<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Dixie Yarns, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
DIXIE YARNS, INC.
1100 SOUTH WATKINS STREET
CHATTANOOGA, TENNESSEE 37404
(615) 698-2501
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Dixie Yarns, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Dixie
Yarns, Inc., a Tennessee corporation (the "Company"), will be held at the
Company's general office, 1100 South Watkins Street, Chattanooga, Tennessee
37404, on May 4, 1995, at 10:00 a.m., Eastern Daylight Time, for the purpose of
considering and acting upon the following:
1. Election of nine individuals to the Board of Directors for a term of one
year each; and
2. Such other business as may properly come before the Annual Meeting of
Shareholders, or any adjournment or adjournments thereof.
Only shareholders of record of the Common Stock and Class B Common Stock at
the close of business on March 10, 1995 (the "Record Date"), are entitled to
notice of, and to vote at, the Annual Meeting of Shareholders or any adjournment
thereof. A list of shareholders will be available for inspection by shareholders
at least ten days prior to the meeting at the general office of the Company as
shown above.
By Order of the Board of Directors
Daniel K. Frierson
Chairman of the Board
Chattanooga, Tennessee
Dated: March 31, 1995
PLEASE READ THE ATTACHED MATERIAL CAREFULLY AND COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY TO THE COMPANY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE SO THAT YOUR SHARES OF COMMON STOCK AND CLASS B COMMON
STOCK WILL BE REPRESENTED AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON, SHOULD YOU SO DESIRE.
<PAGE> 3
DIXIE YARNS, INC.
1100 SOUTH WATKINS STREET
CHATTANOOGA, TENNESSEE 37404
(615) 698-2501
---------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 1995
---------------------
PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement, the accompanying form of proxy (the "Proxy"), and the
Notice of Annual Meeting of Shareholders (collectively the "Proxy Material") are
being furnished by the Board of Directors of Dixie Yarns, Inc., a Tennessee
corporation (the "Company"), in connection with the solicitation of proxies by
the Company to be voted at the Annual Meeting of Shareholders to be held at the
Company's general office, 1100 South Watkins Street, Chattanooga, Tennessee
37404 on May 4, 1995, at 10:00 a.m., Eastern Daylight Time, and at any
adjournment or adjournments thereof (the "Annual Meeting"), for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. It is
contemplated that this Proxy Material will be mailed on or about March 31, 1995,
to the shareholders of record of the Company's Common Stock and Class B Common
Stock as of the close of business on March 10, 1995 (the "Record Date").
At the Annual Meeting, holders of the Company's Common Stock, $3.00 par
value per share ("Common Stock"), and Class B Common Stock, $3.00 par value per
share ("Class B Common Stock"), will be asked to: (i) elect nine individuals to
the Board of Directors for a term of one year each, and (ii) transact any other
business that may properly come before the meeting.
The Board of Directors recommends that the Company's shareholders vote FOR
the election of the nine nominees for director.
RECORD DATE, VOTE REQUIRED AND RELATED MATTERS
The Board has fixed the close of business on March 10, 1995, as the Record
Date for the determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting. Each outstanding share of Common Stock is entitled to
one vote, and each outstanding share of Class B Common Stock is entitled to 20
votes, exercisable in person or by properly executed Proxy, on each matter
brought before the Annual Meeting. There are no outstanding shares of the
Company's Class C Common Stock. Cumulative voting is not permitted. As of March
10, 1995, 11,507,998 shares of Common Stock, representing 11,507,998 votes, were
held of record by approximately 5,400 shareholders (including an estimated 4,360
shareholders whose shares are held in nominee names), and 735,228 shares of
Class B Common Stock, representing 14,704,560 votes, were held by 18 individual
shareholders together representing an aggregate of 26,212,558 votes.
Shares represented at the Annual Meeting by properly executed Proxy will be
voted in accordance with the instructions indicated therein unless such Proxy
has previously been revoked. If no instructions are indicated, such shares will
be voted FOR electing the Board of Directors' nine nominees for director as set
forth in this Proxy Statement.
<PAGE> 4
Any Proxy given pursuant to this solicitation may be revoked at any time by
the shareholder giving it by delivering to the Secretary of the Company a
written notice of revocation bearing a later date than the Proxy, by submitting
a later-dated, properly executed Proxy, or by revoking the Proxy and voting in
person at the Annual Meeting. Attendance at the Annual Meeting will not, in and
of itself, constitute a revocation of a Proxy. Any written notice revoking a
Proxy should be sent to Dixie Yarns, Inc., P. O. Box 751, Chattanooga, Tennessee
37401, Attention: Starr T. Klein, Secretary.
The persons designated as proxies were selected by the Board of Directors
and are: Daniel K. Frierson, James H. Martin, Jr., and Robert J. Sudderth, Jr.,
directors of the Company. Daniel K. Frierson is Chairman of the Board,
President, and Chief Executive Officer of the Company.
The cost of solicitation of Proxies will be borne by the Company.
The presence, in person or by Proxy, of the holders of a majority of the
aggregate outstanding vote of Common Stock and Class B Common Stock entitled to
vote is necessary to constitute a quorum at the Annual Meeting for acting on the
election of directors. The affirmative vote of a plurality of the total votes
eligible to be cast that are represented in person or by Proxy at the Annual
Meeting is required to elect the Board of Directors' nominees.
The Board is not aware of any other matter to be brought before the Annual
Meeting for a vote of shareholders. If, however, other matters are properly
presented, Proxies representing shares of Common Stock and Class B Common Stock
will be voted in accordance with the best judgment of the proxyholders on such
other matters. Abstentions and broker non-votes (other than in respect of shares
subject to proxies given pursuant to this solicitation) will not be included in
vote totals and will have no effect on the outcome of the vote.
