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 April 1, 2000
-----------------------------------
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 I.R.S. Employer
incorporation or organization) 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 |X|whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| . No ______.
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 8, 2000 - 128,762,701 shares
---------------------------------
<PAGE>
SHAW INDUSTRIES, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBERS
--------------------- ------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - April 1, 2000
and January 1, 2000 3-4
Condensed Consolidated Statements of Income and Retained
Earnings - For the Three Months Ended
April 1, 2000 and April 3, 1999 5
Condensed Consolidated Statements of Cash Flow -
For the Three Months Ended April 1, 2000
and April 3, 1999 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 9-10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 12
2
<PAGE>
PART 1 - ITEM ONE- FINANCIAL INFORMATION
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS April 1, January 1,
2000 2000
----------- -----------
CURRENT ASSETS: (UNAUDITED)
Cash and cash equivalents ...................... $ 7,165 $ 34,021
----------- -----------
Accounts receivable, less
allowance for doubtful accounts and
discounts of $23,295 and $18,931 ........... 254,864 234,267
----------- -----------
Inventories -
Raw materials .............................. 251,501 255,083
Work-in-process ............................ 115,470 92,605
Finished goods ............................. 347,224 319,046
----------- -----------
714,195 666,734
----------- -----------
Other current assets ........................... 145,172 140,902
----------- -----------
TOTAL CURRENT ASSETS ...... 1,121,396 1,075,924
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and land improvements ..................... 32,020 31,974
Buildings and leasehold improvements ........... 346,195 331,010
Machinery and equipment ........................ 1,109,677 1,064,074
Construction in progress ....................... 126,981 148,380
----------- -----------
1,614,873 1,575,438
Less - Accumulated depreciation and amortization (840,598) (821,633)
----------- -----------
774,275 753,805
----------- -----------
GOODWILL, net of amortization ....................... 415,351 418,923
----------- -----------
OTHER ASSETS ........................................ 42,537 43,067
----------- -----------
TOTAL ASSETS .............. $ 2,353,559 $ 2,291,719
=========== ===========
3
<PAGE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
(IN THOUSANDS, EXCEPT SHARE DATA)
April 1, January 1,
2000 2000
----------- -----------
(UNAUDITED)
CURRENT LIABILITIES:
Current maturities of long-term debt ........... $ 4,176 $ 4,294
Accounts payable ............................... 267,941 217,332
Accrued liabilities ............................ 286,396 272,341
----------- -----------
TOTAL CURRENT LIABILITIES . 558,513 493,967
----------- -----------
LONG-TERM DEBT, less current maturities ............. 788,092 823,821
----------- -----------
DEFERRED INCOME TAXES ............................... 77,994 77,994
----------- -----------
OTHER LIABILITIES ................................... 27,390 27,352
----------- -----------
SHAREHOLDERS' INVESTMENT:
Common stock, no par, $1.11 stated value,
authorized 500,000,000 shares; issued and
outstanding: 132,681,099 shares at
April 1, 2000 and 132,663,599 shares
at January 1, 2000 .......................... 147,277 147,258
Paid-in-capital ................................ 60,794 60,612
Cumulative translation adjustment .............. (5,030) (2,252)
Retained earnings .............................. 698,529 662,967
----------- -----------
TOTAL SHAREHOLDERS' INVESTMENT 901,570 868,585
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
INVESTMENT .......... $ 2,353,559 $ 2,291,719
=========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
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
April 1, 2000 April 3, 1999
------------- ------------
NET SALES ....................................... $ 986,496 $ 955,803
COST AND EXPENSES:
Cost of sales .............................. 738,315 716,629
Selling, general and administrative ........ 157,221 154,829
Interest expense, net ...................... 17,216 16,205
Other expense, net ......................... 1,662 517
--------- ---------
INCOME BEFORE INCOME TAXES ...................... 72,082 67,623
PROVISION FOR INCOME TAXES ...................... 30,123 28,213
--------- ---------
INCOME BEFORE EQUITY IN INCOME OF
JOINT VENTURES ............................. 41,959 39,410
EQUITY IN INCOME OF JOINT VENTURES .............. 237 956
--------- ---------
NET INCOME ...................................... $ 42,196 $ 40,366
========= =========
DIVIDENDS PAID PER COMMON SHARE ................. $ 0.05 $ --
========= =========
EARNINGS PER COMMON SHARE:
Basic ...................................... $ 0.32 $ 0.29
========= =========
Diluted .................................... $ 0.32 $ 0.28
========= =========
RETAINED EARNINGS:
Beginning of period ........................ $ 662,967 $ 448,665
Add - net income ........................... 42,196 40,366
(Deduct) - dividends paid .................. (6,634) --
--------- ---------
End of period .............................. $ 698,529 $ 489,031
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOW
(IN THOUSANDS)
THREE MONTHS THREE MONTHS
