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 July 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 August 2, 1994
Common Stock, $3 Par Value 11,507,732 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 --
July 2, 1994 and December 25, 1993 3
Consolidated Statements of Income --
Three Months Ended July 2, 1994
and June 26, 1993 5
Consolidated Statements of Income (Loss) --
Six Months Ended July 2, 1994
and June 26, 1993 6
Consolidated Condensed Statements of Cash Flows --
Six Months Ended July 2, 1994
and June 26, 1993 7
Notes to Consolidated Condensed Financial Statements 9
Management's Discussion and Analysis of Results of
Operations and Financial Condition 11
Part II. Other Information:
Item 4 - Submission of Matters to a Vote
of Security Holders 13
Item 6 - Exhibits and Reports on Form 8-K 13
PART I - ITEM 1 3
FINANCIAL INFORMATION
DIXIE YARNS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
July 2, December 25,
1994 1993
____________ ____________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,951,028 $ 4,047,459
Accounts receivable (less allowance for
doubtful accounts of $3,211,414 in
1994 and $3,900,000 in 1993) 43,622,312 26,553,831
Inventories 119,472,472 105,809,888
Other 14,209,615 11,667,083
____________ ____________
TOTAL CURRENT ASSETS 179,255,427 148,078,261
PROPERTY, PLANT AND EQUIPMENT 487,416,596 468,296,174
Less allowances for amortization and
depreciation 210,129,237 193,037,707
____________ ____________
277,287,359 275,258,467
INTANGIBLE ASSETS (less allowances for
amortization of $9,730,720 in 1994
and $8,742,059 in 1993) 61,883,452 62,722,113
OTHER ASSETS 10,854,220 10,520,040
____________ ____________
$529,280,458 $496,578,881
____________ ____________
____________ ____________
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 4
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
July 2, December 25,
1994 1993
____________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 45,750,757 $ 32,245,506
Accrued expenses 28,084,678 26,518,429
Current portion of long-term debt 451,730 446,829
____________ ____________
TOTAL CURRENT LIABILITIES 74,287,165 59,210,764
LONG-TERM DEBT
Senior indebtedness 108,750,564 87,649,871
Subordinated notes 50,000,000 50,000,000
Convertible subordinated debentures 44,782,000 44,782,000
____________ ____________
203,532,564 182,431,871
OTHER LIABILITIES 14,425,484 13,037,877
DEFERRED INCOME TAXES 48,799,257 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 54,853,705 60,302,834
Minimum pension liability adjustment (4,981,943) (4,981,943)
____________ ____________
225,318,199 230,767,328
Less Common Stock in treasury at cost -
3,373,947 shares in 1994 and
3,356,446 shares in 1993 55,260,169 55,085,860
____________ ____________
170,058,030 175,681,468
____________ ____________
$529,280,458 $496,578,881
____________ ____________
____________ ____________
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 5
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
_________________________________
July 2, June 26,
1994 1993
______________ ______________
Net sales $178,317,832 $161,439,166
Cost of sales 150,759,261 138,151,661
____________ ____________
27,558,571 23,287,505
Selling, general and
administrative expenses 20,795,914 15,390,796
Corporate expenses 1,264,868 1,332,037
Other income (expense) - net (1,335,490) 462,377
____________ ____________
4,162,299 7,027,049
Interest expense 3,537,760 3,387,653
____________ ____________
INCOME BEFORE TAXES 624,539 3,639,396
Income tax provision 506,000 1,578,000
____________ ____________
NET INCOME $ 118,539 $ 2,061,396
____________ ____________
____________ ____________
Per common and common
equivalent share:
Net income $ .01 $ .18
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)
Six Months Ended
_________________________________
July 2, June 26,
1994 1993
______________ ______________
Net sales $343,067,925 $282,215,756
Cost of sales 295,987,257 243,521,751
____________ ____________
47,080,668 38,694,005
Selling, general and
administrative expenses 41,393,708 25,293,148
Corporate expenses 2,538,617 2,685,217
Other income (expense) - net (2,502,572) 751,928
____________ ____________
645,771 11,467,568
Interest expense 6,758,674 6,439,838
____________ ____________
INCOME (LOSS) BEFORE TAXES (6,112,903) 5,027,730
Income tax provision (benefit) (1,889,000) 2,059,000
____________ ____________
NET INCOME (LOSS) $ (4,223,903) $ 2,968,730
____________ ____________
____________ ____________
Per common and common
equivalent share:
Net income (loss) $ (.32) $ .29
Cash dividends declared:
Common stock $ .10 $ .10
Class B common stock $ .10 $ .10
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 7
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
___________________________
July 2, June 26,
1994 1993
____________ ____________
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (4,223,903) $ 2,968,730
Depreciation and amortization 18,471,981 14,833,405
Provision for deferred
income taxes 772,000 774,000
Equity in earnings of affiliate -0- (353,000)
(Gain) loss on property, plant
and equipment 37,000 (440,604)
____________ ____________
15,057,078 17,782,531
Changes in operating assets and
liabilities, net of effects
of business combinations (17,107,821) (7,725,332)
____________ ____________
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (2,050,743) 10,057,199
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of
property, plant and equipment -0- 6,785,540
Purchase of property, plant and
equipment (18,803,012) (27,915,311)
Cash payments in connection with
business combinations, net of
cash acquired (323,735) (3,259,787)
____________ ____________
NET CASH USED IN INVESTING ACTIVITIES (19,126,747) (24,389,558)
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 8
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
Six Months Ended
___________________________
July 2, June 26,
1994 1993
____________ ____________
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in credit
line borrowings 20,770,000 16,349,337
Dividends paid (1,225,226) (997,983)
Capital stock acquired (174,309) (321,031)
Installment payments on long-term debt (289,406) (1,151,904)
Other -0- 1,074,379
____________ ____________
NET CASH PROVIDED BY
FINANCING ACTIVITIES 19,081,059 14,952,798
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (2,096,431) 620,439
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 4,047,459 1,425,985
____________ ____________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 1,951,028 $ 2,046,424
____________ ____________
____________ ____________
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 5,646,000 $ 6,055,000
____________ ____________
____________ ____________
Income taxes paid, net of
refunds received $ 1,300,000 $ 1,108,000
____________ ____________
____________ ____________
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 six months ended July 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:
July 2, December 25,
1994 1993
____________ ____________
At current cost
Raw materials $ 29,780,440 $ 25,274,771
Work-in-process 27,159,616 24,602,923
Finished goods 71,536,434 62,664,139
Supplies, repair parts
and other 10,143,657 9,792,498
____________ ____________
138,620,147 122,334,331
Excess of current cost
over LIFO value (19,147,675) (16,524,443)
____________ ____________
$119,472,472 $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 1995. In addition, the Company obtained a waiver of the
dividend restriction provisions of its subordinated loan agreement to
permit payment of dividends of up to $650,000 in the third quarter of 1994.
NOTE D - RECLASSIFICATIONS 10
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. 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 pro forma summary presents the consolidated results
of operations for the three and six months ended July 2, 1994 and
June 26, 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 Six months ended
___________________ __________________
July 2, June 26, July 2, June 26,
1994 1993 1994 1993
________ ________ ________ ________
Net sales $181,866 $174,252 $349,902 $336,752
Net income (loss) 67 2,772 (4,229) 4,555
Net income (loss) per
common and common
equivalent share .01 .22 (.32) .36
PART I - ITEM 2 11
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 July 2, 1994 were $178.3 million, compared
with net sales of $161.4 million in the second quarter of 1993. For the
first six months of 1994, net sales were $343.1 million, compared with net
sales of $282.2 million for the corresponding period of 1993. The increase
in net sales during 1994 is attributable to the Company's floorcovering
business, which includes the operations of Carriage Industries, Inc. and
Masland Carpet Mills, Inc. subsequent to their acquisitions on March 12,
1993 and July 9, 1993, respectively.
Net income was $.1 million, or $.01 per share in the second quarter of
1994, compared with net income of $2.1 million, or $.18 per share in the
second quarter of 1993. For the six months ended July 2, 1994, operations
resulted in a net loss of $4.2 million, or $.32 per share, compared with
net income of $3.0 million, or $.29 per share for the comparable 1993
period.
Results for the second quarter and first six months of 1994 were adversely
affected by the performance of the Company's textile business which more
than offset the improved results of the Company's floorcovering business.
