UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 incorporation or organization) (I.R.S.
Employer Identification No.)
616 E. WALNUT AVENUE, DALTON, GEORGIA 30720
(Address of principal executive offices)
(Zip Code)
(706) 278-3812
Registrant's telephone number, including area code
NOT APPLICABLE
Former name, former address and former fiscal year, if changed since last report
Indicate by check xwhether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes x . No ______.
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: May 3, 1996 - 135,530,694 shares
<PAGE>
SHAW INDUSTRIES, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBERS
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 30, 1996
and December 30, 1995 3-4
Condensed Consolidated Statements of Income and Retained
Earnings - For the Three Months Ended
March 30, 1996 and April 1, 1995 5
Condensed Consolidated Statements of Cash Flows -
For the Three Months Ended March 30, 1996
and April 1, 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8-9
PART II - OTHER INFORMATION 10
SIGNATURES 11
<PAGE>
<TABLE>
PART 1 - ITEM ONE - FINANCIAL INFORMATION
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<S> <C> <C>
ASSETS March 30, December 30, 1995
1996
------------------------ -------------------------
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $ 34,105 $ 31,453
------------------------ -------------------------
Accounts receivable, less
allowance for doubtful accounts and
discounts of $17,363 and $14,746 366,948 345,443
------------------------ -------------------------
Inventories -
Raw materials 225,402 232,693
Work-in-process 28,663 25,330
Finished goods 253,718 231,189
------------------------ -------------------------
507,783 489,212
------------------------ -------------------------
Other current assets 40,031 36,403
------------------------ -------------------------
TOTAL CURRENT ASSETS 948,867 902,511
------------------------ -------------------------
PROPERTY, PLANT AND EQUIPMENT,
at cost:
Land and land improvements 27,609 27,173
Buildings and leasehold improvements 278,664 269,715
Machinery and equipment 929,712 914,126
Construction in progress 23,910 22,986
------------------------ -------------------------
1,259,895 1,234,000
Less - Accumulated depreciation and
amortization (628,322) (602,010)
------------------------ -------------------------
631,573 631,990
------------------------ -------------------------
GOODWILL, net 122,176 104,280
------------------------ -------------------------
INVESTMENT IN JOINT VENTURE 16,442 15,513
------------------------ -------------------------
OTHER ASSETS 9,928 8,489
------------------------ -------------------------
TOTAL ASSETS $1,728,986 $1,662,783
======================== =========================
<PAGE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
March 30, December 30, 1995
1996
------------------------ -------------------------
(UNAUDITED)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 17,878 $ 5,305
Accounts payable 160,204 114,326
Accrued liabilities 155,972 141,435
------------------------ -------------------------
TOTAL CURRENT LIABILITIES 334,054 261,066
------------------------ -------------------------
LONG-TERM DEBT, less current maturities 653,978 627,130
------------------------ -------------------------
DEFERRED INCOME TAXES 51,015 51,000
------------------------ -------------------------
OTHER LIABILITIES 12,208 13,398
------------------------ -------------------------
SHAREHOLDERS' INVESTMENT:
Common stock, no par, $1.11 stated value,
authorized 500,000,000 shares; issued and
outstanding: 135,444,894 at March 30,
1996 and 135,956,602 shares at December 150,345 150,913
30, 1995
Paid-in capital 96,165 101,718
Cumulative translation adjustment 1,388 1,895
Retained earnings 429,833 455,663
------------------------ -------------------------
TOTAL SHAREHOLDERS' INVESTMENT 677,731 710,189
------------------------ -------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
INVESTMENT $1,728,986 $1,662,783
======================== =========================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
March 30, 1996 April 1, 1995
------------------------ -------------------------
<S> <C> <C>
NET SALES $657,742 $676,550
COSTS AND EXPENSES:
Cost of sales 528,238 559,469
Selling, general and administrative 103,901 97,860
Nonrecurring charges 29,139 -
Interest expense, net 9,566 10,774
Other (income), net (865) (940)
------------------------ -------------------------
INCOME (LOSS) BEFORE INCOME TAXES (12,237) 9,387
PROVISION FOR INCOME TAXES 4,276 4,107
------------------------ -------------------------
INCOME (LOSS) BEFORE EQUITY IN INCOME OF JOINT VENTURE AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (16,513) 5,280
EQUITY IN INCOME (LOSS) OF JOINT VENTURE 929 (803)
------------------------ -------------------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (15,584) 4,477
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX BENEFIT - (12,077)
------------------------ -------------------------
NET (LOSS) $(15,584) $ (7,600)
======================== =========================
DIVIDENDS PAID PER COMMON SHARE $ 0.075 $ 0.075
======================== =========================
EARNINGS PER COMMON SHARE:
Primary and fully diluted basis -
Income (loss) before cumulative effect
of accounting change $(0.11) $0.03
Cumulative effect of accounting change,
net of tax benefit - (0.09)
------------------------ -------------------------
Net (loss) $(0.11) $(0.06)
======================== =========================
RETAINED EARNINGS:
Beginning of period $455,663 $444,115
Deduct - net loss (15,584) (7,600)
Deduct - dividends paid (10,246) (10,195)
Decuct - adjustment in equity of joint
venture - (13)
----------------------------------------------------
End of period $429,833 $426,307
