<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
(423) 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 2, 1996, 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 8, 1996 (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 29, 1996
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
(423) 698-2501
---------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1996
---------------------
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 2, 1996, 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 29, 1996,
to the shareholders of record of the Company's Common Stock and Class B Common
Stock as of the close of business on March 8, 1996 (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 8, 1996, 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
8, 1996, 10,465,299 shares of Common Stock, representing 10,465,299 votes, were
held of record by approximately 4,500 shareholders (including an estimated 3,500
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 16 individual
shareholders together representing an aggregate of 25,169,859 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 30, 1995,
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 8, 1996, was 10,465,299, having one vote per share (representing
10,465,299 votes) and 735,228 having twenty votes per share (representing
14,704,560 votes), respectively, for a total of 25,169,859 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 15,309,086 votes
(640,286 shares of Common Stock and 733,440 shares of Class B Common Stock)
representing 60.82% 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., The TCW Group, Inc., Robert B. Pamplin Corporation
and David L. Babson & Co., the information is based on the respective reports
filed by each such beneficial owner with the Securities and Exchange Commission
and with the Company.
<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 335,727(2) 3.21%
Lookout Mountain, TN 37350 Class B Common Stock 661,440(3) 89.96%
Paul K. Frierson
606 Fleetwood Drive Common Stock 256,615(4) 2.45%
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) 3.40%
Lookout Mountain, GA 30750 Class B Common Stock 100,982(7) 13.73%
David L. Babson & Company, Inc.
One Memorial Drive Common Stock 831,529(8) 7.95%
Cambridge, MA 02142 Class B Common Stock -0- --
SunTrust Banks, Inc.
25 Park Place Common Stock 705,630(9) 6.74%
Atlanta, GA 30303 Class B Common Stock -0- --
The TCW Group, Inc.
865 South Figueroa Street Common Stock 581,000(10) 5.55%
Los Angeles, CA 90017 Class B Common Stock 0 0
Robert B. Pamplin Corporation
900 Southwest Fifth Avenue Common Stock 543,600(11) 5.19%
Portland, OR 97204-1259 Class B Common Stock 0 0
</TABLE>
- ---------------
(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) 11,560 shares of Common Stock as to which Mr. Frierson has
sole investment and sole voting power; (ii) 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; (iii)
174,588 shares of Common Stock owned by the "Dixie Yarns, Inc. Defined
Contribution Plan" for which Daniel K. Frierson, Paul K. Frierson and
Robert J. Sudderth, Jr. are fiduciaries and for which SunTrust Bank
Chattanooga, N.A. ("STB") serves as trustee. (See note 9 for a description
of the affiliation between STB and SunTrust Bank, Inc.); and (iv) 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.
(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
3
<PAGE> 6
Shareholder Agreement are 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 Shareholders Agreement
include:(a) 236,178 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) 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; (e) 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 (f) 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) 17,225 shares of Common Stock as to which Mr. Frierson holds
sole investment and sole voting power; (ii) 174,588 shares of Common Stock
owned by the "Dixie Yarns, Inc. Defined Contribution Plan" for which he,
Daniel K. Frierson and Robert J. Sudderth, Jr. are fiduciaries and for
which SunTrust Bank, Chattanooga, N.A. serves as trustee, and (iii) 64,802
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) David L. Babson & Co., Inc., a registered Investment Advisor, has reported
beneficial ownership as follows: (i) 596,996 shares of Common Stock over
which it has sole voting power and (ii) 234,533 shares of Common Stock over
which it has shared voting power. It has reported sole investment power
with respect to all 831,529 such shares.