Textile operations were negatively impacted by lower selling prices on
cotton products and higher cotton raw material costs. Manufacturing
inefficiencies, consolidation expenses and capacity variances associated
with low unit volume, particularly in the first quarter of 1994, also had a
negative impact on this segment's results. Operating profits of the
Company's floorcovering business improved in 1994 principally as the result
of the operations of Carriage and Masland, which are included in the
Company's financial results subsequent to their 1993 acquisitions.
The increase in selling, general and administrative expenses as a
percentage of sales in the second quarter and first six months of 1994,
compared with the comparable 1993 periods, is principally attributable to
the higher selling and product distribution cost associated with the
specialized floorcovering markets serviced by Carriage and Masland.
"Other income (expense) - net" included costs associated with the sale
of accounts receivable of approximately $.8 million in the second
quarter of 1994 and $1.5 million for the first six months of 1994. The
comparable 1993 periods included gains associated with asset sales and
equity earnings from non-consolidated subsidiaries of approximately $1.0
million in the second quarter and $1.3 million for the first six months of
1993, respectively
The Company's effective income tax rate differs from the statutory income
tax rate primarily due to nondeductible amortization of intangible assets.
12
During the second quarter of 1994, operating results improved
significantly, compared with the results for the first quarter of 1994.
The improvement occurred in both the Company's textile and floorcovering
businesses. Textile operating results improved $5.1 million primarily due
to manufacturing costs reductions, which included a cut-back of salaried
and hourly associates, consolidation of distribution and manufacturing
facilities and a limited freeze on hiring. Unit volume also increased due
to improved demand in most of the textile markets served. Floorcovering
operating profits improved $2.7 million, attributable principally to higher
unit volume associated with increased demand in the markets served by this
segment. The higher volume reduced per unit overhead and fixed cost and
positively affected manufacturing efficiencies.
The operating results for each of the Company's businesses exclude general
corporate overhead, certain items classified as other income (expense),
interest expense and income taxes.
Demand for textile products increased significantly during the latter part
of March, 1994. The improved demand resulted in higher selling prices on
new orders that will generally take effect in the last half of 1994. Most
of the Company's textile operations are now running on a full schedule and
selling prices in this segment should improve throughout the remainder of
the year. The Company's floorcovering operations continue to grow and
expand. Management believes that the recent acquisition of Patrick Carpet
Mills, Inc. will enhance the Company's floorcovering presence on the West
Coast.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1994, the Company increased its borrowings
under its revolving credit line by $20.8 million in order to finance
capital expenditures and working capital needs due to seasonal factors and
improved business conditions.
Purchases of property, plant and equipment were less than non-cash charges
for depreciation, amortization and deferred income taxes during the first
six months of 1994. Capital expenditures are expected to remain below such
charges for the last six months of 1994 and are planned to be directed
toward the Company's floorcovering business.
On June 20, 1994, the Company acquired the assets of Patrick Carpet Mills,
Inc. in a transaction valued at approximately $3.3 million. Patrick is a
West Coast manufacturer of commercial and residential carpeting with annual
sales of approximately $20.0 million.
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 allow the Company to pay dividends of up to $.7 million during the
third quarter of 1994.
At July 2, 1994, the Company's unused borrowing capacity under its
revolving credit and term loan agreement was $17.7 million. Improved
operating results and reductions of seasonally high working capital
requirements are anticipated to improve cash flows during the last half of
1994. Management believes that its present credit facilities and cash
generated from operations will provide adequate liquidity to fund
operations.
PART II. OTHER INFORMATION 13
Item 4 - Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held on May 5, 1994.
(c) The meeting was held to consider and vote upon the election of
Directors for the following year. All Directors were elected with
the results of the vote for each Director summarized as follows:
FOR AGAINST ABSTAIN TOTAL
Paul K. Brock 23,642,209 26,727 238,977 23,907,913
Lovic A. Brooks, Jr. 23,645,379 23,557 238,977 23,907,913
Daniel K. Frierson 23,643,474 25,462 238,977 23,907,913
Paul K. Frierson 23,645,629 23,307 238,977 23,907,913
J. Frank Harrison, Jr. 23,644,529 24,407 238,977 23,907,913
James H. Martin, Jr. 23,642,529 26,407 238,977 23,907,913
Peter L. Smith 23,636,349 32,587 238,977 23,907,913
Joseph T. Spence, Jr. 23,641,164 27,772 238,977 23,907,913
Robert J. Sudderth, Jr. 23,644,929 24,007 238,977 23,907,913
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(i) Exhibits Incorporated by Reference
(2a) Asset Purchase Agreement dated May 25, 1994, by and
among Dixie Yarns, Inc., Patrick of California, Inc.,
Regent Industries, Inc. and Frank V. Celiberti.
(2b) Assignment and Assumption Agreement and Bill of Sale
dated June 20, 1994, by and between Dixie Yarns, Inc.
and Patrick of California, Inc.
(ii) Exhibits Filed with this Report
Exhibits (10a) and (10b) listed below omit certain schedules
and exhibits, which are listed therein. The Registrant hereby
undertakes to furnish a copy of any such omitted schedule or
exhibit supplementally upon request of the Commission's Staff.
(10a) Dixie Yarns, Inc. Nonqualified Defined Contribution Plan
(10b) Dixie Yarns, Inc. Nonqualified Employee Savings Plan
(11) Statement re: Computation of Earnings Per Share
(b) Reports on Form 8-K
Current Report on Form 8-K, dated June 20, 1994, reporting the
acquisition of certain of the assets of Patrick of California, Inc.
14
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)
August 15, 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 15
ITEM 6(a)
EXHIBITS
QUARTER ENDED JULY 2, 1994
DIXIE YARNS, INC.
CHATTANOOGA, TENNESSEE
Exhibit Index
EXHIBIT
NO. EXHIBIT DESCRIPTION INCORPORATION BY REFERENCE
(2a) Asset Purchase Agreement Incorporated by reference to
dated May 25, 1994, by and Exhibit (2a) to the Company's
among Dixie Yarns, Inc., Current Report on Form 8-K dated
Patrick of California, Inc., June 20, 1994.*
Regent Industries, Inc. and
Frank V. Celiberti.
(2b) Assignment and Assumption Incorporated by reference to
Agreement and Bill of Sale Exhibit (2b) to the Company's
dated June 20, 1994, by and Current Report on Form 8-K dated
between Dixie Yarns, Inc. June 20, 1994.*
and Patrick of California
Inc.
(10a) Dixie Yarns, Inc. Filed herewith.
Nonqualified Defined
Contribution Plan.
(10b) Dixie Yarns, Inc. Filed herewith.
Nonqualified Employee
Savings Plan.
(11) Statement re: Computation Filed herewith.
of Earnings Per Share.
*Commission File No. 0-2585
EXHIBIT (10a)
DIXIE YARNS, INC.
NONQUALIFIED DEFINED CONTRIBUTION PLAN
(As Restated November 18, 1993)
DIXIE YARNS, INC. NONQUALIFIED
DEFINED CONTRIBUTION PLAN
(as Restated on November 18, 1993)
ARTICLE I
ESTABLISHMENT AND PURPOSE
Establishment. Except as otherwise stated, effective as of
December 31, 1989, Dixie Yarns, Inc. ("Company") hereby adopts an
unfunded deferred compensation plan to be known as the "Dixie
Yarns, Inc. Nonqualified Defined Contribution Plan" (the "Plan").
Purpose. The Plan is intended to provide unfunded deferred
compensation benefits to certain individuals who are highly
compensated employees of the Employer, and it is the intention of
the parties that this Plan be unfunded for tax purposes and for the
purposes of ERISA.
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases have the meanings
ascribed to them in this Article unless a different meaning is
plainly required by the context. Words in the masculine gender
shall be deemed to include the feminine gender and words in the
feminine gender shall be deemed to include the masculine gender.
Any headings used herein are included for ease of reference only,
and are not to be construed so as to alter any of the terms of the
Plan.
2.1 "Account" means the balance the balance, as determined by
the Committee posted to the record of each Participant as of
each Valuation Date, consisting of the Employer's
contributions, forfeitures, and his allocated share of
earnings, less any payments (including expenses) therefrom.
2.2 "Beneficiary" means the person or persons designated by the
Participant under the rules and forms prescribed by the
Committee.