A copy of the Company's Annual Report for the year ended December 31, 1994,
is enclosed herewith.
PRINCIPAL SHAREHOLDERS
Shareholders of record of the Common Stock and Class B Common Stock on the
Record Date will be entitled to vote at the Annual Meeting. The number of shares
of Common Stock and Class B Common Stock outstanding and entitled to vote on
March 10, 1995, was 11,507,998, having one vote per share (representing
11,507,998 votes) and 735,228 having twenty votes per share (representing
14,704,560 votes), respectively, for a total of 26,212,558 votes. Messrs. Daniel
K. Frierson, T. Cartter Frierson, Paul K. Frierson, James W. Frierson, and J.
Burton Frierson, III collectively have the power to direct 15,539,842 votes
(871,042 shares of Common Stock and 733,440 shares of Class B Common Stock)
representing 59.28% of the total vote.
Under the rules of the Securities and Exchange Commission, and for the
purposes of the disclosures being made herein, a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting power,"
which includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose or to direct the
disposition of such security. Under these rules, more than one person may be
deemed to be a beneficial owner of the same securities.
2
<PAGE> 5
The following table sets forth certain information with respect to those
persons known to the Company to be the beneficial owners of more than five
percent (5%) of the Common Stock or Class B Common Stock as of the Record Date.
As to Suntrust Banks, Inc. and David L. Babson & Co., the information is based
on the respective Schedule 13G forms filed by each such beneficial owner.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES % OF
OF BENEFICIAL OWNER TITLE OF CLASS BENEFICIALLY OWNED(1) CLASS
------------------------------------ ---------------------- --------------------- -----
<S> <C> <C> <C>
Daniel K. Frierson
111 East and West Road Common Stock 435,405(2) 3.78%
Lookout Mountain, TN 37350 Class B Common Stock 661,440(3) 89.96%
Paul K. Frierson
606 Fleetwood Drive Common Stock 111,527(4) *
Lookout Mountain, TN 37350 Class B Common Stock 251,373(5) 34.19%
T. Cartter Frierson
1103 Tinker Bell Lane Common Stock 355,671(6) 3.09%
Lookout Mountain, GA 30750 Class B Common Stock 100,982(7) 13.73%
The Prudential Insurance Company of
America
4 Gateway Plaza, 7th Floor
100 Mulberry Street Common Stock 1,029,446(8) 8.95%
Newark, NJ 07102 Class B Common Stock -0- --
SunTrust Bank, Inc.
25 Park Place Common Stock 785,277(9) 6.82%
Atlanta, GA 30303 Class B Common Stock -0- --
David L. Babson & Company, Inc.
One Memorial Drive Common Stock 791,729(10) 6.88%
Cambridge, MA 02142 Class B Common Stock -0- --
</TABLE>
---------------
* Percentage of shares beneficially owned does not exceed 1% of the Class.
(1) The Class B Common Stock is convertible on a share-for-share basis into
shares of Common Stock. However, information presented in this table as to
the number of shares of Common Stock beneficially owned and the percent of
class does NOT give effect to the possible conversion of shares of Class B
Common Stock into shares of Common Stock.
(2) Includes: (i) 27,238 shares of Common Stock as to which Mr. Frierson has
sole investment and sole voting power; (ii) options to acquire 84,000
shares of Common Stock which are immediately exercisable or exercisable
within 60 days; (iii) 27,433 shares of Common Stock owned directly by
Rowena K. Frierson but subject to a general power of attorney granted to
Daniel K. Frierson and T. Cartter Frierson; (iv) 174,588 shares of Common
Stock owned by the "Dixie Yarns, Inc. Defined Contribution Plan" for which
Daniel K. Frierson and Robert J. Sudderth, Jr. are fiduciaries and for
which American National Bank & Trust Company of Chattanooga ("ANB") serves
as trustee. (See note 10 for a description of the affiliation between ANB
and SunTrust Bank, Inc.); and (v) 122,146 shares of Common Stock owned the
wife and children of Daniel K. Frierson and as to which he shares voting
and investment power.
(3) Includes: (i) 105,072 shares of Class B Common Stock owned by Mr.
Frierson's wife and children as to which he shares investment and voting
power and (ii) 556,368 shares of Class B Common Stock held pursuant to a
shareholder agreement under which Daniel K. Frierson has been granted a
proxy, which expires October 2005, to vote such shares (the "Shareholder
Agreement"). The proxy is terminable under certain limited circumstances
prescribed in the Shareholder Agreement. The parties to the Shareholder
Agreement are the Estate of J. Burton Frierson, the wife of J. Burton
Frierson (Rowena K.
3
<PAGE> 6
Frierson) and the five sons of J. Burton and Rowena K. Frierson (Daniel K.
Frierson; Paul K. Frierson; T. Cartter Frierson; James W. Frierson; and J.
Burton Frierson, III). The 556,368 shares of Class B Common Stock subject
to the Shareholder Agreement include: (a) 220,500 shares of Class B Common
Stock owned directly by Daniel K. Frierson; (b) 94,069 shares of Class B
Common Stock owned directly by Paul K. Frierson; (c) 15,678 shares of Class
B Common Stock owned directly by T. Cartter Frierson; (d) 15,678 shares of
Class B Common Stock owned directly by J. Burton Frierson, III; (e) 40,000
shares of Class B Common Stock held by Paul K. Frierson, T. Cartter
Frierson, and Daniel K. Frierson as co-trustees of the Frierson Family
Trusts; (f) 45,304 shares of Class B Common Stock held by Paul K. Frierson,
T. Cartter Frierson, and Daniel K. Frierson as co-trustees of the Special
Purpose Trust of J. Burton Frierson; and (g) 125,139 shares of Class B
Common Stock owned directly by Rowena K. Frierson but subject to a general
power of attorney granted to Daniel K. Frierson and T. Cartter Frierson.