======================== =========================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS THREE MONTHS THREE MONTHS
(UNAUDITED AND IN THOUSANDS) ENDED ENDED
March 30, 1996 April 1, 1995
------------------------ -------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(15,584) $(7,600)
------------------------ -------------------------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 21,586 21,859
Provision for doubtful accounts 1,797 1,748
Deferred income taxes 1 (518)
Nonrecurring charges 29,139 -
Cumulative effect of accounting change - 12,077
Other, net (3,714) 4,683
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable (1,994) (24,029)
Inventories (7,016) (33,264)
Other current assets 659 4,921
Accounts payable 33,483 44,570
Accrued liabilities 5,947 22,715
------------------------ -------------------------
Total adjustments 79,888 54,762
------------------------ -------------------------
Net cash provided by operating activities 64,304 47,162
------------------------ -------------------------
INVESTING ACTIVITIES:
Additions to property, plant and equipment (22,276) (16,524)
Acquisitions of business assets (35,797) (29,503)
Investment in joint venture - (3,500)
Deconsolidation of joint venture - (3,828)
------------------------ -------------------------
Net cash used in investing activities (58,073) (53,355)
------------------------ -------------------------
FINANCING ACTIVITIES:
Increase in long-term debt 28,061 44,808
Dividends paid (10,246) (10,195)
Purchase and retirement of common stock (21,698) (20,590)
Proceeds from exercise of stock options 304 230
------------------------ -------------------------
Net cash (used) provided by financing
activities (3,579) 14,253
------------------------ -------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,652 8,060
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 31,453 34,365
------------------------ ------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $34,105 $42,425
======================== =========================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
_______________________________________________________________
1. Basis of Presentation
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information not misleading. These financial statements should be read
in conjunction with the financial statements and related notes contained in the
Company's 1995 Annual Report on Form 10-K. In the opinion of management, the
accompanying unaudited financial statements contain all adjustments necessary to
present fairly the Company's financial position, results of operations and cash
flows at the dates and for the periods presented. Interim results of operations
are not necessarily indicative of the results to be expected for a full year.
Certain prior period amounts have been reclassified to conform with the current
period presentation.
2. Inventories
The Company uses the last-in, first-out (LIFO) method of valuing
substantially all of its domestic inventories. If LIFO inventories were valued
at current costs, the inventories would have been $14,874,000 lower at March 30,
1996 and $9,992,000 lower at December 30, 1995. The Company's foreign
inventories are valued at the lower of first-in, first-out (FIFO) cost or
market.
3. Acquisitions
In December 1995, the Company announced a new retail and contract
distribution strategy and executed letters of intent during the first quarter of
1996 to acquire Carpetland USA, Inc., as well as several commercial carpet
contractors. Certain of these transactions were completed during the first
quarter of 1996 for cash and common stock.
4. Accounting Change
Effective January 1, 1995, the Company changed its method of accounting for
sample costs from expensing sample costs that exceed the estimated net
realizable value when shipped to expensing that portion of sample costs as they
are produced. This change was made in recognition of an increasing number of
samples placed with customers that do not result in future sales and to better
control the sample order process. The cumulative effect of the change was to
decrease net income by $12,077,000, or $.09 per share, net of income tax
benefit.
5. Nonrecurring Charges
During the first quarter of 1996, the Company recorded nonrecurring charges
of $29,139,000 ($26,519,000 after income taxes, or $.19 per share) for the
reduction of the carrying value of certain goodwill and property, plant and
equipment at the Company's international operations related to the adoption of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
and to provide for the disposal of certain other assets at their estimated fair
value. These asset write-downs will reduce amortization and depreciation expense
of the respective assets in future periods.
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
ITEM TWO-MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- - -----------------------------------------------------------------------------
GENERAL
The Company's business, as well as the U.S. 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. The Company's international operations are also impacted by the
economic climates in the markets in which they operate (primarily the United
Kingdom, Australia and Mexico).
In December 1995, the Company announced a new retail and contract
distribution strategy and subsequently executed letters of intent to acquire
Carpetland USA, Inc., as well as several commercial carpet contractors. Certain
of these transactions were completed during the first quarter of 1996. The
Company believes that, by combining the resources of the manufacturer and
retailer and developing a contract distribution network, it can provide a full
range of products and services to more effectively meet the needs of the
end-users of both residential and commercial carpet products at significantly
improved margins. These plans are progressing according to the Company's
expectations.
