SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 21, 1998 (October 6, 1998)
-----------------------------------
Shaw Industries, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 1-6853 58-1032521
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(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
616 E. Walnut Avenue, Dalton, Georgia 30720
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (706) 278-3812
------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
In the Current Report on Form 8-K filed on October 21, 1998 (the "Form
8-K"), Shaw Industries, Inc. (the "Registrant" or "Shaw") reported that it had
completed the acquisition of Queen Carpet Corporation ("Queen") pursuant to the
merger (the "Queen Merger") of Queen with and into the Registrant. The Queen
Merger was effected pursuant to that certain Agreement and Plan of Merger, dated
August 13, 1998 (the "Merger Agreement"), among the Registrant, its wholly owned
subsidiary, Chessman Acquisition Corp. ("Chessman"), Queen and the shareholders
of Queen (the "Queen Shareholders"), as amended by the First Amendment thereto,
dated October 6, 1998 (the "First Amendment"), among the Registrant, Chessman,
Queen and the Queen Shareholders. As consideration for their shares of Queen
stock, in the Queen Merger the Queen Shareholders received from the Registrant
(i) 3.15 million shares of the common stock of The Maxim Group, Inc., (ii)
19,444,444 shares of the Registrant's common stock, and (iii) approximately
$35.8 million in cash. In addition, in connection with the Queen Merger, the
Registrant satisfied certain executive incentive obligations of Queen to certain
key Queen employees by making payments consisting of (a) an aggregate of 841,733
shares of the Registrant's common stock and (b) $12.1 million in cash.
The Registrant financed the cash portion of the purchase price paid in
the Queen Merger, the cash portion of the executive incentive payments and the
fees and expenses associated with the Queen Merger, through borrowings under its
existing credit facility. In connection with the consummation of the Queen
Merger, the Registrant amended its Amended and Restated Credit Agreement, as
amended, on October 6, 1998 to allow, among other things, the Registrant to
assume certain guaranties and other indebtedness of Queen.
The Form 8-K did not include the Condensed Consolidated Financial Data
required by Item 7(a) or the Pro Forma Condensed Consolidated Financial Data
required by Item 7(b). This Form 8-K/A amends Item 7 of the Form 8-K by
including the financial information referred to below.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
<TABLE>
<CAPTION>
QUEEN CARPET CORPORATION AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
Report of Independent Public Accountants F-1
Consolidated Balance Sheets at August 31, 1998,
May 30, 1998, and May 31, 1997 F-2
Consolidated Statements of Income and Retained Earnings for the three
months ended August 31, 1998 and September 1, 1997, and the
years ended May 30, 1998,
May 31, 1997 and June 1, 1996 F-3
Consolidated Statements of Cash Flows for the three months ended August
31, 1998 and September 1, 1997, and the years ended May 30,
1998,
May 31, 1997 and June 1, 1996 F-4 to F-5
Notes to Consolidated Financial Statements F-6 to F-16
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Queen Carpet Corporation and Subsidiary:
We have audited the accompanying consolidated balance sheets of Queen Carpet
Corporation (a Georgia corporation) and subsidiary as of May 30, 1998 and May
31, 1997 and the related statements of income and retained earnings and cash
flows for each of the three years in the period ended May 30, 1998. 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 Queen Carpet Corporation and
subsidiary as of May 30, 1998 and May 31, 1997 and the results of their
operations and their cash flows for each of the three years in the period ended
May 30, 1998 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
October 9, 1998
F - 1
<PAGE>
<TABLE>
<CAPTION>
QUEEN CARPET CORPORATION
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1998, MAY 30, 1998, AND MAY 31, 1997
(In Thousands, Except Share Data)
ASSETS
August 31, May 30, May 31,
1998 1998 1997
------------ ----------- -----------
(Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 752 $ 2,735 $ 4,510
Accounts receivable, less allowance for doubtful accounts and cash
discounts of $6,049, $5,462, and $5,106 at August 31, 1998,
May 30, 1998, and May 31, 1997, respectively 101,708 101,116 91,162
Related-party receivables 1,232 1,012 1,401
Inventories 142,627 136,256 126,498
Other current assets 251 1,079 7,603
------------ ----------- -----------
Total current assets 246,570 242,198 231,174
PROPERTY, PLANT, AND EQUIPMENT, NET 131,636 120,732 109,962
OTHER ASSETS 19,175 18,533 12,377
------------ ----------- -----------
Total assets $397,381 $381,463 $353,513
============ =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt and capital lease obligations $ 10,455 $ 11,861 $ 5,684
Notes payable 19,400 12,150 0
Accounts payable 45,947 61,328 48,822
Accrued liabilities 63,593 30,219 24,381
------------ ----------- -----------
Total current liabilities 139,395 115,558 78,887
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less
current maturities 66,177 64,466 107,450
OTHER LIABILITIES 4,473 4,951 3,786
------------ ----------- -----------
Total liabilities 210,045 184,975 190,123
------------ ----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $.0012 par value; 1,000,000 Class A voting and
100,000,000 Class B nonvoting shares authorized, 341,250
Class A voting and 33,700,000 Class B nonvoting shares issued and
outstanding at August 31, 1998, May 30, 1998, and May 31, 1997,
respectively 41 41 41
Retained earnings 187,295 196,447 163,349
------------ ----------- -----------
Total shareholders' equity 187,336 196,488 163,390
------------ ----------- -----------
Total liabilities and shareholders' equity $397,381 $381,463 $353,513
============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F - 2
<PAGE>
<TABLE>
<CAPTION>
QUEEN CARPET CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND SEPTEMBER 1, 1997,
AND THE YEARS ENDED MAY 30, 1998, MAY 31, 1997, AND JUNE 1, 1996
(In Thousands)
For the Three
Months Ended For the Years Ended
------------------------- --------------------------------
August 31, September 1, May 30, May 31, June 1,
1998 1997 1998 1997 1996
---------- ------------ --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
NET SALES $216,034 $184,309 $757,449 $685,613 $596,461
COST OF SALES 156,233 137,702 548,755 516,721 465,210
---------- ------------ --------- --------- ---------
Gross profit 59,801 46,607 208,694 168,892 131,251
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 62,513 33,078 143,072 120,777 109,370
---------- ------------ --------- --------- ---------
Operating (loss) income (2,712) 13,529 65,622 48,115 21,881
INTEREST, net 1,561 2,125 7,301 8,722 9,203
OTHER INCOME 879 90 776 1,443 4,377
---------- ------------ --------- --------- ---------
(Loss) income before income taxes
and change in accounting principle (3,394) 11,494 59,097 40,836 17,055
PROVISION FOR INCOME TAXES 510 165 1,300 866 474
---------- ------------ --------- --------- ---------
(Loss) income before change in
accounting principle (3,904) 11,329 57,797 39,970 16,581
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, net of tax benefit 0 0 0 (3,869) 0
---------- ------------ --------- --------- ---------
Net (loss) income (3,904) 11,329 57,797 36,101 16,581
RETAINED EARNINGS, beginning of period 196,447 163,349 163,349 137,626 128,906
DIVIDENDS PAID (5,248) (2,517) (24,699) (10,378) (7,861)
---------- ------------ --------- --------- ---------
RETAINED EARNINGS, end of period $187,295 $172,161 $196,447 $163,349 $137,626
========== ============ ========= ========= =========
The accompanying notes are an integral part of these consolidated
statements.
