-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GCY/vgP1wCwhXOoEq4kqlllC8MRy/9WHcxq7S4e6MzhpFOb3duXWc4hqxtooMHTo s5i6/9DrHBzIwgyo9eKMow== 0000089498-00-000014.txt : 20000515 0000089498-00-000014.hdr.sgml : 20000515 ACCESSION NUMBER: 0000089498-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000401 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHAW INDUSTRIES INC CENTRAL INDEX KEY: 0000089498 STANDARD INDUSTRIAL CLASSIFICATION: CARPETS AND RUGS [2273] IRS NUMBER: 581032521 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06853 FILM NUMBER: 629757 BUSINESS ADDRESS: STREET 1: 616 E WALNUT AVE STREET 2: P O DRAWER 2128 CITY: DALTON STATE: GA ZIP: 30722 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 1ST QTR 10-Q UNITED STATES 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 April 1, 2000 ----------------------------------- 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 58-1032521 - -------------------------------------------------------------------------------- (State or other jurisdiction of I.R.S. Employer incorporation or organization) Identification No.) 616 E. WALNUT AVENUE, DALTON, GEORGIA 30720 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (706) 278-3812 - -------------- Registrant's telephone number, including area code 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: May 8, 2000 - 128,762,701 shares --------------------------------- SHAW INDUSTRIES, INC. FORM 10-Q INDEX PART I - FINANCIAL INFORMATION PAGE NUMBERS --------------------- ------------ Item 1. Financial Statements Condensed Consolidated Balance Sheets - April 1, 2000 and January 1, 2000 3-4 Condensed Consolidated Statements of Income and Retained Earnings - For the Three Months Ended April 1, 2000 and April 3, 1999 5 Condensed Consolidated Statements of Cash Flow - For the Three Months Ended April 1, 2000 and April 3, 1999 6 Notes to Condensed Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-10 Item 3. Quantitative and Qualitative Disclosures about Market Risk 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings 11 Item 2. Changes in Securities and Use of Proceeds 11 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 12 2 PART 1 - ITEM ONE- FINANCIAL INFORMATION SHAW INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) ASSETS April 1, January 1, 2000 2000 ----------- ----------- CURRENT ASSETS: (UNAUDITED) Cash and cash equivalents ...................... $ 7,165 $ 34,021 ----------- ----------- Accounts receivable, less allowance for doubtful accounts and discounts of $23,295 and $18,931 ........... 254,864 234,267 ----------- ----------- Inventories - Raw materials .............................. 251,501 255,083 Work-in-process ............................ 115,470 92,605 Finished goods ............................. 347,224 319,046 ----------- ----------- 714,195 666,734 ----------- ----------- Other current assets ........................... 145,172 140,902 ----------- ----------- TOTAL CURRENT ASSETS ...... 1,121,396 1,075,924 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, at cost: Land and land improvements ..................... 32,020 31,974 Buildings and leasehold improvements ........... 346,195 331,010 Machinery and equipment ........................ 1,109,677 1,064,074 Construction in progress ....................... 126,981 148,380 ----------- ----------- 1,614,873 1,575,438 Less - Accumulated depreciation and amortization (840,598) (821,633) ----------- ----------- 774,275 753,805 ----------- ----------- GOODWILL, net of amortization ....................... 415,351 418,923 ----------- ----------- OTHER ASSETS ........................................ 42,537 43,067 ----------- ----------- TOTAL ASSETS .............. $ 2,353,559 $ 2,291,719 =========== =========== 3 LIABILITIES AND SHAREHOLDERS' INVESTMENT (IN THOUSANDS, EXCEPT SHARE DATA) April 1, January 1, 2000 2000 ----------- ----------- (UNAUDITED) CURRENT LIABILITIES: Current maturities of long-term debt ........... $ 4,176 $ 4,294 Accounts payable ............................... 267,941 217,332 Accrued liabilities ............................ 286,396 272,341 ----------- ----------- TOTAL CURRENT LIABILITIES . 558,513 493,967 ----------- ----------- LONG-TERM DEBT, less current maturities ............. 788,092 823,821 ----------- ----------- DEFERRED INCOME TAXES ............................... 77,994 77,994 ----------- ----------- OTHER LIABILITIES ................................... 27,390 27,352 ----------- ----------- SHAREHOLDERS' INVESTMENT: Common stock, no par, $1.11 stated value, authorized 500,000,000 shares; issued and outstanding: 132,681,099 shares at April 1, 2000 and 132,663,599 shares at January 1, 2000 .......................... 147,277 147,258 Paid-in-capital ................................ 60,794 60,612 Cumulative translation adjustment .............. (5,030) (2,252) Retained earnings .............................. 