LIQUIDITY AND CAPITAL RESOURCES
At March 30, 1996, the Company had working capital of $614.8 million, a
decrease of $26.6 million, or 4.1 percent, over working capital of $641.4
million at December 30, 1995. Cash and cash equivalents increased $2.6 million
from $31.5 million at December 30, 1995 to $34.1 million at March 30, 1996. Cash
flow provided by operating activities was $64.3 million for the three months
ended March 30, 1996 compared to $47.2 million in 1995. The increase in
operating cash flow was primarily due to smaller increases in inventories and
accounts receivable than in the comparable period of the prior year. In
addition, higher non-cash charges of $29.1 million were recorded in 1996 related
to the adoption of SFAS No. 121 and to provide for the disposal of certain other
assets at their estimated fair value, compared to non-cash charges of $12.1
million recorded in 1995 to reflect a cumulative effect of an accounting change.
Cash used in investing activities for the 1996 period consisted of additions to
property, plant and equipment of $22.3 million and acquisitions of business
assets of $35.8 million. Cash was used in financing activities during 1996 to
fund payments of cash dividends of $10.2 million and stock repurchases of $21.7
million, offset by an increase in long-term debt of $28.1 million.
The Company has continued to maintain a strong working capital position.
Effective use of capital and the Company's ability to generate cash flow from
operations has enabled it to invest in technologies which reduce production
costs, generate operating margins that have historically exceeded industry
averages and enabled the Company to be a preeminent force in the carpet
industry.
Capital expenditures for property, plant and equipment necessary to
maintain the Company's facilities in a modern state-of-the-art condition were
$22.3 million for the first quarter of 1996. Management anticipates total
capital expenditures and capitalized lease obligations of approximately $60.0
million during 1996 in order to maintain its facilities and to expand and
upgrade its manufacturing and distribution equipment to meet anticipated
increases in sales volume and to improve efficiency. In addition, management
estimates additional capital expenditures of approximately $40.0 million during
1996 related to the continuing development of the retail and contract
distribution stategy.
The Company's primary source of financing is an unsecured revolving credit
agreement with a banking syndicate which provides for borrowings of up to $620.0
million and expires in December 1997. Interest on borrowings under this facility
is currently based on LIBOR and approximated 6.0% at March 30, 1996. At March
30, 1996, borrowings outstanding under this credit facility were $559.0 million.
The Company also maintains revolving credit facilities in the United Kingdom and
Australia with $30.6 million and $59.9 million, respectively, available and
outstanding at March 30, 1996.
The Company believes that available borrowings under its existing credit
agreements, available cash and internally generated funds will be sufficient to
support its working capital, capital expenditures and debt service requirements
for the foreseeable future. In addition, the Company believes it could expand
its revolving credit and long-term bank facilities, if necessary.
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended March 30, 1996 Compared To Three Months Ended April 1, 1995
Net sales decreased $18.8 million, or 2.8 percent, to $657.7 million in the
first quarter of 1996. The decrease was primarily a result of harsh winter
conditions which affected sales for the overall carpet industry and for the
Company's domestic operations, and declines in sales at the Company's foreign
operations. Net sales attributable to acquisitions were $22.7 million for the
first quarter of 1996 and $42.1 million for the first quarter of 1995. Gross
margin as a percent of net sales increased to 19.7 percent for the first quarter
of 1996, compared to 17.3 percent in 1995. The increase in the gross margin
percentage was primarily due to less product pricing pressures, improving
manufacturing efficiencies in the United Kingdom and slight raw materials cost
reductions.
Selling, general and administrative expenses for the first quarter of 1996
were $103.9 million, or 15.8 percent of net sales, compared to $97.9 million, or
14.5 percent of net sales, in the comparable period of 1995. The marginal
increase of 1.3 percent as a percent of net sales was primarily due to increased
discretionary selling expenses in a sluggish economy. Interest expense, net,
decreased $1.2 million, or 11.2 percent, as a result of lower weighted average
borrowings and lower average interest rates. During the first quarter of 1996,
the Company recorded a tax provision of $4.3 million on taxable income of $16.9
million, net of a tax benefit of $2.6 million applicable to nonrecurring charges
of $29.1 million. The nonrecurring charges were recorded as a result of the
adoption of Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS No. 121") to reflect the reduction of the carrying value of certain
goodwill and property, plant and equipment at the Company's international
operations, and a provision for the disposal of certain other assets at their
estimated fair value. Net earnings for the quarter, before nonrecurring charges,
increased 144.2%, to $10,935,000, or $.08 per share, from $4,477,000 in 1995, or
$.03 per share. After reflecting the nonrecurring charges, the Company had a net
loss for the first quarter of 1996 of $15,584,000, or $.11 per share, compared
to a net loss of $7,600,000, or $.06 per share, for the first quarter of 1995.
The Company recorded equity in income of joint venture of $929,000 during the
first quarter of 1996 related to its investment in Terza Joint Venture.
