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 29, 1997
Commission File Number 0-2585
THE DIXIE GROUP, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-0183370
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 South Watkins Street
Chattanooga, Tennessee 37404
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (423) 698-2501
DIXIE YARNS, INC.
(Former name, if changed since last report.)
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 29, 1997
Common Stock, $3 Par Value 10,466,894 shares
Class B Common Stock, $3 Par Value 735,228 shares
Class C Common Stock, $3 Par Value 0 shares
THE DIXIE GROUP, INC. 2
INDEX
Part I. Financial Information: Page No.
Consolidated Condensed Balance Sheets --
March 29, 1997 and December 28, 1996 3
Consolidated Statements of Income (Loss) --
Three Months Ended March 29, 1997
and March 30, 1996 5
Consolidated Condensed Statements of Cash Flows --
Three Months Ended March 29, 1997
and March 30, 1996 6
Notes to Consolidated Condensed Financial Statements 8
Management's Discussion and Analysis of Results of
Operations and Financial Condition 10
Part II. Other Information:
Item 6 - Exhibits and Reports on Form 8-K 12
PART I - ITEM 1 3
FINANCIAL INFORMATION
THE DIXIE GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
March 29, December 28,
1997 1996
_____________ ____________
(dollar amounts in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,882 $ 1,988
Accounts receivable (less allowance for
doubtful accounts of $3,205 in 1997
and $3,614 in 1996) 29,663 14,628
Inventories 104,738 93,226
Assets held for sale 10,000 10,350
Other 9,446 10,520
_____________ ____________
TOTAL CURRENT ASSETS 155,729 130,712
PROPERTY, PLANT AND EQUIPMENT 345,417 338,573
Less accumulated amortization and
depreciation 188,560 182,797
_____________ ____________
NET PROPERTY, PLANT AND EQUIPMENT 156,857 155,776
INTANGIBLE ASSETS (less accumulated
amortization of $7,261 in 1997
and $6,928 in 1996) 44,706 31,611
OTHER ASSETS 11,672 10,036
_____________ ____________
TOTAL ASSETS $ 368,964 $ 328,135
_____________ ____________
_____________ ____________
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC. 4
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
March 29, December 28,
1997 1996
_____________ ____________
(dollar amounts in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 33,712 $ 31,473
Accrued expenses 29,109 24,338
Current portion of long-term debt 2,638 2,641
_____________ ____________
TOTAL CURRENT LIABILITIES 65,459 58,452
LONG-TERM DEBT
Senior indebtedness 64,187 34,036
Subordinated notes 50,000 50,000
Convertible subordinated debentures 44,782 44,782
_____________ ____________
TOTAL LONG-TERM DEBT 158,969 128,818
OTHER LIABILITIES 9,688 9,555
DEFERRED INCOME TAXES 23,317 22,760
STOCKHOLDERS' EQUITY
Common Stock - issued and outstanding,
13,876,826 shares in 1997 and 1996 41,630 41,630
Class B Common Stock - issued and
outstanding, 735,228 shares in 1997
and 1996 2,206 2,206
Common Stock Subscribed 1,550 1,348
Additional paid-in capital 132,771 132,475
Stock Subscriptions Receivable (2,688) (2,190)
Retained earnings (5,785) (8,766)
Minimum pension liability adjustment (2,668) (2,668)
_____________ ____________
167,016 164,035
Less Common Stock in treasury at cost -
3,409,932 shares in 1997 and
3,409,872 shares in 1996 55,485 55,485
_____________ ____________
TOTAL STOCKHOLDERS' EQUITY 111,531 108,550
_____________ ____________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 368,964 $ 328,135
_____________ ____________
_____________ ____________
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC. 5
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
Three Months Ended
______________________________
March 29, March 30,
1997 1996
_____________ _____________
(dollar amounts in thousands,
except per share data)
Net sales $ 162,360 $ 161,520
Cost of sales 135,147 137,260
_____________ _____________
GROSS PROFIT 27,213 24,260
Selling and administrative
expenses 18,466 20,806
Other expense - net 446 693
_____________ _____________
INCOME BEFORE INTEREST AND TAXES 8,301 2,761
Interest expense 3,337 3,977
_____________ _____________
INCOME (LOSS) BEFORE INCOME TAXES 4,964 (1,216)
Income tax provision (benefit) 1,983 (225)
_____________ _____________
NET INCOME (LOSS) $ 2,981 $ (991)
_____________ _____________
_____________ _____________
Per common and common
equivalent share:
Net income (loss) $ .26 $ (.09)
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC. 6
