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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
(FEE REQUIRED)
For the fiscal year ended December 31, 1995
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
(NO FEE REQUIRED)
Commission file number 1-9457
SHELBY WILLIAMS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 62-0974443
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11-111 Merchandise Mart 60654
Chicago, Illinois (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(312) 527-3593
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
ON WHICH REGISTERED
------------------------------------
TITLE OF EACH CLASS
- ------------------------------------------
Common Stock, $.05 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _X_
At March 1, 1996, there were 8,900,000 shares of the registrant's common
stock outstanding. As of said date the aggregate market value of the voting
stock held by non-affiliates of the registrant (computed by reference to the
closing sale price on such date) was approximately $61,200,000.
Documents incorporated by reference:
PART OF FORM 10-K INTO WHICH
DOCUMENT DOCUMENT IS INCORPORATED
- -------------------------------------------------- ----------------------------
Registrant's annual report to stockholders for
1995............................................. Part II, Items 5-8
Registrant's definitive proxy statement to be
filed for 1996 annual meeting.................... Part III, Items 10-13
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PART I
ITEM 1. BUSINESS.
The registrant, Shelby Williams Industries, Inc. ("Shelby Williams" or the
"Company"), a Delaware corporation incorporated in February, 1976, is the
successor to a business formed in Chicago, Illinois in 1954. Its principal
executive offices are located at 11-111 Merchandise Mart, Chicago, Illinois
60654, telephone (312) 527-3593. The Company has additional executive,
operational and administrative offices at 150 Shelby Williams Drive, Morristown,
Tennessee 37813, telephone (423) 586-7000.
GENERAL
Shelby Williams designs, manufactures and distributes products for the
contract furniture market. The Company has a significant position in the
hospitality and foodservice markets through its "Shelby Williams" seating line,
"King Arthur" line of function room furniture and "Sterno" accessories. The
Company provides contemporary upholstered seating products under the names
"Preview" and "Madison". It serves the health care, university, office furniture
and other institutional markets through its "Thonet" division with health care
and dormitory furniture, including chairs and tables, and ergonomically designed
office seating products, desks and credenzas. The Company also distributes vinyl
wallcoverings for residential, hotel and office use under the name "Sellers &
Josephson," and markets other textile products to the architectural and design
community through "SW Textiles". The Company distributes floor coverings and
other textile products, as well as Shelby Williams products, in Hawaii and the
entire Pacific Basin, through "PHF".
The Company's products are distributed directly to hotel and foodservice
chains, health care providers, colleges and universities, or their buying
agencies and through interior designers, architects and contract furniture,
foodservice and office furniture dealers. The Company maintains showrooms and
sales offices in 14 cities. The Company's major manufacturing and warehousing
facilities (at January 1, 1996) are located in Morristown, Tennessee;
Statesville, North Carolina; Canton, Mississippi; High Point, North Carolina;
Honolulu, Hawaii; Zacatecas, Mexico; and two locations in New Jersey.
The Company estimates that, of its 1995 sales, approximately 75% were for
the hospitality and foodservice industry, and 18% were for health care,
university and office facilities. The balance of 7% was destined for other
interior uses.
MARKETS AND CUSTOMERS
The major hospitality and foodservice customers are large United States
hotels, restaurant companies, casino and gaming operators, and independent
purchasing companies, including: Hyatt Hotel Corp.; Holiday Inns, Inc.; Promus
Companies, Inc.(Embassy Suites, Hampton Inns, and Homewood Suites); Marriott
Hotel Corp.; Hilton Hotels Corp.; The Sheraton Corp.; Ramada International
Hotels & Resorts; Budgetel Inns, Inc.; LaQuinta Motor Inns, Inc.; The
Ritz-Carlton Hotel Company; Four Seasons Hotels, Inc.; Omni Hotels Corporation;
John Q. Hammons Hotels, Inc.; Opryland USA, Inc.; The Walt Disney Company; Pizza
Hut, Inc.; Wendy's International, Inc.; Luby's Cafeterias, Inc.; Darden
Restaurants, Inc. (The Olive Garden Restaurants, Red Lobster); Circus Circus
Enterprises, Inc.; Caesars Palace Corporation; The Mirage Resorts and Casino-
Hotel, Inc.; Grand Casinos, Inc.; Harrah's Casinos, Inc.; Club Corporation
International, Inc.; Pamela Temples Interiors, Inc.; Admiralty Trading Company;
The Wasserstrom Co., Inc.; Benjamin Brothers, Inc.; and Leonard Parker Company,
Inc.
The major customers in the health care, university and other institutional
markets are large health care providers, colleges, and universities, including:
Columbia/HCA Healthcare Corporation; Kaiser Foundation Health Plan, Inc.; Albert
Einstein Medical Center; Parkland Memorial Hospital; University of Tennessee;
Georgia Tech University; University of Georgia; and New Jersey Sports and
Exposition Authority.
The major customers for other contract furniture are office furniture
dealers, corporate users and leading architectural and interior design firms,
among which are: Office Environments, Inc.; California Business Interiors, Inc.;
Sears, Roebuck and Co.; J.C. Penney Company; Walgreen Company; and May Design
and Construction, Inc.
The major wall covering customers are: Thybony Wall Coverings Co., Inc.;
Patton Wallcoverings, Inc.; The Warner Company; and Seabrook Wallcoverings, Inc.
2
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Approximately 90% of the Company's products are manufactured to fill
specific orders. The Company's ten largest customers accounted for approximately
17% of net sales in 1995, and no single customer accounted for more than 3% of
1995 net sales.
The Company estimates that approximately 75% of the products it sells for
the foodservice and lodging markets are used to replace existing seating at
facilities which are being refurnished rather than to provide seating for new
facilities. In general, the Company estimates that foodservice seating (whether
for an independent restaurant or for facilities in a hotel or motel) is replaced
approximately every eight to twelve years and seating in hotel and motel guest
rooms every ten to fifteen years.
PRODUCTS
The Company's product lines consist primarily of seating for dining, casino
gaming, guest rooms, conference and banquet facilities, health care and
dormitory furniture, and desks, credenzas and seating for general office and
institutional use. At December 31, 1995, approximately 350 standard furniture
products were available to the hospitality and foodservice industries, and
approximately 200 standard furniture products were available for health care,
university and other institutional use. The Company offers approximately 100
standard office furniture products. The Company's products are manufactured in
hardwoods, such as maple, elm, oak, and walnut, as well as in rattan and metal
and are available in a variety of finishes. Substantially all products are
supplied under special order and are upholstered to customers' specifications.
In addition, the Company manufactures and distributes a full range of vinyl
wallcovering for the residential, hotel and office markets. The Company designs
and markets approximately 50 standard patterns of textile products. These
textile products are manufactured by outside suppliers and are used both on
Shelby Williams' own seating products and distributed through dealers and
interior designers for use by other manufacturers. The Company also distributes
a wide line of floor coverings which are manufactured by outside suppliers.
MARKETING AND SALES
The Company's sales and marketing staff consists of approximately 105
full-time employees, and the products are marketed to hotel and foodservice
chains or their buying agencies and to other customers through interior
designers, architects, contract furniture, foodservice and office furniture
dealers. The Company invoices its products on a net ten day basis; however, as a
matter of industry practice, payment is generally made within 30 days.
The Company publishes four extensive catalog systems displaying the
Company's products, which are distributed to architects, designers and dealers
and are periodically supplemented as new products are introduced. Customers may
order standard products directly from these catalogs or request changes to meet
their design specifications.
Marketing activities for the Company's products include advertising in major
trade publications and the illustration of the Company's products in customers'
catalogs. In addition, the Company exhibits at major national and international
trade shows. The Company maintains showrooms and sales offices with display
areas in 14 United States cities. The Company's design resource center in
Honolulu, Hawaii, serves customers in the Pacific Basin and Far East.
TRADEMARKS AND TRADENAMES
The Company sells its hospitality and foodservice products (as of January 1,
1996) under the trademarks "Shelby Williams"-Registered Trademark-, "King
Arthur"-Registered Trademark- and "Sterno"-Registered Trademark-; its
contemporary upholstered seating products under the names "Madison Furniture",
and "Preview Furniture"-Registered Trademark-; and its health care, dormitory
and office furniture, including chairs, tables, desks and credenzas under the
trademark "Thonet"-Registered Trademark-. The Company markets cutting room
tables and accessories under the "Phillocraft"-Registered Trademark- name;
fabric products under the "SW Textiles" name and wallcoverings under the name
"Sellers & Josephson." The Company distributes wall and floor coverings,
fabrics, textiles, and furniture in Hawaii and the entire Pacific Basin under
the name "PHF." Management believes that the goodwill associated with the Shelby
Williams and Thonet names is of significant value to the Company, but does not
consider any of the Company's patents, trademarks, or licenses to be of material
importance to its business.
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INTERNATIONAL OPERATIONS
The Company sells its products in foreign countries directly or through
licensees and distributors. Shelby Williams' customers in the international
market are primarily large hotel companies. Export sales were approximately
$15,538,000 in 1995, $16,279,000 in 1994, and $12,008,000 in 1993.
The Company operates a frame and component manufacturing plant in Mexico.
