-----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, tzQJ8xtAna82QjgVyNuYvdrsl7Wx9LFU1I/377oYzC4ZBjBUB9kjyx6tefjDWzOe QzmItjpHXFOs0aqExok6vg== 0000089498-94-000009.txt : 19941129 0000089498-94-000009.hdr.sgml : 19941129 ACCESSION NUMBER: 0000089498-94-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941115 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHAW INDUSTRIES INC CENTRAL INDEX KEY: 0000089498 STANDARD INDUSTRIAL CLASSIFICATION: 2273 IRS NUMBER: 581032521 STATE OF INCORPORATION: GA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06853 FILM NUMBER: 94560217 BUSINESS ADDRESS: STREET 1: 616 E WALNUT AVE STREET 2: P O DRAWER 2128 CITY: DALTON STATE: GA ZIP: 30720 BUSINESS PHONE: 7062783812 MAIL ADDRESS: STREET 1: 616 E WALNUT AVE STREET 2: P O DRAWER 2128 CITY: DALTON STATE: GA ZIP: 30720 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 1, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from________________________to__________________ Commission file number 1-6853 SHAW INDUSTRIES, INC. (Exact name of registrant as specified in its charter) GEORGIA (State or other jurisdiction of incorporation or organization) 58-1032521 (I.R.S. Employer Identification No.) 616 E. WALNUT AVENUE, DALTON, GEORGIA 30720 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (706) 278-3812 NOT APPLICABLE Former name, former address and former fiscal year, if changed since last report. Indicate by check [X] 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: November 5, 1994 -139,337,802 shares SHAW INDUSTRIES, INC. FORM 10- Q October 1, 1994 I N D E X PART I - FINANCIAL INFORMATION PAGE NUMBER Consolidated Balance Sheets - October 1, 1994 and July 2, 1994 1-2 Consolidated Statements of Income and Retained Earnings - For the Three Months Ended October 1, 1994 and October 2, 1993 3 Consolidated Statements of Cash Flows For the Three Months Ended October 1, 1994 and October 2, 1993 4 Notes to Consolidated Financial Statements 5-6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 PART II - OTHER INFORMATION 9 SIGNATURES 10 PART 1 - ITEM ONE - FINANCIAL INFORMATION SHAW INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS October 1, 1994 July 2, 1994 ------------- ------------- CURRENT ASSETS: Cash $ 25,202,000 $ 12,597,000 ------------- ------------- Temporary cash investments 40,000,000 0 ------------- ------------- Accounts and notes receivable, less allowance for doubtful accounts and discounts of $19,977,000 and $18,455,000 362,872,000 367,613,000 ------------- ------------- Inventories - Raw materials 231,835,000 240,726,000 Work-in-process 33,641,000 36,110,000 Finished goods 258,291,000 249,302,000 ------------- ------------- 523,767,000 526,138,000 ------------- ------------- Prepaid expenses 24,503,000 24,507,000 ------------- ------------- TOTAL CURRENT ASSETS 976,344,000 930,855,000 ------------- ------------- PROPERTY, PLANT AND EQUIPMENT, at cost: Land and land improvements 28,739,000 28,196,000 Building and leasehold improvements 252,196,000 231,892,000 Machinery and equipment 775,512,000 743,908,000 Construction in progress 95,523,000 114,604,000 ------------- ------------- 1,151,970,000 1,118,600,000 Less - Accumulated depreciation 500,257,000 481,025,000 ------------- ------------- 651,713,000 637,575,000 ------------- ------------- OTHER