<PAGE>
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 July 2, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File
Number 1-6853
Shaw Industries, Inc.
(Exact name of registrant as specified in its charter)
Georgia 58-1032521
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
616 East Walnut Avenue,
Dalton, Georgia 30720
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: 706/278-3812
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class On Which Registered
Common Stock, No Par Value The New York Stock Exchange
$1.11 Stated Value The Pacific Stock Exchange
Rights to Purchase Series A
Participating Preferred Stock The New York Stock Exchange
$.50 Stated Value The Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF ACT: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filled 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)
Aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the closing sales price on The New York
Stock Exchange on September 15, 1994 was: $ 1,678,772,693.<PAGE>
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Title of Each Class Outstanding at September 15, 1994
Common Stock, No Par Value 139,314,302 Shares
DOCUMENTS INCORPORATED BY REFERENCE
1994 Annual Report to Shareholders --- Part II.
Definitive Proxy Statement for the 1994 Annual Meeting of Shareholders on
October 31, 1994 --- Part III.<PAGE>
PART I
Item I. Business
Shaw Industries, Inc. ("Shaw" or the "Company") is the world's
largest carpet manufacturer. Shaw designs and manufactures
approximately 1,600 styles of tufted and woven carpet for
residential and commercial use under the PHILADELPHIA, TRUSTMARK, CABIN
CRAFTS, SHAW COMMERCIAL CARPETS, STRATTON, NETWORX, SHAWMARK, EVANS
BLACK, SALEM, SUTTON, KOSSET, CROSSLEY, ABINGDON, REDBOOK,
MINSTER, INVICTA and TERZA trade names and under certain private
labels. The Company's manufacturing operations are fully
integrated from the processing of yarns through the finishing of
carpet. The Company's carpet is sold in a broad range of prices,
patterns, colors and textures with the majority of its sales in the
medium to high retail price range. Shaw sells its products to
retailers, distributors and commercial users throughout the United
States, Canada, Mexico, Australia and the United Kingdom and, to a
lesser degree, exports to additional overseas markets.
On July 12, 1993, the Company formed a joint venture through
which it acquired an interest in Capital Carpet Industries, Pty.,
Ltd., Melbourne, Victoria, Australia, and Invicta Group Industries,
Pty., Ltd., Braybrook, Victoria, Australia (together, "CCI"),
enabling the Company to participate in a government-supported rationalization
of the Australian carpet industry. On November 4, 1993, the Company acquired
the remaining interest in the joint venture. Until November 4, 1993,
the investment was accounted for using the equity method, and accordingly,
the Company included its share of CCI's income in other income. Subsequent
to November 4, 1993, the results of operations of CCI are included in
the Company's consolidated financial statements.
On September 10, 1993, the Company acquired Abingdon Carpets,
Gwent, Wales. Abingdon is a British producer of medium-priced
tufted carpets and carpet yarns. The acquisition has been
accounted for as a purchase transaction, and accordingly, the
results of operations of Abingdon are included in the Company's
consolidated financial statements since September 10, 1993.
On May 31, 1994, the Company entered into an agreement to form
a joint venture with Grupo Industrial Alfa, S.A. de C.V. of
Monterrey, Mexico, for the manufacture, distribution and marketing
of carpets, rugs and related products in Mexico and South America.
The Company acquired a fify-one percent interest in Terza, S.A. de
C.V., and accordingly, the subsidiary is included in consolidation
at July 2, 1994 and the results of operations of Terza are included
in the Company's consolidated financial statements since May 31, 1994.
Geographical information about the Company's sales, operating
profit and identifiable assets is incorporated by reference to page
1<PAGE>
19 of Exhibit 13 to this report. The results of the acquired
operations in fiscal 1994 did not have a material effect on the
Company's net income.
Products and Marketing
Substantially all carpet manufactured by the Company is tufted
carpet made from nylon and polypropylene yarn. In the tufting
process, yarn is inserted by multiple needles into a synthetic
backing, forming loops which may be cut or left uncut, depending on
the desired texture or construction. According to industry
estimates, tufted carpet accounted for over 91% of unit volume
shipments of carpet manufactured in the United States during
calendar 1993. Substantially all carpet manufactured in the United
States is made from synthetic fibers, with nylon accounting for
65.2% of the total, polypropylene 24.9%, polyester 9.4% and wool
0.5%. During fiscal 1994, the Company processed approximately 95%
of its requirements for carpet yarn in its own yarn processing facilities.
The Company believes that its significant investment in
modern, state-of-the-art equipment has been an important factor in
achieving and maintaining its leadership position in the
marketplace. During the past five fiscal years, the Company has
invested approximately $782 million in property additions. The
Company continually seeks opportunities for increasing its sales
volume and market share. For example, the Company continues to
expand its product lines of carpet manufactured from polypropylene
fiber, including fibers produced by the Company's own extrusion
equipment. The Company also has a manufacturing facility for the
production of carpet tiles for the commercial market.
The overall level of sales in the carpet industry is
influenced by a number of factors, including consumer confidence
and spending for durable goods, interest rates, turnover in
housing, the condition of the residential construction industry and
the overall strength of the economy.
The marketing of carpet is influenced significantly by current
trends in style and fashion, principally color trends. The Company
believes it has been a leader in the development of color
technology in the carpet industry and that its dyeing facilities
are among the most modern and versatile in the industry. The
Company maintains an in-house product development department to
identify developing color and style trends which are expected to
affect its customers' buying decisions. In 1994 this department
was further strengthened by the completion of the Shaw Industries
Research and Development Center. This state-of-the-art complex
includes a 75,000 square foot pilot plant featuring sample
extrusion, yarn processing, tufting, dyeing, coating and shearing
equipment, and three fiber and dye development laboratories.
2<PAGE>
Sales and Distribution
The Company's products are marketed domestically by
approximately 1,050 salaried sales personnel in its various
marketing divisions directly to retailers and distributors and to
large national accounts through the Company's National Accounts
Division. The Company's ten (10) regional customer service centers
and six (6) redistribution centers, along with its centralized
management information system, enable it to provide prompt delivery
of its products to both its retail customers and wholesale
distributors. The Company's substantial investment in management
information systems permits efficient production scheduling and
control of inventory levels.
The Company sells to approximately 37,250 retailers and
national accounts located throughout the United States and Canada.
Retailers and national accounts, on a combined basis, accounted for
approximately 86% of the Company's carpet sales for fiscal 1994.
Shaw also sells to approximately 100 wholesale distributors.
Approximately 4% of the Company's carpet sales in fiscal 1994 were
to distributors. Sales of Shaw products in foreign markets,
including the sales of foreign subsidiaries, accounted for
approximately 10% of total sales in fiscal 1994. No single
customer accounted for more than 2% of the Company's sales during
fiscal 1994.
Competition
The carpet industry is highly competitive with more than 200
companies engaged in the manufacture and sale of carpet in the
United States. Carpet manufacturers also face competition from the
hard surface floorcovering industry. The principal methods of
competition within the carpet industry are quality, style, price
and service. The Company believes its strategically located
regional customer service centers and redistribution centers
provide a competitive advantage to the Company by enabling it to
supply carpet on a timely basis to customers. The Company's long-
standing practice in investing in modern, state-of-the-art
equipment contributes significantly to its ability to compete
effectively on the basis of quality, style and price.
Raw Materials
The principal raw materials used by the Company are nylon
fiber and filament, and synthetic backing; additional raw materials
include polyester, polypropylene and wool fibers and filaments,
jute, latex and dye. During fiscal 1994, the Company experienced
no significant shortages of raw materials.
Employees
At July 2, 1994, the Company had approximately 24,200 full-
3<PAGE>
time employees. In the opinion of management, employee relations
are good. Employees are involved in the Quality Improvement
Process begun in 1985, a program designed to improve the Company's
products and services through education and training. None of the
Company's employees in the United States are represented by unions.
Employees of foreign subsidiaries are represented by unions.
Environmental Matters
Management believes the Company is currently in compliance in
all material respects with applicable federal, state and local
statutes and ordinances regulating the discharge of materials into
the environment and otherwise relating to the protection of the
environment. Management does not believe the Company will be
required to expend any material amounts in order to remain in
compliance with these laws and regulations or that compliance will
materially affect its capital expenditures, earnings or competitive
position.
Patents, Trademarks, etc.
Patent protection has not been significant to the Company's
business although the Company does hold several patents covering
machinery used in a specific carpet coloring process.
4<PAGE>
Item 2. Properties
Shaw's executive offices are located in Dalton, Georgia. The
principal facilities operated by Shaw and described below are owned
except as otherwise noted:
Approximate Principal Products
Location Sq. Ft. or Functions
Dalton, Georgia 46,700 Executive headquarters
Dalton, Georgia 145,000 Administrative offices
Dalton, Georgia 114,600 Administrative offices
Dalton, Georgia 229,500 Administrative offices
and distribution
Dalton, Georgia 309,800 Administrative offices
and distribution
Dalton, Georgia 291,000 Administrative offices
and distribution
Dalton, Georgia 235,500 Administrative offices
and distribution
Dalton, Georgia 372,700 Administrative offices
and distribution
Cartersville, Georgia 138,900 Administrative offices
and warehousing
Dalton, Georgia 601,000 Distribution
Dalton, Georgia 400,000 Distribution
Dalton, Georgia 303,200 Distribution
Dalton, Georgia 371,600 Distribution
Ringgold, Georgia 649,100 Distribution
Ringgold, Georgia 224,200 Distribution
Andalusia, Alabama 1,119,000 Yarn extrusion
Thomson, Georgia 258,300 Yarn extrusion
Valley Head, Alabama(1) 160,000 Yarn processing
Bainbridge, Georgia 450,000 Yarn processing
Blue Ridge, Georgia(4) 75,100 Yarn processing
Calhoun, Georgia 262,100 Yarn processing
Chatsworth, Georgia(2) 36,800 Yarn processing
Chatsworth, Georgia 117,200 Yarn processing
Lafayette, Georgia 131,900 Yarn processing
Milledgeville, Georgia 78,600 Yarn processing
Rome, Georgia 40,600 Yarn processing
Decatur, Tennessee(1) 151,000 Yarn processing
Eton, Georgia 423,000 Yarn processing and
tufting
Stevenson, Alabama 441,000 Yarn spinning
Chatsworth, Georgia 188,300 Yarn spinning
Dallas, Georgia 138,500 Yarn spinning
Dalton, Georgia 241,600 Yarn spinning
Ellijay, Georgia 157,100 Yarn spinning
Fitzgerald, Georgia 250,000 Yarn spinning
Newnan, Georgia 289,000 Yarn spinning
5<PAGE>
Approximate Principal Products
Location Sq. Ft. or Functions
Tifton, Georgia 142,500 Yarn spinning
Toccoa, Georgia 139,000 Yarn spinning
Trenton, Georgia 192,300 Yarn spinning
Trenton, SC 169,500 Yarn spinning
South Pittsburg, TN 187,900 Yarn spinning
Cartersville, Georgia 317,600 Tufting, dyeing &
coating
Cartersville, Georgia 171,800 Tufting, dyeing &
coating
Dalton, Georgia 650,240 Tufting, dyeing &
coating
Dalton, Georgia 461,000 Tufting, dyeing &
coating
Dalton, Georgia 326,000 Tufting, dyeing &
coating
Dalton, Georgia 354,900 Tufting, dyeing &
coating
Dalton, Georgia 579,600 Tufting, dyeing &
coating
Dalton, Georgia 376,200 Tufting & printing
Ringgold, Georgia 201,000 Tufting
Dalton, Georgia 150,000 Dyeing
Dalton, Georgia 267,000 Dyeing and coating
Dalton, Georgia 231,300 Printing, foaming &
warehousing
Cartersville, Georgia(3) 192,000 Carpet tile
manufacturing
Cartersville, Georgia 255,200 Contract carpet
manufacturing
Charlotte, N.C. 112,400 Backing manufacturing
Ringgold, Georgia(5) 248,000 Finishing and rug
manufacturing
Winchester, Tennessee 320,600 Carpet manufacturing
Chickamauga, Georgia(2) 219,500 Sample manufacturing
and warehousing
Dalton, Georgia 197,680 Sample manufacturing
and warehousing
Dalton, Georgia(2) 103,100 Sample manufacturing
and warehousing
Dalton, Georgia 147,200 Sample manufacturing and
warehousing
Dalton, Georgia (2) 154,800 Sample manufacturing and
warehousing
Dalton, Georgia (2) 45,200 Carpet store
Dalton, Georgia 55,000 Design Center
Dalton, Georgia 85,000 Research and Development
Center
Bradford, England 746,000 Tufting, weaving, coating,
distribution and
6<PAGE>
Approximate Principal Products
Location Sq. Ft. or Functions
administrative offices.
