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.
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
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
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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> OCT-01-1994
<CASH> 1,591,980
<SECURITIES> 0
<RECEIVABLES> 46,900,157
<ALLOWANCES> 3,491,482
<INVENTORY> 123,539,527
<CURRENT-ASSETS> 177,545,097
<PP&E> 494,938,456
<DEPRECIATION> 217,949,391
<TOTAL-ASSETS> 525,607,153
<CURRENT-LIABILITIES> 73,855,319
<BONDS> 201,557,070
<COMMON> 43,775,610
18,177,958
0
<OTHER-SE> 126,196,796
<TOTAL-LIABILITY-AND-EQUITY> 525,607,153
<SALES> 516,991,484
<TOTAL-REVENUES> 516,991,484
<CGS> 443,003,708
<TOTAL-COSTS> 443,003,708
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,261,280
<INCOME-PRETAX> (4,924,942)
<INCOME-TAX> (1,202,000)
<INCOME-CONTINUING> (3,722,942)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,722,942)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