(4) Includes: (i) 17,255 shares of Common Stock as to which Mr. Frierson holds
sole investment and sole voting power; (ii) options to acquire 22,000
shares of Common Stock, which are immediately exercisable or exercisable
within 60 days; and (iii) 72,302 shares of Common Stock owned by his wife
and children and as to which he shares investment and voting power.
(5) Includes: (i) 94,069 shares of Class B Common Stock owned directly by Mr.
Frierson and held subject to the Shareholder Agreement described in Note 3;
(ii) 72,000 shares of Class B Common Stock owned by his children and as to
which he shares investment and voting power; (iii) 40,000 shares of Class B
Common Stock held by him, T. Cartter Frierson, and Daniel K. Frierson as
co-trustees of the Frierson Family Trusts and held subject to the
Shareholder Agreement described in note 3; and (iv) 45,304 shares of Class
B Common Stock held by him, T. Cartter Frierson and Daniel K. Frierson as
co-trustees of the Special Purpose Trust of J. Burton Frierson and held
subject to the Shareholder Agreement described in note 3.
(6) Includes: (i) 195,662 shares of Common Stock as to which Mr. Frierson holds
sole investment and sole voting power; (ii) 132,576 shares of Common Stock
owned by his wife and children as to which he shares investment and voting
power; and (iii) 27,433 shares of Common Stock owned directly by Rowena K.
Frierson but subject to a general power of attorney held by Daniel K.
Frierson and him.
(7) All such shares of Class B Common Stock are held subject to the Shareholder
Agreement described in note 3.
(8) Includes: (i) 964,797 shares of Common Stock over which The Prudential
Insurance Company of America has sole voting and sole investment power and
(ii) 64,649 shares of Common Stock over which it shares investment power.
(9) SunTrust Bank, Inc., as parent holding company for Third National
Corporation, Trust Company of Georgia, and SunBanks, Inc., has reported
beneficial ownership as follows: Third National Corporation, as parent
holding company of ANB, has reported (i) 682,675 shares of Common Stock
over which ANB has sole voting power, (ii) 82,467 shares of Common Stock
over which ANB had shared voting power, (iii) 250,406 shares of Common
Stock over which ANB has sole investment power; and (iv) 324,862 shares of
Common Stock over which ANB has shared investment power. SunBanks, Inc., as
parent holding company of SunBank Miami, N.A., has reported 4,800 shares of
Common Stock over which it has sole voting power and shares investment
power.
(10) David L. Babson & Co., Inc., a registered Investment Advisor, has reported
beneficial ownership as follows: (i) 570,896 shares of Common Stock over
which it has sole voting power, (ii) 220,833 shares of Common Stock over
which it has shared voting power, and 791,729 shares of Common Stock over
which it has sole investment power.
4
<PAGE> 7
INFORMATION ABOUT NOMINEES FOR DIRECTORS
Pursuant to the Company's Bylaws, all Directors are elected to serve a one
year term, or until their successors are elected and qualified. The Board of
Directors is permitted to appoint directors to fill the unexpired terms of
directors who resign.
The names of the nominees for election to the Board, their ages, their
principal occupation or employment (which has continued for at least the past
five years unless otherwise noted), directorships held by them in other
publicly-held corporations or investment companies, the dates they first became
directors of the Company, and certain other relevant information with respect to
such nominees are as follows:
PAUL K. BROCK, age 62, is Chairman of Brach & Brock Confections, Inc., a
candy manufacturer headquartered in Chattanooga, Tennessee. Mr. Brock served as
President of Brock Candy Company, Chattanooga, Tennessee, prior to its merger
with E.J. Brach Corporation on November 1, 1994. He has been a director of the
Company since 1983. Mr. Brock is Chairman of the Company's Compensation
Committee and a member of the Company's Executive Committee.
LOVIC A. BROOKS, JR., age 67, is Chief Executive Partner of Constangy,
Brooks & Smith, attorneys-at-law, in Atlanta, Georgia. He has been a director of
the Company since 1993.
DANIEL K. FRIERSON, age 53, is Chairman of the Board of the Company, a
position he has held since 1987. He also has been Chief Executive Officer of the
Company since 1980 and a director of the Company since 1973. Mr. Frierson serves
as a director of American National Bank & Trust Company, Chattanooga, Tennessee,
and of Astec Industries, Inc., headquartered in Chattanooga, Tennessee. Mr.
Frierson is Chairman of the Company's Executive Committee and a member of the
Company's Retirement Plans Committee.
PAUL K. FRIERSON, age 57, is Vice President of the Company and President of
the Company's Candlewick Group, positions he has held since 1989. He has served
as Executive Vice President of the Candlewick Group since 1984 and as a director
of the Company since 1988. Mr. Frierson serves as a director of
NationsBank/Chattanooga.
J. FRANK HARRISON, JR., age 64, is Chairman of the Board and a director of
Coca-Cola Bottling Co. Consolidated in Charlotte, North Carolina. He has been a
director of the Company since 1973. Mr. Harrison is a member of the Company's
Compensation Committee.
JAMES H. MARTIN, JR., age 75, was Chairman and the Chief Executive Officer
of Ti-Caro, Inc., prior to its acquisition by the Company in 1987. He has been a
director of the Company since 1987. Mr. Martin is a member of the Company's
Audit Committee.