Gwent, Wales 265,000 Yarn extrusion, yarn
processing, tufting,
dyeing and coating
Victoria, Australia 1,425,000 Yarn extrusion, yarn
processing, tufting,
dyeing, coating,
distribution and
administrative offices
Monterrey, Mexico 288,000 Yarn processing,
tufting, dyeing,
coating, distribution
and adminstrative
offices.
(1) Leased from Industrial Development Boards.
(2) Subject to a lease expiring in calendar year 1994.
(3) Subject to a lease expiring in calendar year 1995.
(4) Subject to a lease expiring in calendar year 1997.
(5) Subject to a lease expiring in calendar year 2007.
Shaw maintains leased warehouses and customer service
facilities in or near Dallas; Los Angeles (2); Seattle; San
Francisco; Denver; Chicago; Minneapolis; Boston; and, Cranbury, New
Jersey. Each leased warehouse facility includes a sales showroom.
The Company also maintains redistribution centers in Orlando,
Florida; Columbus, Ohio; Kernersville, North Carolina;
Mechanicsburg, Pennsylvania; St. Louis, Missouri; and,
Fredericksburg, Virginia. Management of the Company believes all
of its properties are suitable and adequate for its current
operations and are substantially utilized.
7<PAGE>
Item 3. Legal Proceedings
From time to time the Company is subject to claims and suits
arising in the course of its business. In April 1993, the Company
became a defendant in certain litigation alleging personal injury
resulting from personal exposure to volatile organic compounds
found in carpet produced by the Company. The complaints seek
injunctive relief and unspecified money damage on all claims. The
Company has denied any liability. In May 1993, the Company became
a defendant in certain litigation alleging violation of both
federal and state laws relating to unfair competition. The
complaint seeks an injunction regarding the unfair competition
claims and money damages. The Company has denied any liability.
The Company believes that is has meritorious defenses in these
suits and that the litigation will not have a material adverse
effect on the Company's financial condition or results of
operations. The Company will vigorously defend these suits. In
June 1994, the Company and several other carpet manufacturers
received grand jury subpoenas from the Antitrust Division of the
United States Department of Justice relating to an investigation of
the industry. The Company believes that once this investigation is
completed it will not have a material adverse effect on the
Company's financial condition or results of operations.
At the end of fiscal year 1994, there were no other pending
legal proceedings to which the Company was a party or to which any
of its property was subject which, in the opinion of management,
were likely to have a material adverse effect on the Company's
business, financial condition or results of operations.
Item 4. Submission of Matters to Vote of Security Holders
Not applicable.
8<PAGE>
Item 4(A). Executive Officers of the Registrant
Officer
Name Age Since Position
J. C. Shaw 64 1967 Chairman of the Board
of Directors
Robert E. Shaw 63 1967 President and Chief
Executive Officer and
Director
William C. Lusk, Jr. 59 1971 Senior Vice President
and Treasurer and
Director
W. Norris Little 63 1978 Senior Vice President,
Operations and
Director
Vance D. Bell 43 1983 Vice President,
Marketing
Joseph M. DeVittorio 59 1992 Vice President,
Corporate Planning
Bennie M. Laughter 43 1986 Vice President,
Secretary and General
Counsel
Carl P. Rollins 51 1991 Vice President
Douglas H. Hoskins 59 1978 Controller
Messrs. J. C. Shaw and Robert E. Shaw are brothers. There are
no other family relationships among any of the executive officers
of the Company.
Officers of the Company are elected annually by the Board of
Directors. All of the executive officers of the Company except for
Mr. Devittorio and Mr. Rollins have served as executive officers
for the Company for more than the past five years.
Mr. DeVittorio joined the Company in October 1992, as a Vice
President. Prior to joining the Company, Mr. DeVittorio was Senior
Vice President and General Manager of Allied Signal's Fibers
Division.
Mr. Rollins joined the Company in June, 1991, as a Vice
President. Prior to June, 1991, Mr. Rollins had been engaged in
the private practice of law with the firm of McCamy, Phillips,
Tuggle, Rollins & Fordham, in Dalton, Georgia.
9<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related
Shareholder Matters
The high and low sales prices for the Company's common stock
as reported by the New York Stock Exchange and the amount of
dividends paid by quarter for the last two fiscal years are
set forth on page 2 of Exhibit 13.
Reference is made to Note 2 of Notes to Consolidated Financial Statements
on page 13 of Exhibit 13 for information concerning restrictions
on the payment of cash dividends.
At September 1, 1994, there were 2,184 holders of record of the
Company's common stock.
Item 6. Selected Financial Data
This information is set forth on pages 3-4 of the Exhibit 13
under the caption "Ten Year Financial Review."
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This information is set forth on pages 5-6 of Exhibit 13 to
this report.
Item 8. Financial Statements and Supplementary Data
This information is set forth on pages 7-21 of Exhibit 13.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
10<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors is incorporated by reference
to "Election of Class of Directors" on pages 3-6 of the Proxy Statement for
the 1994 Annual Meeting of Shareholders. Reference is also made to
Item 4(A) of Part I of this report, "Executive Officers of the
Registrant," which information is incorporated herein.
Item 11. Executive Compensation
This information is incorporated by reference to "Executive
Compensation" on pages 6-11 of the Proxy Statement for the 1994
Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
This information is incorporated by reference to "Voting Rights
and Principal Shareholders" and "Election of Directors" on pages 1-
2 and 3-6 respectively, of the Proxy Statement for the 1994 Annual
Meeting of Shareholders.
11<PAGE>
PART IV
Item 13. Certain Relationships and Related Transactions
This information is incorporated by reference to "Certain
Relationships" on page 5 of the Proxy Statement for the 1994 Annual
Meeting of Shareholders.
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Exhibit 13, a copy of which is filed with this Form 10-K,
contains the balance sheets as of July 2, 1994, and July
3, 1993, the related statements of income, shareholders'
investment and cash flows for each of the three years in
the period ended July 2, 1994, and the related report of
Arthur Andersen LLP. These financial statements and the
report of Arthur Andersen LLP. are incorporated herein by
reference. The financial statements, incorporated by
reference, include the following:
- Balance Sheets -- July 2, 1994, and July 3, 1993.
- Statements of Income and Statements of Shareholders'
Investment for the years ended July 2, 1994, July 3,
1993, and June 27, 1992.
- Statements of Cash Flows for the years ended July 2,
1994, July 3, 1993, and June 27, 1992.
- Notes to Financial Statements -- July 2, 1994, July 3,
1993, and June 27, 1992.
2. Financial Statement Schedules
- Report of Independent Public Accountants as to
Schedules:
Schedule
Number
V Property, Plant and Equipment for the Years
Ended July 2, 1994, July 3, 1993, and June 27,
1992.
VI Accumulated Depreciation and Amortization of
Property, Plant and Equipment for the Years
Ended July 2, 1994, July 3, 1993, and June 27,
1992.
12<PAGE>
VIII Valuation and Qualifying Accounts for the
Years Ended July 2, 1994, July 3, 1993, and
June 27, 1992.
IX Aggregate Short-term Borrowings for the Years
Ended July 2, 1994, July 3, 1993, and June 27,
1992.
13<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Shaw Industries, Inc.:
We have audited, in accordance with generally accepted auditing standards, the
financial statements of Shaw Industries, Inc. included in this annual report
to shareholders on Form 10-K and have issued our report thereon dated August 8,
1994. Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. Schedules V, VI, VIII, and IX are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly state, in all material respects the financial
data required to be set forth therein in relation to the basic financial
statements taken as a whole.
Arthur Andersen LLP
Atlanta, Georgia
August 8, 1994<PAGE>
<TABLE>
SCHEDULE V
SHAW INDUSTRIES, INC.
PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED JULY 2, 1994, JULY 3, 1993, AND JUNE 27, 1992
<S> <C> <C> <C> <C>
Balance at
Beginning Additions, Balance at
of Year at Cost Retirements End of Year
YEAR ENDED JUNE 27, 1992 (a):
Land and land improvements $ 12,470,000 $ 2,521,000 $ 0 $ 14,991,000
Buildings 112,697,000 50,260,000 (50,000) 162,907,000
Machinery and equipment 444,972,000 77,541,000 (22,000) 522,491,000
Leasehold improvements 2,030,000 1,774,000 0 3,804,000
Construction in progress 28,424,000 (13,860,000) 0 14,564,000
$ 600,593,000 $ 118,236,000 $ (72,000)$ 718,757,000
YEAR ENDED JULY 3, 1993 (b):
Land and land improvements $ 14,991,000 $ 2,497,000 $ (4,000)$ 17,484,000
Buildings 162,907,000 30,185,000 0 193,092,000
Machinery and equipment 522,491,000 119,133,000 (544,000) 641,080,000
Leasehold improvements 3,804,000 88,000 0 3,892,000
Construction in progress 14,564,000 5,314,000 0 19,878,000
$ 718,757,000 $ 157,217,000 $ (548,000)$ 875,426,000
YEAR ENDED JULY 2, 1994:
Land and land improvements $ 17,484,000 $ 10,771,000 $ (59,000)$ 28,196,000
Buildings 193,092,000 34,489,000 (521,000) 227,060,000
Machinery and equipment 641,080,000 110,412,000 (7,584,000) 743,908,000
Leasehold improvements 3,892,000 951,000 (11,000) 4,832,000
Construction in progress 19,878,000 94,745,000 (19,000) 114,604,000
$ 875,426,000 $ 251,368,000 $ (8,194,000)$ 1,118,600,000
(a) 1992 additions are primarily the result of the acquisition of Salem Carpet
Mills, Inc.
(b) 1993 additions are primarily the result of the acquisition of certain of the
carpet fiber manufacturing facilities of Amoco Fabrics and Fibers Company.
/TABLE
<PAGE>
<TABLE>
SCHEDULE VI
SHAW INDUSTRIES, INC.