ASSETS 113,538,000 113,718,000 ------------- ------------- TOTAL ASSETS $ 1,741,595,000 $ 1,682,148,000 ============= ============= -1- LIABILITIES AND SHAREHOLDERS' INVESTMENT October 1, 1994 July 2, 1994 ------------- ------------- CURRENT LIABILITIES: Notes payable $ 0 $ 135,000,000 Current maturities of long-term debt 38,923,000 40,579,000 Accounts payable 181,258,000 225,368,000 Accrued liabilities 128,931,000 125,193,000 Accrued income taxes 12,339,000 0 ------------- ------------- TOTAL CURRENT LIABILITIES 361,451,000 526,140,000 ------------- ------------- LONG-TERM DEBT, less current maturities above 591,537,000 382,192,000 ------------- ------------- DEFERRED INCOME TAXES 38,121,000 38,095,000 ------------- ------------- OTHER CREDITS 12,226,000 11,831,000 ------------- ------------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 13,960,000 13,790,000 ------------- ------------- SHAREHOLDERS' INVESTMENT: Preferred stock; 250,000 shares authorized, no shares issued - - Common stock, no par, $1.11 stated value, authorized 500,000,000 shares; 139,321,102 shares issued at October 1, 1994 and 139,868,162 shares issued at July 2, 1994 154,647,000 155,254,000 Paid-in capital 149,022,000 159,192,000 Foreign currency translation adjustment (3,088,000) (2,488,000) Retained earnings 423,719,000 398,212,000 ------------- ------------- 724,300,000 710,170,000 Less -Unearned compensation 0 70,000 ------------- ------------- Total Shareholders' Investment 724,300,000 710,100,000 ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $ 1,741,595,000 $ 1,682,148,000 ============= ============= The accompanying notes are an integral part of these consolidated financial statements. -2- SHAW INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED) THREE MONTHS ENDED October 1, 1994 October 2, 1993 ------------- ------------- NET SALES $ 734,100,000 $ 649,516,000 ------------- ------------- COSTS AND EXPENSES: Cost of sales 577,220,000 512,215,000 Selling expense 68,020,000 51,558,000 General and administrative expense 27,226,000 24,623,000 ------------- ------------- 672,466,000 588,396,000 ------------- ------------- OPERATING INCOME 61,634,000 61,120,000 ------------- ------------- OTHER EXPENSE (INCOME): Interest expense 8,255,000 5,836,000 Interest income (181,000) (288,000) ------------- ------------- Interest, net 8,074,000 5,548,000 Miscellaneous, net (644,000) 24,000 ------------- ------------- Total 7,430,000 5,572,000 ------------- ------------- INCOME BEFORE INCOME TAXES 54,204,000 55,548,000 ------------- ------------- PROVISION FOR INCOME TAXES 20,869,000 21,452,000 ------------- ------------- INCOME BEFORE MINORITY INTEREST 33,335,000 34,096,000 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY (173,000) - ------------- ------------- NET INCOME $ 33,162,000 $ 34,096,000 ============= ============= EARNINGS PER COMMON SHARE: Primary $ 0.24 $ 0.24 ============= ============= Fully diluted $ 0.24 $ 0.24 ============= ============= RETAINED EARNINGS: Beginning of period $ 398,212,000 $ 297,754,000 Add-net income 33,162,000 34,096,000 Deduct - dividends paid 7,655,000 6,433,000 ------------- ------------- End of period $ 423,719,000 $ 325,417,000 ============= ============= The accompanying notes are an integral part of these consolidated financial statements.