PETER L. SMITH, age 53, is a General Partner of Lazard Freres & Co.,
investment bankers, in New York, New York. He has been a director of the Company
since 1987. Mr. Smith is a member of the Company's Audit Committee.
JOSEPH T. SPENCE, JR., age 53, is Managing Director of Russell Reynolds
Associates, Inc., an executive recruiting firm. He has held such position since
1988. Mr. Spence has been a director of the Company since 1993.
ROBERT J. SUDDERTH, JR., age 52, is Chairman and Chief Executive Officer of
American National Bank & Trust Company in Chattanooga, Tennessee. He has been a
director of the Company since 1983. Mr. Sudderth is Chairman of the Company's
Audit Committee, a member of the Company's Compensation Committee, and a member
of the Company's Retirement Plans Committee.
5
<PAGE> 8
Daniel K. Frierson and Paul K. Frierson are brothers, and Paul K. Brock is
the first cousin of Daniel K. Frierson and Paul K. Frierson. James H. Martin,
Jr. is the uncle of Daniel K. Frierson, Paul K. Frierson, and Paul K. Brock.
Other than as set forth above, no director, nominee or executive officer of the
Company has any family relationship, not more remote than first cousin, to any
other director, nominee, or executive officer.
SECURITY OWNERSHIP OF MANAGEMENT
The following table presents certain information regarding the amount and
nature of beneficial ownership of the Company's equity securities by its
nominees for directors, by the Company's executive officers named in the Summary
Compensation Table (see "Executive Compensation"), and by all directors and
officers, as a group, as of March 10, 1995.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL NUMBER OF SHARES
OWNERSHIP OF MANAGEMENT TITLE OF CLASS BENEFICIALLY OWNED(1) % OF CLASS
----------------------------------------- -------------------- --------------------- ----------
<S> <C> <C> <C>
Philip H. Barlow Common Stock 20,354(2) *
Class B Common Stock -- --
Paul K. Brock Common Stock 600 *
Class B Common Stock -- --
Lovic A. Brooks, Jr. Common Stock 2,000 *
Class B Common Stock -- --
C. Pat Driver Common Stock 32,306(5) *
Class B Common Stock -- --
Daniel K. Frierson Common Stock 435,405(3) 3.76%
Class B Common Stock 661,440(4) 89.96%
Paul K. Frierson Common Stock 111,527(6) *
Class B Common Stock 251,373(7) 34.19%
Glenn M. Grandin(8) Common Stock 5,000 *
Class B Common Stock -- --
J. Frank Harrison, Jr. Common Stock 9,324 *
Class B Common Stock -- --
James H. Martin, Jr. Common Stock 6,000 *
Class B Common Stock -- --
Peter L. Smith Common Stock 4,500 *
Class B Common Stock -- --
Joseph T. Spence, Jr. Common Stock 500 *
Class B Common Stock -- --
John O. Sturdy Common Stock 800 *
Class B Common Stock -- --
Robert J. Sudderth, Jr. Common Stock 175,588(9) 1.53%
Class B Common Stock -- --
All Directors and Executive Officers as a Common Stock 700,707(10) 5.99%
Group (20 Persons) Class B Common Stock 733,440(4)(7) 99.76%
</TABLE>
---------------
* Percentage of shares beneficially owned does not exceed 1% of the Class.
(1) The Class B Common Stock is convertible on a share-for-share basis into
shares of Common Stock; however, information presented in this table as to
the number of shares of Common Stock beneficially owned and the percent of
class does NOT give effect to the possible conversion of shares of Class B
Common Stock into shares of Common Stock.
6
<PAGE> 9
(2) Includes: (i) 810 shares of Common Stock owned directly by Mr. Barlow and
(ii) options to acquire 19,544 shares of Common Stock, which are
immediately exercisable or exercisable within 60 days.
(3) Includes: (i) 27,238 shares of Common Stock as to which Mr. Frierson has
sole investment and sole voting power; (ii) options to acquire 84,000
shares of Common Stock, which are immediately exercisable or exercisable
within 60 days; (iii) 27,433 shares of Common Stock owned directly by
Rowena K. Frierson but subject to a general power of attorney granted to
Mr. Frierson and T. Cartter Frierson; (iv) 174,588 shares of Common Stock
owned by the "Dixie Yarns, Inc. Defined Contribution Plan" for which Mr.
Frierson and Robert J. Sudderth, Jr. are fiduciaries and for which American
National Bank & Trust Company of Chattanooga ("ANB") serves as trustee; and
(v) 122,146 shares of Common Stock owned by the wife and children of Daniel
K. Frierson and as to which he shares voting and investment power.
(4) Includes: (i) 105,072 shares of Class B Common Stock owned by Mr.
Frierson's wife and children and to which he shares investment and voting
power and (ii) 556,368 shares of Class B Common Stock held pursuant to a
shareholder agreement under which he has been granted a proxy, which
expires October 2005, to vote such shares (the "Shareholder Agreement").
The proxy is terminable under certain limited circumstances prescribed in
the Shareholder Agreement. The Shareholder Agreement is between the Estate
of J. Burton Frierson, the wife of J. Burton Frierson (Rowena K. Frierson),
and the five sons of J. Burton and Rowena K. Frierson (Daniel K. Frierson;
Paul K. Frierson; T. Cartter Frierson; James W. Frierson; and J. Burton
Frierson, III). The 556,368 shares of Class B Common Stock subject to the
Shareholder Agreement include: (a) 220,500 shares of Class B Common Stock
owned directly by him; (b) 94,069 shares of Class B Common Stock owned
directly by Paul K. Frierson; (c) 15,678 shares of Class B Common Stock
owned directly by T. Cartter Frierson; (d) 15,678 shares of Class B Common
Stock owned directly by J. Burton Frierson, III; (e) 40,000 shares of Class
B Common Stock held by Paul K. Frierson, T. Cartter Frierson, and Daniel K.
