 16.0       |   |  |               | 13.2    |   |            |   | (3.1    | ) |  |   | (5.2    | )
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Earnings per share data:                                                        |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |   |         |   |  |   |         |  
|Net income (loss)                                                               |  | $                                    | (19.1 | ) |                  |   | (18.4 | )             |  |   | 16.0       |   |  |               | 13.2    |   |            |   | (3.1    | ) |  |   | (5.2    | )
|Loss on redemption of subsidiary preferred stock                                |  |                                      |      |   |                  |   |      |               |  |   | (36.3      | ) |  |               | (36.3   | ) |            |   | (36.3   | ) |  |   | (36.3   | )
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Net (loss) available to common shareholders                                     |  | $                                    | (19.1 | ) |                  | $ | (18.4 | )             |  | $ | (20.3      | ) |  | $             | (23.1   | ) |            | $ | (39.4   | ) |  | $ | (41.5   | )
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Net (loss) per basic and diluted common share                                   |  | $                                    | (0.28 | ) |                  | $ | (0.27 | )             |  | $ | (0.29      | ) |  | $             | (0.33   | ) |            | $ | (0.57   | ) |  | $ | (0.60   | )
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  
|Average basic and diluted common shares
    outstanding:                        |  |                                      | 67.2  |   |                  |   | 67.2  |               |  |   | 70.4       |   |  |               | 70.4    |   |            |   | 68.8    |   |  |   | 68.8    |  
|                                                                                |  |                                      |       |   |                  |   |       |               |  |   |            |   |  |               |         |   |            |  

|                       |  |               |        |   |            |   |        |   |  |  |  |               |  |  |            |  |  |   |        |   |  |   |        |  
|---------------------- |  | ------------- | ------ | - | ---------- | - | ------ | - |  |  |  | ------------- |  |  | ---------- |  |  | - | ------ | - |  | - | ------ | -
|                       |  | March 31,     |        |   | March 31,  |   |        |   |  |  |  | June 30,      |  |  | June 30,   | 
|                       |  | 2002          |        |   | 2002       |   |        |   |  |  |  | 2002          |  |  | 2002       | 
|                       |  | (As Reported) |        |   | (Adjusted) |   |        |   |  |  |  | (As Reported) |  |  | (Adjusted) | 
|                       |  |               |        |   |            |   |        |   |  |  |  |               |  |  |            | 
|Accumulated deficit(A) |  | $             | (701.9 | ) |            | $ | (701.2 | ) |  |  |  |               |  |  |            |  |  | $ | (722.1 | ) |  | $ | (724.2 | )
|                       |  |               |        |   |            |   |        |   |  |  |  |               |  |  |            |  |  |  



---



|    |                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) | Includes effect of $11.7 million (having no
    tax impact) cumulative effect of change in accounting principle
    recorded in June 2002, and accounted for as if it occurred on
    January 1, 2002.

F-43



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

23.     Consolidating
Financial Statements

Products issued Senior Notes in a total principal
amount of $500.0 million in December 2001. The Senior Notes
are guaranteed by the Company and all the Companys wholly
owned domestic Subsidiaries other than its receivable, insurance
and charitable subsidiaries (Guarantor Subsidiaries). The
following are consolidating financial statements of the Company,
Products, its guarantor and non-guarantor subsidiaries:

F-44



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES






SUPPLEMENTAL GUARANTOR
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS







CONSOLIDATING STATEMENT OF
INCOME


|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |         |      |       |   |       |     |  |   |         |       | 
|---------------------------------------------------------------- | -------------------------------------- | ------------------------------------ | ----- | ---- | ------ | - | ----- | ---------- | ------------ | - | ---------- | ----- | - | ------------ | ------- | ---- | ----- | - | ----- | --- |  | - | ------- | ----- | 
|                                                                 |                                        |                                     
|                                                                 |                                        | For the Year Ended December 31, 2002 |      
|                                                                 |                                        |                                      |      
|                                                                 |                                        |                                      |       | Non- |        |   |       |            | Consolidated |  
|                                                                 |                                        | Parent                               |       |      | Issuer |   |       | Guarantors |              |   | Guarantors |       |   | Eliminations |         |      | Total |  
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |         |      |       |  
|                                                                 |                                        |                                     
|                                                                 |                                        | (in millions)                        |      
|Net sales                                                        |                                        | $                                    |      |      |        | $ | 289.4 |            |              | $ | 2,415.7    |       |   | $            | 1,216.9 |      |       | $ | (36.2 | )   |  | $ | 3,885.8 |      
|Cost of goods sold                                               |                                        |                                      |      |      |        |   | 181.8 |            |              |   | 2,110.0    |       |   |              | 1,112.1 |      |       |   | (36.2 | )   |  |   | 3,367.7 |      
|Selling, general and administrative expenses                     |                                        |                                      | 0.1   |      |        |   | 166.1 |            |              |   | 82.8       |       |   |              | 44.5    |      |       |   |      |     |  |   | 293.5   |      
|Restructuring charges and impairment of
    long-lived assets    |                                        |                                      |      |      |        |   | 16.5  |            |              |   | 8.3        |       |   |              | 32.1    |      |       |   |      |     |  |   | 56.9    |      
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |         |      |       |  
|Operating income (loss)                                          |                                        |                                      | (0.1  | )    |        |   | (75.0 | )          |              |   | 214.6      |       |   |              | 28.2    |      |       |   |      |     |  |   | 167.7   |      
|                                                                 | Interest expense, net                  |                                      |       | (0.1 | )      |   |       | 15.4       |              |   |            | 126.2 |   |              |         | 7.4  |       |   |       |    |  |   |         | 148.9 | 
|                                                                 | Intercompany interest (income) expense |                                      |       | (6.6 | )      |   |       | (5.9       | )            |   |            | (23.8 | ) |              |         | 36.3 |       |   |       |    |  |   |         |      | 
|                                                                 | Loss on sale of receivables            |                                      |       |     |        |   |       | 0.6        |              |   |            |      |   |              |         | 3.6  |       |   |       |    |  |   |         | 4.2   | 
|                                                                 | Subsidiary preferred stock dividend    |                                      |       |     |        |   |       | 30.8       |              |   |            |      |   |              |         |     |       |   |       |    |  |   |         | 30.8  | 
|                                                                 | Subsidiary preferred stock accretion   |                                      |       |     |        |   |       | 7.6        |              |   |            |      |   |              |         |     |       |   |       |    |  |   |         | 7.6   | 
|                                                                 | Other expense, net                     |                                      |       |     |        |   |       | (45.8      | )            |   |            | 40.4  |   |              |         | 12.5 |       |   |       | 2.9 |  |   |         | 10.0  | 
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |         |      |       |  
|Income (loss) from continuing operations
    before income taxes |                                        |                                      | 6.6   |      |        |   | (77.7 | )          |              |   | 71.8       |       |   |              | (31.6   | )    |       |   | (2.9  | )   |  |   | (33.8   | )    
|Income tax (benefit) expense                                     |                                        |                                      | 2.5   |      |        |   | (16.2 | )          |              |   | 42.4       |       |   |              | (11.2   | )    |       |   |      |     |  |   | 17.5    |      
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |         |      |       |  
|Income (loss) from continuing
    operations                     |                                        |                                      | 4.1   |      |        |   | (61.5 | )          |              |   | 29.4       |       |   |              | (20.4   | )    |       |   | (2.9  | )   |  |   | (51.3   | )    
|Income from discontinued operations                              |                                        |                                      |      |      |        |   | 9.5   |            |              |   |           |       |   |              |        |      |       |   |      |     |  |   | 9.5     |      
|Cumulative effect of a change in accounting
    principle        |                                        |                                      |      |      |        |   |      |            |              |   |           |       |   |              | (11.7   | )    |       |   |      |     |  |   | (11.7   | )    
|Equity in net (loss) income of
    subsidiaries                  |                                        |                                      | (57.6 | )    |        |   | (5.6  | )          |              |   | (60.3      | )     |   |              |        |      |       |   | 123.5 |     |  |   |        |      
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |         |      |       |  
|NET INCOME (LOSS)                                                |                                        | $                                    | (53.5 | )    |        | $ | (57.6 | )          |              | $ | (30.9      | )     |   | $            | (32.1   | )    |       | $ | 120.6 |     |  | $ | (53.5   | )    
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |         |      |       |  

|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |       |     |       |   |       |      |   |   |         |      | 
|---------------------------------------------------------------- | -------------------------------------- | ------------------------------------ | ----- | ---- | ------ | - | ----- | ---------- | ------------ | - | ---------- | ----- | - | ------------ | ----- | --- | ----- | - | ----- | ---- | - | - | ------- | ---- | 
|                                                                 |                                        |                                     
|                                                                 |                                        | For the Year Ended December 31, 2001 |      
|                                                                 |                                        |                                      |      
|                                                                 |                                        |                                      |       | Non- |        |   |       |            | Consolidated |  
|                                                                 |                                        | Parent                               |       |      | Issuer |   |       | Guarantors |              |   | Guarantors |       |   | Eliminations |       |     | Total |  
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |       |     |       |  
|                                                                 |                                        |                                     
|                                                                 |                                        | (in millions)                        |      
|Net sales                                                        |                                        | $                                    |      |      |        | $ | 612.2 |            |              | $ | 676.4      |       |   | $            | 577.1 |     |       | $ | (42.4 | )    |   | $ | 1,823.3 |     
|Cost of goods sold                                               |                                        |                                      |      |      |        |   | 506.3 |            |              |   | 598.2      |       |   |              | 542.4 |     |       |   | (42.4 | )    |   |   | 1,604.5 |     
|Selling, general and administrative expenses                     |                                        |                                      | 0.1   |      |        |   | 34.9  |            |              |   | 81.1       |       |   |              | 48.3  |     |       |   |      |      |   |   | 164.4   |     
|Restructuring charges and impairment of
    long-lived assets    |                                        |                                      |      |      |        |   | 7.3   |            |              |   | 0.9        |       |   |              | 10.6  |     |       |   |      |      |   |   | 18.8    |     
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |       |     |       |  
|Operating income (loss)                                          |                                        |                                      | (0.1  | )    |        |   | 63.7  |            |              |   | (3.8       | )     |   |              | (24.2 | )   |       |   |      |      |   |   | 35.6    |     
|                                                                 | Interest expense, net                  |                                      |       |     |        |   |       | 45.6       |              |   |            | 35.9  |   |              |       | 2.8 |       |   |       |     |   |   |         | 84.3 | 
|                                                                 | Intercompany interest (income) expense |                                      |       |     |        |   |       | 17.3       |              |   |            | (24.7 | ) |              |       | 7.4 |       |   |       |     |   |   |         |     | 
|                                                                 | Loss on sale of receivables            |                                      |       |     |        |   |       | 6.1        |              |   |            |      |   |              |       | 4.7 |       |   |       |     |   |   |         | 10.8 | 
|                                                                 | Subsidiary preferred stock dividend    |                                      |       |     |        |   |       | 1.5        |              |   |            |      |   |              |       |    |       |   |       |     |   |   |         | 1.5  | 
|                                                                 | Subsidiary preferred stock accretion   |                                      |       |     |        |   |       | 0.9        |              |   |            |      |   |              |       |    |       |   |       |     |   |   |         | 0.9  | 
|                                                                 | Other expense, net                     |                                      |       |     |        |   |       | 5.0        |              |   |            | 2.9   |   |              |       | 1.8 |       |   |       | (3.3 | ) |   |         | 6.4  | 
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |       |     |       |  
|Income (loss) from continuing operations
    before income taxes |                                        |                                      | (0.1  | )    |        |   | (12.7 | )          |              |   | (17.9      | )     |   |              | (40.9 | )   |       |   | 3.3   |      |   |   | (68.3   | )   
|Income tax (benefit) expense                                     |                                        |                                      | 0.2   |      |        |   | (11.9 | )          |              |   | (5.6       | )     |   |              | (1.3  | )   |       |   |      |      |   |   | (18.6   | )   
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |       |     |       |  
|Income (loss) from continuing
    operations                     |                                        |                                      | (0.3  | )    |        |   | (0.8  | )          |              |   | (12.3      | )     |   |              | (39.6 | )   |       |   | 3.3   |      |   |   | (49.7   | )   
|Income from discontinued operations                              |                                        |                                      |      |      |        |   | 8.8   |            |              |   |           |       |   |              |      |     |       |   |      |      |   |   | 8.8     |     
|Extraordinary loss on retirement of
    debt                     |                                        |                                      |      |      |        |   | (5.0  | )          |              |   | (0.3       | )     |   |              |      |     |       |   |      |      |   |   | (5.3    | )   
|Equity in net (loss) income of
    subsidiaries                  |                                        |                                      | (45.9 | )    |        |   | (48.9 | )          |              |   | (33.5      | )     |   |              |      |     |       |   | 128.3 |      |   |   |        |     
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |       |     |       |  
|NET INCOME (LOSS)                                                |                                        | $                                    | (46.2 | )    |        | $ | (45.9 | )          |              | $ | (46.1      | )     |   | $            | (39.6 | )   |       | $ | 131.6 |      |   | $ | (46.2   | )   
|                                                                 |                                        |                                      |       |      |        |   |       |            |              |   |            |       |   |              |       |     |       |  