2.3 "Board" or "Board of Directors" means the Board of Directors
of the Company.
2.4 "Change of Control" means any event which results in a
"person" (as such term is defined in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder)
acquiring directly or indirectly, whether by sale, transfer,
assignment, pledge, hypothecation, gift, or other
disposition, in one or more transactions, a majority
controlling interest in the voting capital stock of the
Company, or the entering into of any agreement with the
Company to do any of the foregoing. Except, a Change of
Control shall not include any transaction in which one or
more members of the Frierson family (which shall include all
current members of the family of J. Burton Frierson,
including descendants and spouses, and trusts for the
benefit of same, who presently own capital stock) have a
majority controlling interest in the Company.
2.5 "Code" means the Internal Revenue Code of 1986. Reference
to a section of the Code include that section and any
comparable section or sections of any future legislation
that amends, supplements or supersedes such section.
2.6 "Committee" means the Retirement Committee designated by the
Board.
2.7 "Compensation" means the remuneration paid to an Eligible
Employee for services rendered to the Employer, as reported
or reportable on Form W-2 for Federal Income Tax withholding
purposes (or similar form required for such purposes),
excluding extra year-end pay, vacation allowances, severance
pay, cash profit-sharing, payment for incidental benefits
and non-recurring compensation. Compensation shall include
any contribution made under the Dixie Yarns, Inc.
Nonqualified Employee Savings Plan and any amounts excluded
from income of an Eligible Employee under Sections 125 or
401(k) of the Code; however, Compensation shall not include
amounts contributed by the Employee under any other benefit
plan. For the purposes of this Plan, it shall be presumed
that no Compensation is paid on December 31.
2.8 "DC Plan" means the Dixie Yarns, Inc. Defined Contribution
Plan, as amended from time to time, or if terminated by the
Company prior to the termination of this Plan, the
provisions of the DC Plan as in existence as of the date of
its termination.
2.9 "Effective Date" means December 31, 1989, unless otherwise
specified herein.
2.10 "Eligible Employee" means an Employee as determined by the
Board or Committee (or in the case of initial Participants,
by the Vice President - Human Resources) to be eligible to
participate in this Plan and shall be limited to employees
who are in a select group of management or highly
compensated employees of the Employer, provided, however,
that no person may be an Eligible Employee until he has been
employed by the Company for six months.
2.11 "Eligible Retirement" means the date of termination of
employment (other than on account of death or Total and
Permanent Disability) after a Participant reaches age 60 and
has received credit for five (5) Years of Service.
2.12 "Employee" means all employees of the Employer whose wages
are exempt from the provisions of the Fair Labor Standards
Act of 1947, as amended.
2.13 "Employer" means Dixie Yarns, Inc., and all of its
subsidiaries.
2.14 "Employer Contribution Account" means the account
established for each Participant to which contributions
described in Section 4.1, forfeitures, and the earnings
thereon are credited.
2.15 "Participant" means any Eligible Employee who has agreed to
be bound by the terms and conditions of the Plan by signing
a Participation Agreement.
2.16 "Participation Agreement" means the form designated by the
Committee to be signed by each Participant.
2.17 "Plan Year" means the period commencing on the Effective
Date and ending on December 30, 1990, and thereafter each
12-month period beginning each December 31 and ending on the
following December 30th.
2.18 "Totally and Permanently Disabled" means the condition of a
Participant suffering from a physical or mental condition
arising after the date on which he is first employed by the
Employer which, in the opinion of the Committee based upon
appropriate medical advice and examination by two
physicians, one of whom shall be selected by the Company and
one of whom must be a member of a generally recognized
Medical Association, and in accordance with uniform rules
applied uniformly to all Participants, totally and
permanently prevents the Participant from engaging in any
occupation or employment for remuneration or profit (except
for the purpose of rehabilitation which is not incompatible
with such finding of total and permanent disability). This
definition shall exclude a disability arising from:
(a) Chronic or excessive use of intoxicants, drugs or
narcotics;
(b) Self-inflicted injury or sickness;
(c) Incapacity incurred while or as a result of engaging in
an unlawful enterprise; and
(d) Disability incurred as a result of military service.
2.19 "Valuation Date" means the last day of the Plan Year and any
other date designated by the Committee.
2.20 "Year of Service" shall have the same meaning given such
term in the DC Plan and shall be determined in the sole
discretion of the Committee, in accordance with the rules
and/or procedures utilized under the DC Plan for such
purpose. All Years of Service credited with respect to any
Participant prior to the Effective Date shall also be
counted for purposes of this Plan.
ARTICLE III
ELIGIBILITY
3.1 Eligibility to Participate. Each Employee of the Employer
who is selected for participation in the Plan will become a
Participant in this Plan as of the first day of the first
calendar month which begins after he has signed a
Participation Agreement.
3.2 Participation. A Participant shall remain a Participant so
long as he remains an Employee but shall cease to be a
Participant if he terminates employment with the Employer
prior to the date on which he becomes eligible for payment
of benefits under Article VII of the Plan. Should a
Participant cease to be an Employee, but later become re-
employed by the Employer, he shall again become a
Participant if such individual is selected for participation
in the Plan after his re-employment.
ARTICLE IV
CONTRIBUTIONS
4.1 Employer Contributions. The Employer contribution for any
Plan Year shall be determined as follows:
(a) For each Plan Year, the Employer shall contribute out
of combined net profits a percentage of the
Compensation of each Participant for such Plan Year
related to the percentage of "combined net profits of
the Employer" for such Plan Year to the "combined net
worth" of the Employer as of the first day of such Plan
Year in accordance with the Schedule attached hereto as
Exhibit A. For the purposes of such computation,
"combined net profits of the Employer" shall mean the
current combined earnings and profits of the Employer
computed in accordance with generally accepted
accounting practices, including as a deduction all
contributions to any employee benefit plans maintained
by the Employer for the benefit of its employees and
all state, federal and local income taxes, adjusted
however, for capital gains and losses, all as
determined by the auditors of the Company for each Plan
Year, and any changes or adjustments by reason of an
Internal Revenue Service audit shall be disregarded;
and "combined net worth" shall mean the sum of the net
worth of the Company and all of its subsidiaries,
including capital, surplus, accumulated earnings, and
profits and tax-paid reserves.
(b) In addition, the Employer may in any Plan Year in the
discretion of the Board of Directors of the Company,
make an additional contribution out of net profits in
such amount as the Board of Directors of the Company
may determine but such amount shall be applied as a
uniform percentage of the Compensation of all
Participants; and in no event shall the total
contributions for any Plan Year exceed the maximum
amount that would otherwise be deductible from the
Employer's income for the purposes of Federal income
taxation as provided under Section 404 of the Code if
this Plan were treated as the DC Plan for such purpose.
The determination of such additional amount for each
Plan Year shall be made by the Board of Directors of
the Company prior to the due date (including extensions
thereof) for filing the Federal income tax return of
the Company for the fiscal year of the Company
coinciding with, immediately preceding, or ending on
the December 31 immediately after such Plan Year and
shall be recorded in the minute book of the Company.
The Employer's contribution shall be made in cash, on
or before the date specified by the Committee, in its
sole discretion, for making such contribution.
4.2 Participant Contributions. Participant contributions shall
neither be permitted nor required under the terms of this
Plan.
ARTICLE V
ACCOUNTS
5.1 Establishment of Accounts. The Committee shall establish an
Employer Contribution Account for each Participant, to which
Employer contributions described in Section 4.1, if any, and
the earnings thereon will be credited.
5.2 Allocation of Employer Contributions and Forfeitures. As of
the Valuation Date coinciding with the end of each Plan
Year, the aggregate Employer contribution for such Plan Year
and the sum of all forfeitures occurring during such Plan
Year, as determined in accordance with Article VI, shall be
allocated among all Participants' Accounts in the proportion
that the Compensation of each such Participant for such Plan
Year bears to the total Compensation of all such
Participants for such Plan Year. In the event any portion
of a Participant's Employer Contribution Account is
forfeited and allocated and such Employee later completes
a Year of Service (regardless of whether such person has
again become a Participant), then notwithstanding the
foregoing, Employer contributions shall first restore the
Participant's Employer Contribution Account to its value as
of the day it was allocated to other Participants; provided
the terms of the DC Plan would require the value of such
account to be restored if such account were held pursuant to
that Plan.