Frierson as co-trustees of the Frierson Family Trusts; (f) 45,304 shares of
Class B Common Stock held by Paul K. Frierson, T. Cartter Frierson, and
Daniel K. Frierson as co-trustees of the Special Purpose Trust of J. Burton
Frierson; and (g) 125,139 shares of Class B Common Stock owned directly by
Rowena K. Frierson but subject to a general power of attorney granted to
Daniel K. Frierson and T. Cartter Frierson.
(5) Includes: (i) 18,306 shares of Common Stock owned directly by Mr. Driver
and (ii) options to acquire 14,000 shares of Common Stock, which are
immediately exercisable.
(6) Includes: (i) 17,225 shares of Common Stock as to which Mr. Frierson holds
sole investment and sole voting power; (ii) options to acquire 22,000
shares of Common Stock, which are immediately exercisable or exercisable
within 60 days; and (iii) 72,302 shares of Common Stock owned by his wife
and children and as to which he shares investment and voting power.
(7) Includes: (i) 94,069 shares of Class B Common Stock owned directly by Mr.
Frierson and held subject to the Shareholder Agreement described in Note 4;
(ii) 72,000 shares of Class B Common Stock owned by his wife and children
and as to which he shares investment and voting power; (iii) 40,000 shares
of Class B Common Stock held by him, T. Cartter Frierson, and Daniel K.
Frierson as co-trustees of the Frierson Family Trusts and held subject to
the Shareholder Agreement described in note 4; and (iv) 45,304 shares of
Class B Common Stock held by him, T. Cartter Frierson and Daniel K.
Frierson as co-trustees of the Special Purpose Trust of J. Burton Frierson
and held subject to the Shareholder Agreement described in note 4.
(8) Mr. Grandin joined the Company as Senior Vice-President and Chief Financial
Officer on February 20, 1995.
(9) Includes: (i) 1,000 shares of Common Stock owned directly by Mr. Sudderth
and (ii) 174,588 shares of Common Stock owned by the "Dixie Yarns, Inc.
Defined Contribution Plan" for which he and Daniel K. Frierson are
fiduciaries.
(10) Includes: (i) options to acquire 198,794 shares, which are immediately
exercisable or exercisable within 60 days and (ii) 221,881 shares held by
spouses and children of certain individuals comprising this group.
7
<PAGE> 10
SECTION 16(a) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, and regulations of
the Securities and Exchange Commission ("SEC") thereunder, require the Company's
executive officers and directors and persons who own more than 10% of the
Company's Common Stock, as well as certain affiliates of such persons, to file
initial reports of ownership and monthly transactions reports covering any
changes in ownership with the SEC and the National Association of Securities
Dealers. Executive officers, directors, and persons owning more than 10% of the
Company's Common Stock are required by SEC regulations to furnish the Company
with all such reports they file. Based solely on its review of the copies of
such reports received by it and written representations that no other reports
were required for such persons, the Company believes that, during fiscal year
1994, all filing requirements applicable to its executive officers, directors,
and owners of more than 10% of the Company's Common Stock were complied with.
COMMITTEES, ATTENDANCE AND DIRECTORS' FEES
The Company has an Executive Committee, an Audit Committee, a Retirement
Plans Committee, and a Compensation Committee, but no nominating committee.
The Board of Directors has an Executive Committee whose members were Daniel
K. Frierson, Paul K. Brock, and James H. Martin during 1994. Except as otherwise
limited by law or by resolution of the Board of Directors, the Committee has and
may exercise all of the powers and authority of the Board of Directors for the
management of the business and affairs of the Company, which power the Committee
exercises between the meetings of the full Board of Directors. The Executive
Committee met three times in 1994.
The Board of Directors has a standing Audit Committee whose members were
James H. Martin, Robert J. Sudderth, Jr., and Peter L. Smith during 1994. The
Audit Committee evaluates audit performance, handles relations with the
Company's independent accountants, and evaluates policies and procedures
relating to internal accounting functions and controls. The Committee recommends
to the Board of Directors the appointment of the independent accountants for the
Company. The Audit Committee met three times in 1994.
The Board of Directors has a Compensation Committee whose members during
1994 were Paul K. Brock, J. Frank Harrison, Jr., and Robert J. Sudderth, Jr. The
Compensation Committee administers the Company's compensation plans, reviews and
may establish the compensation of the Company's officers, and makes
recommendations to the Board of Directors concerning such compensation and
related matters. The Compensation Committee met two times in 1994.
The Board of Directors does not have a standing nominating committee or
committee performing similar functions.
No director attended fewer than 75% of the total of meetings of the Board
of Directors and any Committee of the Board of Directors on which he served,
with the exception of J. Frank Harrison, Jr. who attended three Board meetings
and two Compensation Committee meetings.
Directors who are not employees of the Company are paid a retainer of
$10,000 per year, $500 for each Board meeting attended, and $400 for each
committee meeting attended.
8
<PAGE> 11
CERTAIN TRANSACTIONS BETWEEN THE COMPANY AND DIRECTORS AND OFFICERS
Mr. Martin provides advisory services to the Company as a consultant and
was paid $58,150 in Directors' fees, retainer fees, and other fees in 1994. Mr.