The year-end carrying value of property, plant and equipment at this facility
was $3,751,000 for 1995, $4,051,000 for 1994, and $4,347,000 for 1993. All items
produced at the plant are shipped to facilities of the Company in the United
States for further processing. The value of these transfers amounted to
$1,906,000 in 1995, $1,841,000 in 1994, and $1,555,000 in 1993.
The Company licenses its products in four foreign countries, receiving
royalty fees based primarily on sales. Weakness in the Mexican economy lead to
liquidation of Shelby Williams de Mexico, S.A. de C.V., in which the Company had
a twenty-five percent interest. The write-off, of the investment in and
receivable from this affiliate in the fourth quarter of 1995, amounted to
approximately $200,000. The Company's frame and component manufacturing plant in
Mexico, mentioned above, was unaffected. Royalty revenues from the Company's
licensees have not been significant to date.
BACKLOG
The Company's backlog of orders at January 1, 1996, was approximately
$29,700,000, as compared to approximately $28,400,000 at January 1, 1995. The
Company expects to ship substantially all of its backlog by the end of 1996.
RAW MATERIALS AND SUPPLIES
The Company uses a variety of raw materials and supplies in its
manufacturing operations, principally lumber, plywood, rattan, other frame
components, metal tubing, foam cushioning, vinyl and textiles.
The Company is not dependent on any one supplier for any of its raw
materials or supplies. The Company has not experienced any significant raw
material or supply shortages.
MANUFACTURING AND ASSEMBLY
The Company's manufacturing facilities (as of January 1, 1996) are located
in Morristown, Tennessee; Statesville, North Carolina; Canton, Mississippi; High
Point, North Carolina; Zacatecas, Mexico; and two locations in New Jersey.
Management believes that the machinery and equipment used by the Company are in
good operating condition.
Operations consist of wood bending, wood working and finishing, assembly,
metal forming and fabrication, plating, and electrostatic finishing. The Company
also prints and laminates vinyl wallcoverings. The Company imports components
for certain chair styles. All imported components are available domestically
except for rattan, which is indigenous to the Philippines and Indonesia. These
components, which are manufactured to the Company's specifications, are
assembled, finished and upholstered by the Company. The Company also produces
many of these components at its Mexican facility. All manufacturing operations
emphasize quality control during the various production processes.
COMPETITION
All aspects of the Company's business are highly competitive. The principal
methods of competition in the industry include design, quality, service, product
pricing and speed of delivery.
Although there are no published industry statistics, the Company believes
that it is the largest supplier of seating for both the foodservice and lodging
markets in the United States, and that its sales volume is approximately 19% of
the total seating requirements in these markets. The Company is not a
significant factor in the office furniture seating market.
EMPLOYEES
At January 1, 1996, the Company had approximately 1,746 full-time employees.
Of these, approximately 1,507 were engaged in manufacturing, 134 in
administrative and clerical positions, and 105 in sales and marketing. Those
engaged in manufacturing include 243 employees in Mexico.
4
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Hourly manufacturing employees at both Morristown, Tennessee, and Canton,
Mississippi, are represented by separate bargaining units with contracts
expiring in November, 1996, and November, 1997, respectively. The Company
believes that its relations with its employees are good.
ITEM 2. PROPERTIES.
The Company at January 1, 1996 maintained facilities with an aggregate of
approximately 1,800,000 square feet of space for its operations. The Company
considers all of its facilities to be in good operating condition. Currently,
the Company's manufacturing facilities are operating at approximately 80% of
capacity. The following table summarizes the principal physical properties, both
owned and leased, used by the Company in its operations:
<TABLE>
<CAPTION>
APPROXIMATE
SQUARE
LOCATION USE FOOTAGE OWNED/LEASED EXPIRATION DATE
- ----------------------------------- -------------------- ------------ -------------------- -----------------
<S> <C> <C> <C> <C>
Chicago, IL........................ Showroom/Offices 6,750 Leased July, 2000
Morristown, TN..................... Mfg./Offices 515,960 Owned --
Morristown, TN..................... Mfg./Warehousing 228,000 Owned --
Canton, MS......................... Mfg./Warehousing 406,000 Owned/Leased (1) May, 2001(1)
High Point, NC..................... Mfg./Warehousing 108,900 Leased March, 2000(2)
Carlstadt, NJ...................... Mfg./Warehousing 35,000 Leased April, 2004
Englewood, NJ...................... Mfg./Warehousing 68,000 Leased Dec., 2003(3)
Statesville, NC.................... Mfg./Warehousing 326,670 Owned --
Honolulu, HI....................... Warehousing 45,000 Leased Aug., 2003(3)
Zacatecas, MX...................... Mfg./Warehousing 90,000 Owned --
</TABLE>
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(1) Approximately 238,100 square feet owned and 167,900 leased.
(2) The Company has an option to renew the lease on existing terms for 10
additional years.
(3) The Company has an option to renew the lease for 10 additional years at a
nominal rental increase.
The Company has showrooms and sales offices in 14 United States cities,
including Atlanta, Dallas, Honolulu, Los Angeles, and New York.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a defendant in various product liability lawsuits arising in
the normal course of business. Management believes that the Company's insurance
is adequate to cover its potential liability under all pending and threatened
litigation. The Company believes, after consultation with counsel, that
allegations of punitive damages, which are alleged in certain cases, are without
merit.
On July 15, 1992, a case was filed in the Chancery Court for Greene County,
Tennessee, entitled Linda Foshie, Joseph Allen Foshie, David Ray Foshie, and
Michael Scott Foshie, suing individually on their own behalf and as
representative parties of a class action, plaintiffs, v. Steve Cansler, Fred
Cansler, Jimmy Cansler, C & C Millwright Maintenance Co., Inc., Foamex Products,
Inc., Recticel Foam Corporation, Foamex L.P., Morristown Foam Corporation, and
Shelby Williams Industries, Inc., defendants. The complaint alleges, among other
things, that defendants conspired to transport and store hazardous waste on
premises which abutted the home of the named plaintiffs, that such activity
violated both state and federal law, and that plaintiffs were damaged thereby.
The complaint seeks, among other things, compensatory damages of $2.5 million
for each of the four named plaintiffs and punitive damages of $5 million for
each of the four named plaintiffs, and similar damages for other alleged class
members. On August 11, 1992, a case was filed in the Circuit Court for Greene
County, Tennessee entitled Richard Lee Cobble and wife, Patricia Day Cobble;
Richard Lee Cobble, Jr.; Kenneth Dwayne Cobble; Claude Cobble and wife, Lenora
Cobble; Gary A. Douthat and wife Julia A. Douthat; Donald Joseph Hewitt and wife
Jacqueline Kay Hewitt; Robert Hensley, Jr. and wife Brenda Hensley; Penny
Hensley
b/n/f and parents, Robert Hensley, Jr., and Brenda Hensley, Stephen Hensley
b/n/f and parents, Robert Hensley, Jr., and Brenda Hensley, plaintiffs, v. Steve
Cansler; Fred Cansler; Jimmy Cansler; C & C Milwright Maintenance Co., Inc.;
Foamex Products, Inc.; Recticel Foam Corporation; Foamex L.P.; Morristown Foam
Corporation; and Shelby Williams Industries, Inc., defendants, containing
similar allegations and seeking $5 million in compensatory damages and $10
million in punitive damages for each of nine named plaintiff groups.
The Company has been dismissed by the plaintiffs as a defendant in the
lawsuits filed July 15, 1992 and August 11, 1992 by plaintiffs Linda Foshie, and
others, and Richard Lee Cobble, and others, respectively. The Company's only
costs for these claims were insignificant legal expenses. Another defendant in
the Foshie case
5
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has filed a cross-complaint against the Company regarding claims against it by
the same plaintiffs. The Company believes that the cross-complaint against it is
without merit and that the Company has meritorious defenses. Among other things,
the Company believes that no acts complained of by the plaintiffs in these cases
occurred prior to July 1979, at which time the Company sold the stock in its
subsidiary, Morristown Foam Corporation, which owned certain facilities involved
in these cases, and that other than its past ownership of this subsidiary, the
Company has no involvement with the facilities in question. In December 1995,
the Company was served with a third party complaint filed by Steve Cansler in an
action in the federal district court for the eastern district of Tennessee
brought by Recticel Foam Corporation against Steve and Fred Cansler for cost
recovery of funds spent by Recticel Foam Corporation in cleaning up the
contamination that is the subject of the actions described above. In January
1996, the Company was served with an essentially identical third party complaint
in the same action, filed by Fred Cansler. The Company believes that these third
party complaints are meritless, for the same reasons which lead to the Company's
dismissal from the tort actions described above.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
<TABLE>
<CAPTION>
AGE AT PRINCIPAL OCCUPATION AND POSITION
NAME 2-1-96 AND OFFICE WITH REGISTRANT
- ----------------------------------------------- --------- ----------------------------------------------
<S> <C> <C>
Paul N. Steinfeld.............................. 41 Chairman of the Board of Directors and Chief
Executive Officer since January, 1996; Vice
Chairman of the Board and Chief Executive
Officer from May, 1991 to January, 1996;
Vice Chairman of the Board and Chief
Administrative Officer from May, 1990 to
May, 1991; prior thereto Executive Vice
President. Director during past five years.
