FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 30, 1996
Commission File Number 0-2585
DIXIE YARNS, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-0183370
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Indentification No.)
1100 South Watkins Street
Chattanooga, Tennessee 37404
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (423) 698-2501
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of April 30, 1996
Common Stock, $3 Par Value 10,464,796 shares
Class B Common Stock, $3 Par Value 735,228 shares
Class C Common Stock, $3 Par Value 0 shares
DIXIE YARNS, INC 2
INDEX
Part I. Financial Information: Page No.
Consolidated Condensed Balance Sheets --
March 30, 1996 and December 30, 1995 3
Consolidated Statements of Income (Loss) --
Three Months Ended March 30, 1996
and April 1, 1995 5
Consolidated Condensed Statements of Cash Flows --
Three Months Ended March 30, 1996
and April 1, 1995 6
Notes to Consolidated Condensed Financial Statements 8
Management's Discussion and Analysis of Results of
Operations and Financial Condition 9
Part II. Other Information:
Item 6 - Exhibits and Reports on Form 8-K 11
PART I - ITEM 1 3
FINANCIAL INFORMATION
DIXIE YARNS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
March 30, December 30,
1996 1995
____________ ____________
(dollar amounts in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,788 $ 3,413
Accounts receivable (less allowance for
doubtful accounts of $3,291 in 1996
and $3,156 in 1995) 30,383 17,369
Inventories 101,292 103,253
Assets held for sale 21,669 22,090
Other 7,152 10,518
____________ ____________
TOTAL CURRENT ASSETS 164,284 156,643
PROPERTY, PLANT AND EQUIPMENT 388,466 383,741
Less accumulated amortization and
depreciation 197,240 190,238
____________ ____________
NET PROPERTY, PLANT AND EQUIPMENT 191,226 193,503
INTANGIBLE ASSETS (less accumulated
amortization of $6,239 in 1996
and $5,973 in 1995) 35,509 35,775
OTHER ASSETS 11,131 11,076
____________ ____________
TOTAL ASSETS $ 402,150 $ 396,997
____________ ____________
____________ ____________
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 4
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
March 30, December 30,
1996 1995
____________ ____________
(dollar amounts in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 27,342 $ 20,394
Accrued expenses 25,041 23,294
Current portion of long-term debt 2,168 2,171
____________ ____________
TOTAL CURRENT LIABILITIES 54,551 45,859
LONG-TERM DEBT
Senior indebtedness 95,062 97,383
Subordinated notes 50,000 50,000
Convertible subordinated debentures 44,782 44,782
____________ ____________
TOTAL LONG-TERM DEBT 189,844 192,165
OTHER LIABILITIES 11,351 11,486
DEFERRED INCOME TAXES 29,083 29,197
STOCKHOLDERS' EQUITY
Common Stock - issued and outstanding,
13,869,422 shares in 1996 and
13,862,799 shares in 1995 41,608 41,588
Class B Common Stock - issued and
outstanding, 735,228 shares in 1996
and 1995 2,206 2,206
Additional paid-in capital 131,620 131,618
Retained earnings 1,456 2,447
Minimum pension liability adjustment (4,116) (4,116)
____________ ____________
172,774 173,743
Less Common Stock in treasury at cost -
3,404,126 shares in 1996 and
3,404,123 shares in 1995 55,453 55,453
____________ ____________
TOTAL STOCKHOLDERS' EQUITY 117,321 118,290
____________ ____________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 402,150 $ 396,997
____________ ____________
____________ ____________
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 5
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
Three Months Ended
_________________________________
March 30, April 1,
1996 1995
______________ ______________
(dollar amounts in thousands,
except per share data)
Net sales $ 161,520 $ 181,646
Cost of sales 137,260 153,094
____________ ____________
GROSS PROFIT 24,260 28,552
Selling and administrative
expenses 20,806 21,802
Other (income) expense - net 693 953
____________ ____________
INCOME BEFORE INTEREST AND TAXES 2,761 5,797
Interest expense 3,977 3,926
____________ ____________
INCOME (LOSS) BEFORE INCOME TAXES (1,216) 1,871
Income tax provision (benefit) (225) 988
____________ ____________
NET INCOME (LOSS) $ (991) $ 883
____________ ____________
____________ ____________
Per common and common
equivalent share:
Net income (loss) $ (0.09) $ 0.06
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 6
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
___________________________
March 30, April 1,
1996 1995
____________ ____________
(dollar amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (991) $ 883
Depreciation and amortization 7,345 9,480
Provision (benefit) for
deferred income taxes (87) 313
____________ ____________
6,267 10,676
Changes in operating assets and
liabilities 757 (6,337)
____________ ____________
NET CASH PROVIDED BY
OPERATING ACTIVITIES 7,024 4,339
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of
property, plant and equipment 484 318
Purchase of property, plant and
equipment (4,832) (12,642)
____________ ____________
NET CASH USED IN INVESTING ACTIVITIES (4,348) (12,324)
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 7
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
- CONTINUED
(UNAUDITED)
Three Months Ended
___________________________
March 30, April 1,
1996 1995
____________ ____________
(dollar amounts in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in
credit line borrowings (1,664) 8,299
Payments on term-loan (625) -0-
Capital stock acquired -0- (21)
Other (12) (109)
____________ ____________
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (2,301) 8,169
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 375 184
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,413 1,904
____________ ____________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 3,788 $ 2,088
____________ ____________
____________ ____________
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 4,563 $ 4,177
____________ ____________
____________ ____________
Tax refunds received, net
of income taxes paid $ (3,313) $ (2,315)
____________ ____________
____________ ____________
See Notes to Consolidated Condensed Financial Statements.