FOREIGN OPERATIONS
The Company's primary foreign operations are conducted through its United
Kingdom and Australian subsidiaries, where the functional currencies are British
pounds and Australian dollars, respectively. Fluctuations in the value of
foreign currencies create exposures which can impact the Company's operating
results. The Company may employ foreign currency forward exchange contracts
when, in the normal course of business, they are determined to effectively
manage and reduce such exposure. The Company does not enter into foreign
currency forward exchange contracts for speculative trading purposes.
<PAGE>
PART II - OTHER INFORMATION
ITEM ONE - LEGAL PROCEEDINGS
From time to time, the Company is subject to claims and suits arising in
the course of its business. The Company is 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. The Company believes that it has meritorious defenses and
that the litigation will not have a material adverse effect on the Company's
financial condition or results of operations.
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. In December 1995, the
Company learned that it was one of six carpet companies named as additional
defendants in a pending antitrust suit filed in the United States District Court
in Rome, Georgia. The amended complaint alleges price-fixing regarding certain
types of carpet products in violation of Section 1 of the Sherman Act. The
Company believes that the suit is spurious and without merit, and that once
completed, it will not have a material adverse effect on the Company's financial
condition or results of operations.
In February 1996, a jury in Greensboro, North Carolina, returned a verdict
against the Company in litigation brought by four former employees of Salem
Carpet Mills, acquired by the Company in 1992, alleging age discrimination and
sex discrimination in employment decisions made with regard to such employees.
The verdict is now under review by the trial judge and may subsequently be
appealed by either party after judgment is entered. The Company believes that
the litigation will not have a material adverse effect on the Company's
financial condition or results of operations.
ITEM TWO - CHANGES IN SECURITIES
None
ITEM THREE - DEFAULTS UPON SENIOR SECURITIES
None
ITEM FOUR - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM FIVE - OTHER INFORMATION
None
ITEM SIX - EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
10(l) - Second, Third and Fourth amendments to Credit Agreement between
Registrant and Nationsbank of Georgia, National Association dated May 3, 1995,
September 30, 1995 and December 30, 1995
11 - Statement re: Computation of Per Share Earnings
27 - Financial Data Schedule
Shareholders may obtain copies of Exhibits without charge upon written
request to the Corporate Secretary, Shaw Industries, Inc., Mail drop 061-22,
P.O. Drawer 2128, Dalton, Georgia 30722-2128.
(B) No reports on Form 8-K have been filed during the fiscal quarter
ended March 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHAW INDUSTRIES, INC.
(The Registrant)
DATE: May 10 , 1996 /s/ Robert E. Shaw
Robert E. Shaw
Chairman of the Board, Chief Executive
Officer and President
DATE: May 10, 1996 /s/ Kenneth G. Jackson
Kenneth G. Jackson
Vice President and Chief Financial
Officer
(Principal Financial Officer)
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT dated as of May 3, 1995 by and
among SHAW INDUSTRIES, INC., a corporation organized under the laws of the State
of Georgia (the "Borrower"), the Lenders appearing on the signature pages hereof
(the "Lenders") and NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Agent (the
"Agent").
WHEREAS, the Borrower, the Lenders and the Agent entered into that certain
Credit Agreement dated as of November 30, 1994, as amended by that certain First
Amendment to Credit Agreement dated as of February 28, 1995, (as so amended, the
"Credit Agreement"), pursuant to which the Lenders made certain financial
accommodations available to the Borrower;
WHEREAS, the Borrower has requested that the Lenders and the Agent amend
the Credit Agreement on the terms and conditions set forth herein; and
WHEREAS, the Lenders and the Agent are willing to so amend the Credit
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereto
agree as follows:
Section 1. Specific Amendment to Credit Agreement. The Credit Agreement is
hereby amended by deleting Section 8.05 thereof in its entirety and substituting
in lieu thereof the following:
"Section 8.05. Restricted Payments. Declare or make, or permit any
Subsidiary to declare or make, any Restricted Payment; provided however, that
(a) Subsidiaries may make or declare Restricted Payments to the Borrower and (b)
the Borrower may make or declare Restricted Payments in cash, subject to the
satisfaction of each of the following conditions on the date of such Restricted
Payment after giving effect thereto: (i) no Default or Event of Default shall
have occurred and be continuing; and (ii) the aggregate amount of Restricted
Payments made or declared during the period commencing on January 1, 1994 (the
"Relevant Date") through and including the last day of the fiscal quarter most
recently ended prior to the date of such Restricted Payment shall not exceed 50%
of the positive Consolidated Net Income (Loss), if any, of the Borrower and its
Subsidiaries for such period (treated for these purposes as a single accounting
period on a cumulative basis); provided, further, that redemptions by the
Borrower of shares of capital stock of the Borrower that have been or may be
made or declared on or after the Relevant Date up to an aggregate amount of
$200,000,000 shall be excluded from the definition of the term 'Restricted
Payment' when determining whether a given Restricted Payment is permitted by
this Section 8.05."