</TABLE>
F - 3
<PAGE>
PAGE 1 OF 2
<TABLE>
<CAPTION>
QUEEN CARPET CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND SEPTEMBER 1, 1997
AND THE YEARS ENDED MAY 30, 1998, MAY 31, 1997, AND JUNE 1, 1996
(In Thousands)
For the Three
Months Ended For the Years Ended
------------------------ -------------------------------
August 31, September 1, May 30, May 31, June 1,
1998 1997 1998 1997 1996
---------- ------------ ------- -------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (3,904) $11,329 $57,797 $36,101 $16,581
---------- ------------ ------- -------- ---------
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization 4,280 4,100 16,995 16,150 15,797
Loss (gain) on disposal of fixed assets (116) (22) 35 (320) (1,881)
Deferred income taxes 0 0 (39) 13 (71)
Cumulative effect of change in accounting
principle 0 0 0 3,869 0
Changes in operating assets and
liabilities:
Accounts receivable and related-party
receivables 292 (7,979) (5,379) (16,399) (16,243)
Inventories (6,371) (243) (9,758) (4,652) (2,404)
Other assets (918) (3,678) (3,088) 279 (1,634)
Accounts payable (15,381) (13,066) 12,506 (1,553) 1,930
Accrued liabilities and other
liabilities 32,896 13,832 7,042 6,696 7,547
---------- ------------ ------- -------- ---------
Total adjustments 14,682 (7,056) 18,314 4,083 3,041
---------- ------------ ------- -------- ---------
Net cash provided by operating
activities 10,778 4,273 76,111 40,184 19,622
---------- ------------ ------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets 145 64 407 634 2,872
Purchases of property, plant, and equipment (15,213) (1,819) (28,207) (16,414) (12,416)
Investments in life insurance contracts 0 (493) (730) (756) (723)
---------- ------------ ------- -------- ---------
Net cash used in investing
activities (15,068) (2,248) (28,530) (16,536) (10,267)
---------- ------------ ------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on note payable 7,250 1,730 12,150 0 0
Borrowings from financial institutions 10,000 11,400 35,900 22,900 34,800
Repayments to financial institutions (8,281) (10,782) (73,525) (30,688) (34,780)
Repayments on bonds 0 0 (325) (300) (275)
Other borrowings from related parties 150 513 7,709 5,964 4,927
Other repayments to related parties (1,564) 0 (6,672) (7,903) (6,729)
Other borrowings, net 0 0 106 418 0
Dividends paid (5,248) (2,517) (24,699) (10,378) (7,861)
---------- ------------ ------- -------- ---------
Net cash provided by (used in)
financing activities 2,307 344 (49,356) (19,987) (9,918)
---------- ------------ ------- -------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (1,983) 2,369 (1,775) 3,661 (563)
CASH AND CASH EQUIVALENTS, beginning of period 2,735 4,510 4,510 849 1,412
---------- ------------ ------- -------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 752 $ 6,879 $ 2,735 $ 4,510 $ 849
========== ============ ======= ======== =========
F - 4
<PAGE>
PAGE 2 OF 2
For the Three
Months Ended For the Years Ended
------------------------ -------------------------------
August 31, September 1, May 30, May 31, June 1,
1998 1997 1998 1997 1996
---------- ------------ ------- -------- ---------
(Unaudited)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 357 $ 452 $ 5,315 $ 8,536 $ 9,730
========== ============ ======= ======== =========
Cash paid for income taxes $ 1,848 $ 659 $ 1,365 $ 393 $ 488
========== ============ ======= ======== =========
Noncash investing and financing activities:
Capital lease obligations $ 61 $ 0 $ 587 $ 689 $ 755
========== ============ ======= ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated
statements.
F - 5
<PAGE>
QUEEN CARPET CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1998, MAY 30, 1998, AND MAY 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Queen Carpet
Corporation and subsidiary (the "Company"). All significant intercompany
balances and transactions are eliminated in consolidation.
Nature of Business
The Company manufactures and distributes carpet for residential and
commercial use and markets its products to wholesalers and retailers
throughout the United States and in certain international markets.