-3- SHAW INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED October 1, 1994 October 2, 1993 ------------- ------------- OPERATING ACTIVITIES: Net Income $ 33,162,000 $ 34,096,000 ------------- ------------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 20,610,000 21,315,000 Provision for doubtful accounts 2,167,000 3,005,000 Stock option compensation expense 70,000 199,000 Change in assets and liabilities, net of acquisitions: Accounts receivable 2,574,000 7,760,000 Inventories 2,371,000 (14,751,000) Trade accounts payable (44,110,000) 15,464,000 Other accrued liabilities 3,738,000 5,427,000 Income taxes payable 12,339,000 8,326,000 Deferred income taxes and other credits 421,000 709,000 Other, net (836,000) (3,698,000) ------------- ------------- Total Adjustments (656,000) 43,756,000 ------------- ------------- Net Cash Provided by Operating Activies 32,506,000 77,852,000 ------------- ------------- INVESTING ACTIVITIES: Additions to property, plant and equipment (34,158,000) (23,568,000) Business assets acquired 0 (38,443,000) Increase in temporary cash investments (40,000,000) (20,231,000) ------------- ------------- Net Cash Used in Investing Activities (74,158,000) (82,242,000) ------------- ------------- FINANCING ACTIVITIES: Increase (decrease) in debt, net 72,689,000 (1,212,000) Exercise of stock options 973,000 348,000 Dividends paid (7,655,000) (6,433,000) Purchase and retirement of common stock (11,750,000) (3,393,000) ------------- ------------- Net Cash Provided (Used) in Financing Activities 54,257,000 (10,690,000) ------------- ------------- NET INCREASE (DECREASE) IN CASH 12,605,000 (15,080,000) CASH AT BEGINNING OF PERIOD 12,597,000 35,807,000 ------------- ------------- CASH AT END OF PERIOD $ 25,202,000 $ 20,727,000 ============= ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for - Interest $ 6,313,000 $ 5,752,000 Income taxes $ 3,120,150 $ 11,612,000 Noncash capital lease obligations $ 0 $ 378,000 The accompanying notes are an integral part of these consolidated financial statements.
-4- SHAW INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 1, 1994 (UNAUDITED) ______________________________________________________________ 1. The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. These financial statements should be read in conjunction with the financial statements and related notes contained in the 1994 Annual Report on Form 10-K. In the opinion of management, the financial statements contain all adjustments necessary to present fairly the financial position as of October 1, 1994 and the results of operations and cash flows for the three months then ended. These adjustments were of a normal recurring nature. The results of operations for the three months ended October 1, 1994 are not necessarily indicative of the results to be expected for the year ending December 31, 1994. The Company uses the last-in, first-out (LIFO) method of valuing substantially all of its inventories in order to more properly match current costs against current revenues, thereby reducing the effects of inflation on earnings. If LIFO inventories were valued at current costs, the inventories would have been $10,307,000 and $6,449,000 lower at October 1, 1994 and at July 2, 1994, respectively. Certain of the Company's physical inventories are taken on a weekly, monthly or quarterly basis and the Company computes the LIFO inventory amount on a quarterly basis after considering anticipated prices, quantities and product mix as of year-end. 2. The weighted average number of shares used in computing earnings per share for the three months ended October 1, 1994 and October 2, 1993 were as follows: Three Months Ended October 1, 1994 October 2, 1993 Primary 140,291,568 145,100,288 Fully diluted 140,291,567 145,275,926 See Computation of Per Share Earnings - Exhibit 11. -5- 3. On July 21, 1994, the Board of Directors of the Company approved the change of the Company's fiscal year-end from the Saturday closest to the end of June to the new fiscal year-end of the Saturday closest to the end of December. Accordingly, December 31, 1994 will be the next fiscal year-end for the Company. 4. In September, 1994, the Company entered into an agreement to replace its existing revolving credit agreement of $300 million with a syndicated bank facility for $600 million. The new syndicated bank facility matures in 1997 with an option to extend it for two additional one-year terms at a LIBOR based interest rate. Accordingly, $205 million of short-term borrowings have been reclassified to long-term debt in the accompanying balance sheet as of October 1, 1994 reflecting the Company's intention to refinance this debt with borrowings under the new agreement. 