<PAGE>
Section 2. Effectiveness of Amendment. This Second Amendment, and the
amendment effected hereby, shall not be effective until the following conditions
precedent to effectiveness shall be satisfied (or waived by the Requisite
Lenders):
(a) This Second Amendment shall be executed and delivered by the Borrower,
the Agent and the Requisite Lenders; and
(b) The Agent shall have received a certificate from the Senior Vice
President of Finance of the Treasurer of the Borrower certifying that, after
giving effect to the amendment contemplated hereby, no Default or Event of
Default under the Credit Agreement
exists.
Section 3. Reaffirmation of Representations and Warranties.
(a) In order to induce the Agent and the Lenders to enter into this Second
Amendment, the Borrower hereby reaffirms each of the representations and
warranties of the Borrower contained in the Credit Agreement as of the date
hereof except for either: (i) the occurrence of any event that would render such
representations or warranties untrue, but that is expressly permitted by the
terms of the Credit Agreement or which would not cause an Event of Default under
the Credit Agreement or (ii) the occurrence of any event that would render such
representations or warranties untrue but that previously has been disclosed in
writing to the Lenders.
(b) After giving effect to the amendment and the waiver set forth herein,
the Borrower represents and warrants to the agent and the Lenders that no
Default or Event of Default has occurred and is continuing under the Credit
Agreement.
(c) The execution, delivery and performance of this Second Amendment by the
Borrower does not require the consent of any other Person under any document,
instrument or agreement to which the Borrower is a party or under which the
Borrower is bound.
Section 4. References to the Credit Agreement. Each reference to the Credit
Agreement in any of the Loan Documents shall be deemed to be a reference to the
Credit Agreement, as amended by this Second Amendment, and as the same may be
further amended, restated, supplemented or otherwise modified from time to time
in accordance with Section 11.07 of the Credit Agreement.
Section 5. Benefits. This Second Amendment shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
<PAGE>
Section 6. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 7. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement shall remain in full force and effect without
amendment or
modification, express or implied.
Section 8. Counterparts. This Second Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and
shall be binding upon all parties, their successors and assigns.
Section 9. Definitions. All capitalized terms which are used herein and not
otherwise defined herein shall have the meanings given such terms as set forth
in the Credit Agreement.
(Signatures on Following Pages)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Credit Agreement to be executed under seal by their duly authorized officers as
of the date first above written.
THE BORROWER:
SHAW INDUSTRIES, INC.
By: /s/ William C. Lusk, Jr.
Title: Senior Vice President
THE AGENT:
NATIONSBANK, N.A. (SOUTH), successor
to NationsBank of Georgia, National
Association, as Agent
By: /s/ Jan Serafen
Title: Senior Vice President
[Signatures Continued on Next Page]
<PAGE>
[Signature Page to Second Amendment to Credit Agreement dated
as of May 3, 1995 with Shaw Industries, Inc.]
THE LENDERS:
NATIONSBANK, N.A. (SOUTH), successor
to NationsBank of Georgia, National
Association
By: /s/ Jan Serafen
Title: Senior Vice President
SUNTRUST BANK, ATLANTA formerly
known as Trust Company Bank
By: /s/
Title: Assistant Vice President
By: /s/ John K. Shoffner
Title: Group Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Stuart F. Bondurant
Title: Vice President
<PAGE>
OFFICER'S CERTIFICATE
I, William C. Lusk, Jr., hereby certify that I am the duly elected and
qualified Senior Vice President and Treasurer of Shaw Industries, Inc., a
corporation organized under the laws of the State of Georgia (the "Company").
Pursuant to Section 2 of that certain Second Amendment to Credit Agreement dated
as of May 3, 1995 (the "Amendment"; terms used herein and not defined herein
have their respective defined meanings as set forth in the Credit Agreement) by
and among the Company, the Lenders named therein (the "Lenders") and
NationsBank, N.A. (South), successor to NationsBank of Georgia, National
Association (the "Agent"), I hereby certify to the Agent and the Lenders that,
after giving effect to the Amendment, no Default or Event of Default exists
under the Credit Agreement.
IN WITNESS WHEREOF, I have signed this Officer's Certificate as of this 3rd
day of May, 1995.
/s/ William C. Lusk, Jr.
William C. Lusk, Jr.
Senior Vice President and Treasurer
<PAGE>
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT dated as of September 30, 1995 by
and among SHAW INDUSTRIES, INC., a corporation organized under the laws of the
State of Georgia (the "Borrower"), the Lenders appearing on the signature pages
hereof (the "Lenders") and NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as
Agent (the "Agent").