Fiscal Period
The Company's fiscal year-end is the Saturday closest to May 31. Fiscal
year 1998 consisted of 53 weeks, while fiscal years 1997 and 1996
consisted of 52 weeks.
Revenue Recognition
Revenues are recognized when goods are shipped.
Cash and Cash Equivalents
The Company considers all investments with an original maturity of three
months or less to be cash equivalents.
Accounts Receivable
Accounts receivable from all customers located in the United Kingdom are
factored through a financial institution. The factoring arrangement is
without recourse. The balances outstanding under the factoring arrangement
are included in accounts receivable in the accompanying balance sheets.
F - 6
<PAGE>
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Repair and maintenance
costs are expensed in the year incurred. Expenditures for renewals and
betterments are generally capitalized. Cost and accumulated depreciation
for property retirements are removed from the property, plant, and
equipment accounts, with any gain or loss included in other income in the
accompanying statements of income and retained earnings.
For financial reporting purposes, depreciation is computed using the
straight-line method over the estimated useful lives of the assets, 30 to
40 years for buildings and 8 years for machinery and equipment.
Accelerated depreciation methods are used for tax purposes.
Accrued Liabilities
Accrued liabilities include $6,386,000 for returns and allowances at May
30, 1998 and May 31, 1997.
Income Taxes
The Company elected to be taxed under the provisions of the Internal
Revenue Code as an S corporation, whereby shareholders of the Company are
taxed on their proportionate shares of the Company's taxable income in
lieu of corporate income taxes. The provision for income taxes has been
provided for those taxing jurisdictions where S corporation elections are
not recognized. Deferred taxes are recognized for differences between the
basis of assets and liabilities for financial statement and income tax
purposes. The deferred tax assets and liabilities represent the future tax
consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled.
Foreign Currency Transactions
The Company exports goods to foreign entities, and sales are reflected
using the exchange rate at the time of the transaction. On settlement, a
foreign currency translation gain or loss is recognized. Accounts
receivable from foreign currency transactions have been restated to
reflect the spot rate at the balance sheet date.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Accounting Change
Effective June 2, 1996, the Company changed its method of accounting for
the cost of samples from expensing sample costs that exceed estimated net
realizable value when they are shipped to expensing samples as they are
produced. The change was made to recognize that increasing numbers of
samples shipped to customers will not result in future sales. The
cumulative effect of the change was to decrease net income for the year
ended May 31, 1997 by $3,869,000, net of a tax benefit of $76,000.
F - 7
<PAGE>
Derivative Financial Instruments
The Company uses interest rate swaps to fix interest rates on current and
anticipated borrowings to reduce exposure to interest rate fluctuations.
Under existing accounting literature, these interest rate swaps are
accounted for as hedging activities. The net cash paid or received on
interest rate hedges is included in interest expense. The Company may also
employ foreign currency exchange contracts when, in the normal course of
business, they are determined to effectively manage and reduce foreign
currency exchange fluctuation risk. The Company does not enter into
financial derivatives for speculative or trading purposes.
Interim Financial Information
The financial statements and related information for the 13-week periods
ended August 31, 1998 and September 1, 1997 are unaudited and have been
prepared in accordance with the Securities and Exchange Commission's
requirements for such interim financial statements. The unaudited interim
financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, 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 have
been included. All such interim adjustments are of a normal recurring
nature.
2. INVENTORIES
Inventories at May 30, 1998 and May 31, 1997 consisted of the following
(in thousands):
1998 1997
---------- ----------
Raw materials $ 55,288 $ 57,078
Work in process 16,985 17,558
Finished goods 63,983 51,862
---------- ----------
$ 136,256 $ 126,498
========== ==========
Inventories are stated at the lower of cost or market using the last-in,
first-out method. If inventories had been valued using the first-in,
first-out method, total inventories would have been $3,200,000 lower and
$1,900,000 higher than reported at May 30, 1998 and May 31, 1997,
respectively.
F - 8
<PAGE>
3. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment at May 30, 1998 and May 31, 1997 consisted
of the following (in thousands):
1998 1997
---------- ----------
Buildings and leasehold improvements $ 46,600 $ 45,961
Machinery and equipment 163,930 154,589
Vehicles 2,954 3,167
Land 4,651 4,652
Construction in progress 19,905 6,035
---------- ----------
238,040 214,404
Less accumulated depreciation (117,308) (104,442)
---------- ----------
$ 120,732 $109,962
========== ==========
Depreciation expense totaled approximately $17,000,000, $16,100,000, and
$15,500,000 for the years ended May 30, 1998, May 31, 1997, and June 1,
1996, respectively.
4. OTHER ASSETS
Other assets at May 30, 1998 and May 31, 1997 consisted of the following
(in thousands):
1998 1997
-------- ---------
Deposits with Internal Revenue Service $10,962 $ 3,610
Related-party deferred notes and loans
receivable 2,287 2,169
Cash value of life insurance contracts 4,388 3,658
Other assets 896 2,940
-------- ---------
$18,533 $12,377
======== =========
The cash value of life insurance contracts represents assets held for
settlement of the Company's two supplemental unfunded executive retirement
plans (Note 6).
F - 9
<PAGE>
5. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations at May 30, 1998 and May 31,
1997 consisted of the following (in thousands):
1998 1997
-------- ----------
Private placement notes $50,000 $ 50,000
Notes payable to banks 17,344 54,969
Industrial revenue bonds 4,645 4,970
Capital lease obligations 1,548 1,442
Notes payable to related parties 2,790 1,753
-------- ----------
76,327 113,134
Current maturities 11,861 5,684
-------- ----------
Long-term maturities $64,466 $107,450
======== ==========
The Company has a $50,000,000 noncancelable secured variable interest rate
revolving credit agreement with three financial institutions, with
interest determined under a competitive bid process and principal due in
full on August 5, 1999. The Company also has cancelable unsecured lines of
credit of $50,000,000. At May 30, 1998, a total of $100,000,000 was
available for use on the noncancelable and cancelable lines of credit.
