-----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, detJMiPZN4QI3NVpvAbPMxc6ik/FZy9cn2R7L14HQzi0G7GcgwEGK6PCK42YLttq 6qSVFtZP6gPDET81ztJAyw== 0000029332-94-000013.txt : 19941116 0000029332-94-000013.hdr.sgml : 19941116 ACCESSION NUMBER: 0000029332-94-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941114 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: 94560105 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 October 1, 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) Identification 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 November 1, 1994 Common Stock, $3 Par Value 11,511,398 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. DIXIE YARNS, INC 2 INDEX Part I. Financial Information: Page No. Consolidated Condensed Balance Sheets -- October 1, 1994 and December 25, 1993 3 Consolidated Statements of Income -- Three Months Ended October 1, 1994 and September 25, 1993 5 Consolidated Statements of Income (Loss) -- Nine Months Ended October 1, 1994 and September 25, 1993 6 Consolidated Condensed Statements of Cash Flows -- Nine Months Ended October 1, 1994 and September 25, 1993 7 Notes to Consolidated Condensed Financial Statements 9 Management's Discussion and Analysis of Results of Operations and Financial Condition 12 Part II. Other Information: Item 6 - Exhibits and Reports on Form 8-K 15 PART I - ITEM 1 3 FINANCIAL INFORMATION DIXIE YARNS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) October 1, December 25, 1994 1993 ____________ ____________ ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,591,980 $ 4,047,459 Accounts receivable (less allowance for doubtful accounts of $3,491,482 in 1994 and $3,900,000 in 1993) 43,408,675 26,553,831 Inventories 123,539,527 105,809,888 Other 9,004,915 11,667,083 ____________ ____________ TOTAL CURRENT ASSETS 177,545,097 148,078,261 PROPERTY, PLANT AND EQUIPMENT 494,938,456 468,296,174 Less allowances for amortization and depreciation 217,949,391 193,037,707 ____________ ____________ 276,989,065 275,258,467 INTANGIBLE ASSETS (less allowances for amortization of $10,181,309 in 1994 and $8,742,059 in 1993) 61,432,863 62,722,113 OTHER ASSETS 9,640,128 10,520,040 ____________ ____________ $525,607,153 $496,578,881 ____________ ____________ ____________ ____________ See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 4 CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) October 1, December 25, 1994 1993 ____________ ___________ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 45,898,108 $ 32,245,506 Accrued expenses 27,510,919 26,518,429 Current portion of long-term debt 446,292 446,829 ____________ ____________ TOTAL CURRENT LIABILITIES 73,855,319 59,210,764 LONG-TERM DEBT Senior indebtedness 106,775,070 87,649,871 Subordinated notes 50,000,000 50,000,000 Convertible subordinated debentures 44,782,000 44,782,000 ____________ ____________ 201,557,070 182,431,871 OTHER LIABILITIES 12,892,143 13,037,877 DEFERRED INCOME TAXES 49,152,257 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, 13,856,642 shares in 1994 and 13,852,233 shares in 1993 41,569,926 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 131,707,666 131,684,054 Retained earnings 54,742,581 60,302,834 Minimum pension liability adjustment (4,981,943) (4,981,943) ____________ ____________ 225,243,914 230,767,328 Less Common Stock in treasury at cost - 3,375,205 shares in 1994 and 3,356,446 shares in 1993 55,271,508 55,085,860 ____________ ____________ 169,972,406 175,681,468 ____________ ____________ $525,607,153 $496,578,881 ____________ ____________ ____________ ____________ See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 5 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended _________________________________ October 1, September 25, 1994 1993 ______________ ______________ Net sales $173,923,559 $152,530,291 Cost of sales 147,016,451 127,856,976 ____________ ____________ 26,907,108 24,673,315 Selling, general and administrative expenses 19,982,102 17,975,862 Corporate expenses 1,237,562 1,247,463 Other income (expense) - net (996,877) 340,153 ____________ ____________ 4,690,567 5,790,143 Interest expense 3,502,606 3,243,781 ____________ ____________ INCOME BEFORE TAXES 1,187,961 2,546,362 Income tax provision 687,000 1,705,000 ____________ ____________ NET INCOME $ 500,961 $ 841,362 ____________ ____________ ____________ ____________ Per common and common equivalent share: Net income $ .04 $ .07 Cash dividends declared: Common stock $ .05 $ .05 Class B common stock $ .05 $ .05 See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 6 CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) Nine Months Ended _________________________________ October 1, September 25, 1994 1993 ______________ ______________ Net sales $516,991,484 $434,746,047 Cost of sales 443,003,708 371,378,727 ____________ ____________ 73,987,776 63,367,320 Selling, general and administrative expenses 61,375,810 43,269,010 Corporate expenses 3,776,179 3,932,680 Other income (expense) - net (3,499,449) 1,092,081 ____________ ____________ 5,336,338 17,257,711 Interest expense 10,261,280 9,683,619 ____________ ____________ INCOME (LOSS) BEFORE TAXES (4,924,942) 7,574,092 Income tax provision (benefit) (1,202,000) 3,764,000 ____________ ____________ NET INCOME (LOSS) $ (3,722,942) $ 3,810,092 ____________ ____________ ____________ ____________ Per common and common equivalent share: Net income (loss) $ (.28) $ .35 Cash dividends declared: Common stock $ .15 $ .15 Class B common stock $ .15 $ .15 See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 7 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended ___________________________ October 1, September 25, 1994 1993 ____________ ____________ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (3,722,942) $ 3,810,092 Depreciation and amortization 26,863,757 22,969,003 Provision for deferred income taxes 1,123,000 1,599,000 Equity in earnings of affiliate -0- (353,000) (Gain) loss on property, plant and equipment 37,000 (1,240,604) ____________ ____________ 24,300,815 26,784,491 Changes in operating assets and liabilities, net of effects of business combinations (16,548,638) (8,601,078) ____________ ____________ NET CASH PROVIDED BY OPERATING ACTIVITIES 7,752,177 18,183,413 CASH FLOWS FROM INVESTING ACTIVITIES Net proceeds from sale of property, plant and equipment -0- 7,585,540 Purchase of property, plant and equipment (26,397,463) (31,220,910) Cash payments in connection with business combinations, net of cash acquired (323,735) (4,755,848) ____________ ____________ NET CASH USED IN INVESTING ACTIVITIES (26,721,198) (28,391,218) See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 8 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED) Nine Months Ended ___________________________ October 1, September 25, 1994 1993 ____________ ____________ CASH FLOWS FROM FINANCING ACTIVITIES Net increase in credit line borrowings 18,871,006 13,455,034 Dividends paid (1,837,311) (1,610,372) Capital stock acquired (185,648) (336,993) Installment payments on long-term debt (371,344) (2,380,205) Other 36,839 1,749,909 ____________ ____________ NET CASH PROVIDED BY FINANCING ACTIVITIES 16,513,542 10,877,373 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,455,479) 669,568 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,047,459 1,425,985 ____________ ____________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,591,980 $ 2,095,553 ____________ ____________ ____________ ____________ SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 10,297,000 $ 9,952,000 ____________ ____________ ____________ ____________ Income taxes paid, net of refunds received $ 1,483,000 $ 1,399,000 ____________ ____________ ____________ ____________ See Notes to Consolidated Condensed Financial Statements. DIXIE YARNS, INC. 9 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 and nine months ended October 1, 1994 are not necessarily indicative of the results that may be expected for the entire year. NOTE B - INVENTORIES Inventories are summarized as follows: October 1, December 25, 1994 1993 ____________ ____________ At current cost Raw materials $ 32,389,002 $ 25,274,771 Work-in-process 29,658,381 24,602,923 Finished goods 71,491,206 62,664,139 Supplies, repair parts and other 10,063,882 9,792,498 ____________ ____________ 143,602,471 122,334,331 Excess of current cost over LIFO value (20,062,944) (16,524,443) ____________ ____________ $123,539,527 $105,809,888 ____________ ____________ ____________ ____________ NOTE C - DEBT AND CREDIT ARRANGEMENTS The Company amended its revolving Credit and Term Loan Agreement to modify certain financial covenants, principally to defer fixed charge coverage requirements until the twelve month period ended with the close of the second quarter of 1995. In addition, the Company obtained waivers of the dividend restriction provisions of its subordinated loan agreement in order to permit payment of dividends of up to $650,000 per quarter through the first quarter of 1995. NOTE D - OTHER INCOME (EXPENSE) Other income (expense) - net included costs associated with the sale of accounts receivable of approximately $.6 million in the third quarter of 1994 and $2.3 million for the first nine months of 1994. The comparable 1993 periods included gains from asset sales and equity earnings of non-consolidated