5.3 Adjustments to Account Balances.
(a) Regular Valuation Dates. As of each Valuation Date,
the Committee will determine the value of each
Participant's Account. The Account balance of each
Participant will be adjusted to reflect the following
events since the preceding Valuation Date:
(1) Payments from his Account (as if made on the
first day following the preceding Valuation Date
regardless of when paid);
(2) Earnings credited to the Participant's Account
which shall be the overall rate of gross earnings
of all assets (other than life insurance
policies) held in trust, for life insurance
policies in which investments are held in a
separate account, such rate shall be gross
earnings reduced by the fees of investment
managers of investment funds held in such
account, and for life insurance policies which
have no separate account, such rate shall be the
rate of interest credited to the cash value of
the policy by the insurance company; proceeds
from death benefits from life insurance shall not
be considered earnings;
(3) The Account's pro rata share of expenses (as if
made on the first day following the preceding
Valuation Date regardless of when paid); and
(4) The allocation of contributions and forfeitures
(as if made on the day before the Valuation
Date).
(b) Valuations Binding. In determining values, the
Committee will exercise its best judgment, and all
determinations of value will be binding upon all
Participants and their Beneficiaries.
(c) Statement of Account Balances. As soon as practicable
after the end of each Plan Year, the Committee will
provide to each Participant and Beneficiary for whom an
Account is maintained, a statement showing all
allocations to and payments from his Account, and the
current value of his Account. For any Plan Year, the
Committee may provide statements more frequently.
(d) Correction of Errors. As soon as practicable after it
discovers any error in any Participant's Account
balance, the Committee will correct the error. If
possible, the error will be corrected as if it had
never been made. Otherwise, any necessary addition to
the Account will be treated as an expense of the Plan,
and any necessary subtraction from the Account will be
used to reduce the Employer's contribution for the same
or the next Plan Year.
ARTICLE VI
VESTING
A Participant shall become one hundred percent (100%) vested in the
amounts credited to his Employer Contribution Account upon death,
Total and Permanent Disability, the completion of five (5) Years of
Service, or such action as may be taken in accordance with Section
7.2 of this Plan. If a Participant terminates employment with the
Employer before completing five (5) Years of Service, then he shall
forfeit all amounts then credited to his Employer Contribution
Account; and such forfeited amounts will be reallocated in
accordance with Section 5.2 of this Plan.
ARTICLE VII
PAYMENT OF BENEFITS
7.1 Timing of Distributions. Except as otherwise provided
herein, benefits under this Plan shall be paid in a single
lump sum as soon as practicable after the Committee has
received satisfactory evidence that the Participant is
Totally and Permanently Disabled, has died, has terminated
employment, or as otherwise provided in Sections 7.2 and/or
7.3, provided, however, that if any part of such
distribution is not deductible for Federal income tax
purposes, the Committee may postpone payment of any
nondeductible part until such time as it determines the
distribution (or the part thereof to be distributed) will be
deductible. A Participant may make an election to have all
amounts paid on account of Eligible Retirement paid in 180
monthly payments. Such election must be made on the later
of June 30, 1994, or at the end of the first six months
following the date the Participant first became eligible to
participate in the Plan. The Participant may change his
election but only with the approval of the Committee if such
request is made not more than 15 months nor less than 12
months prior to the Participant's Eligible Retirement.
Monthly payments shall begin as soon as practicable after
the Committee has received satisfactory evidence of Eligible
Retirement and continue each month thereafter until 180
payments are made. Payments shall be made by assuming that
the Account as of the first day of the month in which
payments commence has been invested in an annuity for such
180 months earning a rate of interest on the unpaid balance
equal to the prime rate as established by the American
National Bank and Trust Company of Chattanooga, Chattanooga,
Tennessee, as of that date. Notwithstanding the above, if
upon Eligible Retirement the value of Participant's Account
does not exceed $10,000, this amount shall be distributed in
a lump sum.
7.2 Unusual Events. In the event of an impending Change of
Control or the probable occurrence of any other
extraordinary or unusual event, if the Committee determines
that such change equitably requires an adjustment in the
rate at which amounts credited to a Participant's Employer
Contribution Account become vested, or the terms of
distribution of any benefit under this Plan, then such
adjustment may be made immediately by the Committee and
without notice to the Participants. Any action taken by the
Committee pursuant to this Article is void if it has the
effect of divesting the Participants of their benefits.
Such adjustment made by the Committee shall be final,
conclusive and binding for all purposes of the Plan.
7.3 Liquidation or Dissolution. In the event of any liquidation
or dissolution of the Company (or of any successor), or in
the event of the winding up of business of the Company (or
of any successor), the balance of the Employer Contribution
Accounts shall be distributed within sixty (60) days of the
date of such event; provided such liquidation or dissolution
is not part of a plan of reorganization of the corporate
structure of the Company.
7.4 Income and Payroll Tax Withholding. To the extent required
by the laws in effect at the time any amounts are deferred
or deferred compensation payments are made under this Plan,
the Company shall withhold from such amounts that are
deferred or from deferred compensation payments, as the case
may be, any taxes required to be withheld for federal, state
or local government purposes.
ARTICLE VIII
SOURCES OF PAYMENTS
The Company has established a trust fund ("Trust") which may be
used to provide for its benefit obligations hereunder and which the
Company will to the extent necessary conform to the terms of the
model trust as described in Rev. Proc. 92-64. Benefits payable
under this Plan to a Participant may be paid directly by the
Company from the Trust in such proportions as the Company
determines. To the extent that such benefits are not paid from the
Trust, the benefits shall be paid from the general assets of the
Company. The Trust is an irrevocable grantor trust, the assets of
which are subject to the claims of the creditors of the Company in
the event of its insolvency. If so directed by the Committee,
expenses of administering the Plan (including reimbursement to the
Company of any payment of benefits or expenses paid by the Company)
may be paid from the Trust assets. The assets of the Trust are
considered general assets of the Company in the event of bankruptcy
or insolvency of the Company. The Board shall have an express
obligation to notify the trustee of the Trust in the event of
bankruptcy or insolvency or impending insolvency or bankruptcy of
the Company. Upon receipt of such notice, the trustee of the Trust
shall be obligated to suspend payments from the Trust and hold the
Trust assets for the benefit of general creditors or to satisfy the
claims of such creditors as directed by a court of competent
jurisdiction. The trustee may resume payments to Participants
and/or their designated Beneficiaries only after determining that
the Company is not bankrupt or insolvent.
The Company's obligation to pay benefits pursuant to this Plan
shall constitute only a general contractual liability of the
Company; and the Company shall not be obligated to set aside,
earmark or escrow any funds or other assets to satisfy its
obligations under this Plan. Participants and/or their designated
Beneficiaries shall not have any property interest in any specific
assets of the Company other than the unsecured right to receive
payments from the Company as provided herein.
ARTICLE IX
PLAN ADMINISTRATION
The Plan shall be administered by the Committee, which shall have
full power and authority to do all things necessary or appropriate
for the proper administration hereof. Such power and authority
shall include full power and discretionary authority to construe
the Plan and Participation Agreement (including the power to
interpret all ambiguities) and to determine all questions which may
arise thereunder, including questions relating to the status and
rights of Participants, Beneficiaries and other persons hereunder.
The Committee shall be responsible for resolving any dispute or
controversy relating to the Plan or benefits due thereunder. The
decision of the Committee shall be final and binding on all parties
hereto, and judgment may be entered on the Committee's award in any
court having jurisdiction thereof. The Committee may delegate such
aspects of the administration to such individuals as the Committee
determines.
ARTICLE X
NON-ALIENATION OF BENEFITS
The interests of Participants and their Beneficiaries under this
Plan are not subject to the claims of their creditors and may not
be voluntarily sold, transferred, alienated, assigned, pledged,
anticipated, or encumbered. Any attempt by a Participant, his
beneficiary, or any other person to sell, transfer, alienate,
assign, pledge, anticipate, encumber, charge or otherwise dispose
of any right to benefits payable hereunder shall be void. The
Company may cancel and refuse to pay any portion of a benefit which
is sold, transferred, alienated, assigned, pledged, anticipated or
encumbered. Additionally, the benefits which a Participant may
accrue under this Plan are not subject to the terms of any
Qualified Domestic Relations Order (as that term is defined in
Section 414(q) of the Code) with respect to any Participant, nor
shall the Committee, the Company, or any subsidiary of the Company
be required to comply with the terms of such order in connection
with this Plan.