ENDED ENDED
April 1, 2000 April 3, 1999
------------- -------------
OPERATING ACTIVITIES: (UNAUDITED)
<S> <C> <C>
Net income ....................................... $ 42,196 $ 40,366
-------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .............. 22,209 23,027
Provision for doubtful accounts ............ 2,773 1,830
Deferred income taxes ...................... -- 1,867
Changes in operating assets and liabilities:
Accounts receivable ................. (23,370) (45,896)
Inventories ......................... (47,461) (27,532)
Other current assets ................ (4,270) (5,226)
Accounts payable .................... 50,609 48,559
Accrued liabilities ................. 14,055 38,323
Other, net .......................... 405 (5,235)
-------- --------
Total adjustments ................ 14,950 29,717
-------- --------
Net cash provided by operating activities .. 57,146 70,083
-------- --------
INVESTING ACTIVITIES:
Additions to property, plant and equipment ....... (41,747) (32,844)
Retirements of property, plant and
equipment, net ............................... 25 2,112
-------- --------
Net cash used in investing activities ...... (41,722) (30,732)
-------- --------
FINANCING ACTIVITIES:
Decrease in long-term debt, net .................. (35,847) (34,783)
Dividends paid ................................... (6,634) --
Proceeds from exercise of stock options .......... 201 5,121
-------- --------
Net cash used in financing activities ........ (42,280) (29,662)
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS ...................................... (26,856) 9,689
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD ........................................ 34,021 12,555
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............ $ 7,165 $ 22,244
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 1, 2000
(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 1999 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
flow 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.
2. Accounts Receivable
The company has entered into agreements pursuant to which it sells a
percentage ownership interest in a defined pool of the company's trade
receivables to a securitization conduit. As collections reduce accounts
receivable included in the pool, the company sells participating interests in
new receivables to the conduit to bring the amount in the pool up to the maximum
permitted by the agreements. The receivables are sold to the conduit at a
discount which reflects, among other things, the conduit's financing cost of
issuing its own commercial paper backed by these accounts receivable and
accounts receivable sold by other participating entities. The current agreements
expire August 30, 2000, but may be extended for additional one-year terms. As of
April 1, 2000, the company had approximately $286,059,000 of accounts receivable
sold and outstanding under this program.
3. 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 $33,453,000 and $46,915,000
lower at April 1, 2000 and January 1, 2000, respectively. Certain of the
company's finished goods inventories, representing approximately 11 percent of
total inventories, are valued at the lower of first-in, first-out (FIFO) cost or
market.
4. Long-Term Debt
The company maintains a domestic revolving credit facility which provides
for borrowings of up to $1.0 billion and expires in March 2003. The LIBOR-based
rate at April 1, 2000 was approximately 6.5 percent, and borrowings outstanding
under this new facility totaled $735,000,000. The variable interest rates on a
total of $448,137,000 of amounts outstanding under the company's revolving
credit facilities has been fixed through various dates through January 2007 by
interest rate swap agreements. To provide further financing capacity, in
November 1999, the company entered into a 364-day $200 million senior unsecured
revolving credit facility.
5. Earnings Per Share
Earnings per share for the three-month periods ended April 1, 2000 and
April 3, 1999 have been computed based upon the weighted average shares and
dilutive potential common shares outstanding. The net income amounts presented
in the accompanying condensed consolidated statements of income represent
amounts available or related to shareholders.
7
<PAGE>
The following table reconciles the denominator of the basic and diluted
earnings per share computations:
<TABLE>
<CAPTION>
Three Months Ended
April 1, 2000 April 3, 1999
- ------------------------------------------------------ ----------- -----------
<S> <C> <C>
Weighted average common shares ....................... 132,670,076 141,099,637
Dilutive incremental shares from assumed
conversions of options under stock option plans .. 393,119 2,805,197
- ------------------------------------------------------ ----------- -----------
Weighted average common shares and
dilutive potential common shares ................. 133,063,195 143,904,834
- ------------------------------------------------------ ----------- -----------
</TABLE>
6. Derivative Financial Instruments
The company uses interest rate swap agreements 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. In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
for hedging activities. SFAS No. 133 is effective, and the company expects to
adopt this new standard, in the company's first quarter of fiscal 2001. The
company's management has not determined the impact this new statement will have
on the financial statements.