subsidiaries of approximately $.8 million in the third quarter of 1993 and $1.6 million for the first nine months of 1993. NOTE E - RECLASSIFICATIONS 10 Selling, general and administrative expenses and corporate expenses for 1993 have been reclassified to conform with the 1994 presentation. NOTE F - 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. and the operations of Masland Carpets, Inc. on March 12, 1993 and July 9, 1993, respectively. On June 20, 1994, the Company acquired certain of the assets and assumed certain of the liabilities of Patrick of California, Inc., ("Patrick") d/b/a Patrick Carpet Mills, a West Coast manufacturer of commercial and residential carpet for customers with a broad geographic distribution. The purchase price for the assets of Patrick was comprised of cash and expenses of approximately $324,000, long term debt assumed of $625,000, and the contribution of approximately $2,351,000 owed to Dixie by Patrick. The total purchase price was allocated to the assets and liabilities of Patrick based on the estimated fair market values of the net assets acquired. A summary of net assets acquired from Patrick is as follows: Current assets $4,261,040 Property, plant and equipment 1,481,780 Other assets 72,206 Current liabilities (2,515,026) Net assets acquired $3,300,000 The following unaudited summary presents the consolidated pro forma results of operations for the three and nine months ended October 1, 1994 and September 25, 1993 as if the acquisitions of Carriage, Masland and Patrick had occurred at the beginning of each period presented 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 each period presented or of results which may occur in the future. Three months ended Nine months ended ___________________ __________________ Oct 1, Sept 25, Oct 1, Sept 25, 1994 1993 1994 1993 ________ ________ ________ ________ Net sales $173,924 $156,152 $523,826 $492,904 Net income (loss) 501 829 (3,728) 5,384 Net income (loss) per common and common equivalent share .04 .07 (.28) .43 NOTE G - SUBSEQUENT EVENTS 11 The Company's financial results are expected to include an after-tax gain of approximately $11.0 million in the fourth quarter of 1994 from the receipt of approximately $14.0 million of insurance proceeds on the life of the former Chairman of Carriage Industries, Inc. The effect of the gain is anticipated to be partially offset by a charge, also expected to be recorded in the fourth quarter of 1994. The charge is anticipated to be primarily non-cash but has not yet been quantified and is expected to recognize costs related to improvement of the competitive position of the Company's operations. Review of the Company's competitive position is a part of management's long-range planning process begun earlier in the year. PART I - ITEM 2 12 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 Net sales for the quarter ended October 1, 1994 increased 14% to $173.9 million from sales of $152.5 million in the third quarter of 1993. Net income was $.5 million, or $.04 per share in the third quarter of 1994, compared with net income of $.8 million, or $.07 per share for the comparable 1993 period. Net sales increased due to higher unit volume in each of the Company's business segments and also as a result of the June 1994 acquisition of Patrick Carpet Mills, Inc. The lower 1994 net income is primarily the result of higher cotton costs in the Company's textile business. Results of operations of the Company's textile business, while below 1993 levels, improved compared with the first and second quarters of 1994 as a result of higher selling prices and lower manufacturing costs. Compared to the prior year, operating margins tightened in the Company's floorcovering business due to product mix changes and competitive pressure. The effect of the lower margins was more than offset by increased volume in this segment. Net sales were $517.0 million for the first nine months of 1994, compared with net sales of $434.7 million for the comparable 1993 period. Operations during the first nine months of 1994 resulted in a net loss of $3.7 million, or $.28 per share, (including $4.3 million or $.33 per share, incurred in the first quarter of 1994) compared with net income of $3.8 million, or $.35 per share, for the first nine months of 1993. The improvement in 1994 net sales is attributable to the Company's floorcovering business, which included the operations of Carriage Industries, Inc., Masland Carpets, Inc. and Patrick Carpet Mills, Inc. subsequent to their acquisitions on March 12, 1993, July 9, 1993 and June 20, 1994, respectively. Results of operations were adversely affected in 1994 by