-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jBHp4ItwxNlz3KA0rhlnylCTk5eSFYUavKC+efCvQ0/vtJ9FHf8AuKAJAK4EzpjE 0aGGMoWfWBFiiqkw9YDmPA== 0000029332-94-000007.txt : 19940519 0000029332-94-000007.hdr.sgml : 19940519 ACCESSION NUMBER: 0000029332-94-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940402 FILED AS OF DATE: 19940513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIXIE YARNS INC CENTRAL INDEX KEY: 0000029332 STANDARD INDUSTRIAL CLASSIFICATION: 2200 IRS NUMBER: 620183370 STATE OF INCORPORATION: TN FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02585 FILM NUMBER: 94527830 BUSINESS ADDRESS: STREET 1: 1100 S WATKINS ST CITY: CHATTANOOGA STATE: TN ZIP: 37404 BUSINESS PHONE: 6156982501 MAIL ADDRESS: STREET 1: P O BOX 751 CITY: CHATTANOOGA STATE: TN ZIP: 37401 FORMER COMPANY: FORMER CONFORMED NAME: DIXIE MERCERIZING CO DATE OF NAME CHANGE: 19670524 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended April 2, 1994 Commission File Number 0-2585 DIXIE YARNS, INC. (Exact name of registrant as specified in its charter) Tennessee 62-0183370 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Indentification No.) 1100 South Watkins Street Chattanooga, Tennessee 37404 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (615) 698-2501 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 [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding as of May 2, 1994 Common Stock, $3 Par Value 11,510,532 shares (1) Class B Common Stock, $3 Par Value 735,228 shares Class C Common Stock, $3 Par Value 0 shares (1) The shares outstanding include the 1,029,446 shares issued subject to put option pursuant to the acquisition of the assets of Masland Carpets, Inc. on July 9, 1993. DIXIE YARNS, INC 2 INDEX Part I. Financial Information: Page No. Consolidated Condensed Balance Sheets -- April 2, 1994 and December 25, 1993 3 Consolidated Statements of Income (Loss) -- Three Months Ended April 2, 1994 and March 27, 1993 5 Consolidated Condensed Statements of Cash Flows -- Three Months Ended April 2, 1994 and March 27, 1993 6 Notes to Consolidated Condensed Financial Statements 8 Management's Discussion and Analysis of Results of Operations and Financial Condition 10 Part II. Other Information: Item 6 - Exhibits and Reports on Form 8-K 12 PART I - ITEM 1 3 FINANCIAL INFORMATION DIXIE YARNS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) April 2, December 25, 1994 1993 ____________ ____________ ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,366,248 $ 4,047,459 Accounts receivable (less allowance for doubtful accounts of $3,515,914 in 1994 and $3,900,000 in 1993) 30,443,284 26,553,831 Inventories 115,306,118 105,809,888 Other 13,885,291 11,667,083 ____________ ____________ TOTAL CURRENT ASSETS 162,000,941 148,078,261 PROPERTY, PLANT AND EQUIPMENT 478,206,164 468,296,174 Less allowances for amortization and depreciation 201,601,359 193,037,707 ____________ ____________ 276,604,805 275,258,467 INTANGIBLE ASSETS (less allowances for amortization of $9,241,945 in 1994 and $8,742,059 in 1993) 62,372,227 62,722,113 OTHER ASSETS 10,355,910 10,520,040 ____________ ____________ $511,333,883 $496,578,881 ____________ ____________ ____________ ____________ See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 4 CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) April 2, December 25, 1994 1993 ____________ ___________ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 38,518,039 $ 32,245,506 Accrued expenses 27,348,345 26,518,429 Current portion of long-term debt 443,964 446,829 ____________ ____________ TOTAL CURRENT LIABILITIES 66,310,348 59,210,764 LONG-TERM DEBT Senior indebtedness 99,274,690 87,649,871 Subordinated notes 50,000,000 50,000,000 Convertible subordinated debentures 44,782,000 44,782,000 ____________ ____________ 194,056,690 182,431,871 OTHER LIABILITIES 13,682,702 13,037,877 DEFERRED INCOME TAXES 48,415,257 48,038,943 COMMON STOCK, SUBJECT TO PUT OPTION - 1,029,446 shares in 1994 and 1993 18,177,958 18,177,958 STOCKHOLDERS' EQUITY Common Stock - issued and outstanding, including shares in treasury, 13,852,233 shares in 1994 and 1993 41,556,699 41,556,699 Class B Common Stock - issued and outstanding, 735,228 shares in 1994 and 1993 2,205,684 2,205,684 Additional paid-in capital 131,684,054 131,684,054 Retained earnings 55,347,444 60,302,834 Minimum pension liability adjustment (4,981,943) (4,981,943) ____________ ____________ 225,811,938 230,767,328 Less Common Stock in treasury at cost - 3,360,046 shares in 1994 and 3,356,446 shares in 1993 55,121,010 55,085,860 ____________ ____________ 170,690,928 175,681,468 ____________ ____________ $511,333,883 $496,578,881 ____________ ____________ ____________ ____________ See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 5 CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) Three Months Ended _________________________________ April 2, March 27, 1994 1993 ______________ ______________ Net sales $164,750,093 $120,776,590 Cost of sales 145,227,996 105,370,090 ____________ ____________ 19,522,097 15,406,500 Selling, general and administrative expenses 20,597,794 9,902,352 Corporate expenses 1,273,749 1,353,180 Other income (expense) - net (1,167,082) 289,551 ____________ ____________ (3,516,528) 4,440,519 Interest expense 3,220,914 3,052,185 ____________ ____________ INCOME (LOSS) BEFORE TAXES (6,737,442) 1,388,334 Income tax provision (benefit) (2,395,000) 481,000 ____________ ____________ NET INCOME (LOSS) $ (4,342,442) $ 907,334 ____________ ____________ ____________ ____________ Per common and common equivalent share: Net income (loss) $ (0.33) $ 0.10 Cash dividends declared: Common stock $ 0.05 $ 0.05 Class B common stock $ 0.05 $ 0.05 See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 6 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended ___________________________ April 2, March 27, 1994 1993 ____________ ____________ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (4,342,442) $ 907,334 Depreciation and amortization 9,326,068 6,607,998 Provision for deferred income taxes 388,000 377,000 Equity in earnings of affiliate -0- (353,000) ____________ ____________ 5,371,626 7,539,332 Changes in operating assets and liabilities, net of effects of business combinations (6,989,842) 1,504,697 ____________ ____________ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (1,618,216) 9,044,029 CASH FLOWS FROM INVESTING ACTIVITIES Net proceeds from sale of property, plant and equipment -0- 5,400,125 Purchase of property, plant and equipment (11,036,851) (9,439,161) Cash payments in connection with business combinations, net of cash acquired -0- (3,259,787) ____________ ____________ NET CASH USED IN INVESTING ACTIVITIES (11,036,851) (7,298,823) See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 7 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED) Three Months Ended ___________________________ April 2, March 27, 1994 1993 ____________ ____________ CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in credit line borrowings 11,699,819 (1,000,000) Dividends paid (612,948) (437,002) Capital stock acquired (35,150) (289,506) Other (77,865) 151,416 ____________ ____________ NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 10,973,856 (1,575,092) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,681,211) 170,114 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,047,459 1,425,985 ____________ ____________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,366,248 $ 1,596,099 ____________ ____________ ____________ ____________ SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 3,316,000 $ 3,200,000 ____________ ____________ ____________ ____________ Income taxes paid, net of refunds received $ 992,000 $ 277,000 ____________ ____________ ____________ ____________ See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 8 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements which do not include all of the information and footnotes required in annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended April 2, 1994 are not necessarily indicative of the results that may be expected for the entire year. NOTE B - INVENTORIES Inventories are summarized as follows: April 2, March 27, 1994 1993 ____________ ____________ At current cost Raw materials $ 28,588,630 $ 25,274,771 Work-in-process 25,014,102 24,602,923 Finished goods 70,572,172 62,664,139 Supplies, repair parts and other 9,940,680 9,792,498 ____________ ____________ 134,115,584 122,334,331 Excess of current cost over LIFO value (18,809,466) (16,524,443) ____________ ____________ $115,306,118 $105,809,888 ____________ ____________ ____________ ____________ NOTE C - DEBT AND CREDIT ARRANGEMENTS 9 In view of the results of the first quarter 1994, the Company amended its