Brooks is Chief Executive Partner of Constangy, Brooks & Smith, a law firm that
performed certain legal services for the Company in 1994. Mr. Smith is a general
partner of Lazard Freres & Co., an investment banking firm that performs certain
investment banking functions for the Company from time to time. No fees were
paid to Lazard Freres & Co. in 1994.
EMPLOYMENT AGREEMENTS
In 1988, Carriage Industries, Inc. ("Carriage") entered into an Executive
Severance Agreement with Mr. Barlow (the "Agreement"). In 1992, the Agreement
was renewed, with some changes, for a period ending on September 7, 1996.
Pursuant to the terms of the Company's acquisition of Carriage in March 1993,
the Company assumed the obligations of Carriage under the Agreement. The
Agreement provides that if, within ninety days prior to or two years after any
Change of Control (as defined in the Agreement), Mr. Barlow's employment is
terminated for any reason other than for Cause (as defined in the Agreement),
death, disability, retirement (as defined in the Agreement), or Voluntary
Termination (as defined in the Agreement), the Company shall provide Mr. Barlow
with (i) a lump sum cash amount equal to the average of his salary and any bonus
paid to him for the three calendar years preceding the year in which the Change
of Control (as defined in the Agreement) occurs (the "Average Compensation")
plus an amount equal to 20% of the Average Compensation multiplied by the number
of full calendar years he has been employed by the Company and Carriage; (ii)
coverage, paid for by the Company, under the Company's Life, Disability, Medical
and Dental, Health, and Accident insurance plans for a period of thirty-four
months after the date of his termination; (iii) up to a $10,000 relocation
allowance if he moves his residence to pursue other business opportunities
within thirty-four months after the date of his termination; and (iv) the right,
during the three month period following the date of his termination, to either
(a) exercise all options previously granted to him under Carriage's Incentive
Stock Option Plan (as defined in the Agreement) as to all or any part of the
years covered thereby or (b) have the Company, upon written request, purchase
all such options for cash at a price determined by multiplying the excess, if
any, of the fair market value of a share of stock of the Company over the option
price therefor by the number of all such option shares.
9
<PAGE> 12
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the Common Stock against the total return
of the S&P Composite Stock Index and Peer Group for the five year period ended
December 31, 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Dixie Yarns, Standard & Poors 500 And Value Line Textiles Index
(Performance Results Through 12/31/94)
<TABLE>
<CAPTION>
Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94
<S> <C> <C> <C> <C> <C> <C>
Dixie Yarns, Inc. $100 $73.72 $ 68.20 $ 94.93 $ 77.92 $ 53.15
S & P 500(R) $100 $96.83 $126.41 $136.25 $ 150 $151.97
Textiles Index $100 $71.91 $126.88 $ 152 $164.53 $141.99
</TABLE>
[PASTEUP GRAPH]
Assumes $100 invested at the close of trading 12/89 in Dixie Yarns common
stock, Standard & Poors 500, and Textiles.
* Cumulative total return assumes reinvestment of dividends.
10
<PAGE> 13
REPORT OF COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF DIXIE YARNS, INC.
The Compensation Committee of the Board of Directors is composed of Messrs.
J. Frank Harrison, Jr., Paul K. Brock, and Robert J. Sudderth, Jr., none of whom
are employees of the Company. The Committee administers the Company's
compensation plans, annually reviews and recommends compensation for all
officers of the Company, and submits its recommendations to the Board. Final
decisions respecting compensation of executive officers are made by the Board,
with individuals abstaining from decisions concerning their own compensation.
As part of its process of review, the Committee receives recommendations
from the Company's senior management, reviews both public and private
compensation surveys prepared by independent consultants and others, and reviews
executive compensation reported in proxy information from other public textile
and carpet companies. The Committee meets on an as needed basis at other times
during the year.
The following is a report submitted by the Compensation Committee
addressing the Company's compensation policies applicable to Daniel K. Frierson,
the Company's Chief Executive Officer, and its other four most highly
compensated executive officers named in the accompanying summary compensation
table for 1994.
COMPENSATION OF EXECUTIVE OFFICERS DURING FISCAL 1994
The Company's compensation policies are intended to attract, retain,
motivate, and reward qualified individuals to serve in executive positions with
the Company. Incentive compensation is provided to encourage such individuals to
originate and implement successful long-term business strategies that will
enhance long-term shareholder value. Accordingly, compensation of the Company's
executive officers, including the Chief Executive Officer, consists of a
combination of base salary, annual bonuses, and stock options as well as other
fringe benefits generally applicable to salaried employees. In establishing base
salary, the Committee considers the qualifications and experience of the
individual, the duties and responsibilities of the executive officer position,
the competitive market for executive talent, and the overall financial ability
of the Company to bear the expense.
Bonuses are considered for award annually and, for 1994, are based upon
pre-tax earnings and extraordinary individual performance. Stock options may be
granted under the Company's Stock Option Plans and are typically granted at the
current market price of the Company's Common Stock at the time of issue in
amounts believed to be appropriate to the level of duties and responsibilities
for each executive position.
The Committee believes that it is important to retain flexibility in the
establishment of compensation for the Company's executive officers in order to
allow for the use of judgment and discretion with respect to each individual
officer. Compensation, in the opinion of the Committee, should not only reflect
overall Company performance but also performance in specific areas of
responsibility and exceptional individual performance. The Committee believes
that the overall compensation paid to the Company's executive officers,
including the Company's Chief Executive Officer and the four named individuals
in the accompanying table, is reasonable under the circumstances.
11
<PAGE> 14
THE ELEMENTS OF EXECUTIVE OFFICER COMPENSATION
Compensation for each of the Company's senior executive officers may
consist of four elements: base salary; annual bonuses; stock options; and
retirement and other fringe benefits.