lower selling prices on cotton products and higher cotton raw material costs. Consolidation expenses, particularly in the first quarter of 1994, and increased financing cost also had a negative impact on 1994 results of operations. The increase in selling, general and administrative expenses for the first nine months of 1994, compared with the corresponding 1993 period is principally attributable to the higher selling and product distribution cost associated with the specialized floorcovering markets served by Carriage and Masland. Other income (expense) - net included costs associated with the sale of accounts receivable of approximately $.6 million in the third quarter of 1994 and $2.3 million for the first nine months of 1994. The comparable 1993 periods included gains from asset sales and equity earnings of non- consolidated subsidiaries of approximately $.8 million in the third quarter of 1993 and $1.6 million for the first nine months of 1993. 13 The Company's effective income tax rate differs from the statutory income tax rate primarily due to nondeductible amortization of intangible assets. The third quarter and first nine months of 1993 also included an income tax charge of approximately $.5 million to reflect the effect of the 1993 statutory federal income tax rate increase on deferred income taxes established in earlier years. The Company's financial results are expected to include an after-tax gain of approximately $11.0 million in the fourth quarter of 1994 from the receipt of approximately $14.0 million of insurance proceeds on the life of the former Chairman of Carriage Industries, Inc. The effect of the gain is anticipated to be partially offset by a charge, also expected to be recorded in the fourth quarter of 1994. The charge is anticipated to be primarily non-cash but has not yet been quantified and is expected to recognize costs related to improvement of the competitive position of the Company's operations. Review of the Company's competitive position is a part of management's long-range planning process begun earlier in the year. Although demand is presently strong in most of the markets the Company serves, the fourth quarter is historically a seasonally weak quarter for floorcovering and certain of our textile business units. Management expects further improvement in the Company's textile operations in the fourth quarter of 1994 and in 1995. The Company's floorcovering operations are expected to remain strong. Net income for future periods could be adversely affected if interest rates increase significantly. LIQUIDITY AND CAPITAL RESOURCES During the first nine months of 1994, $7.8 million of funds generated from operating activities were supplemented by $18.9 million of additional senior indebtedness. These funds financed the Company's operations, capital expenditures and the Patrick acquisition. Working capital increased $14.8 million due to seasonal factors and sales growth. Purchases of property, plant and equipment were less than non-cash charges for depreciation and amortization during the first nine months of 1994. Capital expenditures are expected to remain below such charges for the remainder of 1994 and are principally directed toward the Company's floorcovering business. Restrictions in the Company's long-term debt arrangements limit the amount of cash dividends that may be paid. These restrictions have been waived in order to permit the Company to pay dividends of up to $.7 million per quarter through the first quarter of 1995. 14 Approximately 1.0 million shares of the Company's Common Stock are subject to a put option, which can be exercised during the two year period beginning July 9, 1995 at a price of approximately $18 per share. If the market price of the Company's Common Stock remains below the put price, the holders are likely to exercise their rights under the put option. At November 4, 1994, the Company's unused borrowing capacity under its credit arrangements was approximately $28.4 million. Proceeds from life insurance, improved operating results and working capital reductions are anticipated to improve cash flows during the fourth quarter of 1994. Management believes the Company's present credit facilities and expected positive cash flows will provide adequate liquidity for normal operations, including anticipated capital expenditures, and to fund any exercise of the put option. PART II. OTHER INFORMATION 15 Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits (i) Exhibits Incorporated by Reference None (ii) Exhibits Filed with this Report (4a) Waiver letter from New York Life Insurance Company dated October 27, 1994 pertaining to 9.96% Senior Subordinated