DIXIE YARNS, INC. 8
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial statements which do not include all of the
information and footnotes required in annual financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 30, 1996 are not
necessarily indicative of the results that may be expected for the entire
year.
NOTE B - INVENTORIES
Inventories are summarized as follows:
March 30, December 30,
1996 1995
____________ ____________
(dollar amounts in thousands)
At current cost
Raw materials $ 21,997 $ 21,012
Work-in-process 23,898 24,441
Finished goods 69,782 73,314
Supplies, repair parts
and other 6,513 6,772
____________ ____________
122,190 125,539
Excess of current cost
over LIFO value (20,898) (22,286)
____________ ____________
$ 101,292 $ 103,253
____________ ____________
____________ ____________
NOTE C - DEBT AND CREDIT ARRANGEMENTS
At March 30, 1996, unused borrowing capacity under the Company's credit
agreements was approximately $39.2 million.
PART I - ITEM 2 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
The following is presented to update the discussion of results of
operations and financial condition included in the Company's 1995 Annual
Report.
RESULTS OF OPERATIONS
In February, 1996, the Company reached an agreement in principle to sell
the operating assets of its Threads USA division ("Threads") to American &
Efird, Inc. The parties have received official notification of the early
termination of the waiting period for the proposed transaction under the
Hart-Scott-Rodino Antitrust Improvements Act. Negotiations with American &
Efird, Inc. for a definitive agreement are continuing and the transaction
is anticipated to be completed in the second quarter. The Company's
financial statements include the results of operations of Threads for the
quarter ended March 30, 1996.
The following table sets forth selected operating data (in millions of
dollars) related to the two business segments of the Company: Textile
Products and Floorcovering.
Quarter Ended
March 30, April 1,
1996 1995
Sales - Textile products $ 74.6 $ 88.4
- Floorcovering 88.2 94.2
- Intersegment elimination (1.3) (1.0)
Total sales $161.5 $181.6
Operating profit/(loss)
- Textile products $ (0.4) $ 0.8
- Floorcovering 4.4 6.5
Total operating profit/(loss) $ 4.0 $ 7.3
Sales in the textile products segment for the quarter ended March 30, 1996
declined 16% from the first quarter of 1995 reflecting weak retail demand
from customers of certain products of the Company's yarn and knit fabric
operations and the sale and consolidation of two textile facilities in mid-
1995. The quarter ended March 30, 1996 reflected an operating loss of $.4
million in the textile products segment compared to an operating profit of
$.8 million for the corresponding period in 1995. The decline in operating
profit was primarily due to the decrease in unit volume which more than
offset lower manufacturing and administrative costs. Operating results in
the March, 1996 quarter improved approximately $4.4 million (excluding
unusual losses) compared to the quarter ended December 30, 1995. The
improvement resulted primarily from manufacturing efficiencies and overhead
cost reductions.
10
Operating profits in the Company's floorcovering segment for the quarter
ended March 30, 1996 were $4.4 million on sales of $88.2 million compared
with an operating profit of $6.5 million on sales of $94.2 million for the
quarter ended April 1, 1995. The decrease in sales and operating profits
in the floorcovering segment is due primarily to operations associated with
the carpet yarn business in the March, 1996 quarter. Increased demand is
currently being experienced in most markets served by the floorcovering
operations.