ARTICLE XI
AMENDMENT AND TERMINATION
The Company hereby reserves the right, by action of the Board, to
amend or terminate this Plan at any time, provided that the Board
may specifically delegate to the Committee or to the President the
right to amend the Plan. Notwithstanding the foregoing, the
Company shall not amend or terminate the Plan in any manner that
would diminish or otherwise reduce the benefits Eligible Employees
had accumulated prior to such amendment or termination.
Furthermore the Company shall not amend or terminate the Plan, or
take any other action that would otherwise result in a reversion of
any assets held pursuant to the Plan of the Company, except as
otherwise provided in Article VIII of this Plan.
ARTICLE XII
GENERAL PROVISIONS
12.1 Benefits to Whom Paid; Facility of Payment. Payments for a
deceased Participant shall be made to the Participant's
Beneficiary; and, in the sole discretion of the Committee
whenever a Participant has terminated employment and is
entitled to receive future payments in the form of an
annuity, such payments may be made in a lump sum. All other
payments shall be made to the Participant. Notwithstanding
the foregoing, when any person entitled to a distribution
under this Plan is under a legal disability, or, in the
opinion of the Committee, is in any way incapacitated so as
to be unable to manage his financial affairs, the Committee
may direct that the distribution to which such person
otherwise would be entitled shall be made to such person's
legal representative(s) or to a relative or friend of such
person for such person's benefit, or the Committee may
direct the application of such distribution for the benefit
of such person in such manner as the Committee considers
advisable. Any payment made in good faith in accordance
with provisions of this Section shall be a complete
discharge of any liability for the making of such payment
under the provisions of this Plan.
Any property, whether principal or income, distributable to
any person (adult or minor) entitled to payment of benefits
under the terms of this Plan may be applied for the benefit
of such person, and in the case of a minor, may be paid or
delivered directly to the minor, to a guardian or parent of
the minor, to a person with whom the minor resides, to a
custodian for the minor under any Uniform Gifts to Minors
Act or similar statute or to the trustee of a trust created
by the Participant by will or otherwise for the benefit of
such minor.
12.2 No Guarantee of Employment. This Plan is not a contract of
employment, and nothing in this Plan shall be construed as
guaranteeing future employment to Eligible Employees. An
Eligible Employee continues to be an Employee of the
Employer solely at the will of the Employer.
12.3 Successors. The provisions of this Plan shall be binding
upon the Company and all of its subsidiaries and their
successors and assigns and upon every Participant and his
heirs, Beneficiaries, estate and legal representatives.
12.4 Required Information to Committee. Each Participant will
furnish to the Committee such information as the Committee
considers necessary or desirable for purposes of
administering the Plan; and the provisions of the Plan
respecting any payments thereunder are conditional upon that
Participant furnishing promptly such true, full and complete
information as the Committee may request. Each Participant
will submit proof of his age to the Committee at such time
as required by the Committee. The Committee will, if such
proof of age is not submitted as required, use as conclusive
evidence thereof such information as is deemed by it to be
reliable, regardless of the lack of proof. Any notice or
information which, according to the terms of the Plan or the
rules of the Committee, must be filed with the Committee,
shall be deemed so filed if delivered in person to the
Committee or mailed to and received by the Committee at the
following address:
Retirement Committee
c/o Dixie Yarns, Inc.
P.O. Box 751
Chattanooga, Tennessee 37401
12.5 Indemnification. The Company will indemnify and hold
harmless the Committee and each member and each person to
whom the Committee has delegated responsibility under
Article IX from all joint and several liability for their
acts and omissions and for the acts and omissions of their
duly appointed agents in the administration of the Plan,
except for their own willful misconduct; provided that any
person who is insured against losses arising from the
administration of the Plan will be entitled to
indemnification only to the extent that the amount of his
liability exceeds the amount payable through insurance.
12.6 Designation of a Beneficiary. Each Participant shall
specifically designate, by name, on forms provided by the
Committee, the Beneficiary(ies) who shall receive any
benefits which might be payable after his death. Such
designation may be made at any time satisfactory to the
Committee. If a Participant has not designated a
Beneficiary in the manner provided above, the Participant's
estate shall be the Beneficiary. A designation of a
Beneficiary may be changed or revoked without the consent of
the Beneficiary at any time or from time to time in such
manner as may be provided by the Committee; and the
Committee shall have no duty to notify any person designated
as a Beneficiary of any change in any such designation which
might affect such person's present or future rights
hereunder. Except as provided in Section 12.1, any payment
under this Plan which may be made to a Beneficiary after the
death of a Participant shall be made only to the person(s)
or trust(s) designated pursuant to this Section by the
Participant.
12.7 Claims Submission and Review Procedure. Any claim for
benefits must initially be submitted in writing to the
Committee. If such claim is denied (in whole or in part),
the claimant shall receive from the Committee notice in
writing, written in a manner calculated to be understood by
the claimant, setting forth the specific reasons for denial,
with specific reference to pertinent provisions of this
Plan. Such notice shall be provided within 90 days of the
date the claim for benefits is received. Any disagreements
about such interpretations and construction may be appealed
within 60 days to the Company, or any committee of the Board
designated for this purpose. The Company shall respond to
such appeal within 60 days with a notice in writing fully
disclosing its decision and the reasons therefore. No
member of the Board of Directors, or any committee thereof,
shall be liable to any person for any action taken hereunder
except those actions undertaken with lack of good faith.
12.8 Income and Payroll Tax Withholding. To the extent required
by the laws in effect at the time deferred compensation
payments are made under this Plan, the Company shall
withhold from such deferred compensation payments any taxes
required to be withheld for federal, state or local
government purposes.
12.9 Official Actions. Any action required to be taken by the
Board pursuant to the Plan may be performed by any person or
persons, including a committee, to which the Board delegates
the authority to take actions of that kind. Whenever under
the terms of this Plan a corporation is permitted or
required to take some action, such action may be taken by an
officer of the corporation who has been duly authorized by
the board of directors of such corporation to take actions
of that kind.
12.10 Unclaimed Benefits. In the event the Committee cannot
locate any person entitled to receive any Participant's
Account balance, with reasonable effort and after a period
of five years, such Participant's interest will be canceled
but will be reinstated within 60 days after the Participant
or, if he is dead, his Beneficiary is located.
12.11 Controlling State Law. To the extent not superseded by the
laws of the United States, the Plan will be construed and
enforced according to the laws of the State of Tennessee.
12.12 Severability. In case any provision of this Plan shall be
held illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining provisions of the
Plan; and the Plan shall be construed and enforced as if
such illegal and invalid provisions had never been set
forth.
IN WITNESS WHEREOF, the Dixie Yarns, Inc. Nonqualified Defined
Contribution Plan, as amended, is executed on behalf of the Company
as of November 18, 1993.
DIXIE YARNS, INC.
By: \s\ W. Derek Davis
Title: V.P., Human Resources
ATTEST:
\s\ Jeffery Laseter
EXHIBIT A
DIXIE YARNS, INC. NONQUALIFIED
DEFINED CONTRIBUTION PLAN
PERCENT OF COMBINED NET PROFITS PERCENT OF COMPENSATION OF
TO COMBINED NET WORTH PARTICIPANTS TO BE CONTRIBUTED
BY THE EMPLOYER
Less than 4% 0
4 4
5 5
6 6
7 7
8 8
9 9
10 and over 10
LIST OF OMITTED SCHEDULES AND EXHIBITS
OMITTED ITEM DESCRIPTION
____________ ___________
Schedule A Beneficiary Designation
Schedule B Election of Form of Benefit
Payment at Eligible Retirement
Form of Participation Agreement
EXHIBIT (10b)
DIXIE YARNS, INC.
NONQUALIFIED EMPLOYEE SAVINGS PLAN
As Amended
(As Restated November 18, 1993)
DIXIE YARNS, INC.
NONQUALIFIED EMPLOYEE SAVINGS PLAN
(As Restated on November 18, 1993)
Dixie Yarns, Inc., herein referred to as the "Company," does
hereby amend and restate the Dixie Yarns, Inc. Nonqualified
Employee Savings Plan adopted June 29, 1990, for the benefit of
Eligible Employees of the Employer on the terms and conditions
described hereinafter:
ARTICLE 1
PREFACE
Section 1.1. Effective Date. Except as otherwise stated,
the effective date of the Plan is July 1, 1990.