Revolving Credit and Term Loan Agreement to modify certain financial convenants. The principle effect of the amendment was to defer fixed charge coverage requirements until the twelve month period ended with the close of the second quarter 1995. In addition, the holders of the Company's subordinated notes granted a waiver of the dividend restriction provisions of that loan agreement. The waiver gives the Company the flexibility to pay dividends of up to $650,000 in each of the second and third quarters of 1994. NOTE D - RECLASSIFICATIONS Cost of sales, selling, general and administrative expenses and corporate expenses for 1993 have been reclassified to conform with the 1994 presentation. NOTE E - BUSINESS COMBINATION As disclosed in Note (B) to the Company's financial statements included in its 1993 Annual Report to Shareholders, the Company acquired Carriage Industries, Inc. on March 12, 1993 and on July 9, 1993, the Company acquired the operating assets and liabilities of Masland Carpets, Inc. The following unaudited pro forma summary presents the consolidated results of operations for the three months ended March 27, 1993 as if the acquisitions of Carriage and Masland had occurred at the beginning of 1993 after giving effect to certain adjustments, including amortization of cost in excess of net tangible assets acquired, interest expense on debt to finance the acquisitions and related income taxes. The pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results that would have occurred had the acquisitions occurred at the beginning of 1993 or of results which may occur in the future. Three months ended April 2, 1993 __________________ Net sales $159,476,000 Net income 1,800,000 Net income per common and common equivalent share .14 PART I - ITEM 2 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following is presented to update the discussion of results of operations and financial condition included in the Company's 1993 Annual Report. RESULTS OF OPERATIONS Sales for the March quarter of 1994 were $164.8 million with a net loss of $4.3 million, or $.33 per share, compared with sales of $120.8 million and net income of $.9 million, or $.10 per share, for the March quarter of 1993. The Company's textile products business incurred an operating loss of $7.1 million on sales of $81.6 million for the first quarter of 1994 compared with an operating profit of $2.9 million on sales of $84.0 million for the corresponding quarter in 1993. Results for the first quarter of 1994 were adversely affected by lower sales prices and higher cotton costs. Also affecting results for the March, 1994 quarter were approximately $1.0 million of severance costs and other expenses associated with operating changes designed to lower administrative and manufacturing costs. The Company's efforts to reduce cost included a cut-back of salaried and hourly associates, consolidation of distribution and manufacturing facilities and a limited freeze on hiring. Although the Company believes that significant progress has been made in streamlining a majority of its textile operations, management continues to pursue further reductions in costs. In the latter part of March, 1994, the Company began to experience increased demand for textile products and higher selling prices on new orders in the markets it serves. The increased demand has resulted in improved operating schedules, which in conjunction with the higher selling prices are expected to positively affect the Company's results as the year progresses. Operating profit of the Company's floorcovering business was $4.8 million on sales of $83.9 million in the first quarter of 1994 compared with an operating profit of $2.2 million on sales of $37.1 million for the corresponding period of 1993. The improved floorcovering results are attributable to the inclusion of the operations of Carriage Industries, Inc. and Masland Carpets, Inc. subsequent to their acquisitions on March 12, 1993 and July 9, 1993, respectively. The first quarter is a seasonally weak quarter for the Company's floorcovering business; however, most of the markets served by the floorcovering operations are currently expanding. Operating profit (loss) for each of our business segments is before general corporate overhead, certain items classified as other income (expense), interest expense, and income taxes. Total selling, general and administrative expenses increased as a percent of sales in 1994 compared with 1993 as a result of higher selling and product distribution costs associated with the specialized floorcovering markets serviced by Carriage and Masland. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - CONTINUED RESULTS OF OPERATIONS - Continued "Other income (expense) - net" included $.7 million of costs associated with the sale of accounts receivables in 1994 versus $.4 million of equity earnings from non-consolidated subsidiaries in 1993. LIQUIDITY AND CAPITAL RESOURCES The Company increased its credit line borrowings by $11.7 million during the first quarter of 1994 to fund its operations, working capital requirements and capital expenditures. Purchases of property, plant and equipment were disproportionately high during the first quarter of 1994, and exceeded non-cash charges for depreciation, amortization and deferred income taxes. The Company anticipates holding spending levels for the 1994 fiscal year below the annual charges for depreciation, amortization and deferred income taxes. Additionally, the improving economic conditions seen in the markets served by the Company's textile products business are anticipated to improve operating cash flows. In view of the results of the first quarter 1994, the Company amended its Revolving Credit and Term Loan Agreement to modify certain financial convenants. The principle effect of the amendment was to defer fixed charge coverage requirements until the twelve month period ended with the close of the second quarter 1995. In addition, the holders of the Company's subordinated notes granted a waiver of the dividend restriction provisions of that loan agreement. The waiver gives the Company the flexibility to pay dividends of up to $.7 million in each of the second and third quarters of 1994. At April 2, 1994, the Company's unused borrowing capacity under its revolving credit and term loan agreement was $26.8 million. The Company considers its credit capacity and operating cash flows to be adequate to support its planned liquidity requirements. PART II. OTHER INFORMATION 12 Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits (i) Exhibits Incorporated by Reference None. (ii) Exhibits Filed with this Report (4a) Second Amendment dated May 3, 1994 to Second Amended and restated Revolving Credit and Term Loan Agreement dated January 31, 1992. (4b) Waiver letter dated March 30, 1994 pertaining to Second Amended and Restated Revolving Credit and Term Loan Agreement dated January 31, 1992. (4c) Waiver letter dated April 11, 1994 pertaining to Loan Agreement dated February 6, 1990. (11) Statement re: Computation of Earnings Per Share (b) Reports on Form 8-K No reports on Form 8-K have been filed by the registrant during the three month period ended April 2, 1994. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DIXIE YARNS, INC. __________________________ (Registrant) May 12, 1994 ____________________ (Date) /s/DANIEL K. FRIERSON __________________________ Daniel K. Frierson Chairman of the Board, President and CEO /s/D. EUGENE LASATER __________________________ D. Eugene Lasater Controller QUARTERLY REPORT ON FORM 10-Q 14 ITEM 6(a) EXHIBITS QUARTER ENDED APRIL 2, 1994 DIXIE YARNS, INC. CHATTANOOGA, TENNESSEE Exhibit Index EXHIBIT NO. EXHIBIT DESCRIPTION INCORPORATION BY REFERENCE (4a) Second Amendment dated Filed herewith. May 3, 1994 to Second Amended and Restated Revolving Credit and Term Loan Agreement dated January 31, 1992. (4b) Waiver letter dated Filed herewith. March 30, 1994 pertaining to Second Amended and Restated Revolving Credit and Term Loan Agreement dated January 31, 1992. (4c) Waiver letter dated Filed herewith. April 11, 1994 pertaining to Loan Agreement dated February 6, 1990. (11) Statement re: Computation Filed herewith. of Earnings Per Share. EX-4.A 2 EXHIBIT (4.A) SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT THIS SECOND AMENDMENT to Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of May 3, 1994 (the "Second Amendment"), by and among DIXIE YARNS, INC. (the "Borrower"), a Tennessee corporation, TRUST COMPANY BANK, a Georgia banking corporation, NATIONSBANK OF NORTH CAROLINA, N.A., a national banking association, and CHEMICAL BANK, a New York banking corporation (collectively, the "Banks" and individually, a "Bank"), and TRUST COMPANY BANK, as agent for the Banks (in such