Robert P. Coulter.............................. 53 President and Chief Operating Officer since
May, 1990; prior thereto President and
Treasurer. Director during past five years.
Manfred Steinfeld.............................. 71 Chairman of Executive Committee and chairman
of executive compensation committee since
January, 1996; Chairman of the Board and
chairman of executive compensation committee
from May, 1991 to January, 1996; prior
thereto Chairman of the Board and Chief
Executive Officer and chairman of executive
compensation and stock option committee.
Director during past five years.
Peter W. Barile................................ 53 Executive Vice President since May, 1990;
prior thereto Senior Vice President.
Sam Ferrell.................................... 54 Vice President, Finance, Treasurer and Chief
Financial Officer and Assistant Secretary
since May, 1990; prior thereto Vice
President, Controller and Assistant
Secretary.
</TABLE>
The executive officers of the registrant are elected annually by the Board
of Directors, hold office until their successors are chosen and qualify, and may
be removed at any time by the affirmative vote of a majority of the Board. There
are no written employment agreements with any executive officers. Manfred
Steinfeld is the father of Paul N. Steinfeld; there is no other family
relationship between any director or executive officer of the Company.
6
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information under the heading "Common Stock Information (Unaudited)" on
page 18 of the Company's 1995 Annual Report to Stockholders is hereby
incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
. The information under the heading "Five Year Summary of Selected Financial
Data" on page 3 of the Company's 1995 Annual Report to Stockholders is hereby
incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on page 21 of the Company's 1995
Annual Report to Stockholders is hereby incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information contained on pages 13 (Consolidated Statements of Income),
14-15 (Consolidated Balance Sheets), 16 (Consolidated Statements of Cash Flows),
17 (Consolidated Statements of Stockholders' Equity), 18-20 (Notes to
Consolidated Financial Statements) and 20 (Report of Independent Auditors) of
the Company's 1995 Annual Report to Stockholders is hereby incorporated by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
The information called for by Part III (Item 10 (Directors and Executive
Officers of the Registrant), Item 11 (Executive Compensation), Item 12 (Security
Ownership of Certain Beneficial Owners and Management), and Item 13 (Certain
Relationships and Related Transactions)) is incorporated by reference, to the
extent required, from the Company's definitive proxy statement to be filed
pursuant to Regulation 14A not later than 120 days after December 31, 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) List of financial statements and schedules.
(1) Financial statements. The following financial statements are
incorporated by reference in Part II, Item 8 of this report:
Consolidated Statements of Income for the years ended December 31,
1995, 1994, and 1993
Consolidated Balance Sheets at December 31, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended December
31, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Independent Auditors
(2) Financial statement schedules:
None since the required information is not present or is not present in
amounts sufficient to require submission of the schedule, or because the
information required is included in the consolidated financial statements or
notes thereto.
(b) No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
(c) List of exhibits: See Exhibit Index immediately preceding exhibits.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 14, 1996
SHELBY WILLIAMS INDUSTRIES, INC.
--------------------------------------
(Registrant)
By PAUL N. STEINFELD
------------------------------------
Paul N. Steinfeld
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- -------------------------------------------------- ------------------------------ ---------------------
<C> <S> <C>
PAUL N. STEINFELD Chairman of the Board and
--------------------------------------- Director (Principal
(Paul N. Steinfeld) Executive Officer)
ROBERT P. COULTER* President and Director
---------------------------------------
(Robert P. Coulter)
MANFRED STEINFELD* Chairman of the Executive
--------------------------------------- Committee and Director
(Manfred Steinfeld)
SAM FERRELL* Vice President of Finance,
--------------------------------------- Treasurer and Assistant
(Sam Ferrell) Secretary (Principal
Financial and Accounting
Officer)
March 14, 1996
ROBERT L. HAAG* Director
---------------------------------------
(Robert L. Haag)
WILLIAM B. KAPLAN* Director
---------------------------------------
(William B. Kaplan)
HERBERT L. ROTH* Director
---------------------------------------
(Herbert L. Roth)
TRISHA WILSON* Director
---------------------------------------
(Trisha Wilson)
*By PAUL N. STEINFELD
-----------------------------------
Paul N. Steinfeld,
Attorney-in-fact
</TABLE>
8
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------- ---------
<C> <S> <C>
3(i) Registrant's Certificate of Incorporation and all amendments thereto, filed as Exhibit 3.1 to
Registrant's annual report on Form 10-K for 1987 and hereby incorporated by reference.
3(ii) Registrant's By-Laws, as amended.
4.0 The Registrant agrees to furnish a copy of the capital lease referred to in the Registrant's
Consolidated Financial Statements to the Commission upon request.
4.1 The Registrant agrees to furnish a copy of the 7.8% note agreement dated July 31, 1992 and
payable in quarterly installments of $1,000,000 beginning in October 1997, for $8,000,000, to the
Commission upon request.
*10.1 1994 Senior Management Incentive Plan, filed as Exhibit 10.5 to Registrant's annual report on
Form 10-K for 1993 and hereby incorporated by reference.
*10.2 1995 Senior Management Incentive Plan, filed as Exhibit 10.3 to Registrant's annual report on
Form 10-K for 1994 and hereby incorporated by reference.
*10.3 1996 Senior Management Plan.
*10.4 Registrant's 1992 Key Employees' Incentive Stock Option Plan, filed as Exhibit 10.6 to
Registrant's annual report on Form 10-K for 1991 and hereby incorporated by reference.
*10.5 Registrant's 1995 Directors' Stock Option Plan, filed as Exhibit 10.1 to Registrant's Form 10-Q
for quarter ended March 31, 1995 and hereby incorporated by reference.
13.1 Portions of Registrant's annual report to stockholders for 1995.
21.1 Subsidiaries of the Registrant, filed as Exhibit 22.1 to Registrant's annual report on Form 10-K
for 1990 and hereby incorporated by reference.
23.1 Consent of accountants to incorporation by reference in Form 10-K.
23.2 Consent of accountants to incorporation by reference in Form S-8.
24.1 Power of Attorney.
27.1 Financial Data Schedule (EDGAR only).
</TABLE>
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* Compensation plan.
9
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EXHIBIT 3(ii)
SHELBY WILLIAMS INDUSTRIES, INC.
B Y - L A W S
(AS IN EFFECT JANUARY 17, 1996)
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of Chicago, State of Illinois, at such place as may be
fixed from time to time by the board of directors, or at such other place either
within or without the State of Delaware as shall be designated from time to time
by the board of directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing within the year
1984, shall be held on the first Tuesday in May if not a legal holiday, and if a
legal holiday, then on the next secular day following, at 10:00 A.M., or at such
other date and time as shall be designated from time to time by the board of
directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
<PAGE>
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders
2
<PAGE>
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
3
<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than three nor more than eight. Thereafter, within the limits
above specified, the number of directors shall be determined by resolution of
the board of directors or by the stockholders at the annual meeting. The
directors shall be elected at the annual meeting of the stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders.
MEETING OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no
4
<PAGE>
notice of such meeting shall be necessary to the newly elected directors in
order legally to constitute the meeting, provided a quorum shall be present. In
the event of the failure of the stockholders to fix the time or place of such
first meeting of the newly elected board of directors, or in the event such
meeting is not held at the time and place so fixed by the stockholders, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president on
three days' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the president or secretary in like
manner and on like notice on the written request of two directors.
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be
present at any meeting of the board of directors the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken
at any meeting of the board of directors or of any committee thereof may be
taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting
of the board of directors, or any committee, by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
5
<PAGE>
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-
laws, the board of directors shall have the authority to fix the compensation of
directors. The directors may be paid their expenses, if any, of attendance at
each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation there for. Members
of special or standing
6
<PAGE>
committees may be allowed like compensation for attending committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board
of Directors and shall be a Chairman of the Board, a President, a Chairman of
the Executive Committee, a Vice President, a Secretary and a Treasurer. The
Board of Directors may also choose additional vice-presidents, and one or
more assistant secretaries and assistant treasurers. Any number of offices
may be held by the same person, unless the certificate of incorporation or
these by-laws otherwise provide.
7
<PAGE>
Section 2. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a Chairman of the Board, a President, a
Chairman of the Executive Committee, one or more Vice-Presidents, a Secretary
and a Treasurer.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
Section 5A. The Chairman of the Board shall be the chief executive officer
of the corporation and, except as otherwise determined by the Board of
Directors, shall preside at meetings of the Board of Directors and stockholders.
He shall be the direct representative of the Board of Directors. He shall also
consult with the President and Chairman of the Executive Committee concerning
the affairs and policies of the corporation.
Section 5B. The Chairman of the Executive Committee shall preside at all
meetings of the Executive Committee. In addition, at the request of the Board
of Directors, the Chairman of the Executive Committee may also preside at
meetings of the Board of Directors and stockholders of the corporation. He
shall also consult with the Chairman of the Board and the President concerning
the affairs and policies of the corporation.
THE PRESIDENT
Section 6. The President, subject to the directives of the Board of
Directors, shall be the chief operating officer of the corporation. In the
absence or disability of the Chairman of the Board and the Vice-Chairman of the
Board, the President shall preside at meetings of the directors and the
stockholders. He shall have such other powers and perform such other duties as
may be delegated to him by the Board of Directors.