Section 1.2. Purpose of the Plan. The purpose of this Plan
is to provide a supplemental savings program for certain key
management Employees of the Employer. This Plan is intended to
benefit a select group of management or highly compensated
employees of the Employer, and it is the intention of the parties
that the Plan be unfunded for tax purposes and for the purposes of
ERISA.
Section 1.3. Gender and Number. The masculine gender shall
be deemed to include the feminine, the feminine gender shall be
deemed to include the masculine, and the singular shall include the
plural unless otherwise clearly required by the context.
ARTICLE 2
DEFINITIONS
As used herein, the following words and phrases have the
meanings ascribed to them in this Article unless a different
meaning is plainly required by the context. Any headings used
herein are included for ease of reference only, and are not to be
construed so as to alter any of the terms of the Plan.
Section 2.1. Account means the balance, as determined by
the Committee posted to the record of each Participant as of each
Valuation Date, consisting of the Participant's contributions and
his allocated share of earnings, less any payments (including
expenses) therefrom.
Section 2.2. Beneficiary means the person or persons
designated by the Participant under the rules and forms prescribed
by the Committee.
Section 2.3. Board means the Board of Directors of the
Company.
Section 2.4. Bonus means discretionary cash remuneration
paid by the Employer in addition to monthly pay on account of
performance of the Employee, the Company or both, including cash
amounts of extra year-end pay and cash profit-sharing.
Section 2.5. Change of Control means any event which
results in a "person" (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder) acquiring
directly or indirectly, whether by sale, transfer, assignment,
pledge, hypothecation, gift, or other disposition, in one or more
transactions, a majority controlling interest in the voting capital
stock of the Company, or the entering into of any agreement with
the Company to do any of the foregoing. Except, a Change of
Control shall not include any transaction in which one or more
members of the Frierson family (which shall include all current
members of the family of J. Burton Frierson, including descendants
and spouses, and trusts for the benefit of same, who presently own
capital stock) have a majority controlling interest in the Company.
Section 2.6. Code means the Internal Revenue Code of 1986.
Reference to a section of the Code include that section and any
comparable section or sections of any future legislation that
amends, supplements or supersedes such section.
Section 2.7. Committee means the Retirement Committee
designated by the Board.
Section 2.8. Compensation means the remuneration paid to an
Eligible Employee for services rendered as reported or reportable
on Form W-2 for Federal income tax withholding purposes (or similar
form required for such purposes), including bonuses, but excluding
vacation allowances, severance pay, payment for incidental benefits
and non-recurring compensation. Notwithstanding the foregoing,
Compensation shall not include any remuneration paid prior to the
first pay-roll period beginning after July 1, 1990. Compensation
shall include any contribution made under this Plan and any amounts
excluded from the income of an Eligible Employee under Sections 125
or 401(k) of the Code; however, Compensation shall not include
amounts contributed by the Employer under any other benefit plan.
For the purposes of this Plan, it shall be presumed that no
Compensation is paid on December 31.
Section 2.9. Eligible Employee means an Employee as
determined by the Board or by the Committee (or in the case of the
initial Participants by the Vice President - Human Resources) to be
eligible to participate in this Plan and shall be limited to
Employees who are in a select group of management or highly
compensated employees of the Employer.
Section 2.10. Eligible Retirement means the date of
termination of employment (other than on account of death) on or
after a Participant reaches age 60.
Section 2.11. Employee means all employees of the Employer
whose wages are exempt from the provisions of the Fair Labor
Standards Act of 1947, as amended.
Section 2.12. Employer means Dixie Yarns, Inc. and all of
its subsidiaries.
Section 2.13. Participant means any Eligible Employee who
has agreed to be bound by the terms and conditions of this Plan by
signing a Participation Agreement.
Section 2.14. Participation Agreement means the form
designated by the Committee to be signed by each Participant.
Section 2.15. Plan means the Dixie Yarns, Inc. Nonqualified
Employee Savings Plan, as herein set out or as duly amended.
Section 2.16. Plan Year means the twelve-month period
beginning on December 31 of each year and ending on December 30 of
each year, except that the first Plan Year shall begin on July 1,
1990, and end on December 30, 1990.
Section 2.17. Unforeseeable Emergency means severe
financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a dependent
(as defined in Section 152(a) of the Code) of the Participant, loss
of the Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. The circumstances
that will constitute an unforeseeable emergency will depend upon
the facts of each case, but, in any case, payment may not be made in an
amount greater than needed to meet the emergency and may not be made
to the extent that such hardship is or may be relieved:
(i) Through reimbursement or compensation by insurance or
otherwise,
(ii) By liquidation of the Participant's assets, to the
extent the liquidation of such assets would not itself cause
severe financial hardship, or
(iii) By cessation of deferrals under the Plan.
Section 2.18. Valuation Date means the last day of the Plan
Year and any other date designated by the Committee.
ARTICLE 3
ELIGIBILITY
Section 3.1. Eligibility to Participate. Each Employee of
the Employer who is selected for participation in the Plan will
become a Participant in this Plan as of the first day of the first
calendar month which begins after he has signed a Participation
Agreement.
Section 3.2. Participation. A Participant shall remain a
Participant so long as he remains an Employee, but shall cease to
be a Participant if he terminates employment with the Employer
prior to the date on which he becomes eligible for payment of
benefits under Article 6 of the Plan. Should a Participant cease
to be an Employee, but later become re-employed by the Employer, he
shall again become a Participant if such individual is selected for
participation in the Plan after his re-employment.
ARTICLE 4
CONTRIBUTIONS AND ALLOCATIONS
Section 4.1. Savings Contributions. Each Eligible Employee
may elect to defer any whole percentage or whole dollar amount of
his Compensation to his Account under this Plan. Such election
may be made separately for Bonuses and for Compensation other than
Bonuses. Any such election shall relate only to Compensation
(including Bonuses, if applicable) for pay periods beginning on or
after the first day of a Plan Year after such election and shall
relate to services performed during such pay period. Any election
with respect to Bonuses, other Compensation, or both shall remain
binding for subsequent Plan Years until revoked or revised by the
Participant; and elections made for Plan Years beginning before
December 31, 1993, shall not include Bonuses for Plan Years
beginning after December 30, 1993, unless specifically amended
after November 18, 1993. A revocation of an election with respect
to Compensation shall be effective as of the first pay period that
begins on or after the first day of a calendar month following the
revocation. A revision of an election with respect to Compensation
and/or Bonuses and a revocation of an election with respect to
Bonuses shall only be effective for amounts earned as of the first
pay period that begins on or after the first day of the Plan Year
after such revision. Forms for election, or for revocation or
revision of election must be delivered to the Committee no later
than five (5) days before the first day of the calendar month or
Plan Year, as the case may be, for which such revocation or
revision is to be effective.
Section 4.2. Adjustments to Account Balances.
(a) Regular Valuation Dates. As of each Valuation Date,
the Committee will determine the value of each
Participant's Account. The Account balance of each
Participant will be adjusted to reflect the following
events since the preceding Valuation Date:
(1) Payments from his Account (as if made on the
first day following the preceding Valuation Date
regardless of when paid);
(2) Earnings credited to the Participant's Account
which shall be the overall rate of gross earnings
of all assets (other than life insurance
policies) held in trust; for life insurance
policies in which investments are held in a
separate account, such rate shall be gross
earnings reduced by the fees of investment
managers of investment funds held in such
account; and for life insurance policies which
have no separate account, such rate shall be the
rate of interest credited to the cash value of
the policy by the insurance company; proceeds
from death benefits from life insurance shall not
be considered earnings;
(3) The Account's pro rata share of expenses (as if
made on the first day following the preceding
Valuation Date regardless of when paid); and
(4) The allocation of contributions (as if made on
the day before the Valuation Date).
(b) Valuations Binding. In determining values, the
Committee will exercise its best judgment, and all
determinations of value will be binding upon all
Participants and their Beneficiaries.
(c) Statement of Account Balances. As soon as practicable
after the end of each Plan Year, the Committee will
provide to each Participant and Beneficiary for whom an
Account is maintained, a statement showing all
allocations to and payments from his Account, and the
current value of his Account. For any Plan Year, the
Committee may provide statements more frequently.
