(Adds analyst comments, updates share movement, adds other details, byline)
By Susan Kelly
CHICAGO, Aug 15 (Reuters) - Auto parts maker Collins & Aikman Corp. on Friday said it was investigating business transactions between the company and two of its directors, just days after its chief executive resigned.
The company also said on Friday it reversed a year-ago loss and posted a quarterly profit, sending its share more than 6 percent higher on the New York Stock Exchange.
The supplier of convertible tops, instrument panels and other auto parts said its audit committee was investigating "assertions" by two former executives concerning transactions between the company and affiliates of company director Elkin McCallum and a related potential accounting implication.
The audit committee is also reviewing non-accounting issues involving the company's acquisition of Becker Group from Charles Becker, who is also a Collins & Aikman director, and from other people.
The Troy, Michigan-based company said in a statement that its senior management believes all of the assertions by the former officials are without merit.
On Monday, Collins & Aikman named its chairman, David Stockman, to the additional post of chief executive. Stockman, President Ronald Reagan's former budget director, replaced CEO Jerry Mosingo, who resigned after just one year on the job.
Stockman declined to discuss the inquiry or reasons for Mosingo's departure in a Friday morning conference call with analysts and investors. Instead, the lengthy call was devoted to reviewing financial results and restructuring actions that include a number of management changes.
Officials were not immediately available for comment.
Analysts said it was difficult to assess the impact of the investigation without more information.
"It certainly is a concern, but we need more information to know how much of a concern it is," said Standard & Poor's Ratings Services analyst Martin King.
Collins & Aikman said its independent auditor, KPMG LLP, would be unable to complete their review of the company's second-quarter results to be included in a federal filing before the audit committee's investigation is completed.
The management shake-up this week was the second in as many years at Collins & Aikman, which has struggled to integrate a string of acquisitions and revamp its European businesses. Mosingo, who joined Collins & Aikman in January 2002 and was promoted to CEO in August, replaced Thomas Evans, who retired.
The auto parts maker, which has lost money the past two years and forecast a 2003 loss, has seen its shares plummet from above $28 in early 2002. The shares were up 6.03 percent at $2.46 on the NYSE on Friday afternoon.
The stock decline accelerated in 2002 after a secondary public stock offering by the company in June, which raised less capital than it had expected.
That offering was delayed after the company announced it was restating first-quarter 2002 results to write off $40 million it paid for intellectual property when it acquired Textron Inc.'s trim unit, known as TAC-Trim.
Collins & Aikman posted a second-quarter net profit of $10.7 million, or 13 cents a share. That compared with a net loss of $23.1 million, or 33 cents, in the same period a year ago, when the company took a charge for a stock repurchase.
Net sales fell to $1.03 billion from $1.09 billion.
Collins & Aikman on Friday forecast a 2003 loss of 40 cents to 50 cents a share on sales of $3.9 billion to $4.0 billion.
It also said it plans to cut 14 percent of its salaried work force, or 750 jobs, in a cost-saving move that will result in charges of $20 million to be spread over three quarters.