8
<PAGE>
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be
more than one vice-president, the vice-presidents in the order designated by
the directors, or in the absence of any designation, then in the order of
their election) shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the president. The vice-presidents shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
9
<PAGE>
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a vice-
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
10
<PAGE>
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor
11
<PAGE>
more than sixty days prior to any other action. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
12
<PAGE>
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees, and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new by-
laws may be adopted by the stockholders or by the board of directors, when such
power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new by-
laws be contained in the notice of such special meeting. If the power to adopt,
amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
13
<PAGE>
EXHIBIT 10.3
1996
SENIOR MANAGEMENT INCENTIVE PLAN
For Fiscal 1996, incentive will be determined by Corporate Earnings per Share as
follows:
<TABLE>
<CAPTION>
BONUS AWARD AS A PERCENT OF
EARNING PER SHARE BASE SALARY
----------------- ---------------------------
<S> <C>
$ .85 - .99 20
.90 - .99 30
1.00+ 40
</TABLE>
If unusual major factors significantly change Fiscal 1996 Earnings, decisions
regarding any adjustments will be made by the Compensation Committee of the
Board of Directors.
The Company's 1996 Senior Management Incentive Plan shall be governed by the
following rules:
A. The incentive compensation for the 1996 fiscal year computed as provided
for in the Plan, shall be divided into two (2) equal installments, one
payable on the first day of February 1997, and the other on the first day
of February 1998 (the "Payment Dates").
B. A participant shall become entitled to the installment payable on each
Payment Date, on that date, if and only if, he then continues to be in the
employ of the company, or if not, that the termination of his employment by
the Company was caused by death, complete disability, retirement after age
sixty (60) or discharged by the Company without cause.
C. Should any installment be payable to a Participant who is not entitled
thereto on any Payment Date as provided for above, such installment shall
not revert to the Company but shall be reallocated and paid to the other
Participants proportionate to the amounts to which they are otherwise
entitled to receive under the plan.
D. All determinations arising under the Plan shall be determined by
theCompensation Committee of the Board of Directors of the Company,
whosedecision thereon shall be final, conclusive and binding.
E. Employees participating in a commission override program will participate
at the rate of one half of the amount of scheduled amount called for.
F. Any senior management employees participating in any other division/local
incentive plans, shall not participate in the foregoing plan.
<PAGE>
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA Shelby Williams Industries, Inc.
<TABLE>
<CAPTION>
December 31 and year then ended
- -------------------------------------------------------------------------------------------------------
($000's omitted except for per share data) 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
- -------------------------------------------------------------------------------------------------------
Net sales $ 166,776 $ 159,072 $ 153,527 $ 140,262 $ 139,703
- -------------------------------------------------------------------------------------------------------
Cost of sales 130,189 126,401 121,872 109,330 109,815
- -------------------------------------------------------------------------------------------------------
Restructuring charge - 5,575 - - 7,763
- -------------------------------------------------------------------------------------------------------
Selling and administrative expenses 25,974 25,402 24,770 24,342 24,707
- -------------------------------------------------------------------------------------------------------
Interest expense 1,257 1,207 1,060 1,622 2,018
- -------------------------------------------------------------------------------------------------------
Interest income (9) - (8) (130) (148)
- -------------------------------------------------------------------------------------------------------
Miscellaneous expense (income) (65) 106 (26) (44) 55
- -------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 9,430 381 5,859 5,142 (4,507)
- -------------------------------------------------------------------------------------------------------
Income taxes 2,650 16 1,709 1,548 (1,364)
- -------------------------------------------------------------------------------------------------------
Net income (loss) 6,780 365 4,150 3,594 (3,143)
- -------------------------------------------------------------------------------------------------------
PER SHARE DATA
- -------------------------------------------------------------------------------------------------------
Net sales per common share $ 18.62 $ 17.58 $ 16.88 $ 15.41 $ 15.33
- -------------------------------------------------------------------------------------------------------
Net income (loss) per common share .76 .04 .46 .39 (.34)
- -------------------------------------------------------------------------------------------------------
Cash dividends declared per
common share .28 .28 .28 .24 .24
- -------------------------------------------------------------------------------------------------------
Equity per common share 5.81 5.41 5.64 5.62 5.47
- -------------------------------------------------------------------------------------------------------
Weighted average number of common
shares outstanding 8,955 9,049 9,097 9,105 9,113
- -------------------------------------------------------------------------------------------------------
CHANGES IN FINANCIAL POSITION
- -------------------------------------------------------------------------------------------------------
Cash provided
by operating activities $ 9,201 $ 4,998 $ 1,778 $ 7,394 $ 7,948
- -------------------------------------------------------------------------------------------------------
Capital expenditures 2,252 2,228 1,720 1,831 1,315
- -------------------------------------------------------------------------------------------------------
Depreciation and amortization 2,833 2,707 2,673 2,706 3,139
- -------------------------------------------------------------------------------------------------------
Cash dividends 2,511 2,533 2,547 2,186 2,189
- -------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
- -------------------------------------------------------------------------------------------------------
Stockholders' equity $ 51,724 $ 48,658 $ 51,316 $ 51,156 $ 49,836
- -------------------------------------------------------------------------------------------------------
Long-term debt (including current portion) 8,895 8,944 8,987 9,025 21,059
- -------------------------------------------------------------------------------------------------------
Total assets 89,907 88,520 90,804 86,775 90,576
- -------------------------------------------------------------------------------------------------------
Working capital 32,016 28,092 28,809 28,680 27,659
- -------------------------------------------------------------------------------------------------------
Current assets 59,256 57,079 57,151 52,237 55,060
- -------------------------------------------------------------------------------------------------------
Net investment in plant and equipment 29,231 29,874 31,630 32,558 33,476
- -------------------------------------------------------------------------------------------------------
FINANCIAL RATIOS
- -------------------------------------------------------------------------------------------------------
Return on average
common shareholders' equity 14% 1% 8% 7% -
- -------------------------------------------------------------------------------------------------------
Return on average total assets 7.6% .4% 4.7% 4.1% -
- -------------------------------------------------------------------------------------------------------
Pre-tax return on net sales 5.7% .2% 3.8% 3.7% -
- -------------------------------------------------------------------------------------------------------
Effective income tax rate 28.1% 4.2% 29.2% 30.1% (30.3%)
- -------------------------------------------------------------------------------------------------------
After-tax return on net sales 4.1% .2% 2.7% 2.6% -
- -------------------------------------------------------------------------------------------------------
Current ratio 2.2 2.0 2.0 2.2 2.0
- -------------------------------------------------------------------------------------------------------
Debt as percent of total invested capital 15% 16% 15% 15% 30%
- -------------------------------------------------------------------------------------------------------
Current assets as percent of total assets 66% 64% 63% 60% 61%
- -------------------------------------------------------------------------------------------------------
Dividend payout ratio 37% - 61% 61% -
- -------------------------------------------------------------------------------------------------------
PRODUCTIVITY STATISTICS
- -------------------------------------------------------------------------------------------------------
Average inventory turnover 4.6X 4.6X 4.3X 4.0X 4.0X
- -------------------------------------------------------------------------------------------------------
Average receivable turnover 6.8X 6.5X 7.1X 7.4X 7.0X
- -------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME Shelby Williams Industries, Inc.
<TABLE>
<CAPTION>
Years Ended December 31, 1995, 1994 and 1993 1995 1994 1993
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $ 166,776,000 $ 159,072,000 $ 153,527,000
------------------------------------------------------------------------------------------------------
Cost of goods sold 130,189,000 126,401,000 121,872,000
------------------------------------------------------------------------------------------------------
Restructuring charge - 5,575,000 -
------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses 25,974,000 25,402,000 24,770,000
------------------------------------------------------------------------------------------------------
10,613,000 1,694,000 6,885,000
------------------------------------------------------------------------------------------------------
OTHER DEDUCTIONS (INCOME):
------------------------------------------------------------------------------------------------------
Interest expense 1,257,000 1,207,000 1,060,000
------------------------------------------------------------------------------------------------------
Interest income (9,000) - (8,000)
------------------------------------------------------------------------------------------------------
Miscellaneous expense (income) (65,000) 106,000 (26,000)
------------------------------------------------------------------------------------------------------
1,183,000 1,313,000 1,026,000
------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 9,430,000 381,000 5,859,000
------------------------------------------------------------------------------------------------------
INCOME TAXES:
------------------------------------------------------------------------------------------------------
Current 2,452,000 429,000 2,010,000
------------------------------------------------------------------------------------------------------
Deferred 198,000 (413,000) (301,000)
------------------------------------------------------------------------------------------------------
2,650,000 16,000 1,709,000
------------------------------------------------------------------------------------------------------
NET INCOME $ 6,780,000 $ 365,000 $ 4,150,000
------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE $ .76 $ .04 $ .46
------------------------------------------------------------------------------------------------------
Weighted average number of
common shares outstanding 8,955,000 9,049,000 9,097,000
------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
13
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1995 and 1994 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
------------------------------------------------------------------------------------------
CURRENT ASSETS:
------------------------------------------------------------------------------------------
Cash and cash equivalents $ 2,376,000 $ 1,633,000
------------------------------------------------------------------------------------------
Accounts receivable, less allowance for doubtful
accounts of $ 423,000 in 1995 and $ 471,000 in 1994 25,198,000 24,124,000
------------------------------------------------------------------------------------------
Inventories:
------------------------------------------------------------------------------------------
Raw materials 12,349,000 12,365,000
------------------------------------------------------------------------------------------
Work in process 4,598,000 4,880,000
------------------------------------------------------------------------------------------
Finished goods 11,488,000 11,217,000
------------------------------------------------------------------------------------------
28,435,000 28,462,000
------------------------------------------------------------------------------------------
Prepaid expenses 3,247,000 2,860,000
------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 59,256,000 57,079,000
------------------------------------------------------------------------------------------
INVESTMENT IN AFFILIATE - 50,000
------------------------------------------------------------------------------------------
EXCESS OF COST OVER NET ASSETS OF ACQUIRED COMPANIES 178,000 186,000
------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
------------------------------------------------------------------------------------------
Land and land improvements 2,876,000 2,870,000
------------------------------------------------------------------------------------------
Buildings and leasehold improvements 25,408,000 25,256,000
------------------------------------------------------------------------------------------
Machinery and equipment 25,029,000 23,592,000
------------------------------------------------------------------------------------------
Construction in progress - 209,000
------------------------------------------------------------------------------------------
53,313,000 51,927,000
------------------------------------------------------------------------------------------
Less accumulated depreciation and amortization 24,082,000 22,053,000
------------------------------------------------------------------------------------------
29,231,000 29,874,000
------------------------------------------------------------------------------------------
OTHER ASSETS 1,242,000 1,331,000
------------------------------------------------------------------------------------------
$ 89,907,000 $ 88,520,000
------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
14
<PAGE>
Shelby Williams Industries, Inc.