7. Comprehensive Income
The company has other comprehensive income in the form of cumulative
translation adjustments which resulted in total comprehensive income of
$39,418,000 and $40,169,000 for the three months ended April 1, 2000 and April
3, 1999, respectively.
8. Subsequent Event
On April 26, 2000 the company completed its previously announced "Dutch
Auction" tender offer in which 3,991,047 shares were purchased at $15.50 per
share. The shares purchased represent approximately 3% of the company's then
outstanding shares.
On May 9, 2000, the company announced that it had completed the sale of
Shaw Industries Australia Pty. Ltd. (the company's wholly-owned Australian
subsidiary) to Feltex Carpets Limited, of New Zealand. The transaction was
valued at approximately $71 million including the assumption of debt, and is
expected to result in an after-tax gain of approximately $400,000 (less than
$.01 per share).
8
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
ITEM TWO-MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
GENERAL
The company manufactures, markets and distributes a broad range of soft
floor covering products primarily consisting of broadloom tufted carpet. The
company also distributes hard floor covering products through its highly
developed sales and distribution channels. The company operates in a business
environment comprised of numerous small customers and several large retailers
and buying groups. The company's customers in turn market floor covering and
other products to retail and other wholesale residential and commercial
end-users. The company experiences demand for its products primarily as a result
of multi and single family residential and commercial floor covering
replacement, new commercial and multi family residential construction, and, or
to a lesser extent, new single family residential construction. This demand is
driven by such end-user factors as consumer spending on durable goods and
general consumer confidence. The company's profitability is dependent upon its
ability to efficiently manage its integrated manufacturing process to produce
products meeting the style, color and quality demanded by its customers and to
deliver those products in a timely manner. During the first quarter of 2000,
demand for the company's domestic products increased along with its sales prices
and margins.
LIQUIDITY AND CAPITAL RESOURCES
At April 1, 2000, the company had working capital of $562.9 million, a
decrease of $19.1 million from the working capital of $582.0 million at January
1, 2000.
Cash and cash equivalents decreased $26.8 million to $7.2 million at April
1, 2000 from $34.0 million at January 1, 2000. The company's operations
generated cash flow of $57.1 million in the first three months of 2000,
principally from net income of $42.2 million adjusted for depreciation and
amortization of $22.2 million, an increase in accounts payable and accrued
liabilities of $64.7 million, offset in part by an increase in accounts
receivable and inventories of $70.8 million. In the first three months of 1999,
cash generated from operating activities was $70.1 million primarily as a result
of net income of $40.4 million adjusted for depreciation and amortization of
$23.0 million, and an increase in accounts payable and accrued liabilities of
$86.9 million, offset in part by an increase in accounts receivable and
inventories of $73.4 million.
In the first three months of 2000, the company's investing activities
primarily included additions to property, plant and equipment, net of
retirements, of $41.7 million compared to additions to property, plant and
equipment, net of retirements, of $30.7 million in the first three months of
1999. Cash used in financing activities for the first three months of 2000 of
$42.3 million included net payments on long-term borrowings of $35.8 million and
dividends paid of $6.6 million. Cash used in financing activities for the first
three months of 1999 of $29.7 million included net payments on long-term
borrowings of $34.8 million offset in part by proceeds from the exercise of
stock options of $5.1 million.
During 1998, the company implemented EVA(R), ("EVA" is a registered
trademark of Stern, Stewart & Company) a financial measurement concept which
emphasizes profitability, proper asset allocation, the cost of capital and the
creation of shareholder wealth. 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
exceed industry averages and pursue its strategy for increasing shareholder
value. Capital expenditures for property, plant and equipment, net of
retirements, necessary to maintain the company's facilities in modern
state-of-the-art condition, expand production capacity and increase efficiency
were $41.7 million for the three months ended April 1, 2000. Management
anticipates total capital expenditures and capitalized lease obligations of
approximately $80 to $100 million for the remainder of 2000 to expand and
upgrade its manufacturing and distribution equipment to meet anticipated
increases in sales volume and to improve efficiency.