On November 11, 1994, the Company issued $50,000,000 in private placement
notes maturing November 30, 2007. Interest is 8.7% fixed and payable
semiannually. Principal is required to be paid in minimum semiannual
installments of $2,500,000 beginning May 31, 1998. The Company paid off
the entire balance of the private placement notes in September 1998 and
incurred approximately $8,500,000 in prepayment penalties related to the
payoff.
The Company has unsecured installment notes payable to banks of
$17,344,000 with variable interest rates (ranging from 5.7% to 6.2% at May
30, 1998) maturing January 8, 2002 and December 1, 2002. Quarterly
principal and interest payments total $781,000.
The industrial revenue bonds bear interest at variable rates (ranging from
3.9% to 4.0% at May 30, 1998), payable monthly, and mature January 2006
and January 2007. The bonds are collateralized by assets purchased from
the proceeds of the bonds and by an automatically renewing irrevocable
letter of credit issued by a financial institution. Monthly contributions
to a debt service reserve fund are required through June 1999.
The variable interest rates on a total of $43,375,000 of the Company's
long-term debt has been fixed through various dates at an average rate of
6.2% using interest rate swap agreements. The interest rate swap
agreements terminate at various dates through 2007.
Capital lease obligations are payable monthly in varying amounts through
August 2001 with interest rates ranging from 3.0% to 13.0%. The lease
obligations are secured by certain office equipment.
F - 10
<PAGE>
Notes payable to related parties include various amounts at fixed interest
rates and maturing within one year. Additionally, during the current year,
the Company entered into term loan agreements totaling $24,200,000 as a
guarantor on behalf of related parties.
The terms of the loan agreements, private placement notes, and industrial
revenue bonds contain covenants which, among other provisions, (i)
restrict redemption of capital stock and payment of dividends, (ii) limit
the Company's ability to incur indebtedness or assume liens and (iii)
require the Company to satisfy certain ratios related to net worth,
debt-to-equity, and fixed charge coverage. At May 30, 1998, the Company
was in compliance with all financial covenants.
Aggregate annual maturities of long-term debt, including capital lease
obligations, as of May 30, 1998 are as follows (in thousands):
1999 $11,861
2000 8,733
2001 8,261
2002 12,972
2003 5,000
Thereafter 29,500
--------
Total $76,327
========
6. EMPLOYEE RETIREMENT PLANS
The Company's retirement and savings plan provides, among other things,
for voluntary contributions by employees not to exceed 15% of their gross
salaries and wages. The Company provides matching contributions of 50%
based on the employee's contribution percentage, not to exceed 5% of the
employee's gross salaries and wages. The Company contributed approximately
$1,900,000, $1,800,000, and $1,700,000 during the years ended May 30,
1998, May 31, 1997, and June 1, 1996, respectively.
The Company has two supplemental unfunded executive retirement plans
covering a select group of management employees. The plans provide for
benefits at normal retirement (age 65), early retirement (age 55), death,
and disability. One plan provides benefits at normal retirement determined
at 35% of the participant's compensation in the last full calendar year of
employment, excluding bonuses, overtime pay, and commissions, payable for
a period of ten years. The second plan provides benefits at normal
retirement consisting of the executive's account balance accumulated at
5.5% annual compensation in excess of the Social Security wage base, not
to exceed $200,000, payable monthly for ten years. Net periodic pension
costs for these plans consist of a service cost component of approximately
$560,000, $322,000, and $245,000 for the years ended May 30, 1998, May 31,
1997, and June 1, 1996, respectively, and an interest cost component of
$455,000, $147,000, and $115,000 for the years ended May 30, 1998, May 31,
1997, and June 1, 1996, respectively. Assumptions used to determine
accruals for periodic pension costs consist of a discount rate of 8.5%,
including a percentage factor of 4% for withdrawals prior to retirement
and future compensation level increases for ten years. Total pension
obligations accrued at May 30, 1998 and May 31, 1997 amounted to
approximately $3,200,000 and $2,200,000, respectively. These accrued
obligations include vested benefits for retired employees and participants
who have reached early retirement age, amounting to approximately
$1,600,000 and $1,400,000 at May 30, 1998 and May 31, 1997, respectively.
F - 11
<PAGE>
7. INCOME TAXES
The Company elected to retain its current fiscal year for income tax
reporting, and as a result, deposits are required approximating income
taxes the shareholders would have paid on the deferral period had the
Company changed to a calendar tax year. The deposits are adjusted annually
to reflect the income taxes associated with taxable income in the deferral
period. These noninterest-bearing deposits are refundable upon a change of
year-end or termination of the S corporation election and are included in
other assets in the accompanying balance sheets.
The provision for income taxes consisted of the following (in thousands):
1998 1997 1996
------- ----- -----
Currently payable $1,339 $853 $318
Current year deferred (benefit)
provision (39) 13 156
------- ----- -----
$1,300 $866 $474
======= ===== =====
The net deferred income tax liability at May 30, 1998 and May 31, 1997
consisted of the following (in thousands):
1998 1997
------ ------
Deferred income tax assets and liabilities:
Deferred income tax assets:
Current $ 237 $ 175
Deferred 80 132
------ ------
317 307
------ ------
Deferred income tax liabilities:
Current (37) (39)
Deferred (417) (444)
------ ------
(454) (483)
------ ------
Net deferred income tax liability $(137) $(176)
====== ======
The deferred tax assets and liabilities consist mainly of differences
between tax and financial accounting treatment of depreciation, allowance
for doubtful accounts, inventory reserves, and certain nondeductible
accrued expenses that will be recognized in different years for financial
statement and income tax purposes.