<TABLE>
<CAPTION>
DECEMBER 31, 1995 AND 1994 1995 1994
----------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
----------------------------------------------------------------------------------------------------
Short-term borrowings $ 5,900,000 $ 8,450,000
----------------------------------------------------------------------------------------------------
Accounts payable 10,425,000 9,972,000
----------------------------------------------------------------------------------------------------
Customer deposits on orders in process 3,245,000 3,391,000
----------------------------------------------------------------------------------------------------
Accrued liabilities 6,787,000 6,738,000
----------------------------------------------------------------------------------------------------
Income taxes 828,000 387,000
----------------------------------------------------------------------------------------------------
Current portion of long-term debt 55,000 49,000
----------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 27,240,000 28,987,000
----------------------------------------------------------------------------------------------------
LONG-TERM DEBT 8,840,000 8,895,000
----------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES 2,103,000 1,980,000
----------------------------------------------------------------------------------------------------
COMMITMENTS (SEE NOTES)
----------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
----------------------------------------------------------------------------------------------------
Common stock, $ .05 par value; authorized 30,000,000 shares;
issued 11,779,000 shares (1994 - 11,758,000) 589,000 588,000
----------------------------------------------------------------------------------------------------
Capital in excess of par value 7,855,000 7,687,000
----------------------------------------------------------------------------------------------------
Retained earnings 63,398,000 59,129,000
----------------------------------------------------------------------------------------------------
Pension liability adjustment (908,000) (871,000)
----------------------------------------------------------------------------------------------------
70,934,000 66,533,000
----------------------------------------------------------------------------------------------------
Less common stock held in treasury;
2,879,000 shares at cost (1994 - 2,759,000) 19,210,000 17,875,000
----------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 51,724,000 48,658,000
----------------------------------------------------------------------------------------------------
$ 89,907,000 $ 88,520,000
----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
15
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS Shelby Williams Industries, Inc.
<TABLE>
<CAPTION>
Years Ended December 31, 1995, 1994 and 1993 1995 1994 1993
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
-----------------------------------------------------------------------------------------------------------
Net income $ 6,780,000 $ 365,000 $ 4,150,000
-----------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income
to net cash provided by operating activities:
-----------------------------------------------------------------------------------------------------------
Depreciation and amortization 2,833,000 2,707,000 2,673,000
-----------------------------------------------------------------------------------------------------------
Assets abandoned and impaired in restructuring - 1,799,000 -
-----------------------------------------------------------------------------------------------------------
Provision for losses on accounts receivable 323,000 308,000 479,000
-----------------------------------------------------------------------------------------------------------
Equity change in affiliate 50,000 (303,000) 49,000
-----------------------------------------------------------------------------------------------------------
Changes in assets and liabilities:
Accounts receivable (1,397,000) 234,000 (6,585,000)
-----------------------------------------------------------------------------------------------------------
Inventories 27,000 (10,000) 64,000
-----------------------------------------------------------------------------------------------------------
Prepaid expenses (387,000) 155,000 319,000
-----------------------------------------------------------------------------------------------------------
Accounts payable and accrued liabilities 356,000 660,000 2,704,000
-----------------------------------------------------------------------------------------------------------
Income taxes payable 441,000 (1,471,000) 326,000
-----------------------------------------------------------------------------------------------------------
Increase (decrease) in deferred taxes 123,000 81,000 (876,000)
-----------------------------------------------------------------------------------------------------------
Pension liability adjustment (37,000) 540,000 (1,411,000)
-----------------------------------------------------------------------------------------------------------
Other 89,000 (67,000) (114,000)
-----------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,201,000 4,998,000 1,778,000
-----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
-----------------------------------------------------------------------------------------------------------
Proceeds from disposal of property,
plant and equipment 70,000 1,000 -
-----------------------------------------------------------------------------------------------------------
Capital expenditures (2,252,000) (2,228,000) (1,720,000)
-----------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (2,182,000) (2,227,000) (1,720,000)
-----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
-----------------------------------------------------------------------------------------------------------
Net borrowings (repayment) of short-term borrowings (2,550,000) 1,450,000 1,750,000
-----------------------------------------------------------------------------------------------------------
Principal payments of long-term debt (49,000) (43,000) (38,000)
-----------------------------------------------------------------------------------------------------------
Sale of common stock under stock option plan 169,000 19,000 220,000
-----------------------------------------------------------------------------------------------------------
Purchase of common stock for the treasury (1,335,000) (1,049,000) (252,000)
-----------------------------------------------------------------------------------------------------------
Dividends declared and paid (2,511,000) (2,533,000) (2,547,000)
-----------------------------------------------------------------------------------------------------------
NET CASH USED BY FINANCING ACTIVITIES (6,276,000) (2,156,000) (867,000)
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents 743,000 615,000 (809,000)
-----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 1,633,000 1,018,000 1,827,000
-----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 2,376,000 $ 1,633,000 $ 1,018,000
-----------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
-----------------------------------------------------------------------------------------------------------
Cash paid during the year for:
-----------------------------------------------------------------------------------------------------------
Interest $ 1,263,000 $ 1,207,000 $ 1,060,000
-----------------------------------------------------------------------------------------------------------
Income taxes 2,061,000 1,766,000 1,318,000
-----------------------------------------------------------------------------------------------------------
$ 3,324,000 $ 2,973,000 $ 2,378,000
-----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
16
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Shelby Williams Industries, Inc.
<TABLE>
<CAPTION>
Years Ended December 31, 1995, 1994 and 1993
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock Capital in Pension Treasury
Shares excess of Retained liability stock,
issued Amount par value earnings adjustment at cost Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992 11,734,000 $ 587,000 $ 7,449,000 $ 59,694,000 $ - $ (16,574,000) $ 51,156,000
- ---------------------------------------------------------------------------------------------------------------------------------
Net income - - - 4,150,000 - - 4,150,000
- ---------------------------------------------------------------------------------------------------------------------------------
Pension liability adjustment - - - - (1,411,000) - (1,411,000)
- ---------------------------------------------------------------------------------------------------------------------------------
Sale of common stock under
stock option plan 22,000 1,000 219,000 - - - 220,000
- ---------------------------------------------------------------------------------------------------------------------------------
Common stock purchased for
treasury (19,000 shares) - - - - - (252,000) (252,000)
- ---------------------------------------------------------------------------------------------------------------------------------
Cash dividends - $ .28 per share - - - (2,547,000) - - (2,547,000)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 11,756,000 588,000 7,668,000 61,297,000 (1,411,000) (16,826,000) 51,316,000
- ---------------------------------------------------------------------------------------------------------------------------------
Net income - - - 365,000 - - 365,000
- ---------------------------------------------------------------------------------------------------------------------------------
Pension liability adjustment - - - - 540,000 - 540,000
- ---------------------------------------------------------------------------------------------------------------------------------
Sale of common stock under
stock option plan 2,000 - 19,000 - - - 19,000
- ---------------------------------------------------------------------------------------------------------------------------------
Common stock purchased for
treasury (105,000 shares) - - - - - (1,049,000) (1,049,000)
- ---------------------------------------------------------------------------------------------------------------------------------
Cash dividends - $ .28 per share - - - (2,533,000) - - (2,533,000)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 11,758,000 588,000 7,687,000 59,129,000 (871,000) (17,875,000) 48,658,000
- ---------------------------------------------------------------------------------------------------------------------------------
Net income - - - 6,780,000 - - 6,780,000
- ---------------------------------------------------------------------------------------------------------------------------------
Pension liability adjustment - - - - (37,000) - (37,000)
- ---------------------------------------------------------------------------------------------------------------------------------
Sale of common stock under
stock option plan 21,000 1,000 168,000 - - - 169,000
- ---------------------------------------------------------------------------------------------------------------------------------
Common stock purchased for
treasury (120,000 shares) - - - - - (1,335,000) (1,335,000)
- ---------------------------------------------------------------------------------------------------------------------------------
Cash dividends - $ .28 per share - - - (2,511,000) - - (2,511,000)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 11,779,000 $ 589,000 $ 7,855,000 $ 63,398,000 $ (908,000) $ (19,210,000) $ 51,724,000
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Shelby Williams Industries, Inc.