5. On July 12, 1993, the Company formed a joint venture through which it acquired an interest in Capital Carpet Industries, Pty., Ltd., Melbourne, Victoria, Australia and Invicta Group Industries, Pty., Ltd., Braybrook, Victoria, Australia (together, "CCI"), enabling the Company to participate in a government-supported rationalization of the Australian carpet industry. On November 4, 1993, the Company acquired the remaining interest in the joint venture. Until November 4, 1993, the investment was accounted for using the equity method, and accordingly, the Company included its share of CCI's income in other income. Subsequent to November 4, 1993, the results of operations of CCI are included in the accompanying financial statements. On September 10, 1993, the Company acquired Abingdon Carpets, Gwent, Wales. Abingdon is a British producer of medium priced tufted carpets and carpet yarns. The acquisition has been accounted for as a purchase transaction, and accordingly, the results of operations of Abingdon are included in the accompanying financial statements since September 10, 1993. On May 31, 1994, the Company entered into an agreement to form a joint venture with Grupo Industrial Alfa, S.A. de C.V. of Monterrey, Mexico, for the manufacture, distribution and marketing of carpets, rugs and related products in Mexico and South America. The Company acquired a 51 percent interest in Terza, S.A. de C.V., and accordingly, the subsidiary is included in consolidation at July 2, 1994 and the results of operations of Terza are included in the accompanying financial statements since May 31, 1994. -6- SHAW INDUSTRIES, INC. ITEM TWO-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company's business, as well as the United States' carpet industry in general, is cyclical in nature and is significantly affected by general economic conditions. The level of carpet sales tends to reflect fluctuations in consumer spending for durable goods, and to a lesser extent, fluctuations in interest rates and new housing starts. The industry achieved reasonable growth in the quarter ended October 1, 1994 compared to the same period last year. The Company's working capital at October 1, 1994 of $614,893,000 is $210,178,000 greater than the prior year because short-term notes payable of $205,000,000 were reclassified to long-term debt as described in Note 4 of the Notes to Consolidated Financial Statements. Operating and financing activities during the quarter ended October 1, 1994 provided a strong cash flow to fund investing activities. Net cash provided by operating activities in the first quarter totaled $32,506,000 and was provided principally from net income of $33,162,000, depreciation and amortization of $20,610,000, and other items, net of $22,844,000. Net cash was used by operating activities to reduce trade accounts payable by $44,110,000. Cash flow used in investing activities in the first quarter totaled $74,158,000. Cash was used for additions to property, plant and equipment of $34,158,000 and an increase in temporary cash investments of $40,000,000. The principal cash used in financing activities was for cash dividends of $7,655,000 and the purchase and retirement of common stock of $11,750,000. Cash was provided by financing activities through an increase in debt of $72,689,000 and the exercise of stock options of $973,000. The Company's liquidity condition remains strong. Conservation of capital and the maintenance of a strong balance sheet have enabled the Company to become a preeminent force in the carpet industry. Capital expenditures (including capital lease obligations ) for incremental additions and modifications to plant and equipment necessary to maintain the facilities in a modern state-of-the-art condition were $34,158,000 for three months ended October 1, 1994. During the remainder of fiscal 1994, which ends December 31, 1994, the Company will continue to expand and upgrade its tufting, dyeing, finishing, yarn processing, distribution, transportation and materials handling equipment to meet an anticipated increase in sales volume and to improve efficiency. Management anticipates capital expenditures and capitalized lease obligations of approximately $20,000,000 during the remainder of fiscal 1994 which will be funded through cash flow from operations and, if appropriate, through additional sources of long-term capital. As described in Note 4 of the Notes to Consolidated Financial Statements, the Company has arranged to replace its existing revolving credit agreement of $300,000,000 with a $600,000,000 syndicated bank facility to meet expected borrowing requirements. -7- RESULTS OF OPERATIONS THREE MONTHS ENDED OCTOBER 1, 1994 COMPARED TO THREE MONTHS ENDED OCTOBER 2, 1993 Net sales increased $84,584,000, or 13.0 percent, primarily as a result of an increase in the volume of shipments. Results for the three months ended October 1, 1994 included incremental