F - 12
<PAGE>
8. RELATED-PARTY TRANSACTIONS
The Company leases manufacturing facilities from partnerships principally
owned by shareholders of the Company. The Company loaned the partnerships
funds for construction costs. The terms of notes due from partnerships are
as follows (in thousands):
1998 1997
----- -----
Unsecured notes receivable maturing June 1,
1998 and June 1, 2003, payable quarterly
with interest at 6.7% $711 $971
Less current maturities (359) (434)
----- -----
Long-term maturities $352 $537
===== =====
Long-term balances receivable under these notes are included in other
assets in the accompanying balance sheets. Interest earned on the
related-party notes for the years ended May 30, 1998, May 31, 1997, and
June 1, 1996 was approximately $34,000, $85,000, and $122,000,
respectively. Rental expense paid to the partnerships during the years
ended May 30, 1998, May 31, 1997, and June 1, 1996 was approximately
$2,303,000, $1,102,000, and $1,068,000, respectively.
Various related-party loans were made and repaid during the years, with
loan receivable balances remaining at May 30, 1998 and May 31, 1997 of
approximately $722,000 and $967,000, respectively, included in accounts
receivable in the accompanying balance sheets.
The balance of notes payable to related parties totaled $2,790,000 and
$1,753,000 at May 30, 1998 and May 31, 1997, respectively. Interest
expense under these notes amounted to approximately $168,000, $187,000,
and $212,000 for the years ended May 30, 1998, May 31, 1997, and June 1,
1996, respectively, and are included in long-term debt and capital lease
obligations in the accompanying balance sheets.
The Company makes scheduled premium payments on life insurance contracts
under several split-dollar agreements with shareholders' trusts. The
accumulated loans related to these contracts were $1,935,000 and
$1,632,000 at May 30, 1998 and May 31, 1997, respectively, and are
included in other assets in the accompanying balance sheets.
A shareholder of the Company has a majority interest in yarn manufacturing
companies. Materials and supplies acquired during the year ended May 30,
1998 totaled $11,200,000. Liabilities due to those related companies were
$919,000 and $706,000 at May 30, 1998 and May 31, 1997, respectively. The
Company had sales of $4,800,000 during the year ended May 30, 1998 and
receivables due from the related companies of $184,000 at May 30, 1998.
All related party amounts were settled concurrent with the acquisition by
Shaw Industries, Inc. (Note 11).
F - 13
<PAGE>
9. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has entered into five interest rate swap agreements with a
total notional amount of $43,375,000 to fix the interest rate paid on a
portion of the Company's long-term debt. The average fixed rate paid on
the interest rate swap agreements was 6.20% while the floating rate
received in 1998 averaged 5.75%. The carrying amount and fair value of the
interest rate swap agreements were $0 and approximately $617,000 at May
30, 1998.
The Company utilizes hedging through foreign currency exchange contracts
when they are determined to effectively manage and reduce foreign currency
exchange rate fluctuation risk. As of May 30, 1998, the Company had
outstanding foreign currency exchange contracts with notional amounts of
$4,200,000 and an unrealized gain of $134,000.
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:
o The carrying amounts of notes and loans receivable
approximate their fair values due to interest rates which
approximate market rates available at May 30, 1998 and May
31, 1997.
o The carrying amounts of notes payable, industrial revenue
bonds, and other obligations approximate their fair values
due to floating or fixed market interest rates charged on
those debts which approximate market rates available at May
30, 1998 and May 31, 1997.
10. COMMITMENTS AND CONTINGENCIES
The Company leases equipment and warehouse and manufacturing space under
short- and long-term lease agreements. Certain leases have escalation
clauses that allow annual increases for property taxes and other items.
Assets under capital lease are depreciated on a straight-line basis over
the related lease terms. The related obligations are included in long-term
debt (Note 5).
Equipment under capital lease is included in the accompanying financial
statements at May 30, 1998 and May 31, 1997 as follows (in thousands):
Machinery
and Accumulated
Equipment Depreciation
----------- --------------
May 30, 1998 $2,601 $1,149
May 31, 1997 2,006 601
F - 14
<PAGE>
At May 30, 1998, future minimum lease payments on operating (including
related-party leases) and capital leases exceeding one year were as
follows (in thousands):
<TABLE>
<CAPTION>
Capital Operating Total
Leases Leases Payments
--------- ----------- ----------
<S> <C> <C> <C> <C>
1999 $ 859 $ 3,369 $ 4,228
2000 631 3,254 3,885
2001 139 2,050 2,189
2002 3 1,688 1,691
2003 0 1,422 1,422
--------- ----------- ----------
1,632 $11,783 $13,415
=========== ==========
Less amount representing interest 84
Present value of capitalized lease ---------
payments with a weighted average
interest rate of 5.4% $1,548
=========
</TABLE>
Rental expense under noncancelable operating leases totaled approximately
$3,300,000, $2,500,000, and $2,200,000 for the years ended May 30, 1998,
May 31, 1997, and June 1, 1996, respectively.
At May 30, 1998, the Company had commitments to purchase certain capital
assets of approximately $16,700,000.
The Company is a party to several lawsuits incidental to its various
activities and incurred in the ordinary course of its business. The
Company believes that it has meritorious claims and defenses in each case.
After consultation with counsel, it is the opinion of management that,
although there can be no assurance given, none of the associated claims,
when resolved, would have a material adverse effect on the Company.
On January 28, 1998, the Company was served with a subpoena for the
production of documents in connection with an antitrust litigation. On
February 4, 1998, the Company filed objections to this subpoena. The
Company has not been served with any motion seeking to enforce this
subpoena or with any revised or additional subpoenas.