As a result of operating improvements and an improvement in demand
currently being experienced, the Company anticipates a return to
profitability in the second quarter and expects 1996, as a whole, to be
profitable.
The Company's selling and administrative costs decreased $1.0 million in
the first quarter of 1996 compared to the first quarter of 1995 primarily
from staffing and other cost reduction measures in the textile products
segment.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter ended March 30, 1996, $7.0 million of funds were
generated from operating activities while $4.8 million of funds were used
for purchases of property, plant and equipment and $2.3 million was used to
reduce debt.
At March 30, 1996, the available combined unused borrowing capacity under
the Company's revolving credit agreements was approximately $39.2 million.
The Company's future liquidity requirements are expected to consist
primarily of capital expenditures and seasonal working capital
requirements. These requirements are expected to be financed from
operating cash flow and existing debt arrangements. In addition, the
Company anticipates proceeds of approximately $50.0 million to result from
the planned sale of the Threads business.
PART II. OTHER INFORMATION 11
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(i) Exhibits Incorporated by Reference
None.
(ii) Exhibits Filed with this Report
(11) Statement re: Computation of Earnings Per Share.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the registrant
during the three month period ended March 30, 1996.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DIXIE YARNS, INC.
__________________________
(Registrant)
May 9, 1996
____________________
(Date)
/s/GLENN M. GRANDIN
__________________________
Glenn M. Grandin
Senior Vice President and
Chief Financial Officer
QUARTERLY REPORT ON FORM 10-Q 13
ITEM 6(a)
EXHIBITS
QUARTER ENDED MARCH 30, 1996
DIXIE YARNS, INC.
CHATTANOOGA, TENNESSEE
Exhibit Index
EXHIBIT
NO. EXHIBIT DESCRIPTION INCORPORATION BY REFERENCE
(11) Statement re: Computation Filed herewith.
of Earnings Per Share.
EXHIBIT (11)
EXHIBIT 11
DIXIE YARNS, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(amounts in thousands, except per share data)
Three Months Ended
__________________________
March 30, April 1,
1996 1995
___________ ___________
PRIMARY:
NET INCOME (LOSS) $ (991) $ 883
___________ ___________
___________ ___________
Weighted average number of
Common Shares outstanding
assuming conversion of
Class B Common Stock 11,196 12,244
Net effect of dilutive stock
options based on the
treasury stock method using
average market price -0- 20
Net effect of put options
based on the reverse
treasury stock method using
average market price -0- 1,753
___________ ___________
TOTAL SHARES 11,196 14,017
___________ ___________
___________ ___________
PER SHARE AMOUNT $ (.09) $ .06
___________ ___________
___________ ___________
FULLY DILUTED:
Net income (loss) $ (991) $ 883
After-tax interest
requirement of
convertible subordinated
debentures (A) -0- -0-
___________ ___________
ADJUSTED NET INCOME (LOSS) $ (991) $ 883
___________ ___________
___________ ___________
EXHIBIT 11
DIXIE YARNS, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE - CONTINUED
Three Months Ended
__________________________
March 30, April 1,
1996 1995
___________ ___________
FULLY DILUTED - CONTINUED:
Weighted average number of
Common Shares outstanding
assuming conversion of
Class B Common Stock 11,196 12,244
Net effect of dilutive stock
options based on the
treasury stock method using
quarter end market price
if higher than the average
market price -0- 20
Net effect of put options
based on the reverse
treasury stock method using
quarter end market price
if lower than the average
market price -0- 2,275
Net effect of conversion of
convertible subordinated
debentures (A) -0- -0-
___________ ___________
TOTAL SHARES 11,196 14,539
___________ ___________
___________ ___________
PER SHARE AMOUNT $ (.09) $ .06
___________ ___________
___________ ___________
(A) Conversion of convertible subordinated debentures to 1,391 shares
with an after-tax interest requirement of $473 for the three months ended
March 30, 1996 and April 1, 1995 has been excluded from computation since
the effect was anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF DIXIE YARNS, INC. AT AND
FOR THE THREE MONTHS ENDED MARCH 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
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<RECEIVABLES> 33,674
<ALLOWANCES> 3,291
<INVENTORY> 101,292
<CURRENT-ASSETS> 164,284
<PP&E> 388,466
<DEPRECIATION> 197,240
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<CURRENT-LIABILITIES> 54,551
<BONDS> 189,844
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<OTHER-SE> 73,507
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<SALES> 161,520
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<CGS> 137,260
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