698,529 662,967 ----------- ----------- TOTAL SHAREHOLDERS' INVESTMENT 901,570 868,585 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT .......... $ 2,353,559 $ 2,291,719 =========== =========== The accompanying notes are an integral part of these condensed consolidated financial statements. 4 SHAW INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) THREE MONTHS THREE MONTHS ENDED ENDED April 1, 2000 April 3, 1999 ------------- ------------ NET SALES ....................................... $ 986,496 $ 955,803 COST AND EXPENSES: Cost of sales .............................. 738,315 716,629 Selling, general and administrative ........ 157,221 154,829 Interest expense, net ...................... 17,216 16,205 Other expense, net ......................... 1,662 517 --------- --------- INCOME BEFORE INCOME TAXES ...................... 72,082 67,623 PROVISION FOR INCOME TAXES ...................... 30,123 28,213 --------- --------- INCOME BEFORE EQUITY IN INCOME OF JOINT VENTURES ............................. 41,959 39,410 EQUITY IN INCOME OF JOINT VENTURES .............. 237 956 --------- --------- NET INCOME ...................................... $ 42,196 $ 40,366 ========= ========= DIVIDENDS PAID PER COMMON SHARE ................. $ 0.05 $ -- ========= ========= EARNINGS PER COMMON SHARE: Basic ...................................... $ 0.32 $ 0.29 ========= ========= Diluted .................................... $ 0.32 $ 0.28 ========= ========= RETAINED EARNINGS: Beginning of period ........................ $ 662,967 $ 448,665 Add - net income ........................... 42,196 40,366 (Deduct) - dividends paid .................. (6,634) -- --------- --------- End of period .............................. $ 698,529 $ 489,031 ========= ========= The accompanying notes are an integral part of these condensed consolidated financial statements. 5
SHAW INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (IN THOUSANDS) THREE MONTHS THREE MONTHS ENDED ENDED April 1, 2000 April 3, 1999 ------------- ------------- OPERATING ACTIVITIES: (UNAUDITED) Net income ....................................... $ 42,196 $ 40,366 -------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .............. 22,209 23,027 Provision for doubtful accounts ............ 2,773 1,830 Deferred income taxes ...................... -- 1,867 Changes in operating assets and liabilities: Accounts receivable ................. (23,370) (45,896) Inventories ......................... (47,461) (27,532) Other current assets ................ (4,270) (5,226) Accounts payable .................... 50,609 48,559 Accrued liabilities ................. 14,055 38,323 Other, net .......................... 405 (5,235) -------- -------- Total adjustments ................ 14,950 29,717 -------- -------- Net cash provided by operating activities .. 57,146 70,083 -------- -------- INVESTING ACTIVITIES: Additions to property, plant and equipment ....... (41,747) (32,844) Retirements of property, plant and equipment, net ............................... 25 2,112 -------- -------- Net cash used in investing activities ...... (41,722) (30,732) -------- -------- FINANCING ACTIVITIES: Decrease in long-term debt, net .................. (35,847) (34,783) Dividends paid ................................... (6,634) -- Proceeds from exercise of stock options .......... 201 5,121 -------- -------- Net cash used in financing activities ........ (42,280) (29,662) -------- -------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ...................................... (26,856) 9,689 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........................................ 34,021 12,555 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ............ $ 7,165 $ 22,244 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 SHAW INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APRIL 1, 2000 (UNAUDITED) --------------------------------------------------------------- 1. Basis of Presentation 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 company's 1999 Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the company's financial position, results of operations and cash flow at the dates and for the periods presented. Interim results of operations are not necessarily indicative of the results to be expected for a full year. 2. Accounts Receivable The company has entered into agreements pursuant to which it sells a percentage ownership interest in a defined pool of the company's trade receivables to a securitization conduit. As collections reduce accounts receivable included in the pool, the company sells participating interests in new receivables to the conduit to bring the amount in the pool up to the maximum permitted by the agreements. The receivables are sold to the conduit at a discount which reflects, among other things, the conduit's financing cost of issuing its own commercial paper backed by these accounts receivable and accounts receivable sold by other participating entities. The current agreements expire August 30, 2000, but may be extended for additional one-year terms. As of April 1, 2000, the company had approximately $286,059,000 of accounts receivable sold and outstanding under this program. 