ACCUMULATED DEPRECIATION AND AMORTIZATION
PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED JULY 2, 1994, JULY 3, 1993, AND JUNE 27, 1992
<S> <C> <C> <C> <C>
Additions
Balance at Charged to
Beginning Costs and Balance at
of Year Expenses Retirements End of Year
YEAR ENDED JUNE 27, 1992:
Land and land improvements $ 1,323,000 $ 182,000 $ 0 $ 1,505,000
Buildings 21,394,000 4,481,000 (7,000) 25,868,000
Machinery and equipment 242,872,000 58,415,000 (9,000) 301,278,000
Leasehold improvements 539,000 89,000 0 628,000
$ 266,128,000 $ 63,167,000 $ (16,000)$ 329,279,000
YEAR ENDED JULY 3, 1993:
Land and land improvements $ 1,505,000 $ 257,000 $ 0 $ 1,762,000
Buildings 25,868,000 5,693,000 0 31,561,000
Machinery and equipment 301,278,000 66,870,000 (281,000) 367,867,000
Leasehold improvements 628,000 170,000 0 798,000
$ 329,279,000 $ 72,990,000 $ (281,000)$ 401,988,000
YEAR ENDED JULY 2, 1994:
Land and land improvements $ 1,762,000 $ 366,000 $ 0 $ 2,128,000
Buildings 31,561,000 7,127,000 0 38,688,000
Machinery and equipment 367,867,000 76,337,000 (5,038,000) 439,166,000
Leasehold improvements 798,000 256,000 (11,000) 1,043,000
$ 401,988,000 $ 84,086,000 $ (5,049,000)$ 481,025,000
/TABLE
<PAGE>
<TABLE>
SCHEDULE VIII
SHAW INDUSTRIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JULY 2, 1994, JULY 3, 1993, AND JUNE 27, 1992
<S> <C> <C> <C> <C>
Additions
Balance at Charged to
Beginning Costs and Balance at
of Year Expenses Deductions End of Year
YEAR ENDED JUNE 27, 1992:
Allowance for doubtful accounts
and discounts $ 5,941,000 $ 58,804,000 $ 55,461,000 $ 9,284,000
YEAR ENDED JULY 3, 1993:
Allowance for doubtful accounts
and discounts $ 9,284,000 $ 91,418,000 $ 86,360,000 $ 14,342,000
YEAR ENDED JULY 2, 1994:
Allowance for doubtful accounts
and discounts $ 14,342,000 $ 107,179,000 $ 103,066,000 $ 18,455,000
/TABLE
<PAGE>
<TABLE>
SCHEDULE IX
SHAW INDUSTRIES, INC.
AGGREGATE SHORT-TERM BORROWINGS
FOR THE YEARS ENDED JULY 2, 1994, JULY 3, 1993, AND JUNE 27, 1992
<S> <C> <C> <C> <C> <C>
Average Weighted
Weighted Maximum Amount Average
Average Amount Outstanding Interest
Balance at Interest Outstanding During Rate During
End of Year Rate During Year Year (a) Year (b)
YEAR ENDED JUNE 27, 1992 $ 45,000,000 4.43% $ 45,000,000 $ 22,917,000 4.9%
YEAR ENDED JULY 3, 1993 $ 20,000,000 3.63% $ 170,000,000 $ 72,500,000 4.2%
YEAR ENDED JULY 2, 1994 $ 135,000,000 3.60% $ 135,000,000 $ 53,333,000 3.6%
(a) The average amount outstanding during the year was computed by
dividing the total of month-end outstanding principal balances by
the number of months that balances were outstanding at month-end.
(b) The weighted average interest rate during the year was computed
by dividing the actual interest expenses related to short-term
borrowings by average short-term debt outstanding.
/TABLE
<PAGE>
Number Description
3. Exhibits incorporated by reference or filed with this
report.
3(a) Amended and Restated Articles of Incorporation.
[Incorporated herein by reference to Exhibit
3(a) to Registrant's Registration Statement
filed with the Commission on December 28, 1993,
(File No. 33-51719).]
3(b) Bylaws. [Incorporated herein by reference to
Exhibit 3(b) to Registrant's Registration Statement
filed with the Commission on December 28, 1993,
(File No. 33-51719).]
4(a) Specimen form of Common Stock Certificate.
[Incorporated herein by reference to Exhibit 2
to Registrant's Report on Form 8-A filed with
the Securities and Exchange Commission on May
12, 1989 (File No. 1-6853).]
4(b) Articles II, V and VI of the Restated Articles of
Incorporation, as amended, contained in
Exhibit 3(a), and Articles Two and Seven and
Section 8.1 of the Bylaws of Registrant,
contained in Exhibit 3(b), and Statement of
Designation, Preferences and Rights of Series
A Participating Preferred Stock, filed as
Exhibit 3(c), are incorporated herein by
reference.
4(c) Rights Agreement dated as of April 10, 1989,
between Registrant and Citizens and Southern
Trust Company (Georgia), N.A., as Rights
Agent. [Incorporated herein by reference to
Exhibit 1 to Registrant's Current Report on
Form 8-K filed with the Securities and
Exchange Commission on May 5, 1989 (File No.
1-6853).]
10(a) Reserved
10(b)* Deferred Compensation Plan and form of
Deferred Compensation Agreement of Registrant
as adopted in April, 1980.
10(c) Reserved
10(d) Reserved
10(e) Reserved
10(f) Reserved<PAGE>
10(g) Loan Agreement dated February 1, 1991, between
Registrant and The Citizens and Southern
National Bank, regarding a $200,000,000
revolving credit facility. [Incorporated
herein by reference to Exhibit 10(g) to
Registrant's Report on Form 10-K for the
fiscal year ended June 29, 1991 (File No. 1-
6853).]
10(h)* 1987 Incentive Stock Option Plan of the
Registrant. [Incorporated herein by reference
to Exhibit A to Registrant's 1987 Proxy
Statement, dated September 22, 1987 (File No.
1-6853).]
10(i) Reserved
10(j)* 1989 Discounted Stock Option Plan of the
Registrant. [Incorporated herein by reference
to Exhibit A to Registrant's 1989 Proxy
Statement, dated September 21, 1989 (File No.
1-6853).]
10(k)* 1992 Incentive Stock Option Plan of the
Registrant. [Incorporated herein by reference
to Exhibit A to Registrant's 1992 Proxy
Statement, dated September 18, 1992 (File No.1-
6853).]
11 Computation of Earnings per Share for the
fiscal years ended July 2, 1994, July 3, 1993
and June 27, 1992.
13 Items Incorporated by Reference From the 1994
Annual Report to Shareholders.
21 List of Subsidiaries.
23 Consent of independent public accountants.
27 Financial Data Schedule.
* Compensatory plan or management contract required
to be filed as an exhibit to Item 14(c) of Form 10-K.
(b) No reports on Form 8-K were filed during the last quarter
of fiscal 1994.<PAGE>
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.
SHAW INDUSTRIES, INC.
Date: September 28, 1994 By: /S/ROBERT E. SHAW
Robert E. Shaw
President and Chief
Executive Officer
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.
Date: September 28, 1994 /S/ ROBERT E. SHAW
Robert E. Shaw
President, Chief
Executive Officer and
Director
Date: September 28, 1994 /S/ J. C. SHAW
J. C. Shaw
Chairman of the Board of
Directors
Date: September 28, 1994 /S/ WILLIAM C. LUSK, JR.
William C. Lusk, Jr.
Sr. VP, Treasurer and
Director (Principal
Financial and Accounting
Officer)
Date: September 28, 1994 /S/ W. NORRIS LITTLE
W. Norris Little
Senior VP, Operations and
Director
Date: September 28, 1994 /S/ ROBERT R. HARLIN
Robert R. Harlin
Director
Date: September 28, 1994 /S/ THOMAS G. COUSINS
Thomas G. Cousins
Director<PAGE>
Date: September 28, 1994 /S/ S. TUCKER GRIGG
S.Tucker Grigg
Director
Date: September 28, 1994 /S/ CLIFFORD M. KIRTLAND, Jr.
Clifford M. Kirtland, Jr.
Director
Date: September 28, 1994 /S/ J. HICKS LANIER
J. Hicks Lanier
Director
Date: September 28, 1994 /S/ R. JULIAN McCAMY
R. Julian McCamy
Director<PAGE>
Exhibit Page
Number Description Number
3(a) Amended and Restated Articles of Incorporation.
[Incorporated herein by reference to Exhibit
3(a) to Registrant's Registration Statement
filed with the Commission on December 28, 1993,
(File No. 33-51719).]
3(b) Bylaws. [Incorporated herein by reference to
Exhibit 3(b) to Registrant's Registration Statement
filed with the Commission on December 28, 1993,
(File No. 33-51719).]
4(a) Specimen form of Common Stock Certificate.
[Incorporated herein by reference to Exhibit 2
to Registrant's Report on Form 8-A filed with
the Securities and Exchange Commission on May
12, 1989 (File No. 1-6853).]
4(b) Articles II, V and VI of the Restated Articles of
Incorporation, as amended, contained in
Exhibit 3(a), and Articles Two and Seven and
Section 8.1 of the Bylaws of Registrant,
contained in Exhibit 3(b), and Statement of
Designation, Preferences and Rights of Series
A Participating Preferred Stock, filed as
Exhibit 3(c), are incorporated herein by
reference.
4(c) Rights Agreement dated as of April 10, 1989,
between Registrant and Citizens and Southern
Trust Company (Georgia), N.A., as Rights
Agent. [Incorporated herein by reference to
Exhibit 1 to Registrant's Current Report on
Form 8-K filed with the Securities and
Exchange Commission on May 5, 1989 (File No.
1-6853).]
10(a) Reserved
10(b)* Deferred Compensation Plan and form of
Deferred Compensation Agreement of Registrant
as adopted in April, 1980.
10(c) Reserved
10(d) Reserved
10(e) Reserved
10(f) Reserved<PAGE>
10(g) Loan Agreement dated February 1, 1991, between
Registrant and The Citizens and Southern
National Bank, regarding a $200,000,000
revolving credit facility. [Incorporated
herein by reference to Exhibit 10(g) to
Registrant's Report on Form 10-K for the
fiscal year ended June 29, 1991 (File No. 1-
6853).]<PAGE>
10(h)* 1987 Incentive Stock Option Plan of the
Registrant. [Incorporated herein by reference
to Exhibit A to Registrant's 1987 Proxy
Statement, dated September 22, 1987 (File No.
1-6853).]
10(i) Reserved
10(j)* 1989 Discounted Stock Option Plan of the
Registrant. [Incorporated herein by reference
to Exhibit A to Registrant's 1989 Proxy
Statement, dated September 21, 1989 (File No.
1-6853).]
10(k)* 1992 Incentive Stock Option Plan of the
Registrant. [Incorporated herein by reference
to Exhibit A to Registrant's 1992 Proxy
Statement, dated September 18, 1992 (File No.1-
6853).]
11 Computation of Earnings per Share for the
fiscal years ended July 2, 1994, July 3, 1993
and June 27, 1992.
13 Items Incorporated by Reference From the 1994
Annual Report to Shareholders.
21 List of Subsidiaries.
23 Consent of independent public accountants.
27 Financial Data Schedule.
* Compensatory plan or management contract required
to be filed as an exhibit to Item 14(c) of Form 10-K.
(b) No reports on Form 8-K were filed during the last quarter
of fiscal 1994.
EXHIBIT 10(b)
SHAW INDUSTRIES, INC.
DEFERRED COMPENSATION PLAN
The Board of Directors of Shaw Industries, Inc. (the "Company")
hereby recognizes that it is in the best interests of the Company to
provide incentive for highly compensated key employees to remain in
the employ of the Company, to reward such employees for outstanding
service and to provide a system of benefits that will assist the
Company to attract and retain the services of additional key
employees. The Board of Directors hereby determines that in order to
achieve these goals, the Company should adopt a deferred compensation
plan to provide for the payment of benefits to certain key employees
selected by the Board of Directors upon their retirement, death or
disability, provided they have remained in the employ of the Company
until the occurrence of such an event.