F-45



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL GUARANTOR
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS






CONSOLIDATING STATEMENT OF
INCOME


|                                                                 |                                        |                                      |      |        |   |            |       |            |  |              |       |              |   |   |       |      |   |   |       |     |  |   |         |      | 
|---------------------------------------------------------------- | -------------------------------------- | ------------------------------------ | ---- | ------ | - | ---------- | ----- | ---------- |  | ------------ | ----- | ------------ | - | - | ----- | ---- | - | - | ----- | --- |  | - | ------- | ---- | 
|                                                                 |                                        |                                     
|                                                                 |                                        | For the Year Ended December 31, 2000
|                                                                 |                                        |                                     
|                                                                 |                                        |                                      |      | Non-   |   |            |       | Total     
|                                                                 |                                        | Parent                               |      | Issuer |   | Guarantors |       | Guarantors |  | Eliminations |       | Consolidated
|                                                                 |                                        |                                      |      |        |   |            |       |            |  |              |       |             
|                                                                 |                                        |                                     
|                                                                 |                                        | (in millions)                       
|Net sales                                                        |                                        | $                                    |     |        |   | $          | 547.7 |            |  | $            | 619.6 |              |   | $ | 815.4 |      |   | $ | (80.9 | )   |  | $ | 1,901.8 |     
|Cost of goods sold                                               |                                        |                                      |     |        |   |            | 464.4 |            |  |              | 554.1 |              |   |   | 697.6 |      |   |   | (80.9 | )   |  |   | 1,635.2 |     
|Selling, general and administrative expenses                     |                                        |                                      | 0.1  |        |   |            | 36.0  |            |  |              | 53.5  |              |   |   | 68.9  |      |   |   |      |     |  |   | 158.5   |     
|                                                                 |                                        |                                      |      |        |   |            |       |            |  |              |       |              |   |   |       |      |   |   |       |     |  |   |         |     
|Operating income (loss)                                          |                                        |                                      | (0.1 | )      |   |            | 47.3  |            |  |              | 12.0  |              |   |   | 48.9  |      |   |   |      |     |  |   | 108.1   |     
|                                                                 | Interest expense, net                  |                                      |      | (0.1   | ) |            |       | 86.8       |  |              |       | 7.4          |   |   |       | 2.5  |   |   |       |    |  |   |         | 96.6 | 
|                                                                 | Intercompany interest (income) expense |                                      |      |       |   |            |       | 19.9       |  |              |       | (16.2        | ) |   |       | (3.7 | ) |   |       |    |  |   |         |     | 
|                                                                 | Loss on sale of receivables            |                                      |      |       |   |            |       | 1.6        |  |              |       |             |   |   |       | 7.6  |   |   |       |    |  |   |         | 9.2  | 
|                                                                 | Other expense, net                     |                                      |      |       |   |            |       | 2.1        |  |              |       | (13.6        | ) |   |       | 9.9  |   |   |       | 3.1 |  |   |         | 1.5  | 
|                                                                 |                                        |                                      |      |        |   |            |       |            |  |              |       |              |   |   |       |      |   |   |       |     |  |   |         |     
|Income (loss) from continuing operations
    before income taxes |                                        |                                      |     |        |   |            | (63.1 | )          |  |              | 34.4  |              |   |   | 32.6  |      |   |   | (3.1  | )   |  |   | 0.8     |     
|Income tax (benefit) expense                                     |                                        |                                      |     |        |   |            | (24.1 | )          |  |              | 15.3  |              |   |   | 12.2  |      |   |   | (1.2  | )   |  |   | 2.2     |     
|                                                                 |                                        |                                      |      |        |   |            |       |            |  |              |       |              |   |   |       |      |   |   |       |     |  |   |         |     
|Income (loss) from continuing
    operations                     |                                        |                                      |     |        |   |            | (39.0 | )          |  |              | 19.1  |              |   |   | 20.4  |      |   |   | (1.9  | )   |  |   | (1.4    | )   
|Income from discontinued operations                              |                                        |                                      |     |        |   |            | 6.6   |            |  |              |      |              |   |   |      |      |   |   |      |     |  |   | 6.6     |     
|Extraordinary loss on retirement of
    debt                     |                                        |                                      |     |        |   |            |      |            |  |              | (0.7  | )            |   |   |      |      |   |   |      |     |  |   | (0.7    | )   
|Equity in net income (loss) of
    subsidiaries                  |                                        |                                      | 4.5  |        |   |            | 36.9  |            |  |              | 9.2   |              |   |   |      |      |   |   | (50.6 | )   |  |   |        |     
|                                                                 |                                        |                                      |      |        |   |            |       |            |  |              |       |              |   |   |       |      |   |   |       |     |  |   |         |     
|NET INCOME (LOSS)                                                |                                        | $                                    | 4.5  |        |   | $          | 4.5   |            |  | $            | 27.6  |              |   | $ | 20.4  |      |   | $ | (52.5 | )   |  | $ | 4.5     |     
|                                                                 |                                        |                                      |      |        |   |            |       |            |  |              |       |              |   |   |       |      |   |   |       |     |  |   |         |     

F-46



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL GUARANTOR
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS






CONSOLIDATING BALANCE
SHEET


|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |   |          |     |  |   |         |       | 
|-------------------------------------------------------- | ------------------------------------ | ------------------------------------ | ----- | ---- | ------ | - | ------- | ---------- | ------------ | - | ---------- | ----- |  | ------------ | ------- | ----- | ----- | - | -------- | --- |  | - | ------- | ----- | 
|                                                         |                                      |                                     
|                                                         |                                      | For the Year Ended December 31, 2002 |      
|                                                         |                                      |                                      |      
|                                                         |                                      |                                      |       | Non- |        |   |         |            | Consolidated |  
|                                                         |                                      | Parent                               |       |      | Issuer |   |         | Guarantors |              |   | Guarantors |       |  | Eliminations |         |       | Total |  
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |  
|                                                         |                                      |                                     
|                                                         |                                      | (in millions)                        |      
|ASSETS                                                  
|Current Assets:                                          |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |   |          |     |  |   |         |      
|                                                         | Cash and cash equivalents            |                                      | $     |     |        |   | $       | 0.2        |              |   | $          | 0.3   |  |              | $       | 80.8  |       |   | $        |    |  |   | $       | 81.3  | 
|                                                         | Accounts and other receivables, net  |                                      |       |     |        |   |         | 5.0        |              |   |            | 40.7  |  |              |         | 324.4 |       |   |          | 2.9 |  |   |         | 373.0 | 
|                                                         | Inventories                          |                                      |       |     |        |   |         | 13.0       |              |   |            | 106.7 |  |              |         | 51.9  |       |   |          |    |  |   |         | 171.6 | 
|                                                         | Other                                |                                      |       |     |        |   |         | 51.4       |              |   |            | 75.5  |  |              |         | 50.5  |       |   |          |    |  |   |         | 177.4 | 
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |  
|Total current assets                                     |                                      |                                      |      |      |        |   | 69.6    |            |              |   | 223.2      |       |  |              | 507.6   |       |       |   | 2.9      |     |  |   | 803.3   |      
|Investment in subsidiaries                               |                                      |                                      | 397.5 |      |        |   | 1,794.5 |            |              |   | (54.8      | )     |  |              |        |       |       |   | (2,137.2 | )   |  |   |        |      
|Property, plant and equipment, net                       |                                      |                                      |      |      |        |   | 51.2    |            |              |   | 316.9      |       |  |              | 370.4   |       |       |   | (0.7     | )   |  |   | 737.8   |      
|Goodwill                                                 |                                      |                                      |      |      |        |   |        |            |              |   | 1,144.8    |       |  |              | 120.7   |       |       |   |         |     |  |   | 1,265.5 |      
|Other assets                                             |                                      |                                      |      |      |        |   | 212.3   |            |              |   | 85.8       |       |  |              | 52.4    |       |       |   |         |     |  |   | 350.5   |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |  
|                                                         |                                      | $                                    | 397.5 |      |        | $ | 2,127.6 |            |              | $ | 1,715.9    |       |  | $            | 1,051.1 |       |       | $ | (2,135.0 | )   |  | $ | 3,157.1 |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |  
|LIABILITIES &
    STOCKHOLDERS EQUITY (DEFICIT)        
|Current Liabilities:                                     |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |   |          |     |  |   |         |      
|                                                         | Short-term borrowings                |                                      |       |     |        |   |         |           |              |   |            |      |  |              |         | 10.5  |       |   |          |    |  |   |         | 10.5  | 
|                                                         | Current maturities of long-term debt |                                      |       |     |        |   |         | 22.7       |              |   |            | 0.1   |  |              |         | 0.7   |       |   |          |    |  |   |         | 23.5  | 
|                                                         | Accounts payable                     |                                      |       |     |        |   |         | 58.5       |              |   |            | 269.7 |  |              |         | 252.3 |       |   |          |    |  |   |         | 580.5 | 
|                                                         | Accrued expenses                     |                                      |       |     |        |   |         | 157.5      |              |   |            | 50.8  |  |              |         | 106.6 |       |   |          |    |  |   |         | 314.9 | 
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |  
|Total current liabilities                                |                                      |                                      |      |      |        |   | 238.7   |            |              |   | 320.6      |       |  |              | 370.1   |       |       |   |         |     |  |   | 929.4   |      
|Long-term debt                                           |                                      |                                      |      |      |        |   | 1,255.0 |            |              |   | 0.1        |       |  |              | 0.1     |       |       |   |         |     |  |   | 1,255.2 |      
|Intercompany payable (receivable)                        |                                      |                                      |      |      |        |   | (92.1   | )          |              |   | (359.9     | )     |  |              | 452.0   |       |       |   |         |     |  |   |        |      
|Other noncurrent liabilities                             |                                      |                                      |      |      |        |   | 204.6   |            |              |   | 140.8      |       |  |              | 105.7   |       |       |   |         |     |  |   | 451.1   |      
|Mandatorily redeemable preferred stock of
    subsidiary |                                      |                                      |      |      |        |   | 123.9   |            |              |   |           |       |  |              |        |       |       |   |         |     |  |   | 123.9   |      
|Total common stockholders equity (deficit)              |                                      | $                                    | 397.5 |      |        | $ | 397.5   |            |              | $ | 1,614.3    |       |  | $            | 123.2   |       |       | $ | (2,135.0 | )   |  | $ | 397.5   |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |  
|                                                         |                                      | $                                    | 397.5 |      |        | $ | 2,127.6 |            |              | $ | 1,715.9    |       |  | $            | 1,051.1 |       |       | $ | (2,135.0 | )   |  | $ | 3,157.1 |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |         |       |       |  