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
______________________________
March 29, March 30,
1997 1996
_____________ _____________
(dollar amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 2,981 $ (991)
Depreciation and amortization 6,099 7,345
Benefit for deferred income taxes (250) (87)
_____________ _____________
8,830 6,267
Changes in operating assets and
liabilities, net of effects
of business combination (16,192) 757
_____________ _____________
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (7,362) 7,024
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of
property, plant, and equipment 191 484
Purchase of property, plant, and
equipment (4,036) (4,832)
Net cash paid in business
combination (19,046) -0-
_____________ _____________
NET CASH USED IN INVESTING ACTIVITIES (22,891) (4,348)
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC. 7
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
- CONTINUED
(UNAUDITED)
Three Months Ended
______________________________
March 29, March 30,
1997 1996
_____________ _____________
(dollar amounts in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in
credit line borrowings 30,807 (1,664)
Payments on term loan (625) (625)
Other (35) (12)
_____________ _____________
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 30,147 (2,301)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (106) 375
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 1,988 3,413
_____________ _____________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 1,882 $ 3,788
_____________ _____________
_____________ _____________
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 3,517 $ 4,563
____________ _____________
____________ _____________
Tax refunds received, net
of income taxes paid $ (429) $ (3,313)
____________ _____________
____________ _____________
See Notes to Consolidated Condensed Financial Statements.
THE DIXIE GROUP, INC. 8
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(dollar amounts in thousands, except per share data)
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 29, 1997 are not
necessarily indicative of the results that may be expected for the entire
year.
NOTE B - INVENTORIES
Inventories are summarized as follows:
March 29, December 28,
1997 1996
_____________ ____________
At current cost
Raw materials $ 23,763 $ 20,276
Work-in-process 24,974 26,294
Finished goods 63,360 54,109
Supplies, repair parts,
and other 3,851 4,000
_____________ ____________
115,948 104,679
Excess of current cost
over LIFO value (11,210) (11,453)
_____________ ____________
$ 104,738 $ 93,226
_____________ ____________
_____________ ____________
NOTE C - EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share", which the Company is required to adopt on
December 27, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating "basic earnings
per share", which replaces primary earnings per share, the dilutive effect
of stock options will be excluded. The restated basic earnings per share
is expected to result in an increase over primary earnings per share for
the quarter ended March 29, 1997 of $.01 per share. The adoption of
Statement 128 will have no impact on the calculation of diluted earnings
per share for the quarter ended March 29, 1997.
9
NOTE D - DEBT AND CREDIT ARRANGEMENTS
Under the Company's revolving credit and term loan agreement, the Company
is required to maintain a certain ratio of equity to total capitalization.
Including reductions in borrowing availability associated with this
covenant, the Company's available unused borrowing capacity under revolving
credit facilities was approximately $42,863 at May 3, 1997.
NOTE E - BUSINESS COMBINATION
In early fiscal 1997, the Company acquired the business and operating
assets of Danube Carpet Mills, Inc. ("Danube"), a manufacturer of carpet
for the manufactured housing, recreational vehicle, and van conversion
industries. The acquisition was accounted for as a purchase effective
December 31, 1996, and accordingly, the results of operations of Danube
subsequent to December 31, 1996 are included in the Company's consolidated
financial statements. The total purchase price of $20,846 (of which
$19,046 had been expended through March 29, 1997) was allocated to the net
tangible assets acquired based on their estimated fair market values. The
excess amount of the purchase price over the estimated fair market value of
the net tangible assets was recorded as an intangible asset and is being
amortized using the straight-line method over 40 years.