sales of $55,545,000 attributable to acquisitions as described in Note 5 to the Consolidated Financial Statements included herein. Gross profit margins increased .3 percent to 21.4 percent from 21.1 percent for the current three months compared to the same period last year principally as a result of an improvement in the efficiency relationship of volume and fixed costs. Selling, general and administrative expense increased $19,065,000 in the current three months compared to the same period last year, and increased 1.3 percent to 13.0 percent of net sales due principally to higher selling and sampling costs. Interest expense, net, increased $2,526,000 to $8,074,000 in the current three months compared to the same period last year due primarily to an increase in outstanding short and long-term borrowings. The effective income tax rate decreased from 38.6 percent to 38.5 percent for the current three months compared to the same period last year. -8- PART II - OTHER INFORMATION ITEM ONE - LEGAL PROCEEDINGS From time to time the Company is subject to claims and suits arising in the course of its business. In April 1993, the Company became a defendant in certain litigation alleging personal injury resulting from personal exposure to volatile organic compounds found in carpet produced by the Company. The complaints seek injunctive relief and unspecified money damages on all claims. The Company has denied any liability. In May 1993, the Company became a defendant in certain litigation alleging violation of both federal and state laws relating to unfair competition. The complaint seeks an injunction regarding the unfair competition claims and money damages. The Company has denied any liability. The Company believes that it has meritorious defenses in these suits and that the litigation will not have a material adverse effect on the Company's financial condition or results of operations. The Company will vigorously defend these suits. In June 1994, the Company and several other carpet manufacturers received a grand jury subpoena from the Antitrust Division of the United States Department of Justice relating to an investigation of the industry. The Company believes that once this investigation is completed, it will not have a material adverse effect on the Company's financial condition or results of operations. ITEM TWO - CHANGES IN SECURITIES None ITEM THREE - DEFAULTS UPON SENIOR SECURITIES None ITEM FOUR - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM FIVE - OTHER INFORMATION None ITEM SIX - EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits - Computation of Per Share Earnings (Exhibit 11) - Financial Data Schedule (Exhibit 27) (B) A report on Form 8-K was filed during the fiscal quarter ended October 1, 1994 reporting a change in fiscal year. On July 21, 1994, the Board of Directors of the Company, approved the change of the Company's fiscal year-end from the Saturday closest to the end of June to the new fiscal year-end of the Saturday closest to the end of December. -9- 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 SHAW INDUSTRIES, INC. (The Registrant) DATE: November 10, 1994 /s/ Robert E. Shaw Robert E. Shaw President and Chief Executive Officer DATE: November 10, 1994 /s/ William C. Lusk, Jr. William C. Lusk, Jr. Senior Vice President and Treasurer (Principal Financial Officer) -10- EX-11 2 EXHIBIT 11 SHAW INDUSTRIES, INC. COMPUTATION OF PER SHARE EARNINGS ----------------------------------------------------------------------------------------------------------------- (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended October 1, 1994 October 2, 1993 PRIMARY: Weighted average common shares outstanding 139,432 143,112 Additional shares assuming exercise of stock options 860 1,988 ----------- ----------- Average common shares outstanding, as adjusted 140,292 145,100 =========== =========== Net Income $ 33,162 $ 34,096 =========== =========== Primary earnings per common share $ 0.24 $ 0.24 =========== =========== FULLY DILUTED Weighted average common shares outstanding 139,432 143,112 Additional shares assuming exercise of stock options 860 2,164 ----------- ----------- Average common shares outstanding, as adjusted 140,292 145,276 =========== =========== Net Income $ 33,162 $ 34,096 =========== =========== Fully diluted earnings per common share $ 0.24 $ 0.24 =========== =========== -11-
EX-27 3 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 QUARTER DEC-31-1994 OCT-01-1994 65,202,000 0 382,849,000 (19,977,000) 523,767,000 976,344,000 1,151,970,000 500,257,000 1,741,595,000 361,451,000 591,537,000 154,647,000 0 0 569,653,000 1,741,595,000 734,100,000 734,100,000 577,220,000 577,220,000 0 2,167,000 8,074,000 54,204,000 20,869,000 33,162,000 0 0 0 33,162,000 .24 .24
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