F-47



---



##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL GUARANTOR
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS






CONSOLIDATING BALANCE
SHEET


|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |   |          |     |  |   |         |       | 
|-------------------------------------------------------- | ------------------------------------ | ------------------------------------ | ----- | ---- | ------ | - | ------- | ---------- | ------------ | - | ---------- | ----- |  | ------------ | ----- | ----- | ----- | - | -------- | --- |  | - | ------- | ----- | 
|                                                         |                                      |                                     
|                                                         |                                      | For the Year Ended December 31, 2001 |      
|                                                         |                                      |                                      |      
|                                                         |                                      |                                      |       | Non- |        |   |         |            | Consolidated |  
|                                                         |                                      | Parent                               |       |      | Issuer |   |         | Guarantors |              |   | Guarantors |       |  | Eliminations |       |       | Total |  
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  
|                                                         |                                      |                                     
|                                                         |                                      | (in millions)                        |      
|ASSETS                                                  
|Current Assets                                           |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |   |          |     |  |   |         |      
|                                                         | Cash and cash equivalents            |                                      | $     | 0.2  |        |   | $       | (3.8       | )            |   | $          | 12.7  |  |              | $     | 64.8  |       |   | $        |    |  |   | $       | 73.9  | 
|                                                         | Accounts and other receivables, net  |                                      |       |     |        |   |         | 8.7        |              |   |            | 140.6 |  |              |       | 250.9 |       |   |          | 5.9 |  |   |         | 406.1 | 
|                                                         | Inventories                          |                                      |       |     |        |   |         | 37.6       |              |   |            | 55.7  |  |              |       | 39.3  |       |   |          |    |  |   |         | 132.6 | 
|                                                         | Other                                |                                      |       |     |        |   |         | 8.6        |              |   |            | 71.4  |  |              |       | 51.9  |       |   |          |    |  |   |         | 131.9 | 
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  
|Total current assets                                     |                                      |                                      | 0.2   |      |        |   | 51.1    |            |              |   | 280.4      |       |  |              | 406.9 |       |       |   | 5.9      |     |  |   | 744.5   |      
|Investment in subsidiaries                               |                                      |                                      | 374.5 |      |        |   | 1,784.9 |            |              |   | 396.5      |       |  |              |      |       |       |   | (2,555.9 | )   |  |   |        |      
|Property, plant and equipment, net                       |                                      |                                      |      |      |        |   | 63.9    |            |              |   | 254.7      |       |  |              | 294.0 |       |       |   |         |     |  |   | 612.6   |      
|Goodwill                                                 |                                      |                                      |      |      |        |   | 23.7    |            |              |   | 1,101.3    |       |  |              | 133.0 |       |       |   | (4.2     | )   |  |   | 1,253.8 |      
|Other assets                                             |                                      |                                      |      |      |        |   | 195.9   |            |              |   | 106.6      |       |  |              | 74.5  |       |       |   |         |     |  |   | 377.0   |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  
|                                                         |                                      |                                      | 374.5 |      |        |   | 2,068.4 |            |              |   | 1,859.1    |       |  |              | 501.5 |       |       |   | (2,560.1 | )   |  |   | 2,243.4 |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  
|                                                         |                                      | $                                    | 374.7 |      |        | $ | 2,119.5 |            |              | $ | 2,139.5    |       |  | $            | 908.4 |       |       | $ | (2,554.2 | )   |  | $ | 2,987.9 |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  
|LIABILITIES & STOCKHOLDERS EQUITY
    (DEFICIT)        
|Current Liabilities:                                     |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |   |          |     |  |   |         |      
|                                                         | Short-term borrowings                |                                      |       |     |        |   |         |           |              |   |            | 0.1   |  |              |       | 25.5  |       |   |          |    |  |   |         | 25.6  | 
|                                                         | Current maturities of long-term debt |                                      |       |     |        |   |         | 18.0       |              |   |            | 0.3   |  |              |       | 1.6   |       |   |          |    |  |   |         | 19.9  | 
|                                                         | Accounts payable                     |                                      |       |     |        |   |         | 100.2      |              |   |            | 247.5 |  |              |       | 121.0 |       |   |          |    |  |   |         | 468.7 | 
|                                                         | Accrued expenses                     |                                      |       |     |        |   |         | 76.0       |              |   |            | 83.3  |  |              |       | 90.1  |       |   |          |    |  |   |         | 249.4 | 
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  
|Total current liabilities                                |                                      |                                      |      |      |        |   | 194.2   |            |              |   | 331.2      |       |  |              | 238.2 |       |       |   |         |     |  |   | 763.6   |      
|Long-term debt                                           |                                      |                                      |      |      |        |   | 1,282.0 |            |              |   | (0.1       | )     |  |              | 0.7   |       |       |   |         |     |  |   | 1,282.6 |      
|Intercompany payable (receivable)                        |                                      |                                      |      |      |        |   | (102.4  | )          |              |   | 4.1        |       |  |              | 98.3  |       |       |   |         |     |  |   |        |      
|Other noncurrent liabilities                             |                                      |                                      |      |      |        |   | 221.9   |            |              |   | 137.2      |       |  |              | 58.6  |       |       |   |         |     |  |   | 417.7   |      
|Mandatorily redeemable preferred stock of
    subsidiary |                                      |                                      |      |      |        |   | 149.3   |            |              |   |           |       |  |              |      |       |       |   |         |     |  |   | 149.3   |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  
|                                                         |                                      |                                      |      |      |        |   | 1,550.8 |            |              |   | 141.2      |       |  |              | 157.6 |       |       |   |         |     |  |   | 1,849.6 |      
|Total common stockholders equity (deficit)              |                                      | $                                    | 374.7 |      |        | $ | 374.5   |            |              | $ | 1,667.1    |       |  | $            | 512.6 |       |       | $ | (2,554.2 | )   |  | $ | 374.7   |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  
|                                                         |                                      | $                                    | 374.7 |      |        | $ | 2,119.5 |            |              | $ | 2,139.5    |       |  | $            | 908.4 |       |       | $ | (2,554.2 | )   |  | $ | 2,987.9 |      
|                                                         |                                      |                                      |       |      |        |   |         |            |              |   |            |       |  |              |       |       |       |  

F-48



---



##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL GUARANTOR
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS






CONSOLIDATING STATEMENT OF
CASH FLOWS


|                                                     |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |   |   |   |   |   |      |        |        |  
|---------------------------------------------------- | ------------------------------------------------------- | ------------------------------------------------------- | ---- | ------ | ------ | - | ---- | ---------- | ------------ | - | ---------- | ------ | ------ | ------------ | ---- | ------ | ------ | - | - | - | - | - | ---- | ------ | ------ | -
|                                                     |                                                         |                                                        
|                                                     |                                                         | For the Year Ended December 31, 2002                    |     
|                                                     |                                                         |                                                         |     
|                                                     |                                                         |                                                         |      | Non-   |        |   |      |            | Consolidated |  
|                                                     |                                                         | Parent                                                  |      |        | Issuer |   |      | Guarantors |              |   | Guarantors |        |        | Eliminations |      | Total  |       
|                                                     |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |       
|                                                     |                                                         |                                                        
|                                                     |                                                         | (in millions)                                           |     
|                                                     |                                                         |                                                        
|OPERATING ACTIVITIES                                 |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |   |   |   |   |   |      |       
|                                                     | Net cash provided by (used in) operating
    activities |                                                         | $    | (0.2   | )      |   | $    | 24.0       |              |   | $          | (271.3 | )      |              | $    | 437.0  |        |   | $ |  |   |   | $    | 189.5  |       
|                                                     |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |  
|INVESTING ACTIVITIES                                 |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |   |   |   |   |   |      |       
|                                                     | Additions to property, plant and equipment              |                                                         |      |       |        |   |      | (31.2      | )            |   |            | (71.9  | )      |              |      | (44.8  | )      |   |   |  |   |   |      | (147.9 | )     
|                                                     | Sales of property, plant and equipment                  |                                                         |      |       |        |   |      |           |              |   |            | 13.3   |        |              |      |       |        |   |   |  |   |   |      | 13.3   |       
|                                                     | Additional investment in joint venture                  |                                                         |      |       |        |   |      |           |              |   |            |       |        |              |      | (5.9   | )      |   |   |  |   |   |      | (5.9   | )     
|                                                     | Acquisitions of businesses, net of cash acquired        |                                                         |      |       |        |   |      |           |              |   |            | (6.8   | )      |              |      |       |        |   |   |  |   |   |      | (6.8   | )     
|                                                     | Payment of acquisition costs                            |                                                         |      |       |        |   |      |           |              |   |            | (38.8  | )      |              |      |       |        |   |   |  |   |   |      | (38.8  | )     
|                                                     |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |  
|                                                     |                                                         | Net cash provided by (used in) investing
    activities |      |        |       |   |      |            | (31.2        | ) |            |        | (104.2 | )            |      |        | (50.7  | ) |   |   |  |   |      |        | (186.1 | )
|FINANCING ACTIVITIES                                 |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |   |   |   |   |   |      |       
|                                                     | Repayment of long-term debt                             |                                                         |      |       |        |   |      | (22.4      | )            |   |            | (0.1   | )      |              |      | (1.4   | )      |   |   |  |   |   |      | (23.9  | )     
|                                                     | Increase (decrease) in short-term borrowings            |                                                         |      |       |        |   |      |           |              |   |            |       |        |              |      | (16.0  | )      |   |   |  |   |   |      | (16.0  | )     
|                                                     | Net proceeds from issuance of common stock              |                                                         |      | 150.6  |        |   |      |           |              |   |            |       |        |              |      |       |        |   |   |  |   |   |      | 150.6  |       
|                                                     | Repayment of preferred stock                            |                                                         |      |       |        |   |      | (100.0     | )            |   |            |       |        |              |      |       |        |   |   |  |   |   |      | (100.0 | )     
|                                                     | Repayment of debt assumed in acquisition                |                                                         |      |       |        |   |      | (6.7       | )            |   |            |       |        |              |      |       |        |   |   |  |   |   |      | (6.7   | )     
|                                                     | Intercompany transfers (from) to Subsidiary             |                                                         |      | (150.6 | )      |   |      | 140.3      |              |   |            | 364.0  |        |              |      | (353.7 | )      |   |   |  |   |   |      |       |       
|                                                     |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |  
|                                                     |                                                         | Net cash provided by (used in) financing
    activities |      |        |       |   |      |            | 11.2         |   |            |        | 363.9  |              |      |        | (371.1 | ) |   |   |  |   |      |        | 4.0    |  
|                                                     |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |  
|Increase (decrease) in cash and cash
    equivalents |                                                         |                                                         | (0.2 | )      |        |   | 4.0  |            |              |   | (11.6      | )      |        |              | 15.2 |        |        |   |  |   |   |   | 7.4  |       
|Cash and cash equivalents at beginning of year       |                                                         |                                                         | 0.2  |        |        |   | (3.8 | )          |              |   | 12.7       |        |        |              | 64.8 |        |        |   |  |   |   |   | 73.9 |       
|                                                     |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |  
|Cash and cash equivalents at end of year             |                                                         | $                                                       |     |        |        | $ | 0.2  |            |              | $ | 1.1        |        |        | $            | 80.0 |        |        | $ |  |   |   | $ | 81.3 |       
|                                                     |                                                         |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |        |        |  