A summary of net assets acquired is as follows:
Current assets $ 8,863
Property, plant, and equipment 4,421
Current liabilities (5,203)
Deferred taxes (663)
Intangible asset 13,428
Net assets acquired $20,846
The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisition of Danube had occurred at the beginning
of 1996 after giving effect to certain adjustments, including the
consolidation of Danube into existing operations, amortization of cost in
excess of net tangible assets acquired, interest expense on debt to finance
the acquisition, and related income taxes. The pro forma results are
presented for comparative purposes only and do not purport to be indicative
of future results or of the results that would have occurred had the
acquisition taken place at the beginning of 1996. Pro forma information is
not presented for the current year since the transaction was completed at
the beginning of fiscal 1997.
Three months ended
March 30, 1996
Net sales $172,951
Loss from continuing operations (113)
Net loss (113)
Per common and common equivalent share:
Loss from continuing operations (.01)
Net loss (.01)
PART I - ITEM 2 10
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 1996 Annual
Report.
RESULTS OF OPERATIONS
The Company reported net income of $3.0 million, or $.26 per share, on
sales of $162.4 million in the first quarter of 1997 compared with a net
loss of $1.0 million, or $.09 per share, on sales of $161.5 million in the
first quarter of 1996. The 1997 results include the effects of acquiring
the assets and business of Danube Carpet Mills, Inc. at the beginning of
fiscal 1997.
The following table reflects selected operating data (in millions of
dollars) related to the two business segments of the Company:
Floorcovering Business and Textile/Apparel Business.
Quarter Ended
March 29, March 30,
1997 1996
SALES
Floorcovering $102.2 $ 88.2
Textile/Apparel 60.5 74.6
Intersegment elimination (0.3) (1.3)
Total sales $162.4 $161.5
OPERATING PROFIT (LOSS)
Floorcovering $ 7.8 $ 4.4
Textile/Apparel 2.7 (0.4)
Total operating profit $ 10.5 $ 4.0
Sales in the Company's Floorcovering Business were $102.2 million in the
quarter ended March 29, 1997, reflecting an increase of $14.0 million, or
16%, compared with the corresponding period in 1996. Sales were above
first quarter levels of the prior year in each company within the
Floorcovering Business. Operating profits in the Company's Floorcovering
Business were $7.8 million in the first quarter of 1997, an increase of
$3.4 million from the corresponding period in 1996. The increased
profitability resulted primarily from the additional business associated
with the Danube acquisition and included a more favorable product mix as
sales of lower margin products declined.
Operating profits in the Company's Textile/Apparel Business were $2.7
million on sales of $60.5 million during the quarter ended March 29, 1997,
compared with an operating loss of $.4 million on sales of $74.6 million in
the corresponding period in 1996. Sales declined in 1997 compared with
1996 by $22.6 million as a result of the mid-1996 sale of the Company's
thread business. Excluding sales related to the Company's thread business,
Textile/Apparel sales increased 17% in the first quarter of 1997 compared
with the corresponding period in 1996. The 1997 increase in operating
profits of $3.1 million compared with 1996 resulted from stronger demand
for specialty products combined with lower costs of manufacturing and
11
selling and administrative cost decreases resulting primarily from exiting
the thread business.
The Company's interest expense declined in the first quarter of 1997
compared with the first quarter of 1996 due to a net reduction in debt
resulting from the application of proceeds from the sale of the Company's
thread business partially offset by debt incurred to finance the Danube
acquisition.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter ended March 29, 1997, the Company's debt increased $30.1
million from year-end 1996 levels as a result of $19.0 million expended in
connection with the acquisition of Danube, a net cash usage of $7.4 million
from operating activities (including a $15.0 million increase in accounts
receivable from the seasonally low year-end level and the higher level of
first quarter 1997 sales), and $4.0 million in capital expenditures.
Under the Company's revolving credit and term loan agreement, the Company
is required to maintain a certain ratio of equity to total capitalization.
Including reductions in borrowing availability associated with this
covenant, the Company's available unused borrowing capacity under revolving
credit facilities was approximately $42.9 million at May 3, 1997. The
available borrowing capacity and operating cash flows are deemed adequate
to finance the Company's future liquidity requirements, which are
anticipated to consist primarily of capital expenditures and seasonal
working capital needs.