capacity, the "Agent"). W I T N E S S E T H : WHEREAS, the Borrower, the Banks and the Agent are parties to a certain Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of January 31, 1992, as amended by that certain First Amendment to Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of August 25, 1993 (as amended, the "Agreement") pursuant to which the Banks agreed to lend and the Borrower agreed to borrow revolving credit loans and term loans in an aggregate principal amount not to exceed $125,000,000; and WHEREAS, the Borrower has requested and the Banks have agreed, subject to the terms and conditions hereof, to amend the Agreement to adjust certain financial covenants as more particularly set forth below; NOW, THEREFORE, for and in consideration of the sum of $10.00 in hand paid by the Borrower to the Banks, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: I. Subsections 5.11 (a) and (b) of the Agreement are hereby amended by deleting such subsections in their entirety and substituting the following in lieu thereof: "(a) Maintain at all times a Current Ratio of not less than 1.5 to 1.0. (b) Maintain at all times, commencing with the twelve month period ending on or about March 31, 1993, a Fixed Charge Coverage Ratio of not less than 1.5:1.0; PROVIDED THAT such Fixed Charge Coverage Ratio shall not be required to be maintained during the twelve month period commencing on the last day of the fiscal quarter ending on or about March 31, 1994 and ending on the last day of the fiscal quarter ending on or about March 31, 1995." II. This Second Amendment shall not be effective unless and until each of the following conditions has been satisfied: (i) the receipt by the Agent of an executed counterpart of this Second Amendment from each of the borrower and the required banks; (ii) the receipt by the Agent for the benefit of the Banks of an amendment fee equal to 5 basis points of the aggregate amount of the Commitments, to be divided amongst the Banks, pro rata, and (iii) such evident of the corporate authority of the Borrower as the Agent may reasonably request. III. Upon and after the effective date of this Second Amendment, all references to the Agreement shall mean the Agreement as amended by this Second Amendment. Except as expressly provided in this Second Amendment, the execution and delivery of this Second Amendment does not and will not amend, modify or supplement any provision of or constitute a consent to a waiver of noncompliance with the provisions of the Agreement, and except as specifically provided in this Second Amendment, the Agreement shall remain in full force and effect. IV. All the representations and warranties set forth in Article IV of the Agreement are true and correct as if made on the date hereof except for matters occurring since the date of the Agreement not reflected in the schedules; all of such matters have been reported to the Banks if required by Article V of the Agreement and do not otherwise violate the terms of the Agreement. No Default or Event of Default exists under the Agreement as of the date hereof. V. This Second Amendment shall be binding on, and shall inure to the benefit of the parties hereto and their respective successors and assigns. VI. This Second Amendment shall be governed by, and construed in accordance with, the laws of the State of Georgia. VII. The Second Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute one and the same instrument. VIII. This Second Amendment constitutes the entire understanding of the parties with respect to the subject matter hereof, and any other prior or contemporaneous agreements, whether written or oral, with respect thereto are expressly superseded hereby. IN WITNESS WHEREOF the parties hereto have caused this Second Amendment to be executed and delivered by their duly authorized officers as of the day and year first above written. DIXIE YARNS, INC. By: \s\Gary A. Harmon Title: Treasurer Attest: \s\Starr T. Klein Title: Secretary [CORPORATE SEAL] TRUST COMPANY BANK, individually and as Agent By:\s\Susan S. Stall Title:Group V.P. By:\s\Ruth E. Whitner Title:Banking Officer NATIONSBANK OF NORTH CAROLINA, N.A. By:\s\Alison H. Mewborne Title:Vice President CHEMICAL BANK By:\s\Suzanne Kjorlien Title:Vice President EX-4.B 3 EXHIBIT (4.B) TRUST COMPANY BANK A SUNTRUST BANK Susan S. Stall Group Vice President March 30, 1994 Dixie Yarns, Inc. 