F-49



---



##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES


SUPPLEMENTAL GUARANTOR
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

CONSOLIDATING STATEMENT OF
CASH FLOWS  (Continued)

|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |   |   |   |   |   |      |        |        |  
|---------------------------------------------------- | -------------------------------------------------------------- | ------------------------------------------------------- | ---- | ------ | ------ | - | ---- | ---------- | ------------ | - | ---------- | ------ | ------ | ------------ | ---- | ----- | ------ | - | - | - | - | - | ---- | ------ | ------ | -
|                                                     |                                                                |                                                        
|                                                     |                                                                | For the Year Ended December 31, 2001                    |     
|                                                     |                                                                |                                                         |     
|                                                     |                                                                |                                                         |      | Non-   |        |   |      |            | Consolidated |  
|                                                     |                                                                | Parent                                                  |      |        | Issuer |   |      | Guarantors |              |   | Guarantors |        |        | Eliminations |      | Total |       
|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |       
|                                                     |                                                                |                                                        
|                                                     |                                                                | (in millions)                                           |     
|OPERATING ACTIVITIES                                 |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |   |   |   |   |   |      |       
|                                                     | Net cash provided by (used in) operating
    activities        |                                                         | $    | (0.3   | )      |   | $    | (266.6     | )            |   | $          | 237.6  |        |              | $    | 170.3 |        |   | $ |  |   |   | $    | 141.0  |       
|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |  
|INVESTING ACTIVITIES                                 |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |   |   |   |   |   |      |       
|                                                     | Additions to property, plant and equipment                     |                                                         |      |       |        |   |      | (14.8      | )            |   |            | (14.5  | )      |              |      | (25.2 | )      |   |   |  |   |   |      | (54.5  | )     
|                                                     | Sales of property, plant and equipment                         |                                                         |      |       |        |   |      | 62.2       |              |   |            | 24.0   |        |              |      | 1.9   |        |   |   |  |   |   |      | 88.1   |       
|                                                     | Acquisitions of businesses, net of cash acquired               |                                                         |      |       |        |   |      | (760.9     | )            |   |            |       |        |              |      |      |        |   |   |  |   |   |      | (760.9 | )     
|                                                     | Sale of business                                               |                                                         |      |       |        |   |      |           |              |   |            | 3.5    |        |              |      |      |        |   |   |  |   |   |      | 3.5    |       
|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |  
|                                                     |                                                                | Net cash provided by (used in) investing
    activities |      |        |       |   |      |            | (713.5       | ) |            |        | 13.0   |              |      |       | (23.3  | ) |   |   |  |   |      |        | (723.8 | )
|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |  
|FINANCING ACTIVITIES                                 |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |   |   |   |   |   |      |       
|                                                     | Issuance of long-term debt                                     |                                                         |      |       |        |   |      | 950.0      |              |   |            |       |        |              |      |      |        |   |   |  |   |   |      | 950.0  |       
|                                                     | Debt issuance costs                                            |                                                         |      |       |        |   |      | (59.4      | )            |   |            |       |        |              |      |      |        |   |   |  |   |   |      | (59.4  | )     
|                                                     | Repayment of long-term debt                                    |                                                         |      |       |        |   |      | (383.2     | )            |   |            |       |        |              |      |      |        |   |   |  |   |   |      | (383.2 | )     
|                                                     | Increase (decrease) in short-term borrowings                   |                                                         |      |       |        |   |      | 9.7        |              |   |            | 2.0    |        |              |      | (1.6  | )      |   |   |  |   |   |      | 10.1   |       
|                                                     | Net borrowings (repayments) on revolving credit
    facilities |                                                         |      |       |        |   |      | (133.4     | )            |   |            |       |        |              |      | (16.8 | )      |   |   |  |   |   |      | (150.2 | )     
|                                                     | Net proceeds from issuance of common stock                     |                                                         |      | 207.2  |        |   |      |           |              |   |            |       |        |              |      |      |        |   |   |  |   |   |      | 207.2  |       
|                                                     | Reissue (purchase) treasury stock, net                         |                                                         |      | 61.3   |        |   |      |           |              |   |            |       |        |              |      |      |        |   |   |  |   |   |      | 61.3   |       
|                                                     | Intercompany transfers (from) to Subsidiary                    |                                                         |      | (268.5 | )      |   |      | 596.8      |              |   |            | (240.9 | )      |              |      | (87.4 | )      |   |   |  |   |   |      |       |       
|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |  
|                                                     |                                                                | Net cash provided by (used in) financing
    activities |      |        |       |   |      |            | 980.5        |   |            |        | (238.9 | )            |      |       | (105.8 | ) |   |   |  |   |      |        | 635.8  |  
|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |  
|Increase (decrease) in cash and cash
    equivalents |                                                                |                                                         | (0.3 | )      |        |   | 0.4  |            |              |   | 11.7       |        |        |              | 41.2 |       |        |   |  |   |   |   | 53.0 |       
|Cash and cash equivalents at beginning of year       |                                                                |                                                         | 0.5  |        |        |   | (4.2 | )          |              |   | 1.0        |        |        |              | 23.6 |       |        |   |  |   |   |   | 20.9 |       
|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |  
|Cash and cash equivalents at end of year             |                                                                | $                                                       | 0.2  |        |        | $ | (3.8 | )          |              | $ | 12.7       |        |        | $            | 64.8 |       |        | $ |  |   |   | $ | 73.9 |       
|                                                     |                                                                |                                                         |      |        |        |   |      |            |              |   |            |        |        |              |      |       |        |  

F-50



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL GUARANTOR
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS






CONSOLIDATING STATEMENT OF
CASH FLOWS


|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |   |   |   |   |   |      |       |       |  
|---------------------------------------------------- | -------------------------------------------------------------- | ------------------------------------------------------- | --- | ---- | ------ | - | ---- | ---------- | ------------ | - | ---------- | ----- | ----- | ------------ | ---- | ----- | ----- | - | - | - | - | - | ---- | ----- | ----- | -
|                                                     |                                                                |                                                        
|                                                     |                                                                | For the Year Ended December 31, 2000                    |    
|                                                     |                                                                |                                                         |    
|                                                     |                                                                |                                                         |     | Non- |        |   |      |            | Consolidated |  
|                                                     |                                                                | Parent                                                  |     |      | Issuer |   |      | Guarantors |              |   | Guarantors |       |       | Eliminations |      | Total |      
|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |      
|                                                     |                                                                |                                                        
|                                                     |                                                                | (in millions)                                           |    
|OPERATING ACTIVITIES                                 |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |   |   |   |   |   |      |      
|                                                     | Net cash provided by operating activities                      |                                                         | $   | 0.4  |        |   | $    | 13.2       |              |   | $          | 7.1   |       |              | $    | 76.6  |       |   | $ |  |   |   | $    | 97.3  |      
|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |  
|INVESTING ACTIVITIES                                 |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |   |   |   |   |   |      |      
|                                                     | Additions to property, plant and equipment                     |                                                         |     |     |        |   |      | (20.9      | )            |   |            | (13.9 | )     |              |      | (34.2 | )     |   |   |  |   |   |      | (69.0 | )    
|                                                     | Sales of property, plant and equipment                         |                                                         |     |     |        |   |      | 5.6        |              |   |            |      |       |              |      |      |       |   |   |  |   |   |      | 5.6   |      
|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |  
|                                                     |                                                                | Net cash used in investing activities                   |     |      |       |   |      |            | (15.3        | ) |            |       | (13.9 | )            |      |       | (34.2 | ) |   |   |  |   |      |       | (63.4 | )
|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |  
|FINANCING ACTIVITIES                                 |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |   |   |   |   |   |      |      
|                                                     | Repayment of long-term debt                                    |                                                         |     |     |        |   |      | (27.5      | )            |   |            | (38.1 | )     |              |      | (1.0  | )     |   |   |  |   |   |      | (66.6 | )    
|                                                     | Increase (decrease) in short-term borrowings                   |                                                         |     |     |        |   |      |           |              |   |            |      |       |              |      | 0.2   |       |   |   |  |   |   |      | 0.2   |      
|                                                     | Net borrowings (repayments) on revolving
    credit facilities |                                                         |     |     |        |   |      | 64.9       |              |   |            |      |       |              |      | (25.9 | )     |   |   |  |   |   |      | 39.0  |      
|                                                     | Reissue (purchase) treasury stock, net                         |                                                         |     | 0.4  |        |   |      |           |              |   |            |      |       |              |      |      |       |   |   |  |   |   |      | 0.4   |      
|                                                     | Intercompany transfers to (from) subsidiary                    |                                                         |     | (0.4 | )      |   |      | (37.8      | )            |   |            | 43.7  |       |              |      | (5.5  | )     |   |   |  |   |   |      |      |      
|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |  
|                                                     |                                                                | Net cash provided by (used in) financing
    activities |     |      |       |   |      |            | (0.4         | ) |            |       | 5.6   |              |      |       | (32.2 | ) |   |   |  |   |      |       | (27.0 | )
|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |  
|Increase (decrease) in cash and cash
    equivalents |                                                                |                                                         | 0.4 |      |        |   | (2.5 | )          |              |   | (1.2       | )     |       |              | 10.2 |       |       |   |  |   |   |   | 6.9  |      
|Cash and cash equivalents at beginning of year       |                                                                |                                                         | 0.1 |      |        |   | (1.7 | )          |              |   | 2.2        |       |       |              | 13.4 |       |       |   |  |   |   |   | 14.0 |      
|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |  
|Cash and cash equivalents at end of year             |                                                                | $                                                       | 0.5 |      |        | $ | (4.2 | )          |              | $ | 1.0        |       |       | $            | 23.6 |       |       | $ |  |   |   | $ | 20.9 |      
|                                                     |                                                                |                                                         |     |      |        |   |      |            |              |   |            |       |       |              |      |       |       |  

F-51



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##### Table of Contents



COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES






SCHEDULE I 
CONDENSED FINANCIAL INFORMATION OF REGISTRANT


The information required under this Schedule is
included in Note 23 of the Consolidated Financial
Statements.