(9) SunTrust Banks, Inc., as parent holding company for SunTrust Banks of
Tennessee, Inc.; SunTrust Banks of Georgia, Inc.; and in various fiduciary
capacities, has reported beneficial ownership of 705,630 shares of Common
Stock as follows: SunTrust Banks of Tennessee, Inc., as Parent Holding
Company for SunTrust Bank, Chattanooga, N.A. ("STB"), has reported 585,828
shares of Common Stock over which STB has sole power to vote, 79,467 shares
of Common Stock over which STB has shared power to vote, 256,658 shares of
Common Stock over which STB has sole investment power, and 218,963 shares
of Common Stock over which STB has shared investment power. SunTrust Banks
of Georgia, Inc., as Parent Holding Company of SunTrust Bank, Savannah, has
reported 25,000 shares of Common Stock over which it has sole voting power
and no investment power.
(10) The TCW Group, Inc., as parent holding company for certain associated
entities, has reported beneficial ownership of 581,000 shares of Common
Stock, for which it has sole voting and sole investment power.
4
<PAGE> 7
(11) Robert B. Pamplin, the R. B. Pamplin Corporation and Subsidiaries Pension
Plan and Trust, the R. B. Pamplin Corporation and Subsidiaries Savings Plan
and Trust, and the Katherine R. Pamplin Trust have filed a report on
Schedule 13D listing beneficial ownership of Common Stock as follows: (i)
398,600 shares held by Robert B. Pamplin with sole voting and investment
power; (ii) 60,000 shares held by the R. B. Pamplin Corporation and
Subsidiaries Pension Plan and Trust, as to which the trustees (including
Robert B. Pamplin) have sole voting and investment power; (iii) 60,000
shares held by the R. B. Pamplin Corporation and Subsidiaries Savings Plan
and Trust, as to which the trustees (including Robert B. Pamplin) have sole
voting and investment power; and (iv) 25,000 shares held by the Katherine
R. Pamplin Trust, as to which Robert B. Pamplin (as trustee) has sole
voting and investment power.
5
<PAGE> 8
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 63, is retired Chairman of Brach & Brock Confections,
Inc., a candy manufacturer headquartered in Chattanooga, Tennessee. 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 68, is a Partner of Constangy, Brooks & Smith,
attorneys-at-law, in Atlanta, Georgia. He has been a director of the Company
since 1993. Mr. Brooks is a member of the Company's Audit Committee.
DANIEL K. FRIERSON, age 54, 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 SunTrust Bank Chattanooga N.A. 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 58, is Vice President of the Company and President of
the Company's Candlewick Group, positions he has held since 1989. He served as
Executive Vice President of the Candlewick Group from 1984 to 1989 and has been
a director of the Company since 1988. Mr. Frierson serves as a director of
NationsBank/Chattanooga. Mr. Frierson is a member of the Company's Retirement
Plans Committee.
J. FRANK HARRISON, JR., age 65, 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 76, 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
Executive Committee.
PETER L. SMITH, age 54, is a Managing Director of Lazard Freres & Co., LLC,
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 54, is Managing Director of Russell Reynolds
Associates, Inc., an executive recruiting firm in Atlanta, Georgia. He has held
such position since 1988. Mr. Spence has been a director of the Company since
1993 and is a member of the Company's Audit Committee.
ROBERT J. SUDDERTH, JR., age 53, is Chairman and Chief Executive Officer of
SunTrust Bank, Chattanooga, N.A. 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 Executive
6
<PAGE> 9
Committee, a member of the Company's Compensation Committee, and a member of the
Company's Retirement Plans Committee.
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 8, 1996.
<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 27,104(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 -- --
Daniel K. Frierson Common Stock 335,727(3) 3.21%
Class B Common Stock 661,440(4) 89.96%
Paul K. Frierson Common Stock 256,615(5) 2.45%
Class B Common Stock 251,373(6) 34.19%
George B. Smith Common Stock 1,935 *
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 3,000 *
Class B Common Stock -- --
Robert J. Sudderth, Jr. Common Stock 175,588(7) 1.68%
Class B Common Stock --
All Directors and Executive Officers Common Stock 494,423(8) 4.72%
as a Group (19 Persons) Class B Common Stock 733,440(4)(6) 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.
7
<PAGE> 10
(2) Includes: (i) 11,310 shares of Common Stock owned directly by Mr. Barlow
with sole voting and investment power and (ii) options to acquire 15,794
shares of Common Stock, which are immediately exercisable.