PENDING ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share", which the Company is required to adopt on
December 27, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating "basic earnings
per share", which replaces primary earnings per share, the dilutive effect
of stock options will be excluded. The restated basic earnings per share
is expected to result in an increase over primary earnings per share for
the quarter ended March 29, 1997 of $0.01 per share. The adoption of
Statement 128 will have no impact on the calculation of diluted earnings
per share for the quarter ended March 29, 1997.
PART II. OTHER INFORMATION 12
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(i) Exhibits Incorporated by Reference
None.
(ii) Exhibits Filed with this Report
(3) Restated Charter of The Dixie Group, Inc.
as amended to date.
(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 29, 1997.
13
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.
THE DIXIE GROUP, INC.
__________________________
(Registrant)
May 12, 1997
____________________
(Date)
/s/GLENN A. BERRY
__________________________
Glenn A. Berry
Executive Vice President and
Chief Financial Officer
/s/D. EUGENE LASATER
__________________________
D. Eugene Lasater
Controller
QUARTERLY REPORT ON FORM 10-Q 14
ITEM 6(a)
EXHIBITS
QUARTER ENDED MARCH 29, 1997
THE DIXIE GROUP, INC.
CHATTANOOGA, TENNESSEE
Exhibit Index
EXHIBIT
NO. EXHIBIT DESCRIPTION INCORPORATION BY REFERENCE
(3) Restated Charter of Filed herewith.
The Dixie Group, Inc.
as amended to date.
(11) Statement re: Computation Filed herewith.
of Earnings Per Share.
EXHIBIT (3)
ARTICLES OF AMENDMENT
TO THE RESTATED CHARTER OF
DIXIE YARNS, INC.
Pursuant to Section 48-20-106 of the Tennessee Business
Corporation Act, the undersigned corporation hereby submits
the following Articles of Amendment to amend its Restated
Charter and states as follows:
1. The name of the corporation is Dixie Yarns, Inc.
2. The text of Part I, Article 1 of the Restated Charter
is hereby amended to read as follows:
The name of the corporation is THE DIXIE GROUP, INC.
3. The amendment was duly adopted on February 20, 1997, by
the Board of Directors.
4. The amendment was duly adopted on May 1, 1997, by
the shareholders.
DATED this 1st day of May, 1997.
DIXIE YARNS, INC.
BY: /s/ DANIEL K. FRIERSON
Daniel K. Frierson
President, Chief Executive
Officer and Chairman of the
Board
RESTATED CHARTER
OF
DIXIE YARNS, INC.
UNDER SECTION 48-20-107 OF THE TENNESSEE BUSINESS CORPORATION ACT
Pursuant to the provisions of Section 48-20-107 of the Tennessee Business
Corporation Act, the undersigned corporation, by its board of directors,
adopts the following restated charter:
Part I:
1. The name of the Corporation is DIXIE YARNS, INC.
2. The address of the principal office of the Corporation in Tennessee is
1100 South Watkins Street, Chattanooga, Hamilton County, Tennessee 37404.
3. The general nature of the business to be transacted by the corporation
is manufacturing, mercerizing and processing yarns, and doing all things
necessary or incidental thereto.
4. The total amount of the capital stock of this corporation is 296,000,000
shares of common stock and 16,000,000 shares of Preferred Stock.
(a)(i) The common stock which the corporation shall have authority to
issue shall consist of:
(1) 80,000,000 shares of Common Stock having $3 par value per
share;
(2) 16,000,000 shares of Class B Common Stock having $3 par value
per share; and
(3) 200,000,000 shares of Class C Common Stock having $3 par
value per share.
(a)(ii) The preferred stock which the Corporation shall have authority
to issue shall consist of 16,000,000 shares of Preferred Stock, issuable in
series, the rights, preferences and powers of which shall be determined by
the Board of Directors in the resolution or resolutions authorizing the
issuance of such shares.