COLLINS & AIKMAN
CORPORATION AND SUBSIDIARIES






SCHEDULE II 
VALUATION AND QUALIFYING ACCOUNTS


For the Fiscal Years Ended December 31,
2002, December 31, 2001, and December 31,
2000


|                                         |  |               |      |           |              |   |     |           |  |   |          |  |  |            |      |            |             |   |      |      |  |   |      | 
|---------------------------------------- |  | ------------- | ---- | --------- | ------------ | - | --- | --------- |  | - | -------- |  |  | ---------- | ---- | ---------- | ----------- | - | ---- | ---- |  | - | ---- | 
|                                         |  |               |      | Additions |              |   |     |           |  |   |          |  | 
|                                         |  | Balance At    |      |           | Resulting    |   |     | Charge to |  |   | Charged  |  |  |            |      |           
|                                         |  | Beginning     |      |           | from         |   |     | Cost And  |  |   | to Other |  |  |            |      | Balance at |            
|Description                              |  | of Year       |      |           | Acquisitions |   |     | Expenses  |  |   | Accounts |  |  | Deductions |      |            | End of Year |  
|                                         |  |               |      |           |              |   |     |           |  |   |          |  |  |            |      |            |             |  
|                                         |  |              
|                                         |  | (in millions) |     
|Fiscal Year Ended
    December 31, 2002: |  |               |      |           |              |   |     |           |  |   |          |  |  |            |      |            |             |   |      |      |  |   |      | 
|Allowance for doubtful accounts          |  | $             | 14.6 |           |              | $ |    |           |  | $ | 2.5      |  |  | $          | 4.8  |            |             | $ | (3.3 | )    |  | $ | 18.6 | 
|Fiscal Year Ended December 31,
    2001: |  |               |      |           |              |   |     |           |  |   |          |  |  |            |      |            |             |   |      |      |  |   |      | 
|Allowance for doubtful accounts          |  | $             | 8.1  |           |              | $ | 6.8 |           |  | $ | 6.6      |  |  | $          | (0.3 | )(a)       |             | $ | (6.6 | )    |  | $ | 14.6 | 
|Fiscal Year Ended December 31,
    2000: |  |               |      |           |              |   |     |           |  |   |          |  |  |            |      |            |             |   |      |      |  |   |      | 
|Allowance for doubtful accounts          |  | $             | 8.5  |           |              | $ |    |           |  | $ | 6.6      |  |  | $          | (0.9 | )(a)       |             | $ | (6.1 | )(b) |  | $ | 8.1  | 



---



|    |                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Reclassifications and collection of accounts
    previously written off.                                                                                                                                                                                                     
|   
|(b) | Reclassifications to other accounts,
    uncollectible amounts written off, and the elimination of
    amounts included in the allowance due from Enjema which was
    considered as a component of the Companys purchase cost
    for the remaining 50% interest in Enjema.

S-1



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##### Table of Contents



Exhibit Index

|        |     |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | --- |  | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |  |            
|Number  |     |  | Description
|        |     |  |            
|        | 2.1 |  |             | Agreement and Plan of Merger dated May 14,
    2001 by and among Collins & Aikman Corporation,
    Collins & Aikman Products Co., Becker Group, L.L.C.,
    CE Becker Inc., ME McInerney Inc., J Hoehnel Inc.
    and the individuals party thereto as sellers is hereby
    incorporated by reference to Exhibit 2.1 of
    Collins & Aikman Corporations Current Report on
    Form 8-K dated July 13, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 2.2 |  |             | Agreement and Plan of Merger dated as of
    August 17, 2001 by and among Collins & Aikman
    Corporation, Collins & Aikman Products Co., JAII
    Acquisition Co., Elkin McCallum, Joan Fabrics Corporation and
    Joan Automotive Industries, Inc is hereby incorporated by
    reference to Exhibit 2.1 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    September 21, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 2.3 |  |             | First Amendment to Agreement and Plan of Merger
    by and among Collins & Aikman Corporation,
    Collins & Aikman Products Co., JAII Acquisition Co.,
    Elkin McCallum, Joan Fabrics Corporation and Joan Automotive
    Industries, Inc dated as of September 21, 2001 is hereby
    incorporated by reference to Exhibit 2.2 of
    Collins & Aikman Corporations Current Report on
    Form 8-K dated September 21, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 2.4 |  |             | Purchase Agreement dated as of August 7,
    2001, as amended and restated as of November 30, 2001, by
    and among Textron Inc., Collins & Aikman Corporation
    and Collins & Aikman Products Co., including
    Exhibit 1 (Certificate of Designation of the 15%
    Series A Redeemable Preferred Stock, the 16% Series B
    Redeemable Preferred Stock and the 16% Series C Redeemable
    Preferred Stock) and Exhibit 7 (Asset Purchase Agreement
    dated as of August 7 by and between Textron Automotive
    Exteriors Inc. and JPS Automotive, Inc.), which is incorporated
    by reference to Collins and Aikman Corporation Current Report on
    Form 8-k dated December 20, 2001 and filed on
    January 4, 2002. The Table of Contents of the Purchase
    Agreement listed as Exhibit 2.4 contains a list briefly
    identifying the contents of all omitted schedules and exhibits.
    Collins & Aikman Corporation will supplementally
    furnish a copy of any omitted schedule or Exhibit to the
    Commission upon request.
|        | 2.5 |  |             | Asset Purchase Agreement dated as of
    August 7, 2001, as amended and restated as of
    November 30, 2001, by and between Textron Automotive
    Exteriors Inc. and JPS Automotive, Inc., which is incorporated
    herein by reference to Exhibit 2.2 of Collins &
    Aikman Corporations Current Report on Form 8-K dated
    December 20, 2001 and filed on January 4, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 2.6 |  |             | Asset Purchase Agreement dated as of
    August 17, 2001 by and among Collins & Aikman
    Products Co., Western Avenue Dyers, L.P., Elkin McCallum, Kerry
    McCallum, Penny Richards and Tyng Textiles LLC, which is
    incorporated by reference to Exhibit 2.3 to
    Collins & Aikman Corporations Current Report on
    Form 8-K filed on October 4, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 2.7 |  |             | First Amendment to Asset Purchase Agreement dated
    as of September 21, 2001, which is incorporated by
    reference to Exhibit 2.4 to Collins & Aikman
    Corporations Current Report on Form 8-K filed on
    October 4, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 3.1 |  |             | Restated Certificate of Incorporation of
    Collins & Aikman Corporation is hereby incorporated by
    reference to Exhibit 3.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended June 26, 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 3.2 |  |             | Certificate of Amendment to the Restated
    Certificate of Incorporation of Collins & Aikman
    Corporation, which is incorporated by reference to
    Exhibit 3.2 of Collins & Aikman Corporations
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 3.3 |  |             | Certificate of Amendment of Amended and Restated
    Certificate of Incorporation is hereby incorporated by reference
    to Exhibit 3.5 of Collins & Aikman
    Corporations Current Report on Form 8-K filed
    May 29, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 3.4 |  |             | By-laws of Collins & Aikman Corporation,
    as amended, are hereby incorporated by reference to
    Exhibit 3.2 of Collins & Aikman Corporations
    Report on Form 10-K for the fiscal year ended
    January 27, 1996.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

S-2



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##### Table of Contents



|        |     |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | --- |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |  |            
|Number  |     |  | Description
|        |     |  |            
|        | 3.5 |  |             | Certificate of Elimination of Cumulative
    Exchangeable Redeemable Preferred Stock of Collins &
    Aikman Corporation is hereby incorporated by reference to
    Exhibit 3.3 of Collins & Aikman Corporations
    Report on Form 10-Q for the fiscal quarter ended
    October 28, 1995.                                                                                                                                                                                                                                                                                                                                                                                        
|        | 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 June 1, 1996, between
    Collins & Aikman Products Co., Collins &
    Aikman Corporation and First Union National Bank of North
    Carolina, as Trustee, is hereby incorporated by reference to
    Exhibit 4.2 of Collins & Aikman Corporations
    Report on Form 10-Q for the fiscal quarter ended
    April 27, 1996.                                                                                                                                                                                                                                                                                                                                 
|        | 4.3 |  |             | First Supplemental Indenture dated as of
    June 1, 1996, between Collins & Aikman Products
    Co., Collins & Aikman Corporation and First Union
    National Bank of North Carolina, as Trustee, is hereby
    incorporated by reference to Exhibit 4.3 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the fiscal quarter ended April 27, 1996.                                                                                                                                                                                                                                                                                                               
|        | 4.4 |  |             | Waiver dated as of October 27, 1998 under
    the Credit Agreement dated as of May 28, 1998, among
    Collins & Aikman Products Co., Collins &
    Aikman Canada, Inc. and Collins & Aikman Plastics,
    Ltd., as Canadian Borrowers, Collins & Aikman
    Corporation, as Guarantor, the Lender Parties thereto, Bank of
    America, N.T.S.A., as Documentation Agent, The Chase Manhattan
    Bank, as Administrative Agent, and The Chase Manhattan Bank of
    Canada, as Canadian 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 September 26, 1998.
|        | 4.5 |  |             | Waiver dated as of December 22, 1998 under
    the Credit Agreement dated as of May 28, 1998, among
    Collins & Aikman Products Co., Collins &
    Aikman Canada, Inc. and Collins & Aikman Corporation,
    as Guarantor, the Lender Parties thereto, Bank of America,
    N.T.S.A., as Documentation Agent, The Chase Manhattan Bank, as
    Administrative Agent, and The Chase Manhattan Bank of Canada, as
    Canadian Administrative Agent is hereby incorporated by
    reference to Exhibit 4.6 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 26, 1998.                                                                      
|        | 4.6 |  |             | Amendment and Waiver dated as of March 8,
    1999, among Collins & Aikman Products Co.,
    Collins & Aikman Canada, Inc., Collins &
    Aikman Plastics Ltd., Collins & Aikman Corporation, as
    Guarantor, the Lender Parties thereto, Bank of America N.T.S.A.,
    as Documentation Agent, The Chase Manhattan Bank, as
    Administrative Agent, and The Chase Manhattan Bank of Canada, as
    Canadian Administrative Agent is hereby incorporated by
    reference to Exhibit 4.7 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 26, 1998.                                                                                    
|        | 4.7 |  |             | Tranche C Term Loan Supplement dated as of
    May 12, 1999 to the Credit Agreement dated as of
    May 28, 1998 among Collins & Aikman Products Co.,
    Collins & Aikman Canada, Inc., Collins &
    Aikman Plastics, Ltd., Collins & Aikman Corporation,
    the Financial Institutions parties thereto, Bank of America
    N.T.S.A., as Documentation Agent, The Chase Manhattan Bank, as
    Administrative Agent, and The Chase Manhattan Bank of Canada, as
    Canadian Administrative Agent is hereby incorporated by
    reference to Exhibit 4.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended June 26, 1999.              
|        | 4.8 |  |             | Indenture dated as of June 28, 1994, between
    JPS Automotive Products Corp., as Issuer, JPS Automotive L.P.,
    as Guarantor and Shawmut Bank Connecticut, N.A., as Trustee, is
    hereby incorporated by reference to Exhibit 4.2 of JPS
    Automotive Corp.s Registration Statement on Form S-1,
    Registration No. 33-75510.                                                                                                                                                                                                                                                                                                                                            
|        | 4.9 |  |             | First Supplemental Indenture, dated as of
    October 5, 1994, between JPS Automotive Products Corp. and
    JPS Automotive L.P., as Co-Obligors, and Shawmut Bank
    Connecticut, N.A., as Trustee is hereby incorporated by
    reference to Exhibit 4.48A of JPS Automotive L.P.s
    and JPS Automotive Products Corp.s Report on
    Form 10-Q for the fiscal quarter ended October 2, 1994.                                                                                                                                                                                                                                                                                