Consequently, the following deferred compensation plan (the
"Plan") is hereby approved and adopted.
l. Name of the Plan. This Plan, as now enacted and as
hereafter amended, shall be known as the Shaw Industries,
Inc. Deferred Compensation Plan.
2. Purpose of Plan. The purposes of the Plan are to retain
the services of highly compensated key employees for the
Company, to reward them for outstanding performances in the
past, to encourage them to continue to devote their full
attention and efforts to the growth and profitability of the
Company and to recruit new key employees for the Company.
3. Determination of Eligibility. The Board of Directors of
the Company, or its designated Compensation Committee, shall
have the right to determine those key employees who shall be
eligible to participate in the Plan. The Board of Directors
or such committee, which shall hereafter collectively be
referred to as the "Board", shall have the further right and
authority to enter into agreements with such designated
employees pursuant to the Plan and to modify, alter or
terminate such agreements with the consent or approval of
the affected employees.
4. Amount of Benefits. The Board shall have the sole and
exclusive right to determine the amount of deferred
compensation to be paid to any designated employee pursuant
to the Plan; however, unless specifically approved by a
majority of the members of the Board of Directors (excluding
the votes of any members of the Board who may be
beneficiaries of such a proposal), the maximum amount
payable to any employee under this plan (the "Benefit
Amount") shall not exceed twice the Annual Benefit Amount as
defined.<PAGE>
Unless otherwise specified by the Board, the Annual Benefit
Amount shall be equal to the average of the three highest
years of income for the designated employee for the last
five years prior to retirement, death or total disability.
5. Payment of Benefits. The Board shall determine the
appropriate method of payment for each employee under the
Plan, but the typical method of payment shall constitute
payment of the aggregate Benefit Amount in 120 equal monthly
installments over the 10 year period following the
employee's death, retirement or total disability. The Board
is hereby specifically authorized, in its discretion, to
negotiate for a more rapid payment, on a discounted basis,
if it determines that such an accelerated method of payment
is in the best interests of the Company and the employee.
The basis and amount of any discount shall be determined by
the Board, in its discretion, subject to the agreement of
the employee or his designated beneficiary, executors, heirs
or personal representatives.
6. Early Retirement. Upon the mutual agreement of an employee
participating in the Plan and the Board, such an employee
who elects to take early retirement may receive benefits
under the Plan on such terms as the Board and such employee
may determine.
7. Forfeiture of Benefits. Benefits to be received by
designated employees under the Plan are forfeitable. In the
event that the employee should at any time voluntarily
resign from the Company or be terminated for cause (as
defined), all benefits payable to such employee under the
Plan shall immediately terminate and the Company shall have
no obligation to pay any amounts under this Plan to such
employee. As used in this Plan and in any agreement between
the Company and designated employee, the term "cause" shall
mean acts of gross negligence or willful or wanton disregard
for duties; conviction of a crime involving moral turpitude;
or the commission or omission of any other acts deemed by
the Board to be inimical to the best interest of the
Company. The determination of "cause" shall be made solely
by the Board, in its exclusive discretion, and its
determination shall be final and binding.
8. Method of Funding. Nothing contained in this Plan shall
create any obligation on the part of the Company to fund its
obligations under this Plan or to establish a separate or
segregated fund for its obligations under this Plan.
9. Evidence of Agreement. The Company and each designated
employee shall enter into an agreement containing the terms
of the Plan as set forth above and such other terms and
conditions as the Board shall deem necessary or appropriate.
10. Termination. The Board shall have the right to amend,
modify or terminate this Plan at any time in its sole
discretion.<PAGE>
DEFERRED COMPENSATION AGREEMENT
This Agreement is made and entered into this ____________ day of
________________, 19 _____ between ____________________ (the
"Employee") and SHAW INDUSTRIES, INC., a Georgia corporation ("Shaw").
Employee is currently employed by Shaw as __________________(title)
and in such capacity and others has rendered valuable services to Shaw
which have been of outstanding merit and which have contributed to the
growth and development of Shaw.
The Board of Directors of Shaw, in recognition of such past services
and as an incentive to assure that the Employee will continue his best
efforts on behalf of Shaw, now desires, together with the Employee, to
provide for certain deferred compensation of the Employee to take effect
on the employee's death, retirement or total disability as set forth
herein.
Therefore, in consideration of the services performed by the
Employee for Shaw in the past and in consideration and contemplation of
services to be performed by the Employee for Shaw in the future, the
Employee and Shaw hereby agree as follows:
l. Definition.
(a) "Annual Benefit Amount" shall mean the average
annual gross compensation of the Employee for
the three highest years of income over the five
years of service immediately preceding the
Determination Date. In the event that the
Determination Date occurs on a date other than
the last day of Shaw's fiscal year, the Annual
Gross Compensation for the year in which the
Determination Date occurs shall be equal to the
annualized amount of the Employee's actual
gross salary through the Determination Date
plus any bonus or other incentive compensation
paid or accrued through the Determination Date.
(b) "Benefit Amount" shall mean the number obtained
by multiplying the Annual Benefit Amount by a
factor of 2.
(c) "Cause" shall mean conduct by the Employee
consisting of gross negligence, wanton or
willful disregard of his duties, conviction of
a crime involving moral turpitude or any other
act or omission determined by the Board of
Directors to be inimical to the best interests
of Shaw. The determination of cause shall be
made by the Board, solely in its discretion,and
its determination shall be final and binding.<PAGE>
(d) "Designated Beneficiary" shall mean the person
or persons specified as beneficiary or
beneficiaries by the Employee in writing to
Shaw. If, at the Employee's death, the named
beneficiary or all beneficiaries shall not be
alive, the term Designated Beneficiary shall
mean the estate of the deceased Employee acting
through his administrator, executor or personal
representative.
(e) "Determination Date" shall mean the earlier of:
(i) retirement, whether upon early retirement
approved by Shaw, at normal retirement age
established by Shaw or at such later date as
the employee may retire, (ii) the date of the
determination of total disability (as herein
defined) by the Board of Directors of Shaw or
(iii) death.
(f) "Benefit Period". Unless otherwise specified
herein, the Benefit Period shall mean the ten
year period commencing with the first day of
the month following the Determination Date.
(g) "Total Disability" shall mean total and
permanent disability of the Employee such that
he is unable to perform his duties in a manner
satisfactory to Shaw as determined in a
resolution by the Board of Directors of Shaw
whose decision shall be final and binding.
Employee hereby consents to be examined by such
physicians as Shaw may request to assist Shaw
in determining whether total disability has
occurred.
2. Benefits.
(a) Retirement. If the Employee shall continue in
Shaw's employ until his normal retirement date
established by Shaw then upon his normal
retirement date, or such later date as the
Employee shall actually retire, Shaw shall pay
the Employee the Benefit Amount as herein
defined during the Benefit Period as herein
defined, commencing on the first day of the
month next following his retirement and
continuing on a monthly basis thereafter for a
total of 120 monthly payments. In the event of
the Employee's death after retirement but prior
to completion of the payment of the Benefit
Amount, the remaining payments shall be paid to
such person or persons as the Employee shall
Save designated in writing to Shaw.<PAGE>
During the Benefit Period, Employee shall, at
Shaw's request, be available at mutually
agreeable times to provide consultation and
advice to Shaw, but Employee shall not be
required to travel away from his residence for
purposes of such consultation unless all
expenses incurred by him are paid by Shaw.
Also during the Benefit Period, without the
prior consent of Shaw, Employee shall not
offer his services as a consultant to any other
carpet manufacturer or own more than ten
percent of stock of or be employed in an
executive capacity by any other carpet
manufacturer which competes with Shaw.
Payments to the Employee of the Benefit Amount
are conditioned upon his fulfillment of these
obligations and if Employee should materially
breach any of the foregoing requirements, the
Board of Directors of Shaw may suspend or
eliminate any future payments. The
determination by the Board of Directors of Shaw
of a material breach shall be final and
conclusive.
(b) Total Disability. In the event the Employee
becomes totally disabled as herein defined
while employed by Shaw, the Board of Directors
of Shaw may by resolution terminate the active
services of Employee. In such event Shaw
shall pay the full Benefit Amount to the
Employee over the Benefit Period, as such terms
are herein defined, in equal monthly payments
as described in Paragraph 2(a) above or as may
be mutually agreed upon as provided in
Paragraph 2(d) below. If the Employee should
die after the onset of total disability but
prior to retirement, the Employee shall be
deemed to have retired at death and payments of
the Benefit Amount originally determined at the
onset of total disability shall be continued
for the remainder of the Benefit Period
established at the time of total disability to
the Designated Beneficiary.
(c) Death. If the Employee should die while
employed by Shaw prior to his normal retirement
date, Shaw shall pay to such person or persons
designated in writing by the Employee Benefit
Amount during the Benefit Period in equal
monthly payments as described in Paragraph 2(a)
above as those terms are herein defined.
(d) Lump Sum or Modified Payments. At any time<PAGE>
after the retirement, death or disability of
the Employee, Shaw and the Employee or, in the
event of the Employee's death, the Designated
Beneficiary may agree upon a more accelerated
method of payment, or a lump sum payment of all
the unpaid balance of the Benefit Amount,
discounted to present value by any method
mutually satisfactory to the parties.
3. Other Benefits. Nothing contained in this Agreement shall be
construed to alter, impair or affect the rights of the
Employee to participate in any pension, profit-sharing or
other benefit plan now or hereafter adopted by Shaw.
4. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Employee and his personal
representative, heirs, and executors and to Shaw and its
successors and assigns.
5. Entire Agreement. This Agreement constitutes the sole and
entire agreement between the parties concerning the subject
matter hereof and may be altered or amended only in writing
and signed by the party against whom enforcement of this
agreement may be sought.
6. Governing Law. This Agreement shall be construed and enforced
in accordance with Georgia Law.
7. Relationship Between the Parties. This Agreement shall not be
construed as an employment agreement between the Employee and
Shaw nor shall any provision hereof restrict Shaw's
right to modify or terminate the services of the Employee.
IN WITNESS WHEREOF, Shaw and the Employee have each duly executed
this Agreement the day and year written above.
_________________________(Seal)
Employee
SHAW INDUSTRIES, INC.
BY:____________________________<PAGE>
DESIGNATED BENEFICIARY
I hereby designate ___________________________, my_________________,
as my beneficiary under the foregoing agreement, reserving the right to
change said beneficiary at any time by written notice to Shaw. If at my
death the person or persons named above do not survive me, then I
designate my estate as the beneficiary under the foregoing agreement.
________________________________
Employee
________________________________
DATE
<TABLE>
SHAW INDUSTRIES,INC. EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEARS ENDED JULY 2, 1994, JULY 3, 1993 and JUNE 27, 1992
(In Thousands, Except Per Share Data)
<S> <C> <C> <C>
1994 1993 1992
PRIMARY:
Weighted average common shares outstanding 143,485 137,854 121,296
Additional shares assuming exercise of stock options 1,620 2,456 3,591
Average common shares outstanding, as adjusted 145,105 140,310 124,887
Net income $129,172 $100,623 $58,045
Primary earnings per common share $0.89 $0.72 $0.46
FULLY DILUTED:
Weighted average common shares outstanding 143,485 137,854 121,296
Additional shares assuming exercise of stock options 1,651 2,786 3,719
Average common shares outstanding, as adjusted 145,136 140,640 125,015
Net income $129,172 $100,623 $58,045
Fully diluted earnings per common share $0.89 $0.72 $0.46
Note: Adjusted for two-for-one stock splits effected in the form of a stock dividend in December 1993
and March 1992.