1100 Watkins Street Chattanooga, TN 37404 Attention: President Ladies and Gentlemen: Reference is hereby made to that certain Second Amended and Restated Revolving Credit and Term Loan Agreement dated as of January 31, 1992, by and among Dixie Yarns, Inc. (the "COMPANY"), Trust Company Bank, NationsBank of North Carolina, N.A. and Chemical Bank (collectively, the "BANKS"), and Trust Company Bank as Agent for the Banks (in such capacity, the "AGENT"), (as amended, supplemented, waived or modified to the date hereof, the "CREDIT AGREEMENT"). Unless other wise defined herein, terms used in this Waiver Letter are used with the same definition as set forth in the Credit Agreement. Pursuant to Section 5.11(a) of the Credit Agreement, the Company is required to maintain at all times a Current Ratio of not less than 2.0 to 1.0. Pursuant to the Section 5.11(b) of the Credit Agreement, the Company is required to maintain at all times a Fixed Charge Coverage Ratio of not less than 1.5 to 1.0. The Company has informed the Banks that based on the Company's anticipated results of operations for the fiscal quarter ending March 31, 1994, the Company is not expected to be in compliance with the financial covenants set forth above. The Company has requested and the Banks have agreed to waive any Default or Event of Default under the Credit Agreement arising from the Failure of the Company to meet the financial covenants set forth in Section 5.11(a) and 5.11(b) as more fully described above for the fiscal period ending on March 31, 1994. Except as expressly set forth herein, all terms and conditions of the Credit Agreement shall remain in full force and effect, and this Waiver Letter shall not be deemed to be a waiver of any provisions of the Credit Agreement and shall not preclude the future exercise of any right, power or privilege available to the Banks whether under the Credit Agreement or otherwise, including without limitation all rights, powers and privileges available to the Banks for a failure by the Company to comply with the above-referenced financial covenants for the fiscal period ending on June 30, 1994. Without limiting the generality of the foregoing, the parties expressly agree that the waiver provided herein shall not be effective to waive any Default or Event of Default that might indirectly arise under the Credit Agreement as a result of the Company being in default under other agreements with other parties as a result of the violations of the financial covenants described herein. Dixie Yarns, Inc. Page Two March 30, 1994 This Waiver Letter constitutes the entire understanding of the parties with respect to the subject matter hereof and any other prior or contemporaneous agreements, whether written or oral, with respect thereto are expressly superseded hereby. If you agree to the terms of this Waiver Letter, please evidence such agreement and consent by executing and returning at least two counterparts of the Waiver Letter to the Agent at a location set forth on the signature page of the Credit Agreement, to the attention of Ms. Susan Stall. This Waiver Letter shall become effective as of the date first written above, when counterparts of the Waiver Letter shall have been executed by all parties hereto and delivered to the Agent. This Waiver Letter is subject to the provisions of Section 9.12 of the Credit Agreement. This Waiver Letter may be executed in any number of counterparts and by any combination of the parties hereto in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same Waiver Letter. Very truly yours, TRUST COMPANY BANK, individually and as Agent By: \s\Susan S. Stall Title: Group V.P. By: \s\Raymond B. King Title: A.V.P. AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN: DIXIE YARNS, INC. By: \s\Gary A. Harmon Title: Treasurer Attest: \s\Starr T. Klein Title: Secretary NATIONSBANK OF NORTH CAROLINA By: \s\Alison H. Mewborne Title: Vice President CHEMICAL BANK By: \s\Suzanne Kjorlien Title: Vice President EX-4.C 4 EXHIBIT (4.C) DIXIE YARNS, INC. P. O. BOX 751 CHATTANOOGA, TN 37401 April 11, 1994 Mr. Himi L. Kittner Investment Vice President Investment Department New York Life Insurance Co. 51 Madison Ave. New York, NY 10010 Re: Dixie Yarns, Inc. 9.96% Senior Subordinated Note Due February 1, 2010 Dear Mr. Kittner: The provisions of Section 9, Paragraph (F) of the Dixie Yarns, Inc. 9.96% Senior Subordinated