3. Inventories The company uses the last-in, first-out (LIFO) method of valuing substantially all of its domestic inventories. If LIFO inventories were valued at current costs, the inventories would have been $33,453,000 and $46,915,000 lower at April 1, 2000 and January 1, 2000, respectively. Certain of the company's finished goods inventories, representing approximately 11 percent of total inventories, are valued at the lower of first-in, first-out (FIFO) cost or market. 4. Long-Term Debt The company maintains a domestic revolving credit facility which provides for borrowings of up to $1.0 billion and expires in March 2003. The LIBOR-based rate at April 1, 2000 was approximately 6.5 percent, and borrowings outstanding under this new facility totaled $735,000,000. The variable interest rates on a total of $448,137,000 of amounts outstanding under the company's revolving credit facilities has been fixed through various dates through January 2007 by interest rate swap agreements. To provide further financing capacity, in November 1999, the company entered into a 364-day $200 million senior unsecured revolving credit facility. 5. Earnings Per Share Earnings per share for the three-month periods ended April 1, 2000 and April 3, 1999 have been computed based upon the weighted average shares and dilutive potential common shares outstanding. The net income amounts presented in the accompanying condensed consolidated statements of income represent amounts available or related to shareholders. 7 The following table reconciles the denominator of the basic and diluted earnings per share computations:
Three Months Ended April 1, 2000 April 3, 1999 - ------------------------------------------------------ ----------- ----------- Weighted average common shares ....................... 132,670,076 141,099,637 Dilutive incremental shares from assumed conversions of options under stock option plans .. 393,119 2,805,197 - ------------------------------------------------------ ----------- ----------- Weighted average common shares and dilutive potential common shares ................. 133,063,195 143,904,834 - ------------------------------------------------------ ----------- -----------
6. Derivative Financial Instruments The company uses interest rate swap agreements to fix interest rates on current and anticipated borrowings to reduce exposure to interest rate fluctuations. Under existing accounting literature, these interest rate swaps are accounted for as hedging activities. The net cash paid or received on interest rate hedges is included in interest expense. The company may also employ foreign currency exchange contracts when, in the normal course of business, they are determined to effectively manage and reduce foreign currency exchange fluctuation risk. The company does not enter into financial derivatives for speculative or trading purposes. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments and for hedging activities. SFAS No. 133 is effective, and the company expects to adopt this new standard, in the company's first quarter of fiscal 2001. The company's management has not determined the impact this new statement will have on the financial statements. 7. Comprehensive Income The company has other comprehensive income in the form of cumulative translation adjustments which resulted in total comprehensive income of $39,418,000 and $40,169,000 for the three months ended April 1, 2000 and April 3, 1999, respectively. 8. Subsequent Event On April 26, 2000 the company completed its previously announced "Dutch Auction" tender offer in which 3,991,047 shares were purchased at $15.50 per share. The shares purchased represent approximately 3% of the company's then outstanding shares. On May 9, 2000, the company announced that it had completed the sale of Shaw Industries Australia Pty. Ltd. (the company's wholly-owned Australian subsidiary) to Feltex Carpets Limited, of New Zealand. The transaction was valued at approximately $71 million including the assumption of debt, and is expected to result in an after-tax gain of approximately $400,000 (less than $.01 per share). 