11. SUBSEQUENT EVENTS
On June 1, 1998, 33,000,000 nonvoting Class B shares were issued in the
form of a stock dividend. In accordance with generally accepted accounting
principles, the stock dividends were accounted for as a stock split and
are reflected as such in the accompanying financial statements.
On August 10, 1998, the board of directors declared a cash dividend in the
amount of $131,000,000 payable to shareholders of record as of the
declaration date. The dividend was contingently payable within ten days of
the date a new credit facility was obtained to fund the dividend
distribution. Concurrently, the board of directors approved up to
$30,000,000 in bonuses to be paid to members of management. This amount is
included in accrued liabilities at August 31, 1998 in the accompanying
financial statements.
F - 15
<PAGE>
Effective October 6, 1998, the Company was acquired by Shaw Industries,
Inc. ("Shaw") for approximately $603,000,000, including $36,000,000 in
cash, approximately 19,500,000 shares of Shaw common stock, 3,150,000
shares of third-party stock, assumption of $216,000,000 in debt and
$24,000,000 in additional liabilities. The acquisition was accounted for
under the purchase method of accounting.
On October 21, 1998, the Company was named as a defendant in a class
action antitrust lawsuit related to the sale of nylon carpet. The amount
of damages sought has not been specified. No additional motions have been
filed related to this case.
F - 16
<PAGE>
Item 7. (b) Pro Forma Financial Information.
On April 3, 1998, the Registrant disposed of all of the issued
and outstanding capital stock of Carpets International (U.K.) Limited
and Kosset Carpets Limited, its indirect wholly owned subsidiaries. On
August 9, 1998, the Registrant disposed of substantially all of the
assets of Shaw Carpet Showplace, Inc., its wholly owned residential
retail subsidiary (collectively, the "Prior Dispositions"). On October
6, 1998, the Registrant acquired the outstanding capital of Queen
Carpet Corporation (the "Acquisition"). The Unaudited Pro Forma
Condensed Consolidated Balance Sheet dated as of October 3, 1998
includes the effect of the Acquisition and excludes the Prior
Dispositions, which occurred prior to October 3, 1998. The Unaudited
Pro Forma Condensed Consolidated Statements of Income for the year
ended January 3, 1998 and the nine months ended October 3, 1998 include
the effect of the Prior Dispositions and the Acquisition.
The following Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of October 3, 1998 was prepared as if the Acquisition
had occurred on such date, the Prior Dispositions having already been
reflected in the Shaw balance sheet. The Unaudited Pro Forma Condensed
Consolidated Balance Sheet reflects the preliminary allocation of the
purchase price to Queen's tangible and intangible assets and
liabilities. The final allocation of such purchase price and the
resulting amortization expense in the accompanying Unaudited Pro Forma
Condensed Consolidated Statements of Income will differ from the
preliminary estimates due to the final allocation being based on: (a)
estimations of value of certain loss contingencies, primarily related
to environmental and litigation contingencies, and (b) actual values of
property, plant and equipment and any identifiable intangible assets.
The following Unaudited Pro Forma Condensed Consolidated
Statements of Income give effect to the Prior Dispositions and the
Acquisition as if they had occurred at the beginning of each respective
period. The unaudited pro forma financial data are based on the
historical financial statements of the Registrant and Queen and the
assumptions and adjustments described in the accompanying notes. The
Unaudited Pro Forma Condensed Consolidated Statements of Income do not
purport to represent what the Registrant's results of operations
actually would have been if the Acquisition and the Prior Dispositions
had occurred as of the date indicated or what such results will be for
any future periods.
The unaudited pro forma financial data are based upon
assumptions that the Registrant believes are reasonable and should be
read in conjunction with the financial statements of Queen and the
accompanying notes thereto included elsewhere in this Form 8-K/A and
the Registrant's Form 10-K for the year ended January 3, 1998.
<PAGE>
<TABLE>
<CAPTION>
Shaw Industries, Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of October 3, 1998
(Unaudited)
(Dollars in thousands)
- -------------------------------------------------------------------------------------------------------------------------
Acquisition
Shaw Queen (a) Adjustments Pro Forma
--------------- -------------- ------------------ --------------
Assets
<S> <C> <C> <C> <C>
Cash $ 3,807 $ 752 $ - $ 4,559
Accounts receivable 219,004 102,392 - 321,396
Inventories 528,076 142,627 (3,144) (b) 667,559
Other current assets 119,013 799 (28,495) (c) 91,317
--------------- -------------- -------------- --------------
Total current assets 869,900 246,570 (31,639) 1,084,831
--------------- -------------- -------------- --------------
Property, plant and equipment 1,331,436 253,229 (121,593) (d) 1,463,072
Accumulated depreciation (765,022) (121,593) 121,593 (d) (765,022)
--------------- -------------- -------------- --------------
Net property, plant and equipment 566,414 131,636 - 698,050
--------------- -------------- -------------- --------------
Goodwill, net 100,506 - 307,831 (b) 408,337
Investment in joint venture 21,124 - - 21,124
Other assets 69,385 19,175 - 88,560
--------------- -------------- -------------- --------------
Total assets $1,627,329 $ 397,381 $ 276,192 $2,300,902
=============== ============== ============== ==============
Liabilities and Shareholders' Equity
Notes Payable - 19,400 (19,400) (e) -
Current maturities of long-term debt 8 10,455 (10,455) (e) 8
Accounts payable 162,128 45,947 - 208,075
Accrued liabilities 229,618 63,593 1,822 (b) 295,033
--------------- -------------- -------------- --------------
Total current liabilities 391,754 139,395 (28,033) 503,116
--------------- -------------- -------------- --------------
Long-term debt 709,015 66,177 205,636 (e) 980,828
Deferred income taxes 57,707 454 7,831 (f) 65,992
Other liabilities 11,582 4,019 - 15,601
--------------- -------------- -------------- --------------
Total liabilities 1,170,058 210,045 185,434 1,565,537
Common stock 148,171 41 7,004 (g) 155,216
Paid-in capital 80,672 - 96,099 (h) 176,771
Unrealized loss on equity securities (11,950) - 11,950 (i) -
Cumulative translation adjustment (5,186) - - (5,186)
Retained earnings 421,934 187,295 (200,665) (i) 408,564
--------------- -------------- -------------- --------------
633,641 187,336 (85,612) 735,365
Less - Treasury stock, at cost 176,370 - (176,370) (h) -
--------------- -------------- -------------- --------------
Total shareholders' equity 457,271 187,336 90,758 735,365
--------------- -------------- -------------- --------------
Total liabilities and shareholders' equity $1,627,329 $ 397,381 $ 276,192 $2,300,902
=============== ============== ============== ==============
</TABLE>
<PAGE>
Footnotes to Pro Forma Condensed Consolidated Balance Sheet As of October 3,
1998 (Dollars in thousands except per share amounts)
(a) Dated as of August 31, 1998.