December 31, 1995, 1994 and 1993
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
DESCRIPTION OF BUSINESS
Shelby Williams designs, manufactures and distributes products for the contract
furniture market. The Company has a significant position in the hospitality and
food service markets through its "Shelby Williams" seating line and its "King
Arthur" line of function room furniture. The Company provides contemporary
upholstery seating products under the names "Preview" and "Madison." It serves
the health care, university, office furniture and other institutional markets
through its "Thonet" division with health care and dormitory furniture,
including chairs and tables, and ergonomically designed office seating products,
desks and credenzas. The Company also distributes vinyl wallcoverings for
residential, hotel and office use under the name "Sellers & Josephson," and
markets other textile products to the architectural and design community through
"SW Textiles." The Company distributes floor coverings and other textile
products, as well as Shelby Williams products, in Hawaii and the entire Pacific
Basin, through "PHF."
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany items
and transactions have been eliminated in consolidation.
REVENUE RECOGNITION
Sales are recognized when the products are shipped and include export sales of
$ 15,538,000 for 1995, $ 16,279,000 for 1994, and $ 12,008,000 for 1993.
INCOME TAXES
Income tax expense includes Federal and state income taxes currently payable and
deferred taxes arising from temporary differences between the tax bases of
assets or liabilities and their reported amounts in the financial statements.
CASH AND CASH EQUIVALENTS
Cash equivalents include highly liquid investments, with original maturities of
three months or less, that are readily convertible to known amounts of cash.
INVENTORIES
Inventories are carried at the lower of cost or market, determined by the last-
in, first-out (LIFO) method. The current replacement cost of inventories
exceeded carrying value by approximately $ 10,019,000 at December 31, 1995 and
$ 10,490,000 at December 31, 1994.
As a result of the difference between the method of allocating the cost of
acquisitions in 1976, 1987 and 1988 for financial reporting purposes, and the
method used for income tax purposes, the Company's tax basis in the inventories
is approximately $ 25,478,000 at December 31, 1995 and $ 25,505,000 at
December 31, 1994.
PROPERTY, PLANT AND EQUIPMENT
Depreciation and amortization of property, plant and equipment is provided using
the straight-line method over the estimated useful lives of the respective
assets.
POSTEMPLOYMENT BENEFITS
The Company provides certain postemployment benefits. Payments of these benefits
in the past have been infrequent and are not estimable, thus the Company records
these benefits on an event basis.
OTHER SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
As a result of significant deductibles in its insurance coverage for liability
and worker's compensation claims, the Company provides amounts which management
believes are sufficient to cover the associated liabilities.
SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
The Company has unsecured lines of credit amounting to $ 18,400,000 at interest
rates of prime or less. At December 31, 1995, $ 12,500,000 of these lines were
unused. The weighted average interest rate on short-term borrowings outstanding
on December 31, 1995 and 1994 was 6.7% and 6.8% respectively.
COMMITMENTS
- --------------------------------------------------------------------------------
LEASES
The Company leases certain manufacturing facilities under operating leases which
expire over the next ten years and one capital lease which expires in 2010. The
Company also leases showroom space under operating leases expiring over the next
five years.
At December 31, 1995 and 1994, the accompanying consolidated balance sheets
included a manufacturing facility under a capital lease as follows:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Buildings and leasehold improvements $ 2,647,000 $ 2,640,000
Less accumulated amortization 1,530,000 1,382,000
- --------------------------------------------------------------------------------
$ 1,117,000 $ 1,258,000
- --------------------------------------------------------------------------------
</TABLE>
Future minimum lease payments under capital lease, with the present value of the
net minimum lease payments, as of December 31, 1995 are:
<TABLE>
<CAPTION>
Year ending December 31,
- --------------------------------------------------------------------------------
<S> <C>
1996 $ 171,000
1997 171,000
1998 171,000
1999 171,000
2000 171,000
Subsequent to 2000 720,000
- --------------------------------------------------------------------------------
Total minimum lease payments 1,575,000
Less amount representing interest (at 13%) 680,000
- --------------------------------------------------------------------------------
Present value of net minimum lease payments $ 895,000
- --------------------------------------------------------------------------------
</TABLE>
Future minimum rental payments required under operating leases that have initial
or remaining non-cancelable lease terms in excess of one year as of December 31,
1995 are:
<TABLE>
<CAPTION>
Year ending December 31,
- --------------------------------------------------------------------------------
<S> <C>
1996 $ 1,687,000
1997 1,709,000
1998 1,641,000
1999 1,166,000
2000 1,042,000
Subsequent to 2000 1,811,000
- --------------------------------------------------------------------------------
Total minimum lease payments required $ 9,056,000
- --------------------------------------------------------------------------------
</TABLE>
Total rental expense for all operating leases aggregated $ 2,008,000 in 1995,
$ 1,998,000 in 1994, and $ 1,959,000 in 1993.
COMMON STOCK INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The following table sets forth the high and low sales prices of the Company's
common stock as reported by the New York Stock Exchange.
<TABLE>
<CAPTION>
Sales Prices High Low
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1994
1st Quarter 14 3/8 12
2nd Quarter 12 1/4 10
3rd Quarter 10 7/8 9 1/2
4th Quarter 10 7 1/2
- --------------------------------------------------------------------------------
1995
1st Quarter 10 1/4 7 1/2
2nd Quarter 11 3/4 9
3rd Quarter 13 3/4 11 3/4
4th Quarter 13 1/2 11 3/8
- --------------------------------------------------------------------------------
</TABLE>
At December 31, 1995, there were approximately 3,000 holders of record of the
Company's common stock, including individual participants in security position
listings.
The Company declared and paid cash dividends on its common stock during the last
two fiscal years as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Period Cash Dividend per Common Share
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
1st Quarter $ .07 $ .07
2nd Quarter .07 .07
3rd Quarter .07 .07
4th Quarter .07 .07
- --------------------------------------------------------------------------------
$ .28 $ .28
- --------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Shelby Williams Industries, Inc.
December 31, 1995, 1994 and 1993
QUARTERLY RESULTS (UNAUDITED)
- --------------------------------------------------------------------------------
Summarized quarterly results for the years ended December 31, 1995, 1994 and
1993 are as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1995 Net Sales Gross Profit Net Income Net Income Per Share
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First $ 39,301,000 $ 8,400,000 $ 1,325,000 $ .15
Second 42,352,000 9,277,000 1,702,000 .19
Third 42,518,000 9,379,000 1,874,000 .21
Fourth 42,605,000 9,531,000 1,879,000 .21
- --------------------------------------------------------------------------------------------------------
Total $ 166,776,000 $ 36,587,000 $ 6,780,000 $ .76
- --------------------------------------------------------------------------------------------------------
1994 Net Sales Gross Profit Net Income (Loss) Net Income (Loss) Per Share
- --------------------------------------------------------------------------------------------------------
First $ 38,122,000 $ 7,723,000 $ 785,000 $ .09
Second 40,208,000 8,340,000 1,104,000 .12
Third 38,859,000 7,858,000 876,000 .10
Fourth 41,883,000 3,175,000* (2,400,000)* (.27)*
- --------------------------------------------------------------------------------------------------------
Total $ 159,072,000 $ 27,096,000* $ 365,000* $ .04 *
- --------------------------------------------------------------------------------------------------------
1993 Net Sales Gross Profit Net Income Net Income Per Share
- --------------------------------------------------------------------------------------------------------
First $ 34,329,000 $ 7,384,000 $ 633,000 $ .07
Second 38,244,000 7,930,000 1,002,000 .11
Third 39,701,000 8,110,000 1,060,000 .12
Fourth 41,253,000 8,231,000 1,455,000 .16
- --------------------------------------------------------------------------------------------------------
Total $ 153,527,000 $ 31,655,000 $ 4,150,000 $ .46
- --------------------------------------------------------------------------------------------------------
</TABLE>
* See "Restructuring Charge" below for a description of the charge recorded in
the fourth quarter of 1994 and its effect on operations.