Notes due February 1, 2010 (4b) Waiver letter from New York Life Insurance and Annuity Corporation dated October 27, 1994 pertaining to 9.96% Senior Subordinated Notes due February 1, 2010 (11) Statement re: Computation of Earnings Per Share (27) Financial Data Schedule (b) Reports on Form 8-K Amendment No. 1 on Form 8-K/A filed September 2, 1994 to Current Report on Form 8-K, dated June 20, 1994, reporting the acquisition of certain of the assets of Patrick of California, Inc. 16 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) November 14, 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 17 ITEM 6(a) EXHIBITS QUARTER ENDED OCTOBER 1, 1994 DIXIE YARNS, INC. CHATTANOOGA, TENNESSEE Exhibit Index EXHIBIT NO. EXHIBIT DESCRIPTION (4a) Waiver letter from Filed herewith. New York Life Insurance Company dated October 27, 1994 pertaining to 9.96% Senior Subordinated Notes due February 1, 2010 (4b) Waiver letter from Filed herewith. New York Life Insurance and Annuity Corporation dated October 27, 1994 pertaining to 9.96% Senior Subordinated Notes due February 1, 2010 (11) Statement re: Computation Filed herewith. of Earnings Per Share. (27) Financial Data Schedule. Filed herewith. EX-4.A 2 New York Life Insurance Company 51 Madison Avenue New York, NY 10010 October 27, 1994 Mr. Daniel K. Frierson Chairman of the Board, President and Chief Executive Officer Dixie Yarns, Inc. PO Box 751 Chattanooga, TN 37401 Re: Dixie Yarns, Inc. ("Dixie") 9.96% Senior Subordinated Notes Due February 1, 2010 ("Notes") Dear Mr. Frierson: The Notes, pursuant to the terms of Section 9, Paragraph (F), provide that Dixie shall not declare or pay, or set apart funds for the payment of, any dividends if immediately after giving effect to such action, the sum of the amounts declared and paid or payable as, or set apart for, dividends on or distribution in respect of all shares of capital stock of Dixie 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. You have informed the holders of the Notes ("Noteholders") that due to the terms of such section and the anticipated results of operations of Dixie for the 3rd and 4th Quarters of 1994, it is anticipated that no dividend may be declared and paid to Dixie's shareholders without a waiver by Noteholders of Dixie's compliance with its obligations as set forth in such section. Dixie has requested such a waiver. Pursuant to Dixie's request, New York Life Insurance Company hereby waives Dixie's compliance with the terms of Section 9, Paragraph (F) of the Notes only to the extent that Dixie may pay dividends of $.05 per share on Common Stock and Class B Common Stock in the fourth quarter of 1994 and first quarter of 1995. The aggregate amount of such payments for Common Stock and Class B Common Stock shall not exceed $650,000 for each such quarter. This waiver is not intended to be a waiver of Dixie's compliance with any other terms of the Notes or the Loan Agreement ("Agreement") dated February 6, 1990, executed by Dixie and the Noteholders that are parties thereto in connection with the issuance of the Notes and shall not be construed as a waiver or amendment of any other provisions or sections of the Notes or the Agreement. In all other respects the Notes and the Agreement shall continue in full force and effect. Sincerely, New York Life Insurance Company By: \s\John E. Schumacher John E. Schumacher Its: Investment Vice President EX-4.B 3 New York Life Insurance and Annuity Corporation 51 Madison Avenue New York, NY 10010 October 27, 1994 Mr. Daniel K. Frierson Chairman of the Board, President and Chief Executive Officer Dixie Yarns, Inc. PO Box 751 Chattanooga, TN 37401 Re: Dixie Yarns, Inc. ("Dixie") 9.96% Senior Subordinated Notes Due February 1, 2010 ("Notes") Dear Mr. Frierson: The Notes, pursuant to the terms of Section 9, Paragraph (F), provide that Dixie shall not declare or pay, or set apart funds for the payment of, any dividends if immediately after giving effect to such action, the sum of the amounts declared and paid or payable as, or set apart for, dividends on or distribution in respect of all shares of capital stock of Dixie 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. You have informed the holders of the Notes ("Noteholders") that due to the terms of such section and the anticipated results of operations of Dixie for the 3rd and 4th Quarters of 1994, it is anticipated that no dividend may be declared and paid to Dixie's shareholders without a waiver by Noteholders of Dixie's compliance with its obligations as set forth in such section. Dixie has requested such a waiver. Pursuant to Dixie's request, New York Life Insurance and Annuity Corporation hereby