<PAGE>
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.
<PAGE>
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
<PAGE>
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
____________ ____________
____________ ____________
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
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
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