<TABLE>
<CAPTION>
(b) The Acquisition will be accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations." The
purchase price is being allocated first to the tangible and identifiable
intangible assets and liabilities of Queen based on preliminary estimates
of their fair values, with the remainder allocated to goodwill. The total
purchase price and allocation are as follows:
<S> <C> <C>
Purchase Price:
Shares of Shaw common stock (19,444,444 shares
at $14.375 each) $279,514
Shares of The Maxim Group common stock
(3,150,000 shares at $15.25 each) $ 48,038
Cash $ 35,781
----------------
Consideration paid $363,333
Acquisition expenses $ 750
----------------
$364,083
----------------
Book Value of Net Assets Acquired:
Book value of net assets acquired before
reflecting certain Queen transactions $ 187,336
Queen transactions occuring immediately prior
to acquisition:
Dividend paid to shareholders $(131,000)
Extraordinary loss on early retirement
of debt and credit facility fee payment $ (8,250)
-----------------
$ 48,086
----------------
Increase in Basis $315,997
================
Allocation of Increase in Basis:
Adjustment to record inventory at fair value $ (3,144)
Adjustment to mark derivative financial
instruments to market $ (1,822)
Adjustment to record deferred taxes:
Current deferred tax assets $ 21,905
Long-term deferred tax liabilities $ (8,773)
Goodwill $307,831
----------------
$315,997
================
<PAGE>
(c) Reflects the following:
Disposition of The Maxim Group common stock as part of the
purchase consideration in the Acquisition (reflected at
recorded value at October 3, 1998) $ (50,400)
Recording current deferred tax assets of Queen $ 21,905
----------------
$ (28,495)
================
(d) Reflects the initial recording of acquired fixed assets at net book value
as a preliminary estimate of fair value.
(e) Reflects the following:
Borrowings made by Queen prior to the Acquisition for the following:
Payment of dividend to shareholders $ 131,000
Repayment of notes payable $ 19,400
Repayment of current debt $ 10,455
Payment of prepayment penalty and new
facility fee $ 8,250 $169,105
-----------------
Borrowings made by Shaw to fund cash portion
of purchase price and Acquisition expenses $ 36,531
----------------
$205,636
================
(f) Reflects the following:
Recording long-term deferred tax liabilities of Queen $ 8,773
Recording income tax benefit from realized loss on sale of
The Maxim Group common stock $ (942)
----------------
$ 7,831
================
(g) Reflects the following:
Surrender of Queen common stock $ (41)
Issuance of Shaw common stock, net of treasury shares $ 7,045
----------------
$ 7,004
================
(h) Reflects the following:
Value of shares of Shaw common stock issued in Acquisition $279,514
Less: value of shares in treasury $(176,370)
stated value of shares issued in Acquisition, net of
treasury shares $ (7,045)
----------------
$ 96,099
================
<PAGE>
(i) Reflects the following:
Adjustments to Queen net assets prior to Acquisition:
Payment of dividend to shareholders $(131,000)
Payment of prepayment penalty and new
facility fee $ (8,250)
-----------------
$(139,250)
Reversal of book value of net assets acquired, net of capital
surrendered $ (48,045)
Recording realized loss on sale of shares of The
Maxim Group common stock, as follows:
Previously recorded unrealized loss $ (11,950)
Loss realized from October 3, 1998 to date
of Acquisition, as follows:
Recorded value at October 3, 1998 $ 50,400
Value at date of Acquisition $ 48,038
-----------------
Pre-tax loss $ (2,362)
Income tax benefit $ 942
-----------------
After-tax loss (1,420)
----------------
$(200,665)
================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shaw Industries, Inc.