(b) The holders of Common Stock and Class B Common Stock shall have the
same rights and privileges, except that:
(1) The holders of Common Stock and Class B Common Stock shall have
the right to vote, but not as separate classes except to the extent
required by law, upon all matters submitted to the stockholders of the
corporation for consideration at any meeting of stockholders; provided,
however, that (i) the holders of Common Stock shall be entitled to one vote
per share and the holders of Class B Common Stock shall be entitled to
twenty votes per share with respect to each matter to be voted upon, and
(ii) in addition to any other vote required by law, the corporation may not
alter or change, either by increase, diminution or otherwise, the relative
rights, preferences, privileges, restrictions, dividend rights, voting
power or other powers given to the holders of Common Stock and Class B
Common Stock pursuant to this Article Fourth of this Charger other than by
the affirmative vote of not less than two-thirds of all the votes entitled
to be voted by the holders of each class of stock voting as a separate
class, except that the corporation may increase the total number of shares
of Common Stock or Class B Common Stock that may be issued by the
corporation and may approve a merger, acquisition, sale or transfer of all
or substantially all of the assets of the corporation, or any other such
transaction by the affirmative vote of a majority of all the votes entitled
to be voted by the holders of Common Stock and Class B Common Stock voting
together without regard to class, as provided in subsection (i) above.
(2)(i) For the four year period immediately following the completion
of the Corporation's Exchange Offer dated March 22, 1985, if a quarterly
dividend is declared on the Class B Common Stock, a $.20 per share greater
quarterly dividend shall be paid on the Common Stock; provided that should
shares of Common Stock or Class B Common Stock be distributed to
shareholders of the Corporation in the form of a dividend or split, then
the amount per share of greater quarterly dividend required to be paid on
the Common Stock by this Section shall be adjusted proportionately so that
the effect thereof is to provide a $.20 per share greater quarterly
dividend on the Common Stock outstanding prior to all of such stock
dividends and stock splits.
(ii) No cash dividend or dividend of property or stock, other
than stock of the corporation as provided for in subsection 2(iv) below,
may be declared and paid, per share, on the Class B Common Stock unless a
dividend of an equal or greater amount of cash or value of property or
stock has been declared and paid, per share, on the Common Stock.
(iii) A dividend of cash, property or stock may be paid on the
Common Stock without an equal or any dividend being paid on the Class B
Common Stock.
(iv) A dividend of shares of Common Stock may be paid to holders
of Common Stock only or to the holders of both Common Stock and Class B
Common Stock if the number of shares paid per share to holders of Common
Stock and Class B Common Stock shall be the same; a dividend of shares of
Class B Common Stock may be paid to holders of Common Stock only or to
holders of both Common Stock and Class B Common Stock if the number of
shares paid per share to holders of Common Stock and Class B Common Stock
shall be the same; and a dividend of shares may be declared and paid in
Common Stock to holders of Common Stock and in Class B Common Stock to
holders of Class B Common Stock, if the number of shares paid per share to
holders of Common Stock and Class B Common Stock shall be the same.
(3) Shares of Class B Common Stock shall not be registered in
"street" or "nominee" name, nor shall such shares be sold, assigned,
transferred, pledged or otherwise disposed of except as provided in
subparagraphs (i) and (ii) of this paragraph 3.
(i) A holder of shares of Class B Common Stock may sell, assign,
give, bequeath or otherwise transfer all or part of said shares (a) to a
co-owner; (b) to a trust for the benefit of the owner or owners; (c) to the
owner's spouse or a trust for the benefit of the owner's spouse; (d) to the
owner's brothers or sisters; (e) to the parents and issue, including
adopted children, of the owner, or a trust or custodianship for the benefit
of any such person; (f) if the owner is an estate or the personal
representative thereof, a trust or trustee, guardian, custodian or similar
entity, then to the beneficiary or beneficiaries thereof; and (g) to the
corporation; and
(ii) Shares of Class B Common Stock may be pledged by the owner
thereof, provided such shares shall not be transferred to or registered in
the name of the pledgee and shall remain subject to the restrictions of
this paragraph 3. In the event of foreclosure or other similar action by
the pledgee, such pledged shares of Class B Common Stock may, at the option
of the pledgee, be sold, transferred or otherwise disposed of only on
behalf of the owner to those persons specified in subparagraph (i) of this
paragraph 3 or after May 1, 1989 be converted into shares of Common Stock
in accordance with the provisions of paragraph (4) of this Section (b).