(d) Correction of Errors. As soon as practicable after it
discovers any error in any Participant's Account
balance, the Committee will correct the error. If
possible, the error will be corrected as if it had
never been made. Otherwise, any necessary addition to
the Account will be treated as an expense of the Plan,
and any necessary subtraction from the Account will be
used to reduce the Participant's contribution for the
same or the next Plan Year.
ARTICLE 5
VESTING
Each Participant shall at all times be fully vested in his
contributions, including any earnings or losses thereon.
ARTICLE 6
DISTRIBUTION OF BENEFITS
Section 6.1. Timing of Distributions. Except as otherwise
provided however, benefits under this Plan shall be made in a
single lump sum payment as soon as practicable after the Committee
has received satisfactory evidence that one of the following events
has occurred: death, termination of employment or Unforeseeable
Emergency, provided, however, that if any part of such distribution
is not deductible for Federal income tax purposes, the Committee
may postpone payment of any nondeductible part until such time as
it determines the distribution (or the part thereof to be
distributed) will be deductible. Payment may also be made pursuant
to the terms of Article 7. A Participant may make an election to
have all amounts paid on account of Eligible Retirement paid in 180
monthly payments. Such election must be made on the later of June
30, 1994, or at the end of the first six months following the date
the Participant first became eligible to participate in the Plan.
The Participant may change his election but only with the approval
of the Committee if such request is made not more than 15 months
nor less than 12 months prior to the Participant's Eligible
Retirement. Monthly payments shall begin as soon as practicable
after the Committee has received satisfactory evidence of Eligible
Retirement and continue each month thereafter until 180 payments
are made. Payments shall be made by assuming that the Account as
of the first day of the month in which payments commence has been
invested in an annuity for such 180 months earning a rate of
interest on the unpaid balance equal to the prime rate as
established by the American National Bank and Trust Company of
Chattanooga, Chattanooga, Tennessee, as of that date.
Notwithstanding the above, if upon Eligible Retirement the value of
Participant's Account does not exceed $10,000, this amount shall be
distributed in a lump sum.
Section 6.2. Benefits to Whom Paid; Facility of Payment.
Payments for a deceased Participant shall be made to the
Participant's Beneficiary; and, in the sole discretion of the
Committee whenever a Participant has terminated employment and is
entitled to receive future payments in the form of an annuity, such
payments may be made in a lump sum. All other payments shall be
made to the Participant. Notwithstanding the foregoing, when any
person entitled to a distribution under this Plan is under a legal
disability, or, in the opinion of the Committee, is in any way
incapacitated so as to be unable to manage his financial affairs,
the Committee may direct that the distribution to which such person
otherwise would be entitled shall be made to such person's legal
representative(s) or to a relative or friend of such person for
such person's benefit, or the Committee may direct the application
of such distribution for the benefit of such person in such manner
as the Committee considers advisable. Any payment made in good
faith in accordance with provisions of this Section 6.2 shall be a
complete discharge of any liability for the making of such payment
under the provisions of this Plan.
Any property, whether principal or income, distributable to any
person (adult or minor) entitled to payment of benefits under the
terms of this Plan may be applied for the benefit of such person,
and in the case of a minor, may be paid or delivered directly to
the minor, to a guardian or parent of the minor, to a person with
whom the minor resides, to a custodian for the minor under any
Uniform Gifts to Minors Act or similar statute or to the trustee of
a trust created by the Participant by will or otherwise for the
benefit of such minor.
ARTICLE 7
SPECIAL DISTRIBUTION ADJUSTMENTS
Section 7.1. Unusual Events. In the event of an impending
Change of Control or the probable occurrence of any other
extraordinary or unusual event, if the Committee determines that
such change equitably requires an adjustment in the terms of
distribution of any benefit under this Plan, then such adjustment
may be made immediately by the Committee and without notice to the
Participants. Any action taken by the Committee pursuant to this
Article is void if it has the effect of divesting the Participants
of their benefits. Such adjustment made by the Committee shall be
final, conclusive and binding for all purposes of the Plan.
Section 7.2. Liquidation or Dissolution. In the event of
any liquidation or dissolution of the Company (or of any
successor), or in the event of the winding up of business of the
Company (or of any successor), the balance of the Accounts shall be
distributed within sixty days of the date of such event; provided
that such liquidation or dissolution is not a part of a plan of
reorganization of the corporate structure of the Company.
Section 7.3. Income and Payroll Tax Withholding. To the
extent required by the laws in effect at the time any amounts are
deferred or deferred compensation payments are made under this
Plan, the Company shall withhold from such amounts that are
deferred or from deferred compensation payments, as the case may
be, any taxes required to be withheld for federal, state or local
government purposes.
ARTICLE 8
MISCELLANEOUS
Section 8.1. No Guarantee of Employment. This Plan is not
a contract of employment, and nothing in this Plan shall be
construed as guaranteeing future employment to Eligible Employees.
An Eligible Employee continues to be an Employee of the Employer
solely at the will of the Employer.
Section 8.2. Administration. This Plan shall be
administered by the Committee, which shall have full power and
authority to do all things necessary or appropriate for the proper
administration hereof. Such power and authority shall include full
power and authority to construe the Plan and the Participation
Agreement (including the power to interpret all ambiguities) and to
determine all questions which may arise thereunder, including
questions relating to the status and rights of Participants,
Beneficiaries and other persons hereunder. The Committee shall be
responsible for resolving any dispute or controversy relating to
the Plan or benefits due thereunder. The decision of the Committee
shall be final and binding on all parties hereto, and judgment may
be entered on the Committee's award in any court having
jurisdiction thereof. The Committee may delegate such aspects of
the administration to such individuals as the Committee determines.
Section 8.3. Claims Submission and Review Procedure. Any
claim for benefits must initially be submitted in writing to the
Committee. If such claim is denied (in whole or in part), the
claimant shall receive from the Committee notice in writing,
written in a manner calculated to be understood by the claimant,
setting forth the specific reasons for denial, with specific
reference to pertinent provisions of this Plan. Such notice shall
be provided within 90 days of the date the claim for benefits is
received. Any disagreements about such interpretations and
construction may be appealed within 60 days to the Company, or any
committee of the Board designated for this purpose. The Company
shall respond to such appeal within 60 days with a notice in
writing fully disclosing its decision and the reasons therefore.
No member of the Board of Directors, or any committee thereof,
shall be liable to any person for any action taken hereunder except
those actions undertaken with lack of good faith.
Section 8.4. Amendment and Termination. The Company hereby
reserves the right, by action of the Board, to amend or terminate
this Plan at any time, provided that the Board may specifically
delegate to the Committee or to the President the right to amend
the Plan. Notwithstanding the foregoing, the Company shall not
amend or terminate the Plan in any manner that would diminish or
otherwise reduce the benefits Eligible Employees had accumulated
prior to such amendment or termination. Furthermore the Company
shall not amend or terminate the Plan, or take any other action
that would otherwise result in a reversion of any assets held
pursuant to the Plan to the Company, except as otherwise provided
in Section 8.6.
Section 8.5. Non-alienation of Benefits. The interests of
Participants and their Beneficiaries under this Plan are not
subject to the claims of their creditors and may not be voluntarily
sold, transferred, alienated, assigned, pledged, anticipated, or
encumbered. Any attempt by a Participant, his Beneficiary, or any
other person to sell, transfer, alienate, assign, pledge,
anticipate, encumber, charge or otherwise dispose of any right to
benefits payable hereunder shall be void. The Company may cancel
and refuse to pay any portion of a benefit which is sold,
transferred, alienated, assigned, pledged, anticipated or
encumbered. Additionally, the benefits which a Participant may
accrue under this Plan are not subject to the terms of any
Qualified Domestic Relations Order (as that term is defined in
Section 414(q) of the Code) with respect to any Participant, nor
shall the Committee, the Company, or any subsidiary of the Company
be required to comply with the terms of such order in connection
with this Plan.