- BASE SALARY
The base salary of Daniel K. Frierson was unchanged in 1994 and has not
been increased since 1988. The base salaries of C. Pat Driver and John Sturdy
were unchanged in 1994. The base salaries of Philip H. Barlow and Paul K.
Frierson were increased to $145,000 and $167,500, respectively, during 1994.
- BONUS
A new management incentive plan was adopted in 1994 to establish criteria
for the discretionary award of bonuses to the Company's executive officers and
other key management personnel (the "1994 Incentive Plan"). The 1994 Incentive
Plan is applicable to each operating group of the Company (with the exception of
the Company's Knit Group) and provides for a bonus pool of up to 10% of pretax
earnings (subject to certain offsets), with the exact amount of the bonus pool
to be approved by the Company's Chairman. Discretionary bonuses were awarded
under the 1994 Incentive Plan to John O. Sturdy, Vice President/President,
Masland Carpets, Inc.; Phillip H. Barlow, Vice President/President, Carriage
Industries, Inc.; and Paul K. Frierson, Vice President/President, Candlewick
Group.
- STOCK OPTIONS
Each executive officer of the Company is entitled to participate in the
Company's Incentive Stock Option Plan. Although the Plan has been structured to
provide the Company with maximum flexibility in awarding, pricing, and vesting
options granted under the Plan, the Company's practice has been to grant options
under the Plan exercisable only at market prices and subject to phase-in vesting
schedules.
The Committee believes that the grant of stock options for shares of the
Company's Common Stock exercisable at the market price on the date of grant
provides grantees with an incentive to enhance long-term shareholder values. The
value of these options depends directly on increases in the trading price of the
Company's Common Stock.
To ensure option-related compensation is dependent upon long-term increases
in value of the underlying securities, the options vest over a five year period
commencing on the date of grant. All options granted to the named individuals in
the accompanying summary compensation table under the Plan were granted with an
exercise price set at the market price on the date of grant, and with the
following vesting schedules: 25% in two years from the date of grant; 50% in
three years; 75% in four years; and 100% in five years.
Prior to the acquisition of Carriage, various officers of Carriage,
including Mr. Barlow, held options to purchase Carriage common stock. As a part
of the acquisition, the Company issued options for the Company's Common Stock to
all of such individuals in order to replace the Carriage options that were
canceled upon the acquisition. Mr. Barlow holds options for the purchase of
15,794 shares of Common Stock of the Company received as a part of such
transaction.
- RETIREMENT PLANS AND OTHER BENEFITS
The Company's compensation for its executive officers also includes the
opportunity to participate in two non-qualified plans and certain health
insurance, relocation allowances, life insurance, and other benefits.
12
<PAGE> 15
During 1994 the Company maintained two non-qualified retirement plans in
which the Company's executive officers participate: a Non-qualified Savings Plan
and a Non-qualified Defined Contribution Plan, which are designed to mirror the
qualified plans available to other exempt, salaried associates. No Company
contributions are made to the Non-qualified Savings Plan. Participants in the
Non-qualified Defined Contribution Plan may receive contributions from the
Company equal to a percentage of each such participant's compensation, based on
a ratio of the Company's operating profit to net worth and other discretionary
factors. No Company contributions to the Non-qualified Defined Contribution Plan
were made in 1994.
- CEO COMPENSATION
As previously indicated, compensation of the Company's executive officers
is intended to attract, retain, motivate, and reward such officers where
appropriate. Mr. Frierson's compensation in 1994 included his base salary and
other benefits, the opportunity to participate in the 1994 Incentive Plan (with
respect to which no bonus was awarded to Mr. Frierson in 1994), and
participation in the Company's Incentive Stock Plan (with respect to which he
was awarded no options in 1994).
The Committee believes that Mr. Frierson's overall compensation, including
his base salary, falls within the lower tier of executive compensation for
similar positions in comparable companies.
Compensation Committee:
J. Frank Harrison, Jr.
Paul K. Brock
Robert J. Sudderth, Jr.
13
<PAGE> 16
EXECUTIVE COMPENSATION INFORMATION
The following table sets forth the annual and long-term compensation during
the last three fiscal years for the Company's Chief Executive Officer and the
other four most highly compensated executive officers (the "Named Executive
Officers") as of December 31, 1994, as well as the annual compensation of each
such individual for the Company's two previous fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
--------------------------------------------- COMPENSATION
OTHER AWARDS
ANNUAL ------------
SALARY BONUS COMPENSATION OPTIONS/SARS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(D) (#)(E)
------------------------------------------ ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Daniel K. Frierson 1994 350,000 -- -- --
Chairman of the Board and 1993 350,000 100,000 5,314 --
Chief Executive Officer 1992 350,000 -- 18,581 100,000
John O. Sturdy(a) 1994 200,000 70,000 -- --
Vice President/President 1993 100,000 60,000 -- 25,000
Masland Carpets, Inc. 1992 -- -- -- --
Philip H. Barlow(b)(c) 1994 139,905 130,000 -- --
Vice President/President 1993 101,380 95,000 -- 15,000
Carriage Industries, Inc. 1992 -- -- -- --
C. Pat Driver 1994 180,000 -- -- --
Vice President/President 1993 180,000 -- 2,684 --
Rex Group 1992 170,000 -- 8,704 --
Paul K. Frierson 1994 163,333 60,000 -- --
Vice President/President 1993 155,000 -- 3,474 --
Candlewick Group 1992 155,000 -- 10,018 --
</TABLE>
---------------
(a) Includes annual and long-term compensation subsequent to July 9, 1993, when
Mr. Sturdy was employed by the Company.