</TABLE>
EXHIBIT 13
SHAW INDUSTRIES, INC.
ITEMS INCORPORATED BY REFERENCE FROM
THE 1994 ANNUAL REPORT TO SHAREHOLDERS
Page
1. Stock Prices and Dividends Paid Information 2
2. Selected Financial Data - Ten Year Financial Review 3-4
3. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-6
4. Financial Statements and Supplementary Data 7-21<PAGE>
<TABLE>
Shaw Industries, Inc.
Stock Information
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High and low stock prices and cash dividends paid by fiscal quarter (after giving effect to two-for-one stock
splits effected in the form of stock dividends in December 1993 and March 1992).
1994 1993 1992 Dividends Paid
(Cents)
High Low High Low High Low 1994 1993 1992
1st Quarter 24 5/8 16 14 10 1/4 9 5/8 8 4.50 3.75 3.12
2nd Quarter 25 1/2 20 1/8 15 1/2 10 1/4 8 7//8 6 1/8 4.50 3.75 3.13
3rd Quarter 25 17 7/8 19 3/4 14 7/8 14 3/8 8 1/2 5.50 4.50 3.75
4th Quarter 22 1/2 15 3/4 19 7/8 14 1/8 14 9 7/8 5.50 4.50 3.75
Total 20.00 16.50 13.75
On September 1, 1994, there were 2,184 holders of record of the Company's common stock.
</TABLE>
2<PAGE>
<TABLE>
10 YEAR FINANCIAL REVIEW
SHAW INDUSTRIES, INC.
<S> <C> <C> <C> <C> <C>
(Dollars in 000's except per share data)
1994 1993 1992 1991 1990
Net Sales $ 2,630,034 $ 2,320,810 $ 1,751,285 $ 1,607,757 $ 1,475,390
Cost of Sales $ 2,070,915 $ 1,851,126 $ 1,424,951 $ 1,339,569 $ 1,182,980
Selling, General and Administrative
Expenses $ 326,291 $ 280,529 $ 206,548 $ 180,094 $ 159,573
Interest Expense, Net $ 25,154 $ 26,520 $ 25,402 $ 34,878 $ 27,150
Other Expenses (Income) $ (4,326) $ (361) $ 164 $ (279) $ (237)
Income Before Income Taxes $ 212,000 $ 162,996 $ 94,220 $ 53,495 $ 105,924
As a Percentage of Net Sales 8.1 % 7.0 % 5.4 % 3.3 % 7.2 %
Effective Tax Rate 37.4 % 38.3 % 38.4 % 38.2 % 38.2 %
Income Before
Extraordinary Item $ 132,535 $ 100,623 $ 58,045 $ 33,051 $ 65,443
Extraordinary Item $ (3,363) $ -- $ -- $ -- $ --
Net Income $ 129,172 $ 100,623 $ 58,045 $ 33,051 $ 65,443
As a Percentage of Net Sales 4.9 % 4.3 % 3.3 % 2.1 % 4.4 %
As a Percentage of Average
Total Assets 8.7 % 8.5 % 6.1 % 4.1 % 9.8 %
As a Percentage of Average
Invested Capital 12.9 % 11.9 % 8.7 % 6.0 % 14.2 %
As a Percentage of Average
Shareholders' Investment 18.7 % 17.9 % 17.5 % 14.9 % 31.0 %
Earnings Per Share:
Primary and Fully Diluted $ 0.89 $ 0.72 $ 0.46 $ 0.29 $ 0.53
Cash Dividends Per Share $ 0.20 $ 0.165 $ 0.138 $ 0.125 $ 0.113
Property Additions $ 251,368 $ 157,217 $ 118,236 $ 87,459 $ 167,732
Depreciaton and Amortization $ 86,518 $ 73,580 $ 63,167 $ 59,279 $ 46,311
Weighted Average Shares Outstanding:
Primary 145,104,828 140,310,268 124,887,450 114,478,396 123,907,712
Fully Diluted 145,136,362 140,639,848 125,015,030 115,275,232 123,907,712
At Year-End:
Working Capital $ 404,715 $ 433,947 $ 392,848 $ 256,700 $ 258,053
Current Ratio 1.8 2.3 2.4 2.2 2.1
Property, Plant and Equipment, Net $ 637,575 $ 473,438 $ 389,478 $ 334,465 $ 308,186
Total Assets $ 1,682,148 $ 1,280,410 $ 1,090,055 $ 813,519 $ 793,505
Total Long-Term Debt $ 382,192 $ 248,309 $ 316,077 $ 357,319 $ 304,375
Shareholders' Investment $ 710,100 $ 670,048 $ 457,334 $ 205,946 $ 237,403
Total Invested Capital* $ 1,092,292 $ 918,357 $ 773,411 $ 563,265 $ 541,778
Shareholders' Investment Per Share $ 5.08 $ 4.68 $ 3.47 $ 1.91 $ 1.98
*The sum of shareholders' investment and long-term debt.
NOTE: All share data have been adjusted for two-for-one stock splits effected in the form of stock
dividends in December 1993, March 1992, May 1989 and May 1986.
3<PAGE>
10 YEAR FINANCIAL REVIEW-CONTINUED
1989 1988 1987 1986 1985
Net Sales $ 1,175,962 $ 958,288 $ 694,203 $ 550,024 $ 519,472
Cost of Sales $ 947,062 $ 778,233 $ 559,377 $ 439,697 $ 412,626
Selling, General and Administrative
Expenses $ 130,129 $ 107,425 $ 72,150 $ 62,494 $ 54,520
Interest Expense, Net $ 22,379 $ 18,915 $ 8,042 $ 4,679 $ 5,869
Other Expenses (Income) $ (572) $ (218) $ (306) $ (299) $ (184)
Income Before Income Taxes $ 76,964 $ 53,933 $ 54,940 $ 43,453 $ 46,641
As a Percentage of Net Sales 6.5 % 5.6 % 7.9 % 7.9 % 9.0 %
Effective Tax Rate 38.1 % 37.3 % 48.0 % 44.5 % 44.5 %
Income Before
Extraordinary Item $ 47,618 $ 33,792 $ 28,545 $ 24,095 $ 25,881
Extraordinary Item -- -- $ -- $ -- $ --
Net Income $ 47,618 $ 33,792 $ 28,545 $ 24,095 $ 25,881
As a Percentage of Net Sales 4.0 % 3.5 % 4.1 % 4.4 % 5.0 %
As a Percentage of Average
Total Assets 8.8 % 7.4 % 8.9 % 9.4 % 11.4 %
As a Percentage of Average
Invested Capital 12.4 % 10.5 % 12.3 % 12.7 % 15.8 %
As a Percentage of Average
Shareholders' Investment 27.9 % 21.8 % 19.4 % 18.3 % 23.0 %
Earnings Per Share:
Primary and Fully Diluted $ 0.39 $ 0.27 $ 0.21 $ 0.18 $ 0.19
Cash Dividends Per Share $ 0.092 $ 0.079 $ 0.063 $ 0.041 $ 0.035
Property Additions $ 25,796 $ 109,320 $ 54,733 $ 32,659 $ 20,518
Depreciaton and Amortization $ 39,235 $ 33,975 $ 24,033 $ 18,788 $ 16,075
Weighted Average Shares Outstanding:
Primary 121,228,256 127,197,968 134,116,696 136,348,384 136,394,464
Fully Diluted 121,228,256 127,197,968 134,116,696 136,348,384 136,394,464
At Year-End:
Working Capital $ 210,434 $ 201,225 $ 141,679 $ 118,345 $ 96,458
Current Ratio 2.5 2.4 2.5 2.9 2.8
Property, Plant and Equipment, Net $ 187,385 $ 200,985 $ 126,431 $ 95,861 $ 83,796
Total Assets $ 538,001 $ 546,253 $ 362,756 $ 278,911 $ 236,115
Total Long-Term Debt $ 196,515 $ 230,027 $ 104,806 $ 63,716 $ 51,284
Shareholders' Investment $ 184,735 $ 157,115 $ 152,600 $ 141,218 $ 122,662
Total Invested Capital* $ 381,250 $ 387,142 $ 257,406 $ 204,934 $ 173,946
Shareholders' Investment Per Share $ 1.54 $ 1.28 $ 1.16 $ 1.04 $ 0.90
</TABLE>
4<PAGE>
Shaw Industries, Inc.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition, Liquidity and Capital Resources
The Company's business, as well as the United States' carpet
industry in general, is cyclical in nature and
is significantly affected by general economic conditions. The
level of carpet sales tends to reflect fluctuations in
consumer spending for durable goods and, to a lesser extent,
fluctuations in interest rates and new housing starts.
Sales and customer order unit levels during fiscal 1994 were
higher than in fiscal 1993 as the Company, the carpet
industry and the general economy continued to rebound.
Specifically, the Company had a 13.3 percent increase in fiscal
1994 net sales over fiscal 1993 principally related to a volume
increase in shipments. Recent international acquisitions were
a contributing factor to this increase in volume. The industry business
activity for 1994 was reflective of the general economy and moved ahead at
a reasonable growth rate.
During fiscal 1994, working capital decreased $29.2 million
and cash decreased $34.9 million. The principal
source of cash was provided by operating activities in the amount
of $146.2 million, principally from net income
of $129.2 million and depreciation and amortization of $86.5
million. Financing activities also provided cash in the
amount of $43.6 million, which principally resulted from
additional borrowings of $170.0 million from the revolving
credit agreement and an increase in net borrowings of short-term
notes payable of $115.0 million, offset by net long-
term debt payments of $138.2 million, purchases of treasury stock
of $69.7 million, capital lease payments of $6.5
million and the payment of cash dividends of $28.7 million. The
principal cash flow items used in investing
activities were for additions to property, plant and equipment of
$164.2 million and investments in business assets
acquired of $63.6 million.
5<PAGE>
The Company's liquidity condition remains strong.
Conservation of capital and the maintenance of a strong
balance sheet have enabled the Company to become a preeminent
force in the carpet industry. During 1994, the
Company elected to prepay notes payable with interest rates of
9.48% to 10.49%. An extraordinary charge of
$3,363,000 (net of income tax benefit of $2,150,000) was incurred
as a result of this early retirement. The Company
replaced this debt with borrowings under the revolving credit
agreement at LIBOR-based rates providing for substantial
future interest savings. Capital expenditures (including capital
lease obligations, but not including acquisitions in
1994) for incremental additions and modifications to plant and
equipment necessary to maintain the facilities in a
modern, state-of-the-art condition were $164.6 million for fiscal
1994. Management anticipates capital expenditures
and capitalized lease obligations of approximately $130.0 million
during fiscal 1995 to maintain its facilities and to
expand and upgrade its tufting, dyeing, finishing, yarn
processing, distribution, transportation and materials handling
equipment to meet anticipated increases in sales volume and to
improve efficiency. These expenditures will be
funded through cash flow from operations and, if appropriate,
through additional sources of long-term capital. The
Company has short-term credit lines with banks aggregating $300.0
million, of which $165.0 million was unused at
July 2, 1994. The Company believes it could expand its line of
credit and long-term bank facilities, if necessary.
Inflation
The Company's manufacturing costs and operating expenses are
affected by price changes. The costs of
fiber and other raw materials decreased in fiscal 1992, 1993 and
1994 from the levels experienced in fiscal 1991.
The Company has historically mitigated inflationary effects by
passing price changes along to its customers and by
continually developing and implementing more cost-effective
manufacturing and other operational procedures. The
Company's ability to mitigate the effects of price changes will
depend on market factors.