WHEREAS, the Borrower, the Lenders and the Agent entered into that certain
Credit Agreement dated as of November 30, 1994, as amended by that certain First
Amendment to Credit Agreement dated as of February 28, 1995, and as further
amended by that certain Second Amendment to credit Agreement dated as of May 3,
1995 (as so amended, the "Credit Agreement"), pursuant to which the Lenders made
certain financial accommodations available to the Borrower;
WHEREAS, the Borrower has requested that the Lenders and the Agent amend
the Credit Agreement on the terms and conditions set forth herein; and
WHEREAS, the Lenders and the Agent are willing to so amend the Credit
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledge by the parties, the parties hereto
agree as follows: Section 1. Specific Amendment to Credit Agreement. The Credit
Agreement is hereby amended by deleting subsection (a) of Section 8.01 thereof
in its entirety and substituting in lieu thereof the following: "(a) EBIT to
Interest Ratio. Permit, at the end of each fiscal quarter of the Borrower during
the following periods, the Consolidated EBIT/Interest Ratio to be less than the
applicable ratio set forth below corresponding to such period:
- - ------------------------------------------------ -----------------------------
Consolidated
EBIT/Interest
Period Ratio
- - ------------------------------------------------ ----------------------------
- - ------------------------------------------------ -----------------------------
Effective Date through
June 30, 1995 4.00 to 1.00
- - ------------------------------------------------ ------------------------------
- - ------------------------------------------------ ------------------------------
July 1, 1995 through
December 31, 1995 3.40 to 1.00
- - ------------------------------------------------ -----------------------------
- - ------------------------------------------------ -----------------------------
January 1, 1996 and
thereafter 4.00 to 1.00
- - ------------------------------------------------ -----------------------------
<PAGE>
Section 2. Effectiveness of Amendment. This Third Amendment, and the
amendment effected hereby, shall not be effective until the following conditions
precedent to effectiveness shall be satisfied (or waived by the Requisite
Lenders): (a) this Third Amendment shall be executed and delivered by the
Borrower, the Agent and the Requisite Lenders; and (b) the Agent shall have
received a certificate from the Senior Vice President of Finance or the
Treasurer of the Borrower certifying that, after giving effect to the amendment
contemplated hereby, no Default or Event of Default under the Credit Agreement
exists.
Section 3. Reaffirmation of Representations and Warranties.
(a) In order to induce the Agent and the Lenders to enter into this Third
Amendment, the Borrower hereby reaffirms each of the representations and
warranties of the Borrower contained in the Credit agreement as of the date
hereof except for either: (i) the occurrence of any event that would render such
representations or warranties untrue, but that is expressly permitted by the
terms of the Credit Agreement or which would not cause an Event of Default under
the Credit Agreement or (ii) the occurrence of any event that would render such
representations or warranties untrue but that previously has been disclosed in
writing to the Lenders.
(b) After giving effect to the Amendment and the waiver set forth herein,
the Borrower represents and warrants to the Agent and the Lenders that no
Default or Event of Default has occurred and is continuing under the Credit
Agreement.
(c) The execution, delivery and performance of this Third Amendment by the
Borrower does not require the consent of any other person under any document,
instrument or agreement to which the Borrower is a party or under which the
borrower is bound.
Section 4. References to the Credit Agreement. Each reference to the Credit
Agreement in any of the Loan Documents shall be deemed to be a reference to the
credit agreement, as amended by this Third Amendment, and as the same may be
further amended, restated, supplemented or otherwise modified from time to time
in accordance with Section 11.07 of the Credit Agreement.
Section 5. Benefits. This Third Amendment shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
<PAGE>
Section 6. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 7. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement shall remain in full force and effect without
amendment or modification, express or implied.
Section 8. Counterparts. This Third Amendment may be executed in any number
of counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors
and assigns.
Section 9. Definitions. All capitalized terms which are used herein and not
otherwise defined herein shall have the meanings given such terms as set forth
in the Credit Agreement. IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to Credit Agreement to be executed under seal by their duly
authorized officers as of the date first above written.
THE BORROWER:
SHAW INDUSTRIES, INC.
By: /s/ William C. Lusk, Jr.
Title: Senior Vice President
THE AGENT
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, as Agent
By:---------------------------------------
Title:---------------------------------
[Signatures Continued on Next Page]
<PAGE>
[Signature Page to Third Amendment to Credit Agreement dated as of
September 30, 1995 with Shaw Industries, Inc.]
THE LENDERS:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION
By:------------------------------------
Title:------------------------------
SUNTRUST BANK, ATLANTA
(f/k/a TRUST COMPANY BANK)
By:------------------------------------
Title:------------------------------
By:------------------------------------
Title:------------------------------
WACHOVIA BANK OF GEORGIA, N.A.
By:------------------------------------
Title:------------------------------
<PAGE>
OFFICER'S CERTIFICATE
I, William C. Lusk, Jr., hereby certify that I am the duly elected and
qualified Senior Vice President and Treasurer of Shaw Industries, Inc., a
corporation organized under the laws of the State of Georgia (the "Company").