(b) Includes annual and long-term compensation subsequent to March 12, 1993,
when Mr. Barlow was employed by the Company.
(c) Excludes 15,794 options to purchase shares of the Company's Common Stock
issued on March 12, 1993, in connection with the Company's acquisition of
Carriage Industries, Inc.
(d) Reflects the excess of actual earnings of the Company's qualified and
non-qualified defined contribution and salary savings plans over 120% of
the average applicable federal rates, determined in accordance with
applicable regulations of the Securities and Exchange Commission. The
actual rate of earnings of such plans is substantially the same as the rate
of earnings on the Company's other such plans for salaried employees and is
not established or guaranteed by the Company. Such rate of earnings may
vary from year to year. No named officer received perquisites or other
personal benefits in an amount exceeding the lesser of $50,000 or 10% of
such officer's salary and bonus for the periods presented.
(e) Reflects the number of shares of the Company's Common Stock subject to
options granted to the Named Executive Officers for the periods presented.
The Company did not grant any stock options or stock appreciation rights
("SARs") during fiscal 1994.
14
<PAGE> 17
The following table presents summary information concerning options
exercised during 1994 and estimates of the value of unexercised options held by
the Named Executive Officers at fiscal year end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END(#) AT FY-END($)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel K. Frierson -- -- 19,512 117,000 -0- -0-
John O. Sturdy -- -- -- 25,000 -0- -0-
Philip H. Barlow(a) -- -- 15,794 15,000 30,873 -0-
C. Pat Driver -- -- 11,000 7,000 -0- -0-
</TABLE>
---------------
(a) Includes options to purchase 15,794 shares of the Company's Common Stock
issued on March 12, 1993, to replace options to purchase shares of
Carriage's common stock, which were canceled upon the acquisition of
Carriage by the Company. Such options include (i) options to purchase 3,057
shares of Common Stock at an exercise price of $4.2934 per share; (ii)
options to purchase 2,547 shares of Common Stock at an exercise price of
$5.0294 per share; and (iii) options to purchase 10,190 shares of Common
Stock at an exercise price of $5.2748 per share.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the Company's shareholders vote FOR
the election of the Board of Directors' nominees for director as set forth in
this Proxy Statement.
SHAREHOLDER PROPOSALS
In the event any shareholder wishes to present a proposal to the
shareholders at the 1996 Annual Meeting of Shareholders, such proposal must be
received by the Company for inclusion in the Proxy Statement and Proxy relating
to such meeting on or before January 5, 1996.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP has been selected as independent auditors for
the Company. A representative of Ernst & Young LLP is expected to be present at
the Annual Meeting and will have the opportunity to make a statement if he so
desires and to respond to appropriate questions from shareholders.
ADDITIONAL INFORMATION
The entire cost of soliciting proxies will be borne by the Company. In
addition to solicitation of proxies by mail, proxies may be solicited by the
Company's directors, officers, and other employees by personal interview,
telephone, and telegram. The persons making such solicitations will receive no
additional compensation for such services. The Company also requests that
brokerage houses and other custodians, nominees, and fiduciaries forward
solicitation materials to the beneficial owners of the shares of Common Stock
held of
15
<PAGE> 18
record by such persons and will pay such brokers and other fiduciaries all of
their reasonable out-of-pocket expenses incurred in connection therewith.
OTHER MATTERS
As of the date of this Proxy Material, the Board does not intend to
present, and has not been informed that any other person intends to present, any
matter for action at the Annual Meeting other than those specifically referred
to herein. If other matters should properly come before the Annual Meeting, it
is intended that the holders of the proxies will vote in accordance with their
best judgment.
Dixie Yarns, Inc.
Daniel K. Frierson
Chairman of the Board
Dated: March 31, 1995
16
<PAGE> 19
APPENDIX A
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
DIXIE YARNS, INC.
Annual Meeting of Shareholders
May 4, 1995
The undersigned hereby appoints Daniel K. Frierson, James H. Martin, Jr.,
and Robert J. Sudderth, Jr., and each of them, proxies, with full power of
substitution, to act and to vote the shares of common stock which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
at 1100 South Watkins Street, Chattanooga, Tennessee 37404, at 10:00 A.M.,
Eastern Daylight Time, on May 4, 1995, and any adjournment or adjournments
thereof, as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS: / / FOR all nominees / / WITHHOLD ALL AUTHORITY
(Except as indicated to the to vote for all nominees
contrary below) listed below
Paul K. Brock; Lovic A. Brooks, Jr.; Daniel K. Frierson; Paul K. Frierson; J. Frank Harrison, Jr.;
James H. Martin, Jr.; Peter L. Smith; Joseph T. Spence, Jr.; Robert J. Sudderth, Jr.
(Instruction: To withhold authority to vote for any individual, write that nominee's name in the space provided below.)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. Acting upon any other business which may be properly brought before said
meeting or any adjournment or adjournments thereof.
(Continued on reverse side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN
FAVOR OF PROPOSAL 1. THE BOARD IS NOT AWARE OF ANY OTHER MATTER TO BE BROUGHT
BEFORE THE ANNUAL MEETING FOR A VOTE OF SHAREHOLDERS. IF, HOWEVER, OTHER MATTERS
ARE PROPERLY PRESENTED, THE PROXIES WILL VOTE IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders, dated March 31, 1995, and the Proxy Materials furnished
therewith.
Dated this day of , 1995.
---- ---
------------------------------
------------------------------
Note: Signature should agree
with name on stock certificate
as printed hereon. When signing
in a representative capacity,
please give your full title.
Please sign, date and return this Proxy in the accompanying prepaid
self-addressed envelope. Thank you.