Results of Operations - Fiscal 1994 Compared to Fiscal 1993
Net sales increased $309,224,000, or 13.3 percent, to
$2,630,034,000 in fiscal 1994, primarily as a result
of an increase in the volume of shipments. Results for fiscal
1994 included incremental sales of $139,378,000
attributable to recent international acquisitions. The results
of the acquired operations did not have a material effect
on the Company's net income in 1994. Gross profit margins as a
percentage of net sales increased 1.1 percent to
21.3 percent for fiscal 1994 from 20.2 percent for fiscal 1993
principally as a result of an increase in the efficiency
relationship of volume and fixed costs. Selling, general and
administrative expenses increased $45,762,000 or 16.3
percent in fiscal 1994 compared to fiscal 1993, and increased .3
percent to 12.4 percent of net sales. The increase
in percentage of net sales is due substantially to aggressive
sales efforts to increase sales. Interest expense, net,
decreased $1,366,000 to $25,154,000 and decreased .2 percent to
1.0 percent of net sales. The effective income tax
rate decreased .9 percent to 37.4 percent for fiscal 1994
compared to fiscal 1993 primarily due to deferred tax
adjustments.
Results of Operations - Fiscal 1993 Compared to Fiscal 1992
Net sales increased $569,525,000, or 32.5 percent, to
$2,320,810,000 in fiscal 1993, primarily as a result
of an increase in the volume of shipments. Results for fiscal
1993 included incremental sales of $415,413,000
attributable to acquisitions. Gross profit margins as a
percentage of net sales increased 1.6 percent to 20.2 percent
for fiscal 1993 compared to 18.6 percent for fiscal 1992
principally as a result of an increase in the efficiency
relationship of volume and fixed costs. Selling, general and
administrative expenses increased $73,981,000 or 35.8
percent in fiscal 1993 compared to fiscal 1992, and increased .3
percent to 12.1 percent of net sales. The increase
in percentage of net sales is due substantially to continued
sales efforts to increase sales in a weak economy. Interest
expense, net, increased $1,118,000 to $26,520,000 in fiscal 1993
compared to fiscal 1992 due principally to
additional borrowings. The effective income tax rate was 38.3
percent in fiscal 1993 compared to 38.4 percent in
fiscal 1992.
6<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
SHAW INDUSTRIES, INC.
July 2, 1994 and July 3, 1993
<S> <C> <C>
1994 1993
ASSETS
Current Assets:
Cash $ 12,597,000 $ 47,545,000
Accounts and notes receivable, less allowance for doubtful
accounts and discounts of $18,455,000 in 1994 and
$14,342,000 in 1993 367,613,000 307,241,000
Inventories:
Raw materials 240,726,000 191,684,000
Work-in-process 36,110,000 24,066,000
Finished goods 249,302,000 185,977,000
526,138,000 401,727,000
Prepaid expenses 24,507,000 4,080,000
Total current assets 930,855,000 760,593,000
Property, Plant and Equipment, at cost:
Land and land improvements 28,196,000 17,484,000
Buildings and leasehold improvements 231,892,000 196,984,000
Machinery and equipment 743,908,000 641,080,000
Construction in progress 114,604,000 19,878,000
1,118,600,000 875,426,000
Less - Accumulated depreciation 481,025,000 401,988,000
637,575,000 473,438,000
Goodwill and Other Assets 113,718,000 46,379,000
$ 1,682,148,000 $ 1,280,410,000
</TABLE>
7<PAGE>
<TABLE>
<S> <C> <C>
1994 1993
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable $ 135,000,000 $ 20,000,000
Current maturities of long-term debt 40,579,000 69,648,000
Accounts payable 225,368,000 140,044,000
Accrued liabilities 125,193,000 96,954,000
Total current liabilities 526,140,000 326,646,000
Long-Term Debt, less current maturities 382,192,000 248,309,000
Deferred Income Taxes 38,095,000 26,700,000
Other Liabilities 11,831,000 8,707,000
Minority Interest In Consolidated Subsidiary 13,790,000 -
Commitments and Contingencies
Shareholders' Investment:
Preferred stock; 250,000 shares authorized, no shares - -
Common stock, no par, $1.11 stated value, authorized
500,000,000 shares; issued 139,868,162 shares at July 2, 1994
and 71,551,798 shares at July 3, 1993 155,254,000 79,423,000
Paid-in capital 159,192,000 293,608,000
Foreign currency translation adjustment (2,488,000) 131,000
Retained earnings 398,212,000 297,754,000
710,170,000 670,916,000
Less - Unearned compensation 70,000 868,000
710,100,000 670,048,000
$ 1,682,148,000 $ 1,280,410,000
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
8<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
For Years Ended July 2, 1994, July 3, 1993 and June 27, 1992
<S> <C> <C> <C>
1994 1993 1992
Net Sales $2,630,034,000 $2,320,810,000 $1,751,285,000
Costs and Expenses:
Cost of sales 2,070,915,000 1,851,126,000 1,424,951,000
Selling, general and administrative 326,291,000 280,529,000 206,548,000
2,397,206,000 2,131,655,000 1,631,499,000
Operating Income 232,828,000 189,155,000 119,786,000
Other Expenses (Income):
Interest expense 25,911,000 27,280,000 25,538,000
Interest income (757,000) (760,000) (136,000)
Interest, net 25,154,000 26,520,000 25,402,000
Miscellaneous, net (4,326,000) (361,000) 164,000
20,828,000 26,159,000 25,566,000
Income Before Income Taxes, Minority Interest
and Extraordinary Item 212,000,000 162,996,000 94,220,000
Provision for Income Taxes 79,386,000 62,373,000 36,175,000
Income Before Minority Interest
and Extraordinary Item 132,614,000 100,623,000 58,045,000
Minority Interest in
Consolidated Subsidiary (79,000) - -
Income Before Extraordinary
Item 132,535,000 100,623,000 58,045,000
Extraordinary Loss on Early Extinguishment of Debt
(net of income tax benefit of $2,150,000) (3,363,000) - -
Net Income $ 129,172,000 $ 100,623,000 $ 58,045,000
Earnings Per Common Share:
Primary and Fully Diluted Basis-
Income Before Extraordinary
Item $ 0.91 $ 0.72 $ 0.46
Extraordinary Item (0.02) - -
Net Income $ 0.89 $ 0.72 $ 0.46
Weighted Average Shares Outstanding:
Primary 145,104,828 140,310,268 124,887,450
Fully diluted 145,136,362 140,639,848 125,015,030
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
9<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For Years Ended July 2,1994, July 3, 1993 and June 27, 1992
<S> <C> <C> <C> <C> <C> <C>
Common Stock Paid-In Equity Adjustmen Retained Unearned
Shares Amount Capital From Translation Earnings Compensation
Balance, June 29, 1991 26,924,800 $ 29,887,000 $ - $ - $ 178,523,000 $ (2,464,000)
Net income - - - - 58,045,000 -
Issuance of stock in a
public offering 4,062,500 4,509,000 130,315,000 - - -
Issuance of two-for-one
stock split 30,987,300 34,396,000 (34,396,000) - - -
Issuance of stock in
merger 2,874,852 3,191,000 66,525,000 - - -
Amortization of unearned
compensation - - - - - 798,000
Exercise of stock options 1,131,000 1,255,000 3,431,000 - - -
Cash dividends paid
($.138 per share) - - - - (16,681,000) -
Balance, June 27, 1992 65,980,452 73,238,000 165,875,000 - 219,887,000 (1,666,000)
Net income - - - - 100,623,000 -
Issuance of stock in a
public offering 4,471,500 4,964,000 120,251,000 - - -
Exercise of discounted
stock options 144,298 160,000 120,000 - - -
Exercise of stock options 956,850 1,062,000 4,003,000 - - -
Adjustment to stock
issued in merger (1,302) (1,000) (30,000) - - -
Foreign currency translation
adjustment - - - 131,000 - -
Tax benefit on
disqualified dispositions
of stock options - - 3,389,000 - - -
Amortization of unearned
compensation - - - - - 798,000
Cash dividends paid
($.165 per share) - - - - (22,756,000) -
Balance, July 3, 1993 71,551,798 79,423,000 293,608,000 131,000 297,754,000 (868,000)
Net income - - - - 129,172,000 -
Purchase and retirement
of common stock (4,195,700) (4,657,000) (65,074,000) - - -
Exercise of discounted
stock options 60,186 67,000 (66,000) - - -
Exercise of stock options 554,900 616,000 1,091,000 - - -
Issuance of two-for-one
stock split 71,754,831 79,648,000 (79,648,000) - - -
Issuance of stock in acquisiti 142,147 157,000 6,288,000 - - -
Foreign currency translation
adjustment - - - (2,619,000) - -
Tax benefit on
disqualified dispositions
of stock options - - 2,993,000 - - -
Amortization of unearned
compensation - - - - - 798,000
Cash dividends paid
($.200 per share) - - - - (28,714,000) -
Balance, July 2, 1994 139,868,162 $ 155,254,000 $ 159,192,000 $ (2,488,000) $ 398,212,000 $ (70,000)
The accompanying notes are an integral part of these consolidated financial statements.
10
/TABLE
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
For Years Ended July 2, 1994, July 3, 1993 and June 27, 1992
1994 1993 1992
Operating Activities:
Net Income $ 129,172,000 $ 100,623,000 $ 58,045,000
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and amortization 86,518,000 73,580,000 63,167,000
Provision for doubtful accounts 14,909,000 11,444,000 5,778,000
Stock option compensation expense 798,000 798,000 798,000
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable (22,031,000) (70,414,000) (42,105,000)
Inventories (83,181,000) 37,629,000 (40,167,000)
Accounts payable 49,192,000 10,505,000 (39,871,000)
Accrued liabilities 1,953,000 11,097,000 7,518,000
Deferred income taxes 4,731,000 878,000 (2,483,000)
Other, net (35,859,000) 1,311,000 8,070,000
Total Adjustments 17,030,000 76,828,000 (39,295,000)
Net Cash Provided by Operating Activities 146,202,000 177,451,000 18,750,000
Investing Activities:
Additions to property, plant and equipment (164,227,000) (56,661,000) (50,712,000)
Business assets acquired (63,642,000) (110,778,000) -
Proceeds from disposition of property,
plant and equipment 3,145,000 267,000 69,000
Purchase of Salem Carpet Mills, Inc. - - (2,100,000)
Net Cash Used In Investing
Activities (224,724,000) (167,172,000) (52,743,000)
Financing Activities:
Borrowings from revolving credit agreement 170,000,000 5,000,000 45,000,000
Repayments on revolving credit agreement - - (120,000,000)
Principal payments on long-term debt (138,167,000) (57,560,000) (23,557,000)
Principal payments under capital lease obligations (6,522,000) (8,686,000) (5,416,000)
Net borrowings (payments) on short-term notes payable 115,000,000 (25,000,000) 21,050,000
Purchase and retirement of common stock (69,731,000) - -
Exercise of stock options 1,708,000 4,350,000 4,686,000
Dividends paid (28,714,000) (22,756,000) (16,681,000)
Net proceeds from sale of common stock - 125,215,000 134,824,000
Net Cash Provided by Financing Activities 43,574,000 20,563,000 39,906,000
Net (Decrease) Increase in Cash (34,948,000) 30,842,000 5,913,000
Cash at the Beginning of Year 47,545,000 16,703,000 10,790,000
Cash at End of Year $ 12,597,000 $ 47,545,000 $ 16,703,000
Supplemental disclosures of cash flow information:
Cash paid during the year for -
Interest $ 25,698,000 $ 32,578,000 $ 19,821,000
Income taxes $ 75,300,000 $ 58,241,000 $ 37,793,000
Non-cash capital lease obligations $ 378,000 $ 3,492,000 $ 2,369,000
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
11<PAGE>
Notes to Consolidated Financial Statements
Shaw Industries, Inc.