S-3



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##### Table of Contents



|        |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ---- |  | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |            
|Number  |      |  | Description
|        |      |  |            
|        | 4.10 |  |             | Second Supplemental Indenture, dated as of
    February 8, 2001, by and among Collins & Aikman
    Products Co., as Issuer, Collins & Aikman Corporation,
    as Guarantor, and First Union National Bank, as Trustee, which
    is incorporated by reference to Exhibit 4.11 of
    Collins & Aikman Corporations Annual Report on
    Form 10-K for the fiscal year ended December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                 
|        | 4.11 |  |             | Form of Warrant is hereby incorporated by
    reference to Exhibit 4.1 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    July 13, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 4.12 |  |             | Certificate of Designation of Series A
    Redeemable Preferred Stock, Series B Redeemable Preferred
    Stock and Series C Redeemable Preferred Stock, which is
    incorporated herein by reference to Exhibit 4.1 of
    Collins & Aikman Corporations Current Report of
    Form 8-K dated December 20, 2001 and filed on
    January 4, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 4.13 |  |             | Indenture dated as of December 20, 2001 by
    and among Collins & Aikman Products Co., as Issuer, the
    Guarantors parties thereto, and BNY Midwest Trust Company, as
    Trustee, which is incorporated herein by reference to
    Exhibit 4.2 of Collins & Aikman Corporations
    Current Report on Form 8-K dated December 20, 2001 and
    filed on January 4, 2002.                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 4.14 |  |             | Receivables Transfer Agreement dated as of
    December 20, 2001 by and among Carcorp, Inc., as
    Transferor, Collins & Aikman Products Co., individually
    and as Collection Agent, the persons parties thereto, as CP
    Conduit Purchasers, Committed Purchasers and Funding Agents and
    JPMorgan Chase Bank, as Administrative Agent, which is
    incorporated herein by reference to Exhibit 4.3 of
    Collins & Aikman Corporations Current Report on
    Form 8-K dated December 20, 2001 and filed on
    January 4, 2002.                                                                                                                                                                                                                                   
|        | 4.15 |  |             | Amended and Restated Receivables Purchase
    Agreement dated as of December 20, 2001 among
    Collins & Aikman Products Co. and its wholly-owned
    direct and indirect subsidiaries named therein, as Sellers, and
    Carcorp, Inc., as Purchaser, and the other Sellers from time to
    time named therein, which is incorporated herein by reference to
    Exhibit 4.4 of Collins & Aikman Corporations
    Current Report on Form 8-K dated December 20, 2001 and
    filed on January 4, 2002.                                                                                                                                                                                                                                                                      
|        | 4.16 |  |             | Credit Agreement dated as of December 20,
    2001 among Collins & Aikman Products Co., as Borrower,
    Collins & Aikman Canada Inc., as a Canadian Borrower,
    Collins & Aikman Plastics, Ltd., as a Canadian
    Borrower, Collins & Aikman Corporation, the Lenders
    named therein, Deutsche Banc Alex. Brown Inc. and Merrill Lynch
    Capital Corporation, as Co-Documentation Agents, Credit Suisse
    First Boston Corporation, as Syndication Agent, JPMorgan Chase
    Bank, as Administrative Agent, and J.P.Morgan Bank Canada, as
    Canadian Administrative Agent, which is incorporated herein by
    reference to Exhibit 4.5 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 20, 2001 and filed on January 4, 2002.
|        | 4.17 |  |             | First Amendment dated as of December 13,
    2002, to the Credit Agreement dated as of December 20, 2001
    among Collins & Aikman Products Co., as Borrower,
    Collins & Aikman Canada Inc., as a Canadian Borrower,
    Collins & Aikman Plastics, Ltd., as a Canadian
    Borrower, Collins & Aikman Corporation, the Lenders
    named therein, Credit Suisse First Boston Corporation, as
    Syndication Agent, Deutsche Bank Securities Inc. (formerly known
    as Deutsche Banc Alex. Brown Inc.) and Merrill Lynch Capital
    Corporation, as Co-Documentation Agents, JPMorgan Chase Bank, as
    Administrative Agent, and J.P. Morgan Bank Canada, as Canadian
    Administrative Agent.*                                                                      
|        | 4.18 |  |             | Guarantee and Collateral Agreement dated as of
    December 20, 2001 by and among Collins & Aikman
    Corporation, Collins & Aikman Products Co. and certain
    of their subsidiaries and JPMorgan Chase Bank, as Collateral
    Agent, which is incorporated herein by reference to
    Exhibit 4.6 of Collins & Aikman Corporations
    Current Report on Form 8-K dated December 20, 2001 and
    filed on January 4, 2002.                                                                                                                                                                                                                                                                                                                                               
|        | 4.19 |  |             | Third Supplemental Indenture, dated as of
    December 20, 2001, among Collins & Aikman Products
    Co., Collins & Aikman Corporation, the Subsidiary
    Guarantors listed on the signature page thereto, and First Union
    National Bank (as successor in interest to First Union National
    Bank of North Carolina), which is incorporated herein by
    reference to Exhibit 4.7 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 20, 2001 and filed on January 4, 2002.                                                                                                                                                                                                                                                            

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##### Table of Contents



|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ----- |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.1  |  |             | Stockholders Agreement, dated February 23,
    2001, by and among Collins & Aikman Corporation,
    Heartland Industrial Partners, L.P. and other investor
    stockholders listed on Schedule 1 thereto, Blackstone
    Capital Company II, L.L.C., Blackstone Family Investment
    Partnership I L.P., Blackstone Advisory Directors
    Partnership L.P., Blackstone Capital Partners L.P., and
    Wasserstein/ C&A Holdings, L.L.C., incorporated by reference
    to Annex E to Exhibit 10.1 to Collins & Aikman
    Corporations Current Report on Form 8-K dated
    January 12, 2001.
|        | 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.                                                                                                                                                                                                                                                                                                                          
|        | 10.3  |  |             | 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  |  |             | Second Amendment, dated as of October 3,
    1996, to the Employment Agreement, dated as of July 22,
    1992, as amended, between Collins & Aikman Products Co.
    and an executive officer is hereby incorporated by reference to
    Exhibit 10.26 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended October 26, 1996.                                                                                                                                                                                                                             
|        | 10.6  |  |             | Third Amendment dated as of August 1, 1997,
    to the Employment Agreement dated as of July 22, 1992, as
    amended, between the Corporation and an executive officer is
    hereby incorporated by reference to Exhibit 10.35 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the fiscal quarter ended September 27,
    1997.                                                                                                                                                                                                                                             
|        | 10.7  |  |             | Letter Agreement dated March 23, 1999 with
    an executive officer is hereby incorporated by reference to
    Exhibit 10.7 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 26, 1998.                                                                                                                                                                                                                                                                                                                                                          
|        | 10.8  |  |             | Amended and Restated Employment Agreement dated
    as of January 20, 1999 between Collins & Aikman
    Products Co. and an executive officer is hereby incorporated by
    reference to Collins & Aikman Corporations Report
    on Form 10-K for the fiscal year ended December 26,
    1998.                                                                                                                                                                                                                                                                                                
|        | 10.9  |  |             | Employment Agreement dated as of January 20,
    1999 between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.9 of Collins & Aikman
    Corporations Form 10-K for the fiscal year ended
    December 26, 1998.                                                                                                                                                                                                                                                                                                               
|        | 10.10 |  |             | Employment Agreement dated as of April 22,
    1999 between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.10 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended March 27, 1999.                                                                                                                                                                                                                                                                                                       
|        | 10.11 |  |             | Employment Agreement, dated as of March 29,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended April 1, 2000.                                                                                                                                                                                                                                                                                                      
|        | 10.12 |  |             | Employment Agreement, dated as of April 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.3 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 1, 2000.                                                                                                                                                                                                                                                                                                        
|        | 10.13 |  |             | Employment Agreement, dated as of August 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.6 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                                                                                                                                                                                                                                                                                 
|        | 10.14 |  |             | Employment Agreement, dated as of August 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.8 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                                                                                                                                                                                                                                                                                 

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##### Table of Contents



|        |       |  |             |                                                                                                                                                                                                                                                                                                
|------- | ----- |  | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.15 |  |             | Letter agreement, dated as of May 12, 1999,
    with an executive officer is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended June 26, 1999.                                                    
|        | 10.16 |  |             | Letter agreement, dated as of April 7, 2000,
    between Collins & Aikman Corporation and an executive
    officer is hereby incorporated by reference to
    Exhibit 10.12 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.     
|        | 10.17 |  |             | Letter agreement, dated as of July 13, 2000,
    between Collins & Aikman Corporation and an executive
    officer is hereby incorporated by reference to
    Exhibit 10.11 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.     
|        | 10.18 |  |             | Service contract between Collins &
    Aikman Products GmbH and an executive officer is hereby
    incorporated by reference to Exhibit 10.5 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the fiscal quarter ended September 30,
    2000.                                
|        | 10.19 |  |             | Settlement Agreement dated as of April 27,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.10 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.
|        | 10.20 |  |             | Collins & Aikman Corporation 1998
    Executive Incentive Compensation Plan is hereby incorporated by
    reference to Exhibit 10.10 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 26, 1998.                                                
|        | 10.21 |  |             | Collins & Aikman Products Co. 2000
    Executive Incentive Compensation Plan is hereby incorporated by
    reference to Exhibit 10.5 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 1, 2000.                                                  
|        | 10.22 |  |             | 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.     
|        | 10.23 |  |             | Amendment to Collins & Aikman
    Corporation Supplemental Retirement Income Plan is hereby
    incorporated by reference to Exhibit 10.12 of the
    Collins & Aikman Corporations Report on
    Form 10-K for the fiscal year ended December 26, 1998.                                      
|        | 10.24 |  |             | 1993 Employee Stock Option Plan, as amended and
    restated, is hereby incorporated by reference to
    Exhibit 10.13 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended April 29, 1995.                                                              
|        | 10.25 |  |             | 1994 Employee Stock Option Plan, as amended
    through February 7, 1997, is hereby incorporated by
    reference to Exhibit 10.12 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended March 29, 1997.                                                  
|        | 10.26 |  |             | 2000 Employee Stock Option Plan is hereby
    incorporated by reference to Exhibit 10.6 of Collins &
    Aikman Corporations Report on Form 10-Q for the
    fiscal quarter ended July 1, 2000.                                                                                               
|        | 10.27 |  |             | 1994 Directors Stock Option Plan as amended and
    restated is hereby incorporated by reference to
    Exhibit 10.15 to Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 26, 1998.                                                                      
|        | 10.28 |  |             | Excess Benefit Plan of Collins & Aikman
    Corporation is hereby incorporated by reference to
    Exhibit 10.25 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended January 28, 1995.                                                                     
|        | 10.29 |  |             | 1994 Employee Stock Option Plan, as amended and
    restated through June 3, 1999 is hereby incorporated by
    reference to Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended June 26, 1999.                                            
|        | 10.30 |  |             | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.17 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 27, 1997.   
|        | 10.31 |  |             | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.18 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 27, 1997.   