8 SHAW INDUSTRIES, INC. AND SUBSIDIARIES ITEM TWO-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- GENERAL The company manufactures, markets and distributes a broad range of soft floor covering products primarily consisting of broadloom tufted carpet. The company also distributes hard floor covering products through its highly developed sales and distribution channels. The company operates in a business environment comprised of numerous small customers and several large retailers and buying groups. The company's customers in turn market floor covering and other products to retail and other wholesale residential and commercial end-users. The company experiences demand for its products primarily as a result of multi and single family residential and commercial floor covering replacement, new commercial and multi family residential construction, and, or to a lesser extent, new single family residential construction. This demand is driven by such end-user factors as consumer spending on durable goods and general consumer confidence. The company's profitability is dependent upon its ability to efficiently manage its integrated manufacturing process to produce products meeting the style, color and quality demanded by its customers and to deliver those products in a timely manner. During the first quarter of 2000, demand for the company's domestic products increased along with its sales prices and margins. LIQUIDITY AND CAPITAL RESOURCES At April 1, 2000, the company had working capital of $562.9 million, a decrease of $19.1 million from the working capital of $582.0 million at January 1, 2000. Cash and cash equivalents decreased $26.8 million to $7.2 million at April 1, 2000 from $34.0 million at January 1, 2000. The company's operations generated cash flow of $57.1 million in the first three months of 2000, principally from net income of $42.2 million adjusted for depreciation and amortization of $22.2 million, an increase in accounts payable and accrued liabilities of $64.7 million, offset in part by an increase in accounts receivable and inventories of $70.8 million. In the first three months of 1999, cash generated from operating activities was $70.1 million primarily as a result of net income of $40.4 million adjusted for depreciation and amortization of $23.0 million, and an increase in accounts payable and accrued liabilities of $86.9 million, offset in part by an increase in accounts receivable and inventories of $73.4 million. In the first three months of 2000, the company's investing activities primarily included additions to property, plant and equipment, net of retirements, of $41.7 million compared to additions to property, plant and equipment, net of retirements, of $30.7 million in the first three months of 1999. Cash used in financing activities for the first three months of 2000 of $42.3 million included net payments on long-term borrowings of $35.8 million and dividends paid of $6.6 million. Cash used in financing activities for the first three months of 1999 of $29.7 million included net payments on long-term borrowings of $34.8 million offset in part by proceeds from the exercise of stock options of $5.1 million. During 1998, the company implemented EVA(R), ("EVA" is a registered trademark of Stern, Stewart & Company) a financial measurement concept which emphasizes profitability, proper asset allocation, the cost of capital and the creation of shareholder wealth. Effective use of capital and the company's ability to generate cash flow from operations has enabled it to invest in technologies which reduce production costs, generate operating margins that exceed industry averages and pursue its strategy for increasing shareholder value. Capital expenditures for property, plant and equipment, net of retirements, necessary to maintain the company's facilities in modern state-of-the-art condition, expand production capacity and increase efficiency were $41.7 million for the three months ended April 1, 2000. Management anticipates total capital expenditures and capitalized lease obligations of approximately $80 to $100 million for the remainder of 2000 to expand and upgrade its manufacturing and distribution equipment to meet anticipated increases in sales volume and to improve efficiency. The company's primary source of financing is an unsecured revolving credit facility with a banking syndicate. The facility provides for borrowings of up to $1 billion and expires in March 2003. The interest rate on borrowings under this facility is currently based on LIBOR and was approximately 6.5 percent, including applicable margins, at April 1, 2000. Borrowings outstanding under this credit facility at April 1, 2000 were $735 million. To provide further financing capacity, in November 1999, the company entered into a 364-day $200 million senior unsecured revolving credit facility which remained unutilized and available at April 1, 2000. The company maintains a receivables securitization program under which the company sells a percentage ownership interest in a defined pool of the company's trade receivables to a securitization conduit. The receivables securitization program expires August 30, 2000, but may be extended for additional one-year terms. As of April 1, 2000, the company had approximately $286.1 million of accounts receivable sold and outstanding under this program. 