Pro Forma Condensed Consolidated Statement of Income
For the Twelve Months Ended January 3, 1998
(Unaudited)
(In thousands except per share amounts)
- -------------------------------------------------------------------------------------------------------------------------------
Prior Dispositions Acquisition
-------------------------- -----------------------------
Residential Carpets Int'l Acquisition
Shaw Retail (a) U.K. Queen (b) Adjustments Pro Forma
------------ ------------ ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $3,575,774 $ 643,012 $ 210,158 $ 708,446 $ - $3,431,050
Costs and expenses:
Cost of sales 2,680,472 398,100 177,653 523,036 - 2,627,755
Selling, general and administrative 722,590 302,845 28,889 131,088 7,696 (c) 529,640
Pre-opening expenses 3,953 3,516 - - - 437
Charge to record store closing costs 36,787 36,787 - - - -
Write-down of U.K. assets 47,952 - 47,952 - - -
Interest, net 60,769 2,957 8,246 8,361 8,265 (d) 66,192
Other (income) expense, net (7,032) 190 - 1,764 - (5,458)
------------ ------------ ------------ ------------ ------------ ------------
Income before income taxes 30,283 (101,383) (52,582) 44,197 (15,961) 212,484
Provision for income taxes 5,586 (39,722) (28,901) 680 14,329 (e) 89,218
------------ ------------ ------------ ------------ ------------ ------------
Income before equity in
income of joint venture 24,697 (61,661) (23,681) 43,517 (30,290) 123,266
Equity in income of joint venture 4,262 - - - - 4,262
------------ ------------ ------------ ------------ ------------ ------------
Net income (loss) $ 28,959 $ (61,661) $ (23,681) $ 43,517 $ (30,290) $ 127,528
============ ============ ============ ============ ============ ============
Earnings per common share:
Basic $ 0.22 $ (0.46) $ (0.18) $ 0.83
Diluted $ 0.22 $ (0.46) $ (0.18) $ 0.83
Weighted average shares outstanding:
Basic 133,523 19,444 152,967
Diluted 133,714 19,444 153,158
</TABLE>
<PAGE>
Footnotes to Pro Forma Condensed Consolidated Statement of Income
For the Twelve Months Ended January 3, 1998
(Amounts in thousands)
(a) Reflects the elimination of the results of residential retail operations
for the year ended January 3, 1998, the reduction in interest expense
resulting from the application of the $25,000 cash proceeds against Shaw's
revolving credit facility and the interest income on the $18,000 promissory
note from The Maxim Group.
(b) For the year ended November 30, 1997.
(c) Reflects the increase in amortization expense for the amortization of
goodwill recorded in the Acquisition over 40 years.
(d) Reflects the increase in interest expense related to additional borrowings
made by Queen prior to the Acquisition and by Shaw to consummate the
transaction,net of interest expense reduction caused by lower interest
rates paid by Shaw.
(e) Reflects the net increase in income tax provision resulting from 1)
converting Queen to C corporation tax reporting status, and 2) the income
tax benefit of all Acquisition adjustments (except for the goodwill
amortization adjustment as the amortization of goodwill resulting from the
Acquisition will not be deductible for tax purposes).
<PAGE>
<TABLE>
<CAPTION>
Shaw Industries, Inc.
Pro Forma Condensed Consolidated Statement of Income
For the Nine Months Ended October 3, 1998
(Unaudited)
(In thousands except per share amounts)
- ---------------------------------------------------------------------------------------------------------------------------
Prior Dispositions Acquisition
------------------------- -----------------------------
Residential Carpets Int'l Acquisition
Shaw Retail (a) U.K. (b) Queen (c) Adjustments Pro Forma
------------ ----------- ------------ ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $2,589,768 $ 341,514 $ 57,899 $ 594,205 $ - $2,784,560
Costs and expenses:
Cost of sales 1,921,523 212,327 49,183 427,779 - 2,087,792
Selling, general and administrative 464,553 147,670 6,645 136,481 5,772 (d) 452,491
Pre-opening expenses 232 158 - - - 74
Charge to record sale of
residential retail 141,526 141,526 - - - -
Interest, net 45,548 1,581 1,602 4,809 7,173 (e) 54,347
Other (income) expense, net 3,853 161 - (97) - 3,595
------------ ----------- ------------ ------------ ----------- -----------
Income before income taxes 12,533 (161,909) 469 25,233 (12,945) 186,261
Provision for income taxes 19,314 (51,473) 157 1,169 7,199 (f) 78,998
------------ ----------- ------------ ------------ ----------- -----------
Income before equity in
income of joint venture (6,781) (110,436) 312 24,064 (20,144) 107,263
Equity in income of joint venture 682 - - - - 682
------------ ----------- ------------ ------------ ----------- -----------
Net income (loss) $ (6,099) $ (110,436) $ 312 $ 24,064 $ (20,144) $ 107,945
============ =========== ============ ============ =========== ===========
Earnings per common share:
Basic $ (0.05) $ (0.89) $ 0.00 $ 0.75
Diluted $ (0.05) $ (0.88) $ 0.00 $ 0.74
Weighted average shares outstanding:
Basic 124,006 19,444 143,450
Diluted 125,738 19,444 145,182
</TABLE>
<PAGE>
Footnotes to Pro Forma Condensed Consoldated Statement of Income
For the Nine Months Ended October 3, 1998
(Amounts in thousands)
(a) Reflects the elimination of the results of residential retail operations
for the seven months ended August 8, 1998 prior to disposition, the
reduction in interest expense resulting from the application of the $25,000
cash proceeds against Shaw's revolving credit facility, and the interest
income on the $18,000 promissory note from The Maxim Group.
(b) For the three months ended April 3, 1998 prior to disposition.
(c) For the nine months ended August 31, 1998.
(d) Reflects the increase in amortization expense for the amortization of
goodwill recorded in the Acquisition over 40 years.
(e) Reflects the increase in interest expense related to additional borrowings
made by Queen prior to the Acquisition and by Shaw to consummate the
Acquisition,net of interest expense reduction caused by lower interest
rates paid by Shaw.
(f) Reflects the net increase in income tax provision resulting from 1)
converting Queen to C corporation tax reporting status, and 2) the income
tax benefit of all Acquisition adjustments (except for the goodwill
amortization adjustment as the amortization of goodwill resulting from the
Acquisition will not be deductible for tax purposes).
<PAGE>
SIGNATURE
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 hereunto duly authorized.
SHAW INDUSTRIES, INC.
By: /s/ Bennie M. Laughter
-----------------------------------
Bennie M. Laughter
Vice President, Secretary and
General Counsel
Dated: December 21, 1998