waives Dixie's compliance with the terms of Section 9, Paragraph (F) of the Notes only to the extent that Dixie may pay dividends of $.05 per share on Common Stock and Class B Common Stock in the fourth quarter of 1994 and first quarter of 1995. The aggregate amount of such payments for Common Stock and Class B Common Stock shall not exceed $650,000 for each such quarter. This waiver is not intended to be a waiver of Dixie's compliance with any other terms of the Notes or the Loan Agreement ("Agreement") dated February 6, 1990, executed by Dixie and the Noteholders that are parties thereto in connection with the issuance of the Notes and shall not be construed as a waiver or amendment of any other provisions or sections of the Notes or the Agreement. In all other respects the Notes and the Agreement shall continue in full force and effect. Sincerely, New York Life Insurance and Annuity Corporation By: \s\John E. Schumacher John E. Schumacher Its: Investment Vice President EX-11 4 EXHIBIT (11) EXHIBIT 11 DIXIE YARNS, INC. STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE Three Months Ended Nine Months Ended _______________________ _______________________ Oct 1, Sept 25, Oct 1, Sept 25, 1994 1993 1994 1993 ___________ __________ ___________ __________ PRIMARY: NET INCOME (LOSS) $ 500,961 $ 841,362 $(3,722,942) $3,810,092 ___________ __________ ___________ __________ ___________ __________ ___________ __________ Weighted average number of Common Shares outstanding assuming conversion of Class B Common Stock 12,243,400 12,114,964 12,249,896 10,836,870 Net effect of dilutive stock options based on the treasury stock method using average market price 33,716 63,926 36,519 79,515 Net effect of put options based on the reverse treasury stock method using average market price 1,018,544 423,572 871,815 97,316 ___________ ___________ __________ __________ TOTAL SHARES 13,295,660 12,602,462 13,158,230 11,013,701 ___________ ___________ __________ __________ ___________ ___________ __________ __________ PER SHARE AMOUNT $ .04 $ .07 $ (.28) $ .35 ___________ ___________ __________ __________ ___________ ___________ __________ __________ FULLY DILUTED: Net income (loss) $ 500,961 $ 841,362 $(3,722,942) $3,810,092 After-tax interest requirement of convertible subordinated debentures (A) -0- -0- -0- -0- ___________ __________ ___________ __________ ADJUSTED NET INCOME (LOSS) $ 500,961 $ 841,362 $(3,722,942) $3,810,092 ___________ __________ ___________ __________ ___________ __________ ___________ __________ EXHIBIT 11 DIXIE YARNS, INC. STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE - CONTINUED Three Months Ended Nine Months Ended _______________________ _______________________ Oct 1, Sept 25, Oct 1, Sept 25, 1994 1993 1994 1993 ___________ __________ ___________ __________ FULLY DILUTED - CONTINUED: Weighted average number of Common Shares outstanding assuming conversion of Class B Common Stock 12,243,400 12,114,964 12,249,896 10,836,870 Net effect of dilutive stock options based on the treasury stock method using quarter end market price if higher than the average market price 33,708 63,926 36,492 79,718 Net effect of put options based on the reverse treasury stock method using quarter end market price if lower than the average market price 1,173,943 509,048 1,173,943 169,684 Net effect of conversion of convertible subordinated debentures (A) -0- -0- -0- -0- ___________ __________ ___________ __________ TOTAL SHARES 13,451,051 12,687,938 13,460,331 11,086,272 ___________ __________ ___________ __________ ___________ __________ ___________ __________ PER SHARE AMOUNT $ .04 $ .07 $ (.28) $ .34 ___________ __________ ___________ __________ ___________ __________ ___________ __________ (A) Conversion of convertible subordinated debentures to 1,390,745 shares with an after-tax interest requirement of $472,538 and $479,538 for the three months ended October 1, 1994, and September 25, 1993, respectively and of $1,417,613 and $1,439,613 for the nine months ended October 1, 1994, and September 25, 1993, respectively has been excluded from computation since the effect was anti-dilutive. EX-27 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF DIXIE YARNS, INC. AT AND FOR THE NINE MONTHS ENDED OCTOBER 1, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1994 OCT-01-1994 1,591,980 0 46,900,157 3,491,482 123,539,527 177,545,097 494,938,456 217,949,391 525,607,153 73,855,319 201,557,070 43,775,610 18,177,958 0 126,196,796 525,607,153 516,991,484 516,991,484 443,003,708 443,003,708 0 0 10,261,280 (4,924,942) (1,202,000) (3,722,942) 0 0 0 (3,722,942) (.28) (.28)
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