STOCK OPTION PLANS
- --------------------------------------------------------------------------------
Under the Company's incentive stock option plan and directors' stock option
plan, options are granted to key employees and directors to purchase the
Company's common stock at not less than fair market value at date of grant. At
December 31, 1995 and 1994, there were 384,841 and 345,004 shares, respectively,
reserved for issuance under the plans. Options granted, exercised and cancelled
in 1995 and outstanding at December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Number Number Number Number Number Per Number Number
of Shares of Shares of Shares of Shares of Shares Share of Shares of Shares
Under Option Under Options Under Options Under Options Under Option Option Exercisable Exercisable
December 31, 1994 Granted Exercised Cancelled December 31, 1995 Price December 31, 1994 December 31, 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
85,004 - 20,163 3,834 61,007 $ 8.38 55,000 61,007
10,000 - - - 10,000 9.21 6,666 10,000
- 44,000 - - 44,000 7.94 - 16,000
- 4,000 - - 4,000 8.73 - -
- -------------------------------------------------------------------------------------------------------------------------------
95,004 48,000 20,163 3,834 119,007 61,666 87,007
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Options not exercisable at December 31, 1995, become exercisable in specified
increments and expire over the next five years.
LONG-TERM DEBT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Long-term debt at December 31, 1995, and 1994 consisted of the following: 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
7.8% senior notes due in quarterly installments of $ 1,000,000 in October 1997 through July 1999 $ 8,000,000 $ 8,000,000
13% capitalized lease obligation, due in monthly installments of $ 14,000 (including interest) through
March 2005, secured by plant with a carrying value of $ 1,117,000 895,000 944,000
- ----------------------------------------------------------------------------------------------------------------------------------
8,895,000 8,944,000
Less amounts due within one year 55,000 49,000
- ----------------------------------------------------------------------------------------------------------------------------------
$ 8,840,000 $ 8,895,000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The terms of the senior note agreement restrict the payment of dividends and the
acquisition of stock for the treasury until the indebtedness is paid in full. At
December 31, 1995 there was $ 4,827,000 available for payment of dividends and
the acquisition of stock for the treasury. In addition, the Company is
restricted as to the incurrence of additional indebtedness and the amount of
leases which may be entered into. The Company is in compliance with all such
restrictions.
RESTRUCTURING CHARGE
- --------------------------------------------------------------------------------
Due to increases in lumber prices and increased competition primarily from
imported products, the Company made changes in its product and manufacturing
strategies during December 1994, designed to make the Company more competitive
in the industry. The plan was to exit certain portions of the Company's
enterprise by selling an upholstery business with a related manufacturing
facility and discontinuing a part of the product lines in the health care,
university and office markets, resulting in closure of another plant. The
Company anticipated completing the restructuring by December 31, 1995; however,
at that date, negotiations for sale of the upholstery business continued, with
the Company planning to consummate the transaction in the first half of 1996.
The planned discontinuance of a part of the product lines in the health care,
university and office markets was completed in 1995 resulting in the reduction
of operations of that plant by approximately 75 percent. The Company plans to
move the remaining production to other facilities and close the plant by
September 30, 1996.
At December 31, 1994 and 1995, accrued liabilities include $ 795,000 and
$ 439,000, respectively, related to the above, the latter of which is primarily
to return the leased plant being closed to original condition. Exit costs paid
and charged against the liability in 1995 amounted to $ 356,000, principally
severance.
Components of the 1994 charge were as follows:
<TABLE>
<CAPTION>
<S> <C>
Write downs resulting from discontinuance of product lines:
Inventory, to net realizable value $ 2,565,000
Catalogs and other sales materials 416,000
Cost related to plants:
Abandonment of leasehold improvements
and other fixed assets 1,301,000
Cost to return leased plant to original condition 471,000
Other cost, principally severance 324,000
Other assets impaired:
Write-off of goodwill of upholstery business
which will not be recovered upon its sale 498,000
- --------------------------------------------------------------------------------
$ 5,575,000
- --------------------------------------------------------------------------------
</TABLE>
The revenues and net operating income for the upholstery business that is being
sold are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 8,963,000 $ 7,925,000 $ 7,722,000
Net operating income 325,000 188,000 431,000
</TABLE>
The charge was recorded in the fourth quarter of 1994 and reduced the net income
of the year by $ 3,850,000 or $ .43 per share. Excluding the restructuring
charge, 1994 net income was $ 4,215,000, or $ .47 per share.
19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Shelby Williams Industries, Inc.
December 31, 1995, 1994 and 1993
RETIREMENT PLANS
- --------------------------------------------------------------------------------
The Company has several defined benefit pension plans covering essentially all
of its employees in the United States. The benefits are based on years of
service, and for salaried employees, average annual compensation. The Company's
practice is to fund amounts which are required by statute and applicable
regulations and which are tax deductible.
Assumptions used in the accounting were:
<TABLE>
<CAPTION>
As of December 31, 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Discounts rates 8.0% 8.5%
Rates of increase in compensation levels 3.5% 3%
Expected long-term rate of return on assets 8.5% 8.5%
- --------------------------------------------------------------------------------
</TABLE>
Net defined benefit pension cost for 1995, 1994, and 1993 included the following
components:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits
earned during period $ 1,062,000 $ 1,114,000 $ 797,000
Interest cost on
projected benefit obligations 1,088,000 892,000 746,000
Net amortization and deferral 1,504,000 (524,000) (87,000)
Actual return on plan assets (2,128,000) 16,000 (408,000)
- --------------------------------------------------------------------------------
Total pension plan expense $ 1,526,000 $ 1,498,000 $ 1,048,000
- --------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the Company's defined
benefit pension plans and amounts recognized in the accompanying consolidated
balance sheets as of December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of vested benefit obligations $ 13,281,000 $ 10,658,000
Actuarial present value of accumulated benefit obligations $ 13,842,000 $ 11,091,000
- --------------------------------------------------------------------------------------------------------------------------
Actuarial present value of projected benefit obligations for service rendered to date $ 15,495,000 $ 12,194,000
Plan assets at fair value, primarily cash equivalents and publicly traded stocks and bonds,
including 22,000 shares of Shelby Williams Industries, Inc. common stock 12,084,000 8,958,000
- --------------------------------------------------------------------------------------------------------------------------
Projected benefit obligations in excess of plan assets 3,411,000 3,236,000
Unrecognized net assets being recognized over remaining service period 213,000 238,000
Unrecognized net loss (3,379,000) (2,792,000)
Unrecognized prior service cost (589,000) (614,000)
Adjustment required to recognize minimum liability 2,102,000 2,065,000
- --------------------------------------------------------------------------------------------------------------------------
Pension related liability included in accrued liabilities $ 1,758,000 $ 2,133,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company has an employee stock ownership plan covering essentially all
salaried employees. Contributions are determined annually at the discretion of
the Company but not to exceed the amount allowable as a deduction for federal
income tax purposes. The contributions were $ 70,000 for 1995, $ 72,000 for
1994, and $ 56,000 for 1993. The plan held 35,000 shares of the Company's common
stock at December 31, 1995 and 27,000 shares at December 31, 1994.
Retirement plan expense was $ 1,596,000, $ 1,570,000, and $ 1,104,000 for 1995,
1994, and 1993 respectively.
INCOME TAXES
- --------------------------------------------------------------------------------
Deferred income tax liabilities (assets) for differences in tax bases and
amounts in the financial statements were as follows:
<TABLE>
<CAPTION>
As of December 31, 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Current:
Allocated costs of acquisition inventories $ 1,005,000 $ 1,005,000
Pension liability (411,000) (650,000)
Restructuring related liabilities (149,000) (270,000)
Other - net (335,000) (25,000)
- --------------------------------------------------------------------------------
Total included in current income taxes 110,000 60,000
- --------------------------------------------------------------------------------
Noncurrent:
Property, plant and equipment 1,868,000 1,842,000
Other 235,000 138,000
- --------------------------------------------------------------------------------
Total noncurrent deferred income taxes 2,103,000 1,980,000
- --------------------------------------------------------------------------------
Net deferred tax liabilities $ 2,213,000 $ 2,040,000
- --------------------------------------------------------------------------------
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 2,350,000 $ 415,000 $ 1,891,000
State 102,000 14,000 119,000
- --------------------------------------------------------------------------------
2,452,000 429,000 2,010,000
Deferred:
Federal 198,000 (413,000) (301,000)
- --------------------------------------------------------------------------------
$ 2,650,000 $ 16,000 $ 1,709,000
- --------------------------------------------------------------------------------
</TABLE>
Income tax expense differs from amounts computed by applying the Federal
statutory tax rate to income before income taxes as follows:
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate $ 3,206,000 $ 129,000 $ 1,992,000
State income taxes, net
of Federal tax benefit 67,000 9,000 79,000
Other (623,000) (122,000) (362,000)
- --------------------------------------------------------------------------------
$ 2,650,000 $ 16,000 $ 1,709,000
- --------------------------------------------------------------------------------
Effective rate 28.1% 4.2% 29.2%
- --------------------------------------------------------------------------------
</TABLE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
[ERNST & YOUNG LLP LOGO]
THE BOARD OF DIRECTORS AND STOCKHOLDERS
Shelby Williams Industries, Inc.
We have audited the accompanying consolidated balance sheets of Shelby Williams
Industries, Inc., as of December 31, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Shelby Williams
Industries, Inc., as of December 31, 1995 and 1994, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
/s/Ernst & Young LLP
January 26, 1996
Atlanta, Georgia
20
<PAGE>
MANAGEMENT'S DISCUSSION Shelby Williams Industries, Inc.
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Stockholders' equity at December 31, 1995, was $ 51.7 million. The year-end
current ratio was 2.2 to 1, up from 2.0 to 1 a year earlier. Short-term bank
credit lines totalled $ 18.4 million at year-end, of which $ 5.9 million was
used. Long-term debt at year-end, amounted to $ 8.9 million.