(3) Includes: (i) 11,560 shares of Common Stock as to which Mr. Frierson has
sole investment and sole voting power; (ii) 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; (iii) 174,588
shares of Common Stock owned by the "Dixie Yarns, Inc. Defined Contribution
Plan" for which Mr. Frierson, Paul K. Frierson, and Robert J. Sudderth, Jr.
are fiduciaries and for which SunTrust Bank Chattanooga, N.A. of
Chattanooga ("STB") serves as trustee; and (iv) 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 among 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) 236,178 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) 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; (e) 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 (f) 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) 17,225 shares of Common Stock as to which Mr. Frierson holds
sole investment and sole voting power; (ii) 174,588 shares of Common Stock
owned by the "Dixie Yarns, Inc. Defined Contribution Plan" for which he,
Daniel K. Frierson, and Robert J. Sudderth, Jr. are fiduciaries and for
which SunTrust Bank, Chattanooga, N.A. serves as trustee; (iii) 64,802
shares of Common Stock owned by his wife and children and as to which he
shares investment and voting power.
(6) 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 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.
(7) 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, Daniel K. Frierson, and Paul K.
Frierson are fiduciaries.
(8) Includes: (i) options to acquire 16,794 shares, which are immediately
exercisable or exercisable within 60 days and (ii) 214,381 shares held by
spouses and children of certain individuals comprising this group.
8
<PAGE> 11
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
1995, all filing requirements applicable to its executive officers, directors,
and owners of more than 10% of the Company's Common Stock were satisfied.
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 during 1995
were Daniel K. Frierson, Paul K. Brock, James H. Martin, and Robert J. Sudderth,
Jr. 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 performs the functions of a
nominating committee. The Executive Committee met four times in 1995.
The Board of Directors has a standing Audit Committee whose members were
Robert J. Sudderth, Jr., Lovic A. Brooks, Jr., Joseph T. Spence, Jr., and Peter
L. Smith during 1995. 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 1995.
The Board of Directors has a Compensation Committee whose members during
1995 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 three times in 1995.
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.
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.
9
<PAGE> 12
CERTAIN TRANSACTIONS BETWEEN THE COMPANY AND DIRECTORS AND OFFICERS
Mr. Martin provides advisory services to the Company as a consultant and
was paid $46,900 in Directors' fees, retainer fees, and other fees in 1995. Mr.
Brooks is a partner at Constangy, Brooks & Smith, a law firm that performed
certain legal services for the Company in 1995. Mr. Smith is a managing director
of Lazard Freres & Co., LLC, 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., LLC in 1995.
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.
10
<PAGE> 13
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, 1995.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Dixie Yarns, Standard & Poors 500 and the Value Line Textiles Index
(Performance Results Through 12/31/95)
[GRAPH]
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Dixie Yarns $176.40 $211.35 $228.78 $197.44 $201.19
Standard & Poors 500 $130.55 $140.72 $154.91 $157.38 $215.42
Value Line Textiles Index $ 92.52 $128.77 $105.70 $ 72.09 $ 39.81
</TABLE>
Assumes $100 invested at the close of trading 12/90 in Dixie Yarns common
stock, Standard & Poors 500 and the Value Line Textiles Index.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
11
<PAGE> 14
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 1995.
COMPENSATION OF EXECUTIVE OFFICERS DURING FISCAL 1995
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 1995, were based upon
return on capital employed 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. During the year, the Committee
acted to cancel certain outstanding options that were at exercise prices
substantially in excess of then current market prices and to issue replacement
options at exercise prices closer to the then current market price as set forth
below.
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.
12
<PAGE> 15
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 1995 and has not
been increased since 1988. The base salary of John Sturdy was unchanged in 1995.
The base salaries of Messrs. Philip H. Barlow, Paul K. Frierson and George B.
Smith were increased for 1995.