The company's primary source of financing is an unsecured revolving credit
facility with a banking syndicate. The facility provides for borrowings of up to
$1 billion and expires in March 2003. The interest rate on borrowings under this
facility is currently based on LIBOR and was approximately 6.5 percent,
including applicable margins, at April 1, 2000. Borrowings outstanding under
this credit facility at April 1, 2000 were $735 million. To provide further
financing capacity, in November 1999, the company entered into a 364-day $200
million senior unsecured revolving credit facility which remained unutilized and
available at April 1, 2000.
The company maintains a receivables securitization program under which the
company sells a percentage ownership interest in a defined pool of the company's
trade receivables to a securitization conduit. The receivables securitization
program expires August 30, 2000, but may be extended for additional one-year
terms. As of April 1, 2000, the company had approximately $286.1 million of
accounts receivable sold and outstanding under this program.
9
<PAGE>
The company believes that available borrowings under its existing credit
and securitization agreements, available cash and internally generated funds
will be sufficient to support its working capital, capital expenditures, stock
repurchases and debt service requirements for the foreseeable future. In
addition, the company believes it could further expand its revolving credit and
long-term bank facilities, if necessary.
On April 26, 2000 the company completed its previously announced "Dutch
Auction" tender offer in which 3,991,047 shares were purchased at $15.50 per
share. The shares purchased represent approximately 3% of the company's then
outstanding shares.
On May 9, 2000, the company announced that it had completed the sale of
Shaw Industries Australia Pty. Ltd. (the company's wholly-owned Australian
subsidiary) to Feltex Carpets Limited, of New Zealand. The transaction was
valued at approximately $71 million including the assumption of debt, and is
expected to result in an after-tax gain of approximately $400,000 (less than
$.01 per share).
Derivative Financial Instruments
The company uses interest rate swap agreements 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 fluctuation risk. The company does not enter
into financial derivatives for trading purposes. In June 1998, the FASB issued
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
which establishes accounting and reporting standards for derivative instruments
and for hedging activities. SFAS No. 133, as amended by SFAS No. 137, is
effective, and the company expects to adopt this new standard, in the first
quarter of the company's fiscal 2001. The company's management has not
determined the impact this statement will have on the financial statements.
RESULTS OF OPERATIONS
Three Months Ended April 1, 2000 Compared to Three Months Ended April 3, 1999
Sales increased $30.7 million to $986.5 million, a 3.2% increase in the
three months ended April 1, 2000 compared to the same period last year. The
sales increase was a result of an increased overall demand for carpet. Margins
on sales increased to 25.2 percent from 25.0 percent on lower material costs and
improved efficiencies resulting from higher demand and the continuing
integration of the Queen Carpet Corporation operations.
Selling, general and administrative expenses for the first quarter of 2000
were $157.2 million, or 15.9 percent of net sales, compared to $154.8 million,
or 16.2 percent of net sales, in the comparable period of 1999. Interest expense
was $17.2 million for the first quarter of 2000 compared to $16.2 million for
the first quarter of 1999 as a result of higher interest rates.
The effective income tax rate for the first quarter of 2000 increased to
41.8 percent compared to 41.7 percent for the first quarter of 1999.
FORWARD-LOOKING INFORMATION
Certain statements in this report, including those regarding anticipated
total capital expenditures and capitalized lease obligations, availability of
funding for working capital, capital expenditures, stock repurchases and debt
service requirements, and the effects of litigation on the company's future
results of operations, are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1933, as amended, and are subject to the safe harbor
provisions of those Acts. When used in this report, the words "believes,"
"expects," "anticipates," "estimates" or "intends," and similar expressions, are
intended to identify forward-looking statements. The forward-looking statements
herein involve a number of risks and uncertainties that could cause actual
results to differ materially from those expressed or reflected in such
statements. The important factors which may affect the company's future results
and could cause those results to differ materially from the results expressed or
reflected in the forward-looking statements include, but are not limited to, the
following: changes in economic conditions generally; changes in consumer
spending for durable goods, interest rates and new single and multi-family
construction; competition from other carpet, rug and floor covering
manufacturers; changes in raw material prices; and other factors identified from
time to time in the company's reports and other filings with the Securities and
Exchange Commission.
ITEM THREE - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is set forth under the caption
"Derivative Financial Instruments" in "ITEM TWO - MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" above.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM ONE - LEGAL PROCEEDINGS
The company is a party to several lawsuits incidental to its various
activities and incurred in the ordinary course of 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, will have a
material adverse effect upon the company.