For purposes of this paragraph 3, any sale, assignment,
transfer or pledge incident to a merger, acquisition or other such
transaction approved by the Board of Directors of the Corporation shall not
be subject to the restrictions of this paragraph 3; provided, however, that
any other sale, assignment, transfer or pledge occurring by operation of
law, and any sale, assignment, transfer or pledge of the stock or any
interest in a corporation, partnership or other entity which owns or holds
shares of Class B Common Stock, whether or not such sale, assignment,
transfer or pledge constitutes a transfer of control of such entity, shall
be subject to the restrictions of this paragraph 3.
Any transfer or attempted transfer in contravention of the restrictions set
forth in this paragraph 3 shall be void.
(4) From and after May 1, 1989, the outstanding shares of Class B
Common Stock shall be convertible into fully paid and nonassessable shares
of Common Stock at the option of the holders thereof on a one share for one
share basis. In order for a stockholder to effect any such conversion,
such stockholder must furnish the corporation with a written notice of the
request for conversion, which notice shall be addressed to the principal
office of the corporation or to the corporation's designated transfer
agent, shall state the number of shares of Class B Common Stock to be
converted into shares of Common Stock and shall be accompanied by a
certificate or certificates, properly endorsed and ready for transfer. A
conversion shall be deemed to be made on the close of business of the date
when the corporation or transfer agent has received the prescribed written
notice and required certificate or certificates, properly endorsed and
ready for transfer.
(5) Except as provided in subsection (2)(iv) above, shares of Class
B Common Stock outstanding at any time shall not be split or subdivided,
whether by stock distribution, reclassification, recapitalization, or
otherwise, so as to increase the number of shares thereof issued and
outstanding unless at the same time the shares of Common Stock are split up
or subdivided whether by stock distribution, reclassification,
recapitalization, or otherwise, so that the number of shares thereof
outstanding shall be proportionately increased in order to maintain the
same proportionate equity ownership (i.e., the same proportion of shares
held by each class) between the holders of Common Stock and Class B Common
Stock as existed on the date following the date of issuance of the Class B
Common Stock in exchange for shares of Common Stock as proposed in
connection with this amendment of the Charter.
(6) Shares of Common Stock outstanding at any time shall not be
reverse split or combined, whether by reclassification, recapitalization or
otherwise, so as to decrease the number of shares thereof issued and
outstanding unless at the same time the shares of Class B Common Stock are
reverse split or combined so that the number of shares thereof outstanding
shall be proportionately decreased in order to maintain the same
proportionate ownership (i.e., the same proportion of shares held by each
class) between the holders of Common Stock and Class B Common Stock as
existed on the date following the date of issuance of the Class B Common
Stock in exchange for shares of Common Stock as proposed in connection with
this amendment of the Charter.
(7) In the event of a liquidation or dissolution of the corporation,
or a winding up of its affairs, whether voluntary or involuntary, or a
merger or consolidation of the corporation, after payment or provision for
payment of the debts or liabilities of the corporation, holders of Common
Stock and Class B Common Stock shall be entitled to share pro rata(i.e., an
equal amount of assets distributed for each share of either Common Stock or
Class B Common Stock) in the remaining assets of the corporation.
(c) Neither the Common Stock nor the Class B Common Stock shall be
subject to redemption or call by the corporation nor shall the holders of
such shares be entitled to preemptive rights with respect to the issuance
of additional shares of Common Stock or Class B Common Stock.