- - BONUS
A management incentive plan establishes criteria for the discretionary
award of bonuses to the Company's executive officers and other key management
personnel (the "Incentive Plan"). The 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
Compensation Committee of the Board. Discretionary bonuses were awarded under
the Incentive Plan to John O. Sturdy, Executive Vice President/President Masland
Carpets, Inc.; Philip 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 generally at or above 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 or above the market price on the date of grant, and with
the following vesting schedules: 25% after two years from the date of grant; 50%
after three years; 75% after four years; and 100% after 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.
- - REPORT ON REPRICING OF OPTIONS
During 1995, the Committee reviewed the outstanding, unexercised options
held by the Company's executive officers, including the Named executive officers
and Daniel K. Frierson, the Company's Chief
13
<PAGE> 16
Executive Officer. As a result of its review, the Committee recommended
canceling outstanding, unexercised options for all executive officers and
replacing those cancelled options with options to purchase the same number of
shares as those being cancelled but having an exercise price closer to the then
current market price of the Company's common stock. The closing price of the
Company's Common stock on the date of grant of the replacement options was $6.25
per share, and all such replacement options were granted at an exercise price of
$8.00 per share. The new options were given terms and exercise rights
substantially similar to those of the cancelled options.
The Company's stock options are intended to provide incentives to the
Company's officers and employees to enhance long-term Shareholder value. The
Committee determined that, at their original exercise prices, ranging from
$10.75 to $15.25 per share, such options did not provide realistic or meaningful
incentives to the option holders.
Due to economic conditions and the Company's current financial condition,
the Company's common stock price was substantially below the exercise price of
the outstanding options held by such management. Cancellation of outstanding
options and the grant of new options on terms more closely related to then
current market prices was felt by the Committee to be a means of reintroducing
the incentive element of the options for the Company's management.
- - 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.
During 1995, 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 be
substantially similar to 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 1995.
- - 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 1995 included his base salary and
other benefits, the opportunity to participate in the Incentive Plan (with
respect to which no bonus was awarded to Mr. Frierson in 1995), and
participation in the Company's Incentive Stock Plan.
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:
Paul K. Brock
J. Frank Harrison, Jr.
Robert J. Sudderth, Jr.
14
<PAGE> 17
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 30, 1995, 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 1995 $350,000 $ -- $216,846 134,000
Chairman of the Board and 1994 350,000 -- -- --
Chief Executive Officer 1993 350,000 100,000 5,314 --
John O. Sturdy(a) 1995 200,000 60,000 13,829 30,000
Exec. Vice President/President 1994 200,000 70,000 -- --
Masland Carpets, Inc. 1993 100,000 60,000 -- 25,000
Philip H. Barlow(b)(c) 1995 151,667 60,000 4,626 25,000
Vice President/President 1994 139,905 130,000 -- --
Carriage Industries, Inc. 1993 101,380 95,000 -- 15,000
George B. Smith 1995 180,000 -- 13 30,000
Vice President/President 1994 173,333 -- 0 --
Yarn and Knit Group 1993 160,000 -- 0 --
Paul K. Frierson 1995 167,500 60,000 135,259 32,000
Vice President/President 1994 163,333 60,000 -- --
Candlewick Group 1993 155,000 -- 3,474 --
</TABLE>
- ---------------
(a) Includes annual and long-term compensation subsequent to July 9, 1993, when
Mr. Sturdy was employed by the Company. Of the 30,000 options issued to Mr.
Sturdy in 1995, 25,000 are repriced options that originally were issued to
him in 1993 (See "Ten Year Options/SAR Repricings" table).
(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. Of the 25,000 options issued to Mr. Barlow in
1995, 15,000 are repriced options that orginally were issued to him in 1993
(See "Ten Year Options/SAR Repricings" table).
(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 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 $50,000 or 10% of such
officer's salary and bonus for the periods presented.
(e) Reflects the number of shares of the Company's Common Stock subject to
options granted to the Named Executive Officers for the periods presented.