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 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 of Rome, Georgia. The amended complaint alleges
price-fixing regarding certain types of carpet products in violation of Section
1 of the Sherman Act. The amount of damages sought is not specified. If any
damages were to be awarded, they may be trebled under the applicable statute.
The company has filed an answer to the complaint that denies plaintiffs'
allegations and sets forth several defenses. In September 1997, the Court issued
an order certifying a nationwide plaintiff class of persons and entities who
purchased "mass production" polypropylene carpet directly from any of the
defendants from June 1, 1991 through June 30, 1995, excluding, among others, any
persons or entities whose only purchases were from any of the company's retail
establishments. Discovery began in November 1997 and recently concluded. The
company believes that it has meritorious defenses to plaintiffs' claims in the
lawsuits described in this paragraph and intends to vigorously defend these
actions. After consultation with counsel, it is the opinion of management that,
although there can be no assurance given, none of the claims described in this
paragraph, when resolved, will have a material adverse effect upon the company.
On October 3, 1998, the company learned that it was one of five defendants
in a pending antitrust suit filed in the United States District Court in Rome,
Georgia. The complaint alleges price fixing regarding certain types of carpet
products in violation of Section 1 of the Sherman Act. The amount of damages
sought is not specified. If any damages were to be awarded, they may be trebled
under the applicable statute. The company has filed an answer to the complaint
that denies plaintiff's allegations and sets forth several defenses. Discovery
has recently begun and is ongoing. The company believes it has meritorious
defenses to plaintiffs' claims in the lawsuit described in this paragraph and
intends to vigorously defend these actions. After consultation with counsel, it
is the opinion of management that, although there can be no assurance given,
none of the claims described in this paragraph, when resolved, will have a
material adverse effect on the company.
The company is also a party to four consolidated lawsuits pending in the
Superior Court of the State of California, City and County of San Francisco, all
of which were brought on behalf of a purported class of indirect purchasers of
carpet in the State of California and which seek damages for alleged violations
of California antitrust and fair competition laws. The company believes that it
has meritorious defenses to plaintiffs' claims in the lawsuits described in this
paragraph and intends to vigorously defend these actions. After consultation
with counsel, it is the opinion of management that, although there can be no
assurance given, none of the claims described in this paragraph, when resolved,
will have a material adverse effect upon the company.
The company is subject to a variety of environmental regulations relating
to the use, storage, discharge and disposal of hazardous materials used in its
manufacturing processes. Failure by the company to comply with present and
future regulations could subject it to future liabilities. In addition, such
regulations could require the company to acquire costly equipment or to incur
other significant expenses to comply with environmental regulations. The company
is not involved in any material environmental proceedings.
ITEM TWO - CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM THREE - DEFAULTS UPON SENIOR SECURITIES
None
11
<PAGE>
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
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
April 1, 2000.
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 12, 2000 /s/ Robert E. Shaw
- --------------------------- -------------------
Robert E. Shaw
Chairman of the Board and Chief
Executive Officer
DATE: May 12, 2000 /s/ Kenneth G. Jackson
- --------------------------- -----------------------
Kenneth G. Jackson
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS OF SHAW INDUSTRIES, INC. AND SUBSIDIARIES
AS OF APRIL 1, 2000 AND THE RELATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND CASH FLOWS FOR THE THREE MONTHS ENDED APRIL 1, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> APR-01-2000
<CASH> 7,165
<SECURITIES> 0
<RECEIVABLES> 254,864
<ALLOWANCES> 23,295
<INVENTORY> 714,195
<CURRENT-ASSETS> 1,121,396
<PP&E> 1,614,873
<DEPRECIATION> 840,598
<TOTAL-ASSETS> 2,353,559
<CURRENT-LIABILITIES> 558,513
<BONDS> 0
0
0
<COMMON> 147,277
<OTHER-SE> 754,293
<TOTAL-LIABILITY-AND-EQUITY> 2,353,559
<SALES> 986,496
<TOTAL-REVENUES> 986,496
<CGS> 738,315
<TOTAL-COSTS> 738,315
<OTHER-EXPENSES> 156,110
<LOSS-PROVISION> 2,773
<INTEREST-EXPENSE> 17,216
<INCOME-PRETAX> 72,082
<INCOME-TAX> 30,123
<INCOME-CONTINUING> 42,196
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,196
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.32
</TABLE>