During the past three years, cash provided from operating activities amounted
to $ 16.0 million; $ 6.2 million was used for capital expenditures; and
dividends totalling $ 7.6 million were paid to holders of common shares.
The Company purchased 120,000 shares of its common stock in 1995 for
$ 1,335,000 at an average repurchase price of $ 11.13 per share. These
repurchases were made to use in connection with exercise of options granted and
to be granted under the Company's stock option plans and for other proper
corporate purposes. The Board of Directors has authorized the repurchase of an
additional 153,000 shares. The Company may purchase these shares from time to
time in the future, with purchase decisions to be dependent on market conditions
and other factors.
There were no major capital expenditures in 1995, and none are planned for
1996.
The Company operates a frame and component manufacturing plant in Mexico. The
year-end carrying value of property, plant and equipment at this facility was
$ 3,751,000 for 1995, $ 4,051,000 for 1994, and $ 4,347,000 for 1993. All items
produced at the plant are shipped to facilities of the Company in the United
States for further processing. The value of these transfers amounted to
$ 1,906,000 in 1995, $ 1,841,000 in 1994, and $ 1,555,000 in 1993.
INFLATION
During the past year, the Company has experienced an impact of inflation
consistent with general economic conditions. Management has placed strong
emphasis on control of these costs to reduce the impact on the Company's
operations.
PRODUCT LIABILITY LITIGATION
The Company is a defendant in various product liability lawsuits arising in the
normal course of business. Management believes that the Company's insurance is
adequate to cover its potential liability under all pending and threatened
litigation. The Company believes after consultation with counsel, that
allegations of punitive damages, which are alleged in certain cases, are without
merit.
RESULTS OF OPERATIONS: 1995 COMPARED TO 1994
In 1995, net sales for the Company totalled $ 166.8 million, representing a 4.8
percent increase from the prior year, of which approximately two percent was
from volume with the remainder being due to a combination of pricing and mix.
Increased order rates, driven by pent-up demand in the refurbishment sector,
resulted in the highest year-end backlog of unshipped orders in six years, or
$ 29.7 million, being a five percent increase from the prior year.
Excluding the 1994 restructuring charge described below, gross profit increased
from $ 32.7 million, or 20.5 percent of sales, to $ 36.6 million, or 21.9
percent of sales, resulting mainly from greater operating efficiencies and lower
expense levels achieved by the restructuring a year ago. Selling, general and
administrative expenses in 1995 increased $ 572,000 over 1994, which resulted in
an improvement of approximately one-half percent of sales as a function of
volume. Weakness in the Mexican economy led to liquidation of Shelby Williams de
Mexico, S.A. de C.V., in which the Company owned twenty-five percent of the
issued and outstanding shares. The write-off of the investment in and receivable
from this affiliate amounted to approximately $ 200,000. The Company's frame and
component manufacturing plant in Mexico, mentioned above, was unaffected.
For the reasons described above, net income increased 60.9 percent to $ 6.8
million, or 76 cents per share, from $ 4.2 million, or 47 cents per share, prior
to the 1994 restructuring charge. The charge, described below, reduced 1994 net
income by $ 3.9 million, or 43 cents per share.
RESULTS OF OPERATIONS: 1994 COMPARED TO 1993
Net sales for 1994 increased 3.6 percent to $ 159.1 million from $ 153.5
million for 1993, with virtually all of the increase being due to volume. The
year-end unshipped orders backlog of $ 28.4 million was marginally higher than
the prior year and the highest year-end level in the past five years.
A pre-tax restructuring charge of $ 5,575,000 resulted from an "exit plan"
adopted and implemented by management in December 1994. Due to increases in
lumber prices and increased competition primarily from imported products, the
Company made changes in its product and manufacturing strategies during December
1994, designed to make the Company more competitive in the industry. The plan
was to exit certain portions of the Company's enterprise by selling an
upholstery business with a related manufacturing facility and discontinuing a
part of the product lines in the health care, university and office markets,
resulting in closure of another plant. The Company anticipated completing the
restructuring by December 31, 1995; however, at that date, negotiations for sale
of the upholstery business continued, with the Company planning to consummate
the transaction in the first half of 1996. The planned discontinuance of a part
of the product lines in the health care, university and office markets was
completed in 1995 resulting in the reduction of operations of that plant by
approximately 75 percent. The Company plans to move the remaining production to
other facilities and close the plant by September 30, 1996. This charge includes
cash expenditures of $ 795,000 to be incurred in 1995 and 1996. Excluding this
charge, gross profit increased from $ 31.7 million to $ 32.7 million, resulting
mainly as a function of volume. Through careful managing of selling, general and
administrative expenses, these were reduced to a five year low as a percentage
of sales, from 16.1 percent for 1993 to 16.0 percent for 1994.
For the reasons described above, operations for the year resulted in income
before taxes of $ 381,000, compared to $ 5.9 million for the prior year. The net
income for 1994 was $ 365,000, or $ .04 per share, versus $ 4,150,000 for 1993,
or $ .46 per share. The restructuring charge affected net income for the year by
$ 3.9 million, or $ .43 per share. Excluding the charge, income before taxes was
$ 5,956,000, net income was $ 4,215,000, and net income per share was $ .47.
21
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Shelby Williams Industries, Inc. of our report dated January 26, 1996,
included in the 1995 Annual Report to Shareholders of Shelby Williams
Industries, Inc.
ERNST & YOUNG LLP
Atlanta, Georgia
January 26, 1996
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8, No. 33-48370) pertaining to the Shelby Williams Industries, Inc. 1992 Key
Employees' Incentive Stock Option Plan and the related Prospectus and
Registration Statement (Form S-8, No. 33-59705) pertaining to the Shelby
Williams Industries, Inc. 1995 Directors' Stock Option Plan and the related
Prospectus of our report dated January 26, 1996, with respect to the
consolidated financial statements of Shelby Williams Industries, Inc.
incorporated by reference in the Annual Report (Form 10-K) for the year ended
December 31, 1995.
ERNST & YOUNG LLP
Atlanta, Georgia
March 13, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of SHELBY WILLIAMS INDUSTRIES, INC., a Delaware corporation (the
"Company"), does hereby constitute and appoint Manfred Steinfeld, Paul N.
Steinfeld, Robert P. Coulter and Walter Roth, and each of them severally, the
true and lawful attorneys and agents of the undersigned, each with full power to
act without any other and with full power of substitution and resubstitution, to
do any and all acts and things and to execute any and all instruments which said
attorneys and agents may deem necessary or desirable to enable the Company to
comply with the Securities Exchange Act of 1934, as amended (the "Act"), and any
rules, regulations and requirements of the Securities and Exchange Commission
thereunder in connection with the filing under the Act of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 and all related
matters, including specifically, but without limiting the generality of the
foregoing, power and authority to sign the names of the undersigned directors
and officers in the capacities indicated below to said Form 10-K to be filed
with the Securities and Exchange Commission, to any and all amendments to said
Form 10-K, and to any and all instruments or documents filed as part of or in
connection with any of the foregoing and any and all amendments thereto; and
each of the undersigned hereby ratifies and confirms all that said attorneys and
agents, or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these presents
this 14th day of March, 1996.
Capacities Signatures
---------- ----------
Chairman of the Executive
Committee and Director s/ Manfred Steinfeld
---------------------------------------
Manfred Steinfeld
Chairman of the Board
and Director (Principal
Executive Officer) s/ Paul N. Steinfeld
---------------------------------------
Paul N. Steinfeld
President and Director s/ Robert P. Coulter
---------------------------------------
Robert P. Coulter
<PAGE>
Vice-President Finance,
Treasurer and Assistant
Secretary (Principal
Financial and Accounting
Officer) s/ Sam Ferrell
---------------------------------------
Sam Ferrell
Director s/ Robert L. Haag
---------------------------------------
Robert L. Haag
Director s/ William B. Kaplan
---------------------------------------
William B. Kaplan
Director s/ Herbert L. Roth
---------------------------------------
Herbert L. Roth
Director s/ Trisha Wilson
---------------------------------------
Trisha Wilson
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,376,000
<SECURITIES> 0
<RECEIVABLES> 25,621,000
<ALLOWANCES> 423,000
<INVENTORY> 28,435,000
<CURRENT-ASSETS> 59,256,000
<PP&E> 53,313,000
<DEPRECIATION> 24,082,000
<TOTAL-ASSETS> 89,907,000
<CURRENT-LIABILITIES> 27,240,000
<BONDS> 0
0
0
<COMMON> 589,000
<OTHER-SE> 51,135,000
<TOTAL-LIABILITY-AND-EQUITY> 89,907,000
<SALES> 166,776,000
<TOTAL-REVENUES> 166,776,000
<CGS> 130,189,000
<TOTAL-COSTS> 130,189,000
<OTHER-EXPENSES> 25,974,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,257,000
<INCOME-PRETAX> 9,430,000
<INCOME-TAX> 2,650,000
<INCOME-CONTINUING> 6,780,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,780,000
<EPS-PRIMARY> .76
<EPS-DILUTED> .76
</TABLE>