Section 8.6. Obligation to Pay Benefits Hereunder. The
Company has established a trust fund ("Trust") which may be used to
provide for its benefit obligations hereunder and which the Company
will to the extent necessary conform to the terms of the model
trust as described in Rev. Proc. 92-64. Benefits payable under
this Plan to a Participant may be paid directly by the Company from
the Trust in such proportions as the Company determines. To the
extent that such benefits are not paid from the Trust, the benefits
shall be paid from the general assets of the Company. The Trust is
an irrevocable grantor trust, the assets of which are subject to
the claims of the creditors of the Company in the event of its
insolvency. If so directed by the Committee, expenses of
administering the Plan (including reimbursement to the Company of
any payment of benefits or expenses paid by the Company) may be
paid from the Trust assets. The assets of the Trust are considered
general assets of the Company in the event of bankruptcy or
insolvency of the Company. The Board shall have an express
obligation to notify the trustee of the Trust in the event of
bankruptcy or insolvency or impending insolvency or bankruptcy of
the Company. Upon receipt of such notice, the trustee of the Trust
shall be obligated to suspend payments from the Trust and hold the
Trust assets for the benefit of general creditors or to satisfy the
claims of such creditors as directed by a court of competent
jurisdiction. The trustee may resume payments to Participants
and/or their designated Beneficiaries only after determining that
the Company is not bankrupt or insolvent.
The Company's obligation to pay benefits pursuant to this Plan
shall constitute only a general contractual liability of the
Company; and the Company shall not be obligated to set aside,
earmark or escrow any funds or other assets to satisfy its
obligations under this Plan. Participants and/or their designated
Beneficiaries shall not have any property interest in any specific
assets of the Company other than the unsecured right to receive
payments from the Company as provided herein.
Section 8.7. Required Information to Committee. Each
Participant will furnish to the Committee such information as the
Committee considers necessary or desirable for purposes of
administering the Plan; and the provisions of the Plan respecting
any payments thereunder are conditional upon the Participant's
furnishing promptly such true, full and complete information as the
Committee may request. Each Participant will submit proof of his
age to the Committee at such time as required by the Committee.
The Committee will, if such proof of age is not submitted as
required, use as conclusive evidence thereof such information as is
deemed by it to be reliable, regardless of the lack of proof. Any
notice or information which, according to the terms of the Plan or
the rules of the Committee, must be filed with the Committee, shall
be deemed so filed if delivered in person to the Committee or
mailed to and received by the Committee at the following address:
Retirement Committee
c/o Dixie Yarns, Inc.
P.O. Box 751
Chattanooga, TN 37401
Section 8.8. Indemnification. The Company will indemnify
and hold harmless the Committee and each member and each person to
whom the Committee has delegated responsibility under Section 8.2
from all joint and several liability for their acts and omissions
and for the acts and omissions of their duly appointed agents in
the administration of the Plan, except for their own willful
misconduct; provided that any person who is insured against losses
arising from the administration of the Plan will be entitled to
indemnification only to the extent that the amount of his liability
exceeds the amount payable through insurance.
Section 8.9. Successors. The provisions of this Plan shall
be binding upon the Company and all of its subsidiaries and their
successors and assigns and upon every Participant and his heirs,
Beneficiaries, estate and legal representatives.
Section 8.10. Designation of a Beneficiary. Each
Participant shall specifically designate, by name, on forms
provided by the Committee, the Beneficiary(ies) who shall receive
any benefits which might be payable after his death. Such
designation may be made at any time satisfactory to the Committee.
If a Participant has not designated a Beneficiary in the manner
provided above, the Participant's estate shall be the Beneficiary.
A designation of a Beneficiary may be changed or revoked without
the consent of the Beneficiary at any time or from time to time in
such manner as may be provided by the Committee, and the Committee
shall have no duty to notify any person designated as a Beneficiary
of any change in any such designation which might affect such
person's present or future rights hereunder. Except as provided in
Section 6.2, any payment under this Plan which may be made to a
Beneficiary after the death of a Participant shall be made only to
the person(s) or trust(s) designated pursuant to this Section by
the Participant.
Section 8.11. Official Actions. Any action required to be
taken by the Board pursuant to the Plan may be performed by any
person or persons, including a committee, to which the Board
delegates the authority to take actions of that kind. Whenever
under the terms of this Plan a corporation is permitted or required
to take some action, such action may be taken by an officer of the
corporation who has been duly authorized by the board of directors
of such corporation to take actions of that kind.
Section 8.12. Unclaimed Benefits. In the event the
Committee cannot locate any person entitled to receive any
Participant's Account balance, with reasonable effort and after a
period of five years, such Participant's interest will be canceled
but will be reinstated within 60 days after the Participant or, if
he is dead, his Beneficiary is located.
Section 8.13. Controlling State Law. To the extent not
superseded by the laws of the United States, the Plan will be
construed and enforced according to the laws of the State of
Tennessee.
Section 8.14. Severability. In case any provision of this
Plan shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining provisions
of the Plan, and the Plan shall be construed and enforced as if
such illegal and invalid provisions had never been set forth.
IN WITNESS WHEREOF, the Dixie Yarns, Inc. Nonqualified
Employee Savings Plan as amended, is executed on behalf of the
Company, as of the 18th day of November, 1993.
DIXIE YARNS, INC.
By:\s\ W. Derek Davis
Title: V.P., Human Resources
ATTEST:
Jeffery Laseter
LIST OF OMITTED SCHEDULES AND EXHIBITS
OMITTED ITEM DESCRIPTION
____________ ___________
Schedule A Beneficiary Designation
Schedule B Election of Form of Benefit
Payment at Eligible Retirement
Schedule C Deferral Election and Revocation
Form of Participation Agreement
EXHIBIT (11)
EXHIBIT 11
DIXIE YARNS, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Six Months Ended
_______________________ _______________________
July 2, June 26, July 2, June 26,
1994 1993 1994 1993
___________ __________ ___________ __________
PRIMARY:
NET INCOME (LOSS) $ 118,539 $2,061,396 $(4,223,903) $2,968,730
___________ __________ ___________ __________
___________ __________ ___________ __________
Weighted average number of
Common Shares outstanding
assuming conversion of
Class B Common Stock 12,246,999 11,219,454 12,253,024 10,197,823
Net effect of dilutive stock
options based on the
treasury stock method using
average market price 36,190 101,128 37,728 83,210
Net effect of put options
based on the reverse
treasury stock method using
average market price 890,288 -0- 808,568 -0-
___________ ___________ __________ __________
TOTAL SHARES 13,173,477 11,320,582 13,099,320 10,281,033
___________ ___________ __________ __________
___________ ___________ __________ __________
PER SHARE AMOUNT $ .01 $ .18 $ (.32) $ .29
___________ ___________ __________ __________
___________ ___________ __________ __________
FULLY DILUTED:
Net income (loss) $ 118,539 $2,061,396 $(4,223,903) $2,968,730
After-tax interest
requirement of
convertible subordinated
debentures (A) -0- -0- -0- -0-
___________ __________ ___________ __________
ADJUSTED NET
INCOME (LOSS) $ 118,539 $2,061,396 $(4,223,903) $2,968,730
___________ __________ ___________ __________
___________ __________ ___________ __________
EXHIBIT 11
DIXIE YARNS, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE - CONTINUED
Three Months Ended Six Months Ended
_______________________ _______________________
July 2, June 26, July 2, June 26,
1994 1993 1994 1993
___________ __________ ___________ __________
FULLY DILUTED - CONTINUED:
Weighted average number of
Common Shares outstanding
assuming conversion of
Class B Common Stock 12,246,999 11,219,454 12,253,024 10,197,823
Net effect of dilutive stock
options based on the
treasury stock method using
quarter end market price
if higher than the average
market price 36,190 101,158 37,728 83,306
Net effect of put options
based on the reverse
treasury stock method using
quarter end market price
if lower than the average
market price 1,109,137 -0- 1,109,137 -0-
Net effect of conversion of
convertible subordinated
debentures (A) -0- -0- -0- -0-
___________ __________ ___________ __________
TOTAL SHARES 13,392,326 11,320,612 13,399,889 10,281,129
___________ __________ ___________ __________
___________ __________ ___________ __________
PER SHARE AMOUNT $ .01 $ .18 $ (.32) $ .29
___________ __________ ___________ __________
___________ __________ ___________ __________
(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 July 2, 1994, and June 26, 1993, respectively and of
$945,075 and $959,075 for the six months ended July 2, 1994, and June 26,
1993, respectively has been excluded from computation since the effect was
anti-dilutive.