9 The company believes that available borrowings under its existing credit and securitization agreements, available cash and internally generated funds will be sufficient to support its working capital, capital expenditures, stock repurchases and debt service requirements for the foreseeable future. In addition, the company believes it could further expand its revolving credit and long-term bank facilities, if necessary. On April 26, 2000 the company completed its previously announced "Dutch Auction" tender offer in which 3,991,047 shares were purchased at $15.50 per share. The shares purchased represent approximately 3% of the company's then outstanding shares. On May 9, 2000, the company announced that it had completed the sale of Shaw Industries Australia Pty. Ltd. (the company's wholly-owned Australian subsidiary) to Feltex Carpets Limited, of New Zealand. The transaction was valued at approximately $71 million including the assumption of debt, and is expected to result in an after-tax gain of approximately $400,000 (less than $.01 per share). Derivative Financial Instruments The company uses interest rate swap agreements to fix interest rates on current and anticipated borrowings to reduce exposure to interest rate fluctuations. Under existing accounting literature, these interest rate swaps are accounted for as hedging activities. The net cash paid or received on interest rate hedges is included in interest expense. The company may also employ foreign currency exchange fluctuation risk. The company does not enter into financial derivatives for trading purposes. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which establishes accounting and reporting standards for derivative instruments and for hedging activities. SFAS No. 133, as amended by SFAS No. 137, is effective, and the company expects to adopt this new standard, in the first quarter of the company's fiscal 2001. The company's management has not determined the impact this statement will have on the financial statements. RESULTS OF OPERATIONS Three Months Ended April 1, 2000 Compared to Three Months Ended April 3, 1999 Sales increased $30.7 million to $986.5 million, a 3.2% increase in the three months ended April 1, 2000 compared to the same period last year. The sales increase was a result of an increased overall demand for carpet. Margins on sales increased to 25.2 percent from 25.0 percent on lower material costs and improved efficiencies resulting from higher demand and the continuing integration of the Queen Carpet Corporation operations. Selling, general and administrative expenses for the first quarter of 2000 were $157.2 million, or 15.9 percent of net sales, compared to $154.8 million, or 16.2 percent of net sales, in the comparable period of 1999. Interest expense was $17.2 million for the first quarter of 2000 compared to $16.2 million for the first quarter of 1999 as a result of higher interest rates. The effective income tax rate for the first quarter of 2000 increased to 41.8 percent compared to 41.7 percent for the first quarter of 1999. FORWARD-LOOKING INFORMATION Certain statements in this report, including those regarding anticipated total capital expenditures and capitalized lease obligations, availability of funding for working capital, capital expenditures, stock repurchases and debt service requirements, and the effects of litigation on the company's future results of operations, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1933, as amended, and are subject to the safe harbor provisions of those Acts. When used in this report, the words "believes," "expects," "anticipates," "estimates" or "intends," and similar expressions, are intended to identify forward-looking statements. The forward-looking statements herein involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or reflected in such statements. The important factors which may affect the company's future results and could cause those results to differ materially from the results expressed or reflected in the forward-looking statements include, but are not limited to, the following: changes in economic conditions generally; changes in consumer spending for durable goods, interest rates and new single and multi-family construction; competition from other carpet, rug and floor covering manufacturers; changes in raw material prices; and other factors identified from time to time in the company's reports and other filings with the Securities and Exchange Commission. ITEM THREE - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is set forth under the caption "Derivative Financial Instruments" in "ITEM TWO - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" above. 