July 2, 1994, July 3, 1993 and June 27, 1992
Note 1 Summary of Accounting Policies
The consolidated financial statements include the accounts
of Shaw Industries, Inc. and subsidiaries. All
significant intercompany balances and transactions are eliminated
in consolidation. The Company's fiscal year end, which is
the Saturday closest to June 30, has been changed to
the Saturday closest to December 31 effective in December 1994.
Revenues are recognized when goods are shipped.
Inventories are stated at the lower of cost or market. Cost
includes materials, direct and indirect labor and
factory overhead. Market with respect to raw materials is
replacement cost and for work-in-process and finished
goods is net realizable value. The Company primarily uses the
last-in, first-out (LIFO) method of valuing its
inventories in order to more properly match current costs against
current revenues, thereby reducing the effects of
inflation on earnings. If LIFO inventories were valued at
current costs, the inventory amounts would have been
$6,449,000 and $5,984,000 lower than those reported at July 2,
1994 and July 3, 1993, respectively. During 1993,
inventory quantities were reduced. This reduction resulted in a
liquidation of LIFO inventory quantities carried at
higher costs prevailing in prior years as compared with the cost
of 1993 purchases, the effect of which increased cost
of goods sold by approximately $1,033,000 and decreased net
income by approximately $635,000, but did not affect
earnings per share.
Property, Plant and Equipment is recorded at cost. Renewals
and betterments are capitalized; maintenance
and repairs are charged to expenses as incurred. Maintenance and
repairs expense for 1994, 1993 and 1992 was
$78,492,000, $68,977,000 and $50,527,000, respectively. The cost
and accumulated depreciation of property retired
or otherwise disposed of are removed from the accounts and any
gains or losses thereon are included in income.
For financial reporting purposes, depreciation is computed using
the straight-line method over the estimated useful
lives of the assets (15 to 35 years for buildings and 5 to 14
years for machinery and equipment). Leasehold
improvements are amortized over the terms of the leases.
Costs in excess of the fair value of net assets of
businesses acquired are recorded as goodwill and are
amortized using the straight-line method over a period not to
exceed 40 years. The recoverability of goodwill is
periodically reviewed by management based on current and
anticipated conditions. Accumulated amortization was
$2,590,000 and $666,000 at July 2, 1994 and July 3, 1993,
respectively.
Accrued Liabilities include $19,640,000 and $15,692,000 for
workers' compensation claims and $22,278,000
and $20,237,000 for returns and allowances at July 2, 1994 and
July 3, 1993, respectively.
Deferred Income Taxes are provided for temporary differences
in recording various items for financial and
income tax reporting purposes.
The Company's Retirement Savings Plan provides, among other
things, for voluntary contributions by
employees not to exceed 15% of their gross salaries and wages and
a 50% matching contribution by the Company
for employees with three or more years of continuous employment.
During 1994, 1993 and 1992, the Company
contributed $8,612,000, $8,133,000 and $5,820,000, respectively,
under the plan.
The Company has a Deferred Compensation Plan for key
personnel. The plan provides, among other things,
for certain deferred compensation to become payable on the
employee's death, retirement or total disability as set
forth in the plan. During 1994, 1993 and 1992, the Company
provided $2,243,000, $1,925,000, and $1,639,000,
respectively, under the plan. These amounts have been recorded
as Other Liabilities in the accompanying balance
sheets.
Earnings Per Share have been computed based upon the
weighted average shares outstanding and include
the number of dilutive common stock equivalents outstanding
during the year. All Earnings Per Share and
Shareholders' Investment amounts have been adjusted for the
two-for-one stock splits effected in the form of stock
dividends in December 1993 and March 1992.
Certain prior year amounts have been reclassified to conform
with the 1994 presentation.
12<PAGE>
Notes to Consolidated Financial Statements
Shaw Industries, Inc.
Note 2 Indebtedness
Long-term debt presented in the accompanying consolidated balance
sheets at July 2, 1994 and July 3, 1993
consisted of the following (000's omitted):
1994 1993
Revolving credit agreement at LIBOR based rate $300,000 $130,000
Revolving loan facility at LIBOR based rate 42,243 -
Revolving loan facility at LIBOR based rate 24,608 -
9.48% term notes payable - 108,750
9.31% term notes payable - 8,000
10.49% term notes payable - 27,000
Term loan payable at LIBOR based rate - 15,080
Other 43,119 19,136
Capitalized lease obligations (Note 5) 12,801 9,991
422,771 317,957
Less - current maturities (40,579) (69,648)
$382,192 $248,309
The Company elected to exercise its option to prepay the
9.48%, 9.31% and 10.49% term notes payable at June
30, 1994. An extraordinary charge of $3,363,000 (net of income
tax benefit of $2,150,000) was incurred as a result
of the early retirement of the notes payable.
The revolving credit agreement was amended during 1994 to
provide for borrowings of up to $300 million.
This increase in availability was utilized to repay the term notes
payable. The revolving credit agreement expires in
fiscal year 2000. The LIBOR rate at July 2, 1994 was approximately 4.8%.
The amended revolving credit agreement contains, among other
provisions (1) restrictions as to creation or
assumption of liens, payments of cash dividends and acquisitions
of the Company's stock, (2) limitation as to new
indebtedness and lease obligations, and (3) financial
requirements as to minimum working capital ($200,000,000),
current ratio of 1.75 and ratio of cash flow to fixed charges of
1.5 in 1994 (actual was 1.6) and 2.0 thereafter. Retained
earnings of $82,289,000 are available for the payment of cash
dividends and the acquisition of the Company's stock
at July 2, 1994.
The aggregate annual maturities of long-term debt,
including the capitalized lease obligations, as of July 2, 1994
are as follows: 1995 - $40,579,000; 1996 - $73,962,000; 1997 -
$4,416,000; 1998 - $76,555,000; 1999 -
$75,235,000; 2000 and thereafter - $152,024,000. The carrying
value of the Company's variable rate debt
approximates fair market value.
13<PAGE>
Notes to Consolidated Financial Statements
Shaw Industries, Inc.
The following data is presented with respect to short-term notes
payable under line-of-credit agreements in 1994 and 1993 (000's omitted):
1994 1993
Lines of credit -
Available at year-end $300,000 $ 50,000
Unused at year-end $165,000 $ 30,000
Average borrowing for the year, determined
on a monthly basis $ 53,330 $ 72,500
Maximum outstanding at any month-end $135,000 $170,000
Note 3 Shareholders' Investment
Under the Company's 1987 Incentive Stock Option Plan, eight
million shares of common stock are reserved
for issuance at a price no less than the market value on the date
granted. These options are exercisable over five
years.
Under the Company's 1992 Incentive Stock Option Plan, six
million shares of common stock are reserved
for issuance at a price no less than the market value on the date
granted. These options are exercisable over five
to ten years.
The Company's 1989 Discounted Stock Option Plan provides for
the issuance of up to 880,000 shares of
common stock to key employees. Options for 880,000 shares were
granted to three officers at $.25 per share. The
difference between the option price and market price at the date
of grant is being amortized over the option period.
For 1994, 1993 and 1992 this expense was $798,000 for each year.
Beginning in July 1990, 176,000 shares per year
are exercisable for five years. During 1994, 176,000 shares were
exercised, 352,000 shares were exercised in 1993,
no shares were exercised in 1992 and 176,000 shares were
exercised in 1991.
During March 1989, the Company adopted a Shareholder Rights
Plan and pursuant thereto declared a
dividend of one Right for each outstanding share of common stock.
When exercisable, each Right will entitle its
holder to buy a fraction of a share of Series A
Participating Preferred Stock at a price of $12.50 per share
(the "Purchase Price"). If a person or group acquires or makes a
tender or exchange offer to acquire 20% or more
of the Company's common stock without the consent of the Company
(an "Acquiring Shareholder"), the Rights will
become exercisable and each Right will entitle the holder, other
than the Acquiring Shareholder , to receive, upon
payment of the Purchase Price, in lieu of preferred stock, a
number of shares of common stock of the Company
having a market value equal to twice the Purchase Price. The
Rights may be redeemed by the Company under
certain circumstances at a price of $.01 per Right. The Rights
have no voting power and, until exercised, no dilutive
effect on net income per common share. If not previously
redeemed, the Rights will expire in April 1999. The
Company has designated 200,000 shares, of the 250,000 shares of
preferred stock authorized, as Series A
Participating Preferred Stock for issuance upon exercise of the
Rights.
In December 1992, 4,471,500 shares of the Company's common
stock were issued in a public offering.
Net proceeds from the sale of the common stock of $125,215,000
were used to reduce short-term notes payable of
$120,000,000 incurred to finance the acquisition of the
polypropylene carpet fiber manufacturing operations of
Amoco Fabrics and Fibers Company in September 1992, and the
balance of the proceeds of $5,215,000 was used
for working capital.
14<PAGE>
Notes to Consolidated Financial Statements
Shaw Industries, Inc.
The following is a summary of stock option information for the 1987 and
1992 Incentive Stock Option Plans (adjusted for the two-for-one stock splits
effected in the form of stock dividends in December 1993 and March 1992):
1994 1993
Options outstanding, beginning of year 3,454,700 2,890,000
Options granted - 2,498,400
Options exercised (655,600) (1,913,700)
Options canceled (171,200) (20,000)
Options outstanding, end of year 2,627,900 3,454,700
Option price range per share $2.07 - $11.98 $2.07 - $11.98
Options exercisable, end of year 324,700 988,300
Options available for grant 6,540,800 6,369,600
Note 4 Income Taxes
On July 4, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred tax assets and liabilities are determined based on
the difference between the financial accounting and tax accounting basis of
assets and liabilities. Deferred tax assets or liabilities at the end of each
period are determined using the currently enacted tax rate expected to apply
to taxable income in the periods in which the deferred tax asset or liability
is expected to be realized. There was no cumulative effect resulting from the
adoption.
The provision for income taxes consisted of the following (000's omitted):
1994 1993 1992
Federal $69,791 $57,327 $34,441
State 8,098 6,572 3,942
77,889 63,899 38,383
Deferred (temporary differences shown) -
Depreciation 4,777 60 2,892
Inventory valuation 1,475 (3,454) (3,546)
Cash discounts and bad debts (265) 4,126 (2,212)
Other (4,490) (2,258) 658
1,497 (1,526) (2,208)
$79,386 $62,373 $36,175
15<PAGE>
Notes to Consolidated Financial Statements
Shaw Industries, Inc.
The differences between the Federal statutory income tax rate and the
Company's effective tax rate were as follows:
1994 1993 1992
Federal statutory rate 35.0% 34.0% 34.0%
State income taxes, net of Federal tax benefit 3.9 4.3 4.3
Other, net (1.5) - .1
37.4% 38.3% 38.4%
Components of the net deferred income tax liability at July 2, 1994 and July 4,
1993 are shown below (000's omitted):
1994 1993
Deferred income tax assets:
Accrued advertising expenses not currently
deductible $ 4,247 $ 4,067
Reserve for cash discounts and bad debts 5,768 5,503
Employee benefit accruals not currently deductible 18,257 15,732
Reserve for returns and allowances 8,682 7,872
36,954 33,174
Deferred income tax liabilities:
Book basis of inventory over tax basis (17,795) (16,320)
Property tax accrual ( 1,971) ( 2,073)
Book basis of property, plant and equipment
over tax basis (41,345) (36,568)
Other - ( 2,720)
(61,111) (57,681)
$(24,157) $(24,507)
16<PAGE>
Notes to Consolidated Financial Statements
Shaw Industries, Inc.