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##### Table of Contents



|        |       |  |             |                                                                                                                                                                                                                                                                                                                                               
|------- | ----- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.32 |  |             | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.19 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 27, 1997.                                                  
|        | 10.33 |  |             | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.20 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 27, 1997.                                                  
|        | 10.34 |  |             | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.22 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended March 28, 1998.                                                  
|        | 10.35 |  |             | Change in Control Agreement, dated August 9,
    1999, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.25 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                  
|        | 10.36 |  |             | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.26 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                  
|        | 10.37 |  |             | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.27 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                  
|        | 10.38 |  |             | Change in Control Agreement, dated July 26,
    1999, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.28 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                   
|        | 10.39 |  |             | Change in Control Agreement, dated March 17,
    1998, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.29 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                  
|        | 10.40 |  |             | Change in Control Agreement, dated as of April,
    2000, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 1, 2000.                                                  
|        | 10.41 |  |             | Change in Control Agreement, dated as of
    April 1, 2000, between Collins & Aikman Products
    Co. and an executive officer is hereby incorporated by reference
    to Exhibit 10.4 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 1, 2000.                                               
|        | 10.42 |  |             | Change in Control Agreement, dated as of
    August 1, 2000, between Collins & Aikman
    Corporation and an executive officer is hereby incorporated by
    reference to Exhibit 10.7 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                         
|        | 10.43 |  |             | Change in Control Agreement, dated as of
    August 1, 2000, between Collins & Aikman
    Corporation and an executive officer is hereby incorporated by
    reference to Exhibit 10.9 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended September 30, 2000.                                         
|        | 10.44 |  |             | 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.                 
|        | 10.45 |  |             | 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.
|        | 10.46 |  |             | Equity Purchase Agreement by and among JPSGP,
    Inc., Foamex-JPS Automotive L.P. and Collins & Aikman
    Products Co. dated August 28, 1996 is hereby incorporated
    by reference to Exhibit 2.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the fiscal
    quarter ended July 27, 1996.                               

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|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- | ----- |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.47 |  |             | Amendment No. 1 to Equity Purchase Agreement
    by and among JPSGP, Inc., Foamex-JPS Automotive L.P., Foamex
    International Inc. and Collins & Aikman Products Co.
    dated as of December 11, 1996 is hereby incorporated by
    reference to Exhibit 2.2 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 10, 1996.                                                                                                                                                                                                                 
|        | 10.48 |  |             | Equity Purchase Agreement by and among Seiren
    U.S.A. Corporation, Seiren Automotive Textile Corporation,
    Seiren Co., Ltd. and Collins & Aikman Products Co.
    dated December 11, 1996, is hereby incorporated by
    reference to Exhibit 2.3 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 10, 1996.                                                                                                                                                                                                                         
|        | 10.49 |  |             | Acquisition Agreement between Perstorp A.B. and
    Collins & Aikman Products Co. dated December 11,
    1996 is hereby incorporated by reference to Exhibit 2.4 of
    Collins & Aikman Corporations Current Report on
    Form 8-K dated December 10, 1996.                                                                                                                                                                                                                                                                                                                
|        | 10.50 |  |             | Agreement among Perstorp A.B., Perstorp GmbH,
    Perstorp Biotec A.B. and Collins & Aikman Products Co.
    dated December 11, 1996 is hereby incorporated by reference
    to Exhibit 2.5 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 10, 1996.                                                                                                                                                                                                                                                                                     
|        | 10.51 |  |             | Settlement and Amendment Agreement dated as of
    December 16, 1997 by and among Collins & Aikman
    Products Co., Perstorp A.B., Perstorp GmbH, Collins &
    Aikman Holding A.B., Collins & Aikman Automotive
    Systems GmbH, Collins & Aikman Automotive Systems N.V.,
    Collins & Aikman Automotive Systems A.B. and Perstorp
    Components GmbH and related Letter Amendment Agreement is hereby
    incorporated by reference to Exhibit 10.38 of
    Collins & Aikman Corporations Report or
    Form 10-Q for the fiscal quarter ended September 26,
    1998.
|        | 10.52 |  |             | Acquisition Agreement dated as of
    December 9, 1996 among Collins & Aikman Products
    Co., Collins & Aikman Floor Coverings Group, Inc.,
    Collins & Aikman Floor Coverings, Inc., CAF Holdings,
    Inc. and CAF Acquisition Corp. is hereby incorporated by
    reference to Exhibit 2.7 of Collins & Aikman
    Corporations Current Report on Form 8-K dated
    December 10, 1996.                                                                                                                                                                               
|        | 10.53 |  |             | Mastercraft Group Acquisition Agreement dated as
    of April 25, 1997 among Collins & Aikman Products
    Co., Joan Fabrics Corporation and MC Group Acquisition Company
    L.L.C., is hereby incorporated by reference to Exhibit 2.1
    of Collins & Aikman Corporations Report on
    Form 10-Q for the fiscal quarter ended March 29, 1997.                                                                                                                                                                                                                           
|        | 10.54 |  |             | Asset Purchase Agreement dated as of
    June 30, 1997 by and between JPS Automotive L.P. and Safety
    Components International, Inc. is hereby incorporated by
    reference to Exhibit 2.1 of JPS Automotive L.P.s and
    JPS Automotive Products Corp.s Current Report on
    Form 8-K dated July 24, 1997.                                                                                                                                                                                                                                                           
|        | 10.55 |  |             | Closing Agreement dated July 24, 1997
    between JPS Automotive L.P., Safety Components International,
    Inc. and Safety Components Fabric Technologies, Inc. is hereby
    incorporated by reference to Exhibit 2.2 of JPS Automotive
    L.P.s and JPS Automotive Products Corp.s Current
    Report on Form 8-K dated July 24, 1997.                                                                                                                                                                                                                                  
|        | 10.56 |  |             | Amended and Restated Acquisition Agreement dated
    as of November 4, 1997 and amended and restated as of
    March 9, 1998, among Collins & Aikman Products
    Co., Imperial Wallcoverings Inc. and BDPI Holdings Corporation
    is hereby incorporated by reference to Exhibit 2.4 of
    Collins & Aikman Corporations Report on
    Form 10-K for the fiscal year ended December 27, 1997.                                                                                                                                                                            
|        | 10.57 |  |             | Share Purchase Agreement, dated as of
    January 12, 2001, between Collins & Aikman
    Corporation and Heartland Industrial Partners, L.P., is hereby
    incorporated by reference to Exhibit 10.1 of
    Collins & Aikman Corporations Report on
    Form 8-K dated January 12, 2001., incorporated by
    reference to Exhibit 10.1 to Collins & Aikman
    Corporations Current Report on Form 8-K dated
    January 12, 2001.                                                                                                                                        

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##### Table of Contents



|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ----- |  | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.58 |  |             | Registration Rights Agreement, dated
    February 23, 2001, by and among Collins & Aikman
    Corporation, Heartland Industrial Partners, L.P. and the other
    investor stockholders listed on Schedule 1 thereto,
    Blackstone Capital Company II, L.L.C., Blackstone Family
    Investment Partnership I L.P., Blackstone Advisory
    Directors Partnership L.P., Blackstone Capital Partners, L.P.
    and Wasserstein/ C&A Holdings, L.L.C., incorporated by
    reference to Annex D to Exhibit 10.1 to
    Collins & Aikman Corporations Current Report on
    Form 8-K dated January 12, 2001.
|        | 10.59 |  |             | Services Agreement, dated as of February 23,
    2001, by and among Collins & Aikman Corporation,
    Collins & Aikman Products Co. and Heartland Industrial
    Partners, L.P is hereby incorporated by reference to
    Exhibit 10.59 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                
|        | 10.60 |  |             | Profit Participation Interest Agreement, dated as
    of February 23, 2001, by and among Heartland Industrial
    Partners, L.P. and the other investor stockholders listed on
    Schedule 1 thereto and each of Collins & Aikman
    Corporation, Blackstone Capital Company II, L.L.C. and
    Wasserstein/ C&A Holdings, L.L.C., incorporated by reference
    to Annex B to Exhibit 10.1 to Collins & Aikman
    Corporations Current Report on Form 8-K dated
    January 12, 2001.                                                                                                                 
|        | 10.61 |  |             | Employment Agreement dated October 1, 1999
    between Collins & Aikman Products Co. and an executive
    officer is hereby incorporated by reference to
    Exhibit 10.30 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                                                                                                                                                                                                                                                                      
|        | 10.62 |  |             | Severance Benefit Agreement dated July 26,
    1999 between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.31 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                                                                                                                                                                                                                                                                  
|        | 10.63 |  |             | Severance Benefit Agreement dated August 9,
    1999 between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.32 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                                                                                                                                                                                                                                                                 
|        | 10.64 |  |             | Letter Agreement dated December 17, 1999
    between Collins & Aikman Corporation and an executive
    officer is hereby incorporated by reference to
    Exhibit 10.33 of Collins & Aikman
    Corporations Report on Form 10-K for the fiscal year
    ended December 25, 1999.                                                                                                                                                                                                                                                                                                                         
|        | 10.65 |  |             | Employment Agreement dated December 1, 2000
    between Collins & Aikman Products Co. and an executive
    officer, which is incorporated by reference to
    Exhibit 10.75 of Collins & Aikman
    Corporations Annual Report on Form 10-K for the
    fiscal year ended December 31, 2000.                                                                                                                                                                                                                                                                                                              
|        | 10.66 |  |             | Separation Agreement dated as of March 12,
    2001 between Collins & Aikman Products Co. and an
    executive officer, which is incorporated by reference to
    Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended March 31, 2001.                                                                                                                                                                                                                                                                                                                                    
|        | 10.67 |  |             | Employment Agreement dated as of March 29,
    2000 between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended April 1, 2000.                                                                                                                                                                                                                                                                                                                          
|        | 10.68 |  |             | Change in Control Agreement dated as of April
    2000, between Collins & Aikman Corporation and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended July 1, 2000.                                                                                                                                                                                                                                                                                                                        
|        | 10.69 |  |             | Employment Agreement dated as of April 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer is hereby incorporated by reference to
    Exhibit 10.3 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended July 1, 2000.                                                                                                                                                                                                                                                                                                                           
|        | 10.70 |  |             | Change in Control Agreement dated as of
    April 1, 2000, between Collins & Aikman Products
    Co. and an executive officer is hereby incorporated by reference
    to Exhibit 10.4 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended July 1, 2000.                                                                                                                                                                                                                                                                                                                    
|        | 10.71 |  |             | Service Contract between Collins &
    Aikman Products GmbH and an executive officer, which is
    incorporated by reference to Exhibit 10.5 of
    Collins & Aikman Corporations Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2001.                                                                                                                                                                                                                                                                                                                                                  
|        | 10.72 |  |             | Employment Agreement dated as of August 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer, which is incorporated by reference to
    Exhibit 10.6 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                                                                                                                                                                                               