(d) The holders of Class C Common Stock shall have the same rights and
privileges as holders of Common Stock, and Class B Common Stock except
that:
(i) The holders of Class C Common Stock shall have the right to
vote, but not as a separate class except to the extent required by law,
upon all matters submitted to the stockholders of the corporation for
consideration at any meeting of stockholders; provided, however, that the
holders of Class C Common Stock shall be entitled to 1/20th vote per share
with respect to each matter to be voted upon;
(ii) If any cash dividend or dividend of property or stock, other
than stock of the corporation as provided for in subsection (d)(iii) below,
shall be declared and paid, per share, on the Common Stock, then a dividend
of an equal amount of cash or value of property or stock shall be declared
and paid, per share, on the Class C Common Stock; and no cash dividend or
dividend of property or stock, other than as provided for in subsection
(d)(iii) below, may be declared and paid, per share, on the Class C Common
Stock, unless a dividend of an equal amount of cash or value of property or
stock has been declared and paid, per share, on the Common Stock; and
provided that if any cash dividend or dividend of property or stock, other
than as provided for in subsection (d)(iii) below, shall be declared and
paid, per share, on the Class B Common Stock, then a dividend of an equal
or greater amount of cash or value of property or stock shall be declared
and paid, per share, on the Class C Common Stock;
(iii) If any dividend of shares of any class of common stock is paid
to holders of Common Stock, or to holders of Class B Common Stock in the
event that there is no Common Stock outstanding, then an equal dividend of
shares of such common stock shall be paid to holders of Class C Common
Stock; provided, however, that if any dividend of shares of Common Stock is
declared and paid to holders of Common Stock and in Class B Common Stock to
holders of Class B Common Stock, then an equal dividend of shares of Class
C Common Stock shall be paid to holders of Class C Common Stock and if any
dividend of shares of Class C Common Stock is declared and paid to holders
of Class B Common Stock then an equal dividend of shares of Class C Common
Stock shall be declared and paid to holders of Common Stock and Class C
Common Stock; and provided further that if only shares of Class B Common
Stock and Class C Common Stock are outstanding and a dividend of shares of
Class B Common Stock is paid to holders of Class B Common Stock, then an
equal dividend of shares of Class C Common Stock or Common Stock may be
paid to holders of Class C Common Stock;
(iv) Except as provided in subsection (d)(iii) above, if shares of
Common Stock and Class B Common Stock outstanding at any time are split or
subdivided, whether by stock distribution, reclassification,
recapitalization, or otherwise, so as to increase the number of shares
thereof issued and outstanding, then the shares of Class C Common Stock
shall be split or subdivided, whether by stock distribution,
reclassification, recapitalization, or otherwise, so that the number of
shares thereof outstanding shall be proportionately increased in order to
maintain the same proportionate equity ownership (i.e., the same proportion
of shares held by each class) among the holders of Common Stock, Class B
Common Stock and Class C Common Stock as existed on the date hereof;
similarly, if shares of Class C Common Stock shall be split or subdivided
in any manner, then all other outstanding classes of common stock shall be
proportionately split or subdivided;
(v) If shares of Common Stock and Class B Common Stock outstanding
at any time are reverse split or combined, whether by reclassification,
recapitalization or otherwise, so as to decrease the number of shares
thereof issued and outstanding, then the shares of all other classes of
common stock shall be reverse split or combined so that the number of
shares thereof outstanding shall be proportionately decreased in order to
maintain the same proportionate ownership (i.e., the same proportion of
shares held by each class) between the holders of Common Stock, Class B
Common Stock and Class C Common Stock as existed on the date hereof;
similarly, if shares of Class C Common Stock are reverse split or combined
in any manner, all other outstanding classes of common stock shall be
proportionately reverse split or combined;
(vi) In the event of a liquidation or dissolution of the
corporation, or a winding up of its affairs, whether voluntary of
involuntary, or a merger or consolidation of the corporation, after payment
or provision for payment of the debts or liabilities of the corporation,
holders of Class C Common Stock shall be entitled to share pro rata in the
remaining assets of the corporation with the holders of all other
outstanding classes of common stock.
(e) The Class C Common Stock shall not be subject to redemption or call
by the corporation nor shall the holders of such shares be entitled to
preemptive rights with respect to the issuance of additional shares of
Common Stock, Class B Common Stock, or Class C Common Stock.
5. The amount of capital stock with which this corporation will continue
business shall be its present capital and surplus, the capital stock of
which has been unimpaired.
6. The time of existence of this Corporation shall be perpetual.
7. Holders of Common Stock shall not have the right to subscribe pro rata
according to their holdings for any unissued Common Stock which the
corporation proposes to issue.