15
<PAGE> 18
The following table sets forth certain information concerning grants of
options during fiscal 1995 to the Named Executive Officers.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
----------------------------- STOCK PRICE
% OF TOTAL APPRECIATION FOR
OPTIONS GRANTED EXERCISE OR OPTION TERM(A)
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ------------------------------ ---------- --------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Daniel K. Frierson 134,000 18.72% $8.00 5/04/05 $292,120 $1,100,140
John O. Sturdy 30,000 4.19% $8.00 5/04/05 65,400 246,300
Philip H. Barlow 25,000 3.49% $8.00 5/04/05 54,500 205,250
George B. Smith 30,000 4.19% $8.00 5/04/05 65,400 246,300
Paul K. Frierson 32,000 4.47% $8.00 5/04/05 69,760 262,720
</TABLE>
- ---------------
(a) The assumed annual rates of appreciation of five and ten percent on the
market price of the Company's Common Stock at the date the options were
granted would result in the Company's Common Stock price per share
increasing to $10.18 and $16.21, respectively, during the option term.
(b) The Company did not grant any stock appreciation rights ("SAR") during
fiscal 1995.
The following table presents summary information concerning options
exercised during 1995 and estimates of the value of unexercised options held by
the Named Executive Officers at fiscal year end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END(#) AT FY-END($)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel K. Frierson -- -- 0 134,000 0 0
John O. Sturdy -- -- 0 30,000 0 0
Philip H. Barlow(a) -- -- 15,794 25,000 0 0
George B. Smith -- -- 0 30,000 0 0
Paul K. Frierson -- -- 0 32,000 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 $5.2748 per share.
16
<PAGE> 19
TEN-YEAR OPTION/SAR REPRICINGS
The following table sets forth information with respect to the repricing of
outstanding stock options that was effected on May 4, 1995.
<TABLE>
<CAPTION>
SECURITIES MARKET
UNDERLYING PRICE OF EXERCISE LENGTH OF ORIGINAL
NUMBER OF STOCK AT PRICE AT OPTION TERM
OPTIONS/SARS TIME OF TIME OF NEW REMAINING AT DATE
REPRICED OR REPRICING OR REPRICING OR EXERCISE OF REPRICING
NAME DATE AMENDED(3) AMENDMENT($) AMENDMENT($) PRICE($) OR AMENDMENT
- ----------------------------- ----------- ------------ ------------ ------------ -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Daniel K. Frierson May 4, 1995 34,000 $ 6.25 $ 14.00 $ 8.00 5 years
Chairman of the Board May 4, 1995 100,000 $ 6.25 $ 10.75 $ 8.00 7 years
Chief Executive Officer
John O. Sturdy May 4, 1995 25,000 $ 6.25 $ 12.50 $ 8.00 8 years
Executive Vice President/
President, Masland
Carpets, Inc.
Philip H. Barlow May 4, 1995 15,000 $ 6.25 $ 15.25 $ 8.00 8 years
Vice President/President,
Carriage Industries, Inc.
George B. Smith May 4, 1995 15,000 $ 6.25 $ 11.00 $ 8.00 7 years
Vice President/ May 4, 1995 10,000 $ 6.25 $ 15.25 $ 8.00 8 years
President, Yarn and
Knit Group
Paul K. Frierson May 4, 1995 12,000 $ 6.25 $ 14.00 $ 8.00 5 years
Vice President/ May 4, 1995 20,000 $ 6.25 $ 10.75 $ 8.00 7 years
President, Candlewick
Yarn Group
</TABLE>
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 November 29, 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.
17
<PAGE> 20
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 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 29, 1996
18
<PAGE> 21
APPENDIX A
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
DIXIE YARNS, INC.
Annual Meeting of Shareholders
May 2, 1996
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 2, 1996, and any adjournment or adjournments
thereof, as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <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
</TABLE>
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.)
- --------------------------------------------------------------------------------
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 29, 1996, and the Proxy Materials furnished
therewith.
Dated this_____day of___, 1996.
______________________________
______________________________
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.