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##### Table of Contents



|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | ----- |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.73 |  |             | Change in Control Agreement dated as of
    August 1, 2000, between Collins & Aikman
    Corporation and an executive officer, which is incorporated by
    reference to Exhibit 10.7 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                  
|        | 10.74 |  |             | Employment Agreement dated as of August 1,
    2000, between Collins & Aikman Products Co. and an
    executive officer, which is incorporated by reference to
    Exhibit 10.8 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                        
|        | 10.75 |  |             | Change in Control Agreement dated as of
    August 1, 2000, between Collins & Aikman
    Corporation and an executive officer, which is incorporated by
    reference to Exhibit 10.9 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                  
|        | 10.76 |  |             | Settlement Agreement dated as of April 27,
    2000, between Collins & Aikman Products Co. and an
    executive officer, which is incorporated by reference to
    Exhibit 10.10 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                       
|        | 10.77 |  |             | Letter Agreement dated as of July 13, 2000,
    between Collins & Aikman Corporation and an executive
    officer, which is incorporated by reference to
    Exhibit 10.11 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                             
|        | 10.78 |  |             | Letter Agreement dated as of April 7, 2000,
    between Collins & Aikman Corporation and an executive
    officer, which is incorporated by reference to
    Exhibit 10.12 of Collins & Aikman
    Corporations Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.                                                                                                                                             
|        | 10.79 |  |             | Collins & Aikman Products Co. 2000
    Executive Incentive Compensation Plan is hereby incorporated by
    reference to Exhibit 10.5 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended July 1, 2000.                                                                                                                                                                                              
|        | 10.80 |  |             | Agreement of Sale and Purchase, dated as of
    June 22, 2001, by and among Collins & Aikman
    Products Co. and New King, L.L.C is hereby incorporated by
    reference to Exhibit 10.81 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                      
|        | 10.81 |  |             | Lease Agreement, dated as of June 29, 2001,
    between New King, L.L.C., as landlord, and Collins &
    Aikman Products Co., as tenant is hereby incorporated by
    reference to Exhibit 10.82 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                
|        | 10.82 |  |             | Agreement of Sale and Purchase, dated as of
    June 22, 2001, by and among Collins & Aikman
    Products Co. and Anchor Court, L.L.C is hereby incorporated by
    reference to Exhibit 10.83 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                  
|        | 10.83 |  |             | Lease Agreement, dated as of June 29, 2001,
    between Anchor Court, L.L.C., as landlord and Collins &
    Aikman Products Co., as tenant is hereby incorporated by
    reference to Exhibit 10.84 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                             
|        | 10.84 |  |             | Stockholders Agreement dated July 3, 2001,
    by and among Collins & Aikman Corporation, Heartland
    Industrial Partners, L.P. and the other Heartland Entities named
    therein, the Becker Stockholders party thereto and the Joan
    Stockholders party thereto is hereby incorporated by reference
    to Exhibit 10.85 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.
|        | 10.85 |  |             | Registration Rights Agreement, dated July 3,
    2001, by and among Collins & Aikman Corporation,
    Charles E. Becker, Michael E. McInerney and Jens
    Höhnel and, together with the Joan Investors (as defined
    therein) is hereby incorporated by reference to
    Exhibit 10.86 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                       
|        | 10.86 |  |             | First Amendment to Services Agreement, dated as
    of August 7, 2001, among Collins & Aikman
    Corporation, Collins & Aikman Products Co. and
    Heartland Industrial Partners, L.P is hereby incorporated by
    reference to Exhibit 10.87 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                

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##### Table of Contents



|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- | ----- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.87 |  |             | Equipment Lease, dated as of December 18,
    2001, among Textron Automotive Exteriors Inc. and Textron
    Automotive Interiors Inc., collectively as lessee, and IAC TAX
    V, LLC, as lessor is hereby incorporated by reference to
    Exhibit 10.88 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                           
|        | 10.88 |  |             | Registration Rights Agreement, dated
    December 20, 2001, by and among Collins & Aikman
    Products Co., Collins & Aikman Corporation, and each of
    the subsidiaries listed on the signature pages thereof, and J.P.
    Morgan Securities Inc., Credit Suisse First Boston Corporation,
    Deutsche Banc Alex. Brown Inc. and Merrill Lynch, Pierce,
    Fenner & Smith Incorporated and the other several
    initial purchasers parties to the Purchase Agreement is hereby
    incorporated by reference to Exhibit 10.89 of
    Collins & Aikman Corporations Report on
    Form 10-K for the year ended December 31, 2001.
|        | 10.89 |  |             | Registration Rights Agreement dated as of
    December 20, 2001 by and among Becker Ventures, LLC,
    Dresdner Kleinwort Capital Partners 2001 LP, Masco Capital
    Corporation, ML IBK Positions, Inc. and Collins &
    Aikman Corporation is hereby incorporated by reference to
    Exhibit 10.90 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                             
|        | 10.90 |  |             | Registration Rights Agreement, dated
    December 20, 2001, by and between Collins & Aikman
    Corporation, Textron Inc., and Textron Holdco Inc is hereby
    incorporated by reference to Exhibit 10.91 of
    Collins & Aikman Corporations Report on
    Form 10-K for the year ended December 31, 2001.                                                                                                                                                                                                                                                                                                                          
|        | 10.91 |  |             | Preferred Stock Registration and Other Rights
    Agreement, dated as of December 20, 2001, by and among
    Collins & Aikman Products Co. and Textron Inc is hereby
    incorporated by reference to Exhibit 10.92 of
    Collins & Aikman Corporations Report on
    Form 10-K for the year ended December 31, 2001.                                                                                                                                                                                                                                                                                                                 
|        | 10.92 |  |             | Intellimold Technology License and Support
    Agreement, dated as of December 20, 2001, by and between
    Textron, Inc. and Collins & Aikman Corporation and
    Collins & Aikman Products Co is hereby incorporated by
    reference to Exhibit 10.93 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                            
|        | 10.93 |  |             | Technology License Agreement (Retained IP),
    dated as of December 20, 2001, by and between Textron, Inc.
    and Collins & Aikman Corporation and Collins &
    Aikman Products Co is hereby incorporated by reference to
    Exhibit 10.94 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                                      
|        | 10.94 |  |             | Technology License Agreement (Licensed-Back IP),
    dated as of December 20, 2001, by and between Textron, Inc.
    and Collins & Aikman Corporation and Collins &
    Aikman Products Co is hereby incorporated by reference to
    Exhibit 10.95 of Collins & Aikman
    Corporations Report on Form 10-K for the year ended
    December 31, 2001.                                                                                                                                                                                                                                                                                 
|        | 10.95 |  |             | Severance Agreement between Collins &
    Aikman Automotive Holding GmbH and an executive officer of the
    Company dated as of March 6, 2002 is hereby incorporated by
    reference to Exhibit 10.1 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended March 31, 2002.                                                                                                                                                                                                                                                                                                                              
|        | 10.96 |  |             | Separation Agreement and General Release between
    Products and an executive officer of the Company dated as of
    March 5, 2002 is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended March 31, 2002.                                                                                                                                                                                                                                                                                                                                         
|        | 10.97 |  |             | Employment Agreement between Products and an
    officer of the Company dated as of November 1, 2001 is
    hereby incorporated by reference to Exhibit 10.3 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.98 |  |             | Employment Agreement between Products and an
    officer of the Company dated as of November 1, 2001 is
    hereby incorporated by reference to Exhibit 10.4 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.99 |  |             | Employment Agreement between Products and an
    officer of the Company dated as of December 20, 2001 is
    hereby incorporated by reference to Exhibit 10.5 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                                                                                                                                                                                                                                                                                                                                       

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##### Table of Contents



|        |        |  |             |                                                                                                                                                                                                                                                                                                                         
|------- | ------ |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |  |            
|Number  |        |  | Description
|        |        |  |            
|        | 10.100 |  |             | Employment Agreement between Products and an
    officer of the Company dated as of December 20, 2001 is
    hereby incorporated by reference to Exhibit 10.6 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                       
|        | 10.101 |  |             | Employment Agreement between Products and an
    officer of the Company dated as of December 20, 2001 is
    hereby incorporated by reference to Exhibit 10.7 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended March 31, 2002.                                                       
|        | 10.102 |  |             | Separation and Consultancy Agreement dated July
    31, 2002 is hereby incorporated by reference to
    Exhibit 10.1 to Collins & Aikman
    Corporations Current report on Form 8-K filed
    August 2, 2002.                                                                                                         
|        | 10.103 |  |             | Severance Benefit Agreement between Collins and
    Aikman Corporation and an officer of the Company dated
    April 5, 2002 is hereby incorporated by reference to
    Exhibit 10.2 of Collins & Aikman
    Corporations Report on Form 10-Q for the quarter
    ended June 30, 2002.                                 
|        | 10.104 |  |             | Employment and Consulting Agreement between
    Collins and Aikman Corporation and an Employee dated July 2002
    is hereby incorporated by reference to Exhibit 10.1 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended September 30, 2002.                                          
|        | 10.105 |  |             | Separation Agreement between Collins and Aikman
    Corporation and an officer of the Company dated September 2002
    is hereby incorporated by reference to Exhibit 10.2 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended September 30, 2002.                                      
|        | 10.106 |  |             | Separation Agreement between Collins and Aikman
    Corporation and an officer of the Company dated October 2002 is
    hereby incorporated by reference to Exhibit 10.3 of
    Collins & Aikman Corporations Report on
    Form 10-Q for the quarter ended September 30, 2002.                                        
|        | 11     |  |             | Computation of Earnings Per Share.*                                                                                                                                                                                                                                                                                     
|        | 12.1   |  |             | Computation of Ratio of Earnings to Fixed
    Charges.*                                                                                                                                                                                                                                                                 
|        | 21     |  |             | Subsidiaries of the Registrant.*                                                                                                                                                                                                                                                                                        
|        | 23.1   |  |             | Consent of PricewaterhouseCoopers LLP.*                                                                                                                                                                                                                                                                                 
|        | 24.1   |  |             | Powers of Attorney.*                                                                                                                                                                                                                                                                                                    
|        | 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.
|        | 99.1   |  |             | Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18
    U.S.C. 1350(a) and (b)).*                                                                                                                                                                                         



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|  |                                   
|- | ----------------------------------
|* | Indicates document filed herewith.

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