8. To the fullest extent now or hereafter provided by Tennessee law, no
director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as a
director, provided that unless and to the extent so provided by Tennessee
law, such provision shall not eliminate or limit the liability of a
director (a) for any breach of the director's duty of loyalty to the
Corporation or its shareholders, (b) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, or (c) under Section 48-18-304 of the Tennessee Code. This provision
shall not eliminate or limit the liability of a director for any act of
omission occurring prior to the date that it becomes effective.
9. The Corporation's registered agent for service of process is Thomas C.
Robinson, Jr., 1100 South Watkins Street, Chattanooga, Hamilton County,
Tennessee 37404.
10. The Corporation is a for-profit corporation.
Part II:
1. The date the original charter was filed by the Secretary of State was
July 25, 1932.
2. The restated charter restates the text of the charter as amended
theretofore, without making any further amendment or change except as
provided below, and was duly authorized at a meeting of the directors on
August 10, 1989.
a. Article 9 of the Charter was added to identify the Corporation's
registered agent.
b. Article 10 of the Charter was added to state that the Corporation is
for profit.
Dated: September 26, 1989.
DIXIE YARNS, INC.
BY: /s/THOMAS C. ROBINSON
_____________________
Secretary
EXHIBIT (11)
EXHIBIT 11
THE DIXIE GROUP, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(amounts in thousands, except per share data)
Three Months Ended
__________________________
March 29, March 30,
1997 1996
___________ ___________
PRIMARY:
NET INCOME (LOSS) $ 2,981 $ (991)
___________ ___________
___________ ___________
Weighted average number of
Common Shares outstanding
assuming conversion of
Class B Common Stock 11,202 11,196
Net effect of dilutive stock
options based on the
treasury stock method using
average market price 161 -0-
Net effect of stock
subscriptions based on the
treasury stock method using
average market price 151 -0-
___________ ___________
TOTAL SHARES 11,514 11,196
___________ ___________
___________ ___________
PER SHARE AMOUNT $ .26 $ (.09)
___________ ___________
___________ ___________
FULLY DILUTED:
Net income (loss) $ 2,981 $ (991)
After-tax interest
requirement of
convertible subordinated
debentures (A) -0- -0-
___________ ___________
ADJUSTED NET INCOME (LOSS) $ 2,981 $ (991)
___________ ___________
___________ ___________
EXHIBIT 11
THE DIXIE GROUP, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE - CONTINUED
Three Months Ended
__________________________
March 29, March 30,
1997 1996
___________ ___________
FULLY DILUTED - CONTINUED:
Weighted average number of
Common Shares outstanding
assuming conversion of
Class B Common Stock 11,202 11,196
Net effect of dilutive stock
options based on the
treasury stock method using
quarter end market price
if higher than the average
market price 161 -0-
Net effect of stock
subscriptions based on the
treasury stock method using
quarter end market price
if higher than the average
market price 151 -0-
Net effect of conversion of
convertible subordinated
debentures (A) -0- -0-
___________ ___________
TOTAL SHARES 11,514 11,196
___________ ___________
___________ ___________
PER SHARE AMOUNT $ .26 $ (.09)
___________ ___________
___________ ___________
(A) Conversion of convertible subordinated debentures to 1,391 shares
with an after-tax interest requirement of $473 for the three months ended
March 29, 1997 and March 30, 1996 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 THE DIXIE GROUP, INC. AT
AND FOR THE THREE MONTHS ENDED MARCH 29, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 1,882
<SECURITIES> 0
<RECEIVABLES> 32,868
<ALLOWANCES> 3,205
<INVENTORY> 104,738
<CURRENT-ASSETS> 155,729
<PP&E> 345,417
<DEPRECIATION> 188,560
<TOTAL-ASSETS> 368,964
<CURRENT-LIABILITIES> 65,459
<BONDS> 158,969
<COMMON> 43,836
0
0
<OTHER-SE> 67,695
<TOTAL-LIABILITY-AND-EQUITY> 368,964
<SALES> 162,360
<TOTAL-REVENUES> 162,360
<CGS> 135,147
<TOTAL-COSTS> 135,147
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,337
<INCOME-PRETAX> 4,964
<INCOME-TAX> 1,983
<INCOME-CONTINUING> 2,981
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,981
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