Note 5 Commitments and Contingencies
From time to time the Company is subject to claims and suits
arising in the course of its business. In April
1993, the Company became a defendant in certain litigation
alleging personal injury resulting from personal exposure
to volatile organic compounds found in carpet produced by the
Company. The complaints seek injunctive relief and
unspecified money damages on all claims. The Company has denied
any liability. In May 1993, the Company
became a defendant in certain litigation alleging violation of
both federal and state laws relating to unfair
competition. The complaint seeks an injunction regarding the
unfair competition claims and money damages. The
Company has denied any liability. The Company believes that it
has meritorious defenses in these suits and that the
litigation will not have a material adverse effect on the
Company's financial condition or results of operations. The
Company will vigorously defend these suits. In June 1994, the
Company and several other carpet manufacturers
received grand jury subpoenas from the Antitrust Division of the
United States Department of Justice relating to
an investigation of the industry. The Company believes that once
this investigation is completed it will not have a
material adverse effect on the Company's financial condition or
results of operations.
The Company has entered into several capitalized leases for
machinery and equipment, including computer
equipment, at a cost of $49,415,000 at July 2, 1994 and
$37,644,000 at July 3, 1993. These assets are amortized
on a straight-line basis over the lease terms and amortization is
included in depreciation expense. Accumulated
amortization of capital lease cost was $30,926,000 and
$25,219,000 at July 2, 1994 and July 3, 1993, respectively.
The related obligations are included in long-term debt (Note 2).
The Company also leases warehouses and showroom
space, customer service centers and certain equipment under
operating leases.
At July 2, 1994, future minimum lease payments for all
capital and operating leases exceeding one year
were:<PAGE>
Capital Operating Total Future
Leases Leases Payments
1995 $ 8,036,000 $ 20,128,000 $28,164,000
1996 3,473,000 12,948,000 16,421,000
1997 2,109,000 8,729,000 10,838,000
1998 875,000 6,299,000 7,174,000
1999 171,000 2,954,000 3,125,000
Total payments 14,664,000 $ 51,058,000 $65,722,000
Less: amount representing interest 1,863,000
Present value of capitalized lease
payments with a weighted average
interest rate of 8.25% 12,801,000
Rental payments under noncancelable operating leases were
$28,840,000, $25,422,000 and $16,537,000 in 1994,
1993 and 1992, respectively.
17<PAGE>
Notes to Consolidated Financial Statements
Shaw Industries, Inc.
Note 6 Acquisitions
On May 29, 1992, the Company acquired Salem Carpet Mills, Inc.
("Salem") in accordance with the terms of a merger agreement
announced on February 9, 1992. Pursuant to the terms of the
merger, former Salem shareholders not electing to receive cash
received .363 (unadjusted) of a share of the Company's common stock for each
share of Salem common stock owned immediately prior to the merger.
The aggregate value of the Company's common stock exchanged for the
Salem common stock was $69,685,000. The holders of approximately
3% of Salem's common shares elected to receive cash of $7.98 per
common share in the merger totalling approximately $2,100,000.
The acquisition has been accounted for as a purchase
transaction, and accordingly, the results of operations of Salem
have been included in the accompanying financial statements since
May 30, 1992. The purchase price was allocated to assets and
liabilities based on their estimated fair value as of the date of
the acquisition. The excess of the consideration paid over the
estimated fair value of net assets acquired was
$38,843,000 and has been recorded as goodwill and is being amortized on
the straight-line basis over 40 years. The fair value of assets
acquired and liabilities assumed was $158,833,000 and $125,860,000,
respectively. The following table summarizes on a pro forma basis
the consolidated results of operations as though Salem had been
acquired on June 30, 1991 (000's except per share data):
Unaudited
Year Ended
June 27, 1992
Net Sales $ 2,097,836
Net Income $ 55,487
Earnings Per Common Share -
Primary and Fully Diluted $ .43
On September 25, 1992, the Company acquired Amoco Fabrics and
Fibers Company's ("Amoco Fibers") polypropylene carpet fiber
manufacturing facilities located in Andalusia, Alabama, and
Bainbridge, Georgia, and inventories for approximately $91,606,000
in cash. The Company is now producing polypropylene carpet fiber
at these facilities for both its own use and for sale to other
manufacturers. The acquisition has been accounted for as a
purchase transaction, and accordingly, the results of operations of
Amoco Fibers have been included in the Company's financial
statements since September 26, 1992.
On March 31, 1993, the Company acquired all of the
outstanding stock of Kosset Carpets, Ltd., Bradford, England for
approximately $19,043,000 in cash. The acquisition has been
accounted for as a purchase transaction, and accordingly, the
results of operations of Kosset have been included in the
accompanying financial statements since April 1, 1993.
On July 12, 1993, the Company formed a joint venture through
which it acquired an interest in Capital Carpet Industries, Pty.,
Ltd., Melbourne, Victoria, Australia, and Invicta Group Industries,
Pty., Ltd., Braybrook, Victoria, Australia (together, "CCI"),
enabling the Company to participate in a government-supported
rationalization of the Australian carpet industry. On November 4,
1993, the Company acquired the remaining interest in the joint
venture. Until November 4, 1993, the investment was accounted for
using the equity method, and accordingly, the Company included its
share of CCI's income in other income. Subsequent to November 4,
1993, the results of operations of CCI are included in the
accompanying financial statements.
On September 10, 1993, the Company acquired Abingdon Carpets,
Gwent, Wales. Abingdon is a British producer of medium-priced
tufted carpets and carpet yarns. The acquisition has been
accounted for as a purchase transaction, and accordingly, the
results of operations of Abingdon are included in the accompanying
financial statements since September 10, 1993.
On May 31, 1994, the Company entered into an agreement to form
a joint venture with Grupo Industrial Alfa, S.A. de C.V. of
Monterrey, Mexico, for the manufacture, distribution and marketing
of carpets, rugs and related products in Mexico and South America.
The Company acquired a fifty-one percent interest in Terza, S.A. de
C.V., and accordingly, the subsidiary is included in consolidation
at July 2, 1994 and the results of operations of Terza are included
in the accompanying financial statements since May 31, 1994.
The fiscal 1994 acquisitions did not have a material effect on
the Company's results of operations.
18<PAGE>
<TABLE>
Notes to Consolidated Financial Statements
Shaw Industries, Inc.
Note 7 Information About the Company's Foreign Operations
The following information is presented regarding the Company's
foreign operations for the year ended July 2, 1994. Foreign operations
for fiscal years 1993 and 1992 were immaterial. (000's omitted)
<S> <C> <C> <C> <C>
Adjustments
and
Domestic Foreign Eliminations Consolidated
Sales to unaffiliated customers $2,417,469 $212,565 $ -- $2,630,034
Operating profit $ 224,207 $ 8,621 $ -- $ 232,828
Interest expense, net (25,154)
Miscellaneous income, net 4,326
Income before income taxes $ 212,000
Identifiable assets $1,396,946 $318,409 $(33,207) $1,682,148
Sales and transfers between geographic areas and export
sales are not material. Operating profit is total
revenue less operating expenses. In computing operating profit,
none of the following items have been added or
deducted: interest expense, miscellaneous income, net income
taxes and the extraordinary item related to early
retirement of debt.
Identifiable assets are those assets of the Company that are
identified with the operations in each geographic
area, including goodwill.
</TABLE>
19<PAGE>
<TABLE>
Notes to Consolidated Financial Statements Shaw Industries, Inc.
Note 8 Quarterly Financial Data (Unaudited)
Summarized quarterly financial data (000's except per share amounts) for 1994, 1993 and 1992 are as follows:
<S> <C> <C> <C> <C>
1994 Quarters
First Second Third Fourth
Net Sales $ 649,516 $ 638,173 $ 620,126 $ 722,219
Gross Profit 137,301 129,694 126,198 165,926
Net Income 34,096 29,272 25,325 40,479*
Earnings Per Share -
Primary and Fully Diluted 0.24 0.20 0.17 0.28*
1993 Quarters
First Second Third Fourth
Net Sales $ 546,822 $ 585,395 $ 519,318 $ 669,275
Gross Profit 108,714 114,889 100,507 145,574
Net Income 21,815 24,540 16,596 37,672
Earnings Per Share -
Primary and Fully Diluted 0.16 0.18 0.12 0.26
1992 Quarters
First Second Third Fourth
Net Sales $ 436,817 $ 410,723 $ 403,948 $ 499,797
Gross Profit 78,930 76,449 69,934 101,021
Net Income 13,179 12,526 8,891 23,449
Earnings Per Share-
Primary and Fully Diluted** 0.12 0.10 0.07 0.18
*The fourth quarter net income and per share amounts include the effect of an extraordinary loss on early
extinguishment of debt of $3,363,000 or $.02 per share, net of applicable tax benefit.
**The sum of the 1992 quarterly net earnings per share amounts is different from the annual net earnings per share
amounts because of differences in the weighted average number of common shares outstanding used in the
quarterly and annual computations.
</TABLE>
20<PAGE>
Report of Independent Public Accountants
To the Shareholders of Shaw Industries, Inc.:
We have audited the accompanying consolidated balance sheets
of Shaw Industries, Inc. (a Georgia
corporation) and subsidiaries as of July 2, 1994 and July 3, 1993
and the related consolidated statements of income,
shareholders' investment and cash flows for each of the three
years in the period ended July 2, 1994. 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 financial
position of Shaw Industries, Inc. and subsidiaries as of July 2,
1994 and July 3, 1993 and the results of their
operations and their cash flows for each of the three years in
the period ended July 2, 1994 in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
August 8, 1994
21
EXHIBIT 21
The only subsidiaries of the Registrant are Shaw Transport,
Inc., a Georgia corporation, Shaw Financial Services, Inc., a
Georgia corporation, Carpets International, PLC., a United Kingdom
corporation, Capital Carpet Industries, Pty., Ltd., an Australian
corporation and Terza, S.A. de C.V., a Mexican corporation.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included and incorporated by reference in this Form 10-K
into the Company's previously filed Registration Statement File No. 33-45089.
Arthur Andersen LLP
Atlanta, Georgia
September 28, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-02-1994
<PERIOD-END> JUL-02-1994
<CASH> 12,597,000
<SECURITIES> 0
<RECEIVABLES> 386,068,000
<ALLOWANCES> (18,455,000)
<INVENTORY> 526,138,000
<CURRENT-ASSETS> 930,855,000
<PP&E> 1,118,600,000
<DEPRECIATION> 481,025,000
<TOTAL-ASSETS> 1,682,148,000
<CURRENT-LIABILITIES> 526,140,000
<BONDS> 382,192,000
<COMMON> 155,254,000
0
0
<OTHER-SE> 554,846,000
<TOTAL-LIABILITY-AND-EQUITY> 1,682,148,000
<SALES> 2,630,034,000
<TOTAL-REVENUES> 2,630,034,000
<CGS> 2,070,915,000
<TOTAL-COSTS> 2,070,915,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 14,909,000
<INTEREST-EXPENSE> 25,911,000
<INCOME-PRETAX> 212,000,000
<INCOME-TAX> 79,386,000
<INCOME-CONTINUING> 132,535,000
<DISCONTINUED> 0
<EXTRAORDINARY> (3,363,000)
<CHANGES> 0
<NET-INCOME> 129,172,000
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
</TABLE>
