Item 2. Properties
The company's executive offices are located in Dalton, Georgia. At January 1, 2000, the company operated additional facilities as follows:
Domestic Facilities (wholesale)
Alabama Redistribution, yarn spinning and yarn extrusion Arizona Yarn processing California Administrative, coating, dyeing, tufting and warehousing Colorado Warehousing, redistribution Florida Redistribution Georgia Administrative, distribution, carpet manufacturing, yarn processing, yarn spinning, tufting, dyeing, coating, finishing, rug manufacturing, sample manufacturing, warehousing, design center and research and development center. Illinois Warehousing Massachusetts Warehousing Michigan Redistribution Minnesota Warehousing Missouri Redistribution
New Jersey Warehousing North Carolina Redistribution, primary backing manufacturing Ohio Redistribution Pennsylvania Redistribution South Carolina Yarn spinning Tennessee Carpet manufacturing, yarn spinning Texas Warehousing Virginia Redistribution Washington Warehousing
Domestic Facilities (commercial distribution - number of locations in parenthesis)
Arizona Warehousing, administrative (1) California Warehousing, administrative (6) Colorado Warehousing, administrative (1) Florida Warehousing, administrative (7) Georgia Retail store, warehousing, administrative (5) Illinois Retail store, warehousing, administrative (2) Kansas Warehousing, administrative (1) Maryland Retail store, warehousing, administrative (1) Massachusetts Warehousing, administrative (3) Michigan Warehousing, administrative (2) Minnesota Retail store, warehousing, administrative (3) New Jersey Administrative (1) New York Warehousing, administrative (4) Ohio Warehousing, administrative (4) Oregon Warehousing, administrative (1) Pennsylvania Warehousing, administrative (3) Texas Warehousing, administrative (4) Utah Warehousing, administrative (1) Virginia Warehousing, administrative (1) Washington Warehousing, administrative (2) Wisconsin Warehousing, administrative (1)
Foreign Facilities (facilities are located in or near the area listed)
Victoria, Australia Yarn extrusion, yarn processing, tufting, dyeing, coating, distribution and administrative offices
The company maintains leased full-service warehouses in or near Dallas; Los Angeles; La Mirada, California; Seattle; Chicago; Minneapolis; Boston; and Cranbury, New Jersey. Each leased warehouse facility includes a sales showroom. The company believes that current facilities are adequately insured and well maintained, substantially used and provide adequate capacity for current and anticipated future operations.
Item 3.
Item 3. 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.
At the end of fiscal year 1999, there were no other pending legal proceedings to which the company was a party or to which any of its property was subject which, in the opinion of management, were likely to have a material adverse effect on the company's business, financial condition or results of operations.
Item 4.
Item 4. Submission of Matters to Vote of Security Holders
Not applicable.
Item 4(A). Executive Officers of the Registrant
Officers of the company are elected annually by the Board of Directors. All of the executive officers of the company except for Messrs. Saul, Jackson and Julius C. Shaw, Jr. have served as executive officers for the company for more than the past five years.
Mr. Jackson joined the company in February 1996. Prior to February 1996, Mr. Jackson had been a partner with Arthur Andersen LLP in Atlanta, Georgia.
Mr. Saul joined the company in October 1998. Prior to October 1998, Mr. Saul was the Chief Executive Officer and Chairman of the Board of Queen Carpet Corporation.
Mr. Julius C. Shaw, Jr. joined the company in 1976. Prior to 1999, Mr. Shaw held several executive positions in marketing and investor relations with the company.
PART II
Item 5.
Item 5. Market for the Registrant's Common Stock and Related Shareholder Matters
The high and low sales prices for the company's common stock as reported by the New York Stock Exchange the amount of dividends paid by quarter for the last three fiscal years are set forth on page 23 of Exhibit 13.
Reference is made to Note 2 of the Notes to Consolidated Financial Statements on page 13 of Exhibit 13 for information concerning restrictions on the payments, as defined, including cash dividends.
At March 21, 2000, there were 3,166 holders of record of the company's common stock.
Item 6.
Item 6. Selected Financial Data
This information is set forth on page 22 of the Exhibit 13 under the caption "Five-Year Financial Review."
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This information is set forth on pages 1-5 of Exhibit 13 to this report.
Item 7 (a). Quantitative and Qualitative Disclosures About Market Risk
This information is set forth on page 2 of Exhibit 13 to this report, under the caption "Market Risk Exposure and Derivative Financial Instruments."
Item 8.
Item 8. Financial Statements and Supplementary Data
This information is set forth on pages 6-23 of Exhibit 13.
Item 9.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors is incorporated by reference to "Election of Class of Directors" on pages 3-4 of the Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2000. Reference is also made to Item 4A of Part I of this report, "Executive Officers of the Registrant," which information is incorporated herein.
Item 11.
Item 11. Executive Compensation
This information is incorporated by reference to "Executive Compensation" on pages 6-8 of the Proxy Statement for the Annual Meeting of Shareholders.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is incorporated by reference to "Voting Rights and Principal Shareholders" and "Election of Directors" on pages 2 and 3-4 respectively, of the Proxy Statement for the Annual Meeting of Shareholders.
PART IV
Item 13.
Item 13. Certain Relationships and Related Transactions
This information is incorporated by reference to "Certain Relationships" on page 4 of the Proxy Statement for the Annual Meeting of Shareholders.