Pursuant to Section 2 of that certain Third Amendment to Credit Agreement dated
as of September 30, 1995 (the "Amendment"; terms used herein and not defined
herein have their respective defined meanings as set forth in the Credit
Agreement) by and among the Company, the Lenders named therein (the "Lenders")
and NationsBank, N.A. (South), successor to NationsBank of Georgia, National
Association (the "Agent"), I hereby certify to the Agent and the Lenders that,
after giving effect to the Amendment, no Default or Event of Default exists
under the Credit Agreement.
IN WITNESS WHEREOF, I have signed this Officer's Certificate as of the 30th
day of September, 1995.
/s/ William C. Lusk, Jr.
William C. Lusk, Jr.
Senior Vice President and Treasurer
<PAGE>
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT dated as of December 30, 1995 by
and among SHAW INDUSTRIES, INC., a corporation organized under the laws of the
State of Georgia (the "Borrower"), the Lenders appearing on the signature pages
hereof (the "Lenders") and NATIONSBANK, N.A. (SOUTH), successor to NationsBank
of Georgia, National Association, as Agent (the "Agent").
WHEREAS, the Borrower, the Lenders and the Agent entered into that certain
Credit Agreement dated as of November 30, 1994, as amended by that certain First
Amendment to Credit Agreement dated as of February 28, 1995, as further amended
by that certain Second Amendment to Credit Agreement dated as of May 3, 1995,
and as further amended by that certain Third Amendment to Credit Agreement dated
as of September 30, 1995 (as so amended, the "Credit Agreement"), pursuant to
which the Lenders made certain financial accommodations available to the
Borrower;
WHEREAS, the Borrower has requested that the Lenders and the Agent amend the
Credit Agreement on the terms and conditions set forth herein; and
WHEREAS, the Lenders and the Agent are willing to so amend the Credit
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereto
agree as follows:
Section 1. Specific Amendment to Credit Agreement. The Credit Agreement is
hereby amended by deleting subsection (a) of Section 8.01 thereof in its
entirety and substituting in lieu thereof the following:
"(a) EBIT to Interest Ratio. Permit, as at the end of each fiscal quarter
of the Borrower during the following periods, the Consolidated EBIT/Interest
Ratio to be less than the applicable ratio set forth below corresponding to such
period:
- - ---------------------------------------- ---------------------------------------
Consolidated
EBIT/Interest
Period Ratio
- - ---------------------------------------- ---------------------------------------
- - ---------------------------------------- ---------------------------------------
Effective Date through
June 30, 1995 4.00 to 1.00
- - ---------------------------------------- ---------------------------------------
- - ---------------------------------------- ---------------------------------------
July 1, 1995 through
September 30, 1995 3.40 to 1.00
- - ---------------------------------------- ---------------------------------------
- - ---------------------------------------- ---------------------------------------
October 1, 1995 and
thereafter 3.00 to 1.00
- - ---------------------------------------- ---------------------------------------
<PAGE>
Section 2. Effectiveness of Amendment. This Fourth Amendment, and the
amendment effected hereby, shall not be effective until the following conditions
precedent to effectiveness shall be satisfied (or waived by the Requisite
Lenders):
(a) This Fourth Amendment shall be executed and delivered by the Borrower,
the Agent and the Requisite Lenders; and
(b) The Agent shall have received a certificate from the Senior Vice
President of Finance of the Treasurer of the Borrower certifying that, after
giving effect to the amendment contemplated hereby, no Default or Event of
Default under the Credit Agreement exists.
Section 3. Reaffirmation of Representations and Warranties.
(a) In order to induce the Agent and the Lenders to enter into this Fourth
Amendment, the Borrower hereby reaffirms each of the representations and
warranties of the Borrower contained in the Credit Agreement as of the date
hereof except for either: (i) the occurrence of any event that would render such
representations or warranties untrue, but that is expressly permitted by the
terms of the Credit Agreement or which would not cause an Event of Default under
the Credit Agreement or (ii) the occurrence of any event that would render such
representations or warranties untrue but that previously has been disclosed in
writing to the Lenders.
(b) After giving effect to the amendment and the waiver set forth herein,
the Borrower represents and warrants to the agent and the Lenders that no
Default or Event of Default has occurred and is continuing under the Credit
Agreement.
(c) The execution, delivery and performance of this Fourth Amendment by the
Borrower does not require the consent of any other Person under any document,
instrument or agreement to which the Borrower is a party or under which the
Borrower is bound.
Section 4. References to the Credit Agreement. Each reference to the Credit
Agreement in any of the Loan Documents shall be deemed to be a reference to the
Credit Agreement, as amended by this Fourth Amendment, and as the same may be
further amended, restated, supplemented or otherwise modified from time to time
in accordance with Section 11.07 of the Credit Agreement.
Section 5. Benefits. This Fourth Amendment shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
<PAGE>
Section 6. GOVERNING LAW. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 7. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement shall remain in full force and effect without
amendment or modification, express or implied.