10 PART II - OTHER INFORMATION ITEM ONE - LEGAL PROCEEDINGS The company is a party to several lawsuits incidental to its various activities and incurred in the ordinary course of business. The company believes that it has meritorious claims and defenses in each case. After consultation with counsel, it is the opinion of management that, although there can be no assurance given, none of the associated claims, when resolved, will have a material adverse effect upon the company. The company is 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. The company believes that it has meritorious defenses and that the litigation will not have a material adverse effect on the company's financial condition or results of operations. In December 1995, the company learned that it was one of six carpet companies named as additional defendants in a pending antitrust suit filed in the United States District Court of Rome, Georgia. The amended complaint alleges price-fixing regarding certain types of carpet products in violation of Section 1 of the Sherman Act. The amount of damages sought is not specified. If any damages were to be awarded, they may be trebled under the applicable statute. The company has filed an answer to the complaint that denies plaintiffs' allegations and sets forth several defenses. In September 1997, the Court issued an order certifying a nationwide plaintiff class of persons and entities who purchased "mass production" polypropylene carpet directly from any of the defendants from June 1, 1991 through June 30, 1995, excluding, among others, any persons or entities whose only purchases were from any of the company's retail establishments. Discovery began in November 1997 and recently concluded. The company believes that it has meritorious defenses to plaintiffs' claims in the lawsuits described in this paragraph and intends to vigorously defend these actions. After consultation with counsel, it is the opinion of management that, although there can be no assurance given, none of the claims described in this paragraph, when resolved, will have a material adverse effect upon the company. On October 3, 1998, the company learned that it was one of five defendants in a pending antitrust suit filed in the United States District Court in Rome, Georgia. The complaint alleges price fixing regarding certain types of carpet products in violation of Section 1 of the Sherman Act. The amount of damages sought is not specified. If any damages were to be awarded, they may be trebled under the applicable statute. The company has filed an answer to the complaint that denies plaintiff's allegations and sets forth several defenses. Discovery has recently begun and is ongoing. The company believes it has meritorious defenses to plaintiffs' claims in the lawsuit described in this paragraph and intends to vigorously defend these actions. After consultation with counsel, it is the opinion of management that, although there can be no assurance given, none of the claims described in this paragraph, when resolved, will have a material adverse effect on the company. The company is also a party to four consolidated lawsuits pending in the Superior Court of the State of California, City and County of San Francisco, all of which were brought on behalf of a purported class of indirect purchasers of carpet in the State of California and which seek damages for alleged violations of California antitrust and fair competition laws. The company believes that it has meritorious defenses to plaintiffs' claims in the lawsuits described in this paragraph and intends to vigorously defend these actions. After consultation with counsel, it is the opinion of management that, although there can be no assurance given, none of the claims described in this paragraph, when resolved, will have a material adverse effect upon the company. The company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous materials used in its manufacturing processes. Failure by the company to comply with present and future regulations could subject it to future liabilities. In addition, such regulations could require the company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. The company is not involved in any material environmental proceedings. ITEM TWO - CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM THREE - DEFAULTS UPON SENIOR SECURITIES None 11 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 27 - Financial Data Schedule Shareholders may obtain copies of Exhibits without charge upon written request to the Corporate Secretary, Shaw Industries, Inc., Mail drop 061-22, P.O. Drawer 2128, Dalton, Georgia 30722-2128. (B) No reports on Form 8-K have been filed during the fiscal quarter ended April 1, 2000. 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: May 12, 2000 /s/ Robert E. Shaw - --------------------------- ------------------- Robert E. Shaw Chairman of the Board and Chief Executive Officer DATE: May 12, 2000 /s/ Kenneth G. Jackson - --------------------------- ----------------------- Kenneth G. Jackson Executive Vice President and Chief Financial Officer (Principal Financial Officer) 12 EX-27 2 FDS 1ST QTR
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEETS OF SHAW INDUSTRIES, INC. AND SUBSIDIARIES AS OF APRIL 1, 2000 AND THE RELATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE THREE MONTHS ENDED APRIL 1, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-30-2000 APR-01-2000 7,165 0 254,864 23,295 714,195 1,121,396 1,614,873 840,598 2,353,559 558,513 0 0 0 147,277 754,293 2,353,559 986,496 986,496 738,315 738,315 156,110 2,773 17,216 72,082 30,123 42,196 0 0 0 42,196 0.32 0.32
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