Note due February 1, 2010 (hereinafter the "Note") generally limits the payment of dividends by Dixie when the sum of the amounts declared and paid subsequent to December 31, 1988 will be in excess of $20,000,000 plus 75% of consolidated net income accrued subsequent to December 31, 1988. Due to this limitation and the anticipated results of operations of Dixie for the 1st Quarter of 1994, it is anticipated that no dividend may be declared and paid to Dixie's shareholders without a waiver of this provision. Accordingly, Dixie hereby requests that New York Life Insurance Company and New York Life Insurance and Annuity Corporation waive the limitations of Section 9, Paragraph (F) of the Note in order to allow Dixie to pay dividends of $.05 per share on Common Stock and Class B Common Stock in the second quarter and third quarters of 1994. The amount of such payments would not exceed $650,000 for each such quarter. This request is not intended to seek a waiver of any other provisions of the Note, and if granted, shall not be construed as a waiver or amendment of any other provisions or sections of the Note or for the payment of any other or additional dividends unless the limitation specified in Section 9, Paragraph (F) has been met. In all other respects the Note and related Loan Agreement shall continue unchanged. Sincerely, Dixie Yarns, Inc. By: \s\Daniel K. Frierson Daniel K. Frierson, Chairman of the Board, President and Chief Executive Officer Mr. Himi L. Kittner April 11, 1994 Page 2 New York Life Insurance Company and New York Life Insurance and Annuity Corporation hereby consent to the payment of dividends by Dixie on its Common Stock and Class B Common Stock in the second and third quarters of 1994 in an amount not to exceed in the aggregate $650,000 for each such quarter and each waives the limitations of Section 9, Paragraph (F) of the Note for such purpose but not for the purpose of paying any further dividends. NEW YORK LIFE INSURANCE COMPANY and NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION By: \s\Himi L. Kittner Himi L. Kittner, Vice President EX-11 5 EXHIBIT (11) EXHIBIT 11 DIXIE YARNS, INC. STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE Three Months Ended _______________________ April 2, March 27, 1994 1993 ___________ __________ PRIMARY: NET INCOME (LOSS) $(4,342,442) $ 907,334 ___________ __________ ___________ __________ Weighted average number of Common Shares outstanding assuming conversion of Class B Common Stock 12,258,619 9,176,192 Net effect of dilutive stock options based on the treasury stock method using average market price 39,039 64,385 Net effect of put options based on the reverse treasury stock method using average market price 739,010 -0- __________ __________ TOTAL SHARES 13,036,668 9,240,577 __________ _________ __________ _________ PER SHARE AMOUNT $ (.33) $ .10 __________ _________ __________ _________ FULLY DILUTED: Net income (loss) $(4,342,442) $ 907,334 After-tax interest requirement of convertible subordinated debentures (A) -0- -0- ___________ __________ ADJUSTED NET INCOME (LOSS) $(4,342,442) $ 907,334 ___________ __________ ___________ __________ EXHIBIT 11 DIXIE YARNS, INC. STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE - CONTINUED Three Months Ended _______________________ April 2, March 27, 1994 1993 ___________ __________ FULLY DILUTED - CONTINUED: Weighted average number of Common Shares outstanding assuming conversion of Class B Common Stock 12,258,619 9,176,192 Net effect of dilutive stock options based on the treasury stock method using quarter end market price if higher than the average market price 39,039 89,664 Net effect of put options based on the reverse treasury stock method using quarter end market price if lower than the average market price 935,739 -0- Net effect of conversion of convertible subordinated debentures (A) -0- -0- ___________ __________ TOTAL SHARES 13,233,397 9,265,856 ___________ __________ ___________ __________ PER SHARE AMOUNT $ (.33) $ .10 ___________ __________ ___________ __________ (A) Conversion of convertible subordinated debentures to 1,390,745 shares with an after-tax interest requirement of $472,538 for the three months ended April 2, 1994, and of $479,538 for the three months ended March 27, 1993 has been excluded from computation since the effect was anti-dilutive. -----END PRIVACY-ENHANCED MESSAGE-----