Section 8. Counterparts. This Fourth Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and
shall be binding upon all parties, their successors and assigns.
Section 9. Definitions. All capitalized terms which are used herein and not
otherwise defined herein shall have the meanings given such terms as set forth
in the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to
Credit Agreement to be executed under seal by their duly authorized officers as
of the date first above written.
THE BORROWER:
SHAW INDUSTRIES, INC.
By: /s/ William C. Lusk, Jr.
Title: Senior Vice President
THE AGENT:
NATIONSBANK, N.A. (SOUTH), successor
to NationsBank of Georgia, National
Association, as Agent
By: /s/ Kathryn W. Robinson
Title: Senior Vice President
[Signatures Continued on Next Page]
<PAGE>
[Signature Page to Fourth Amendment to Credit Agreement dated
as of December 30, 1995 with Shaw Industries, Inc.]
THE LENDERS:
NATIONSBANK, N.A. (SOUTH), successor
to NationsBank of Georgia, National
Association
By: /s/ Kathryn W. Robinson
Title: Senior Vice President
SUNTRUST BANK, ATLANTA formerly
known as Trust Company Bank
By: /s/ David W. Penter
Title: Vice President
By: /s/ Brad J. Staples
Title: Bank Officer
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Stuart F. Bondurant
Title: Vice President
<PAGE>
OFFICER'S CERTIFICATE
I, William C. Lusk, Jr., hereby certify that I am the duly elected and
qualified Senior Vice President and Treasurer of Shaw Industries, Inc., a
corporation organized under the laws of the State of Georgia (the "Company").
Pursuant to Section 2 of that certain Fourth Amendment to Credit Agreement dated
as of December 31, 1995 (the "Amendment"; terms used herein and not defined
herein have their respective defined meanings as set forth in the Credit
Agreement) by and among the Company, the Lenders named therein (the "Lenders")
and NationsBank, N.A. (South), successor to NationsBank of Georgia, National
Association (the "Agent"), I hereby certify to the Agent and the Lenders that,
after giving effect to the Amendment, no Default or Event of Default exists
under the Credit Agreement.
IN WITNESS WHEREOF, I have signed this Officer's Certificate as of the 7th
day of March, 1996.
/s/ William C. Lusk, Jr.
William C. Lusk, Jr.
Senior Vice President and Treasurer
EXHIBIT 11.0
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (1)
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
Three Months Ended
Mar. 30, 1996 April 1, 1995
PRIMARY:
<S> <C> <C>
Weighted average common shares outstanding 136,148 136,032
Additional shares assuming exercise of stock options 64 539
Weighted average common and common equivalent shares outstanding 136,212 136,571
Income (loss) before accounting change ($15,584) $4,477
Cumulative effect of accounting change, net 0 (12,077)
Net loss ($15,584) ($7,600)
Earnings (loss) per common share before accounting change ($0.11) $0.03
Cumulative effect of accounting change 0.00 (0.09)
Net loss ($0.11) ($0.06)
FULLY DILUTED:
Weighted average common shares outstanding 136,148 136,032
Additional shares assuming exercise of stock options (2) 64 539
Weighted average common and common equivalent shares outstanding 136,212 136,571
Income (loss) before accounting change ($15,584) $4,477
Cumulative effect of accounting change, net 0 (12,077)
Net loss ($15,584) ($7,600)
Earnings per common share before extraordinary loss and accounting change ($0.11) $0.03
Cumulative effect of accounting change 0.00 (0.09)
Net loss ($0.11) ($0.06)
</TABLE>
(1) All numbers of shares in this exhibit are weighted on the basis of the
number of days the shares were outstanding or assumed to be outstanding during
each period.
(2) Based on the treasury stock method using the higher of the average or
period-end market price.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED BALANCE SHEETS OF SHAW INDUSTRIES, INC. AND SUBSIDIARIES AS OF
MARCH 30, 1996 AND THE RELATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
CASH FLOWS FOR THE QUARTER ENDED MARCH 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 34,105,000
<SECURITIES> 0
<RECEIVABLES> 366,948,000
<ALLOWANCES> 17,363,000
<INVENTORY> 507,783,000
<CURRENT-ASSETS> 948,867,000
<PP&E> 1,259,895,000
<DEPRECIATION> 628,322,000
<TOTAL-ASSETS> 1,728,986,000
<CURRENT-LIABILITIES> 334,054,000
<BONDS> 0
<COMMON> 150,345,000
0
0
<OTHER-SE> 527,386,000
<TOTAL-LIABILITY-AND-EQUITY> 1,728,986,000
<SALES> 657,742,000
<TOTAL-REVENUES> 657,742,000
<CGS> 528,238,000
<TOTAL-COSTS> 528,238,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,797,000
<INTEREST-EXPENSE> 9,566,000
<INCOME-PRETAX> (12,237,000)
<INCOME-TAX> 4,276,000
<INCOME-CONTINUING> (16,513,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,584,000)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