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
o Exhibit 13 to this Form 10-K, contains the consolidated balance sheets as of January 1, 2000 and January 2, 1999, the related consolidated statements of income, shareholders' investment and cash flow for each of the three years in the period ended January 1, 2000, and the related report of Arthur Andersen LLP. These financial statements and the report of Arthur Andersen LLP are incorporated herein by reference. The financial statements incorporated by reference include the following:
o Consolidated Balance Sheets - January 1, 2000 and January 2, 1999
o Consolidated Statements of Income for the years ended January 1, 2000, January 2, 1999 and January 3, 1998.
o Consolidated Statements of Shareholders' Investment for the years ended January 1, 2000, January 2, 1999 and January 3, 1998.
o Consolidated Statements of Cash Flow for the years ended January 1, 2000, January 2, 1999 and January 3, 1998.
2. Financial Statement Schedules
o Report of Independent Public Accountants on Financial Statement Schedule
o Schedule II - Valuation and Qualifying Accounts for the Years Ended January 1, 2000, January 2, 1999 and January 3, 1998.
3. Exhibits incorporated by reference or filed with this report.
Number Description
3(a) Amended and Restated Articles of Incorporation. [Incorporated herein by reference to Exhibit 3(a) to Registrant's Registration Statement filed with the commission on December 28, 1993 (File No. 33-51719).]
3(b) Bylaws. [Incorporated herein by reference to Exhibit 3(b) to Registrant's Registration Statement filed with the commission on December 28, 1993 (File No. 33-51714).]
4(a) Specimen form of Common Stock Certificate. [Incorporated herein by reference to Exhibit 2 to Registrant's Report on Form 8-A filed with the Securities and Exchange Commission on May 12, 1989 (File No. 1-6853).]
4(b) Restated Articles of Incorporation, filed as Exhibit 3(a), and the Bylaws of Registrant, filed as Exhibit 3(b), are incorporated herein by reference.
4(c) Rights Agreement dated as of April 10, 1989, between Registrant and Citizens and Southern Trust Company (Georgia), N.A., as Rights Agent. [Incorporated herein by reference to Exhibit 1 to Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 1989 (File No. 1-6853).]
10(a) Share Transfer Agreement dated as of April 3, 1998 among the Registrant, Shaw UK Holdings Limited on Form 8-K filed with the Securities and Exchange Commission on April 20, 1998 (File No. 1-6853).]
10(b)* Deferred Compensation Plan and form of Deferred Compensation Agreement of Registrant as adopted in April, 1980. [Incorporated herein by reference to the Registrant's July 2, 1994 Form 10-K filed with the Securities and Exchange Commission (File No. 1-6853).]
10(c) Agreement and Plan of Merger dated as of June 23, 1998 among the Registrant, The Maxim Group, Inc., CMAX Acquisition, Inc. and Shaw Carpet Showplace, Inc., and forms of Subordinated Promissory Note and Shareholder's Agreement attached thereto as Exhibits B and C, respectively. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 26, 1998 (File No. 1-6853).]
10(d) Amendment, dated August 9, 1998, to Agreement and Plan of Merger dated as of June 23, 1998 among the Registrant, The Maxim Group, Inc., CMAX Acquisition, Inc. and Shaw Carpet Showplace, Inc. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2,1 998 (File No. 1-6853).]
10(e) Agreement and Plan of Merger dated as of August 13, 1998 among the registrant, Chessman Acquisition Corp., Queen Carpet Corporation, Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust, and Linda Saul Schejola Family Trust. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 28, 1998 (File no. 1-6853).]
10(f) First Amendment to Agreement and Plan of Merger dated as of October 6, 1998 among the Registrant, Chessman Acquisition Corp., Queen Carpet Corporation, Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust, and Linda Saul Schejola Family Trust. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 998 (File No. 1-6853).]
10(g)* Employment Agreement dated as of October 6, 1998 between the Registrant and Julian D. Saul.
10(h) [Reserved.]
10(i)* Form of Shaw Industries, Inc. Outside Directors Stock Plan. [Incorporated herein by reference to Exhibit 99 to the Registrant's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on September 1, 1998 (Reg. No. 333-62645).]
10(j) [Reserved.]
10(k)* 1992 Incentive Stock Option Plan of the Registrant. [Incorporated herein by reference to Exhibit A to Registrant's 1992 Proxy (File No. 1-6853).] Statement, dated September 18, 1992 (File No.1-6853).]
10(l) 1997 Stock Incentive Plan of the Registrant [Incorporated herein by reference to Exhibit A to Registrant's 1997 Proxy (File no. 1-6853).]
10(m) Amended and Restated Credit Agreement dated as of March 16, 1998, among the Registrant, the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta.
10(n)* Form of Shaw Industries, Inc. Nonqualified Retirement Savings Plan. [Incorporated herein by reference to Exhibit 4(c) to the Registrant's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on September 4, 1998 (Reg. No. 333-62915).]
10(o) First Amendment to the Amended and Restated Credit Agreement dated as of August 7, 1998 among the Registrant, the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. [Incorporated herein by reference to Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 1998 (File No. 1-6853).]
10(p) Second Amendment to the Amended and Restated Credit Agreement dated as of October 6, 1998 among the Registrant, the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. [Incorporated herein by reference to Exhibit 99.4 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 1998 (File No. 1-6853).]
10(q) Third Amendment to the Amended and Restated Credit Agreement dated as of October 15, 1998 among the Registrant, the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. [Incorporated herein by reference to Exhibit 99.5 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 1998 (File No. 1-6853).]
10(r) Transfer and Administration Agreement dated as of September 3, 1998 among the Registrant, Shaw Funding Company, Enterprise Funding Corporation, NationsBank, N.A. and the financial institutions from time to time parties thereto. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 17, 1998 (File No. 1-6853).]
10(s) Receivables Purchase Agreement dated as of September 3, 1998 between the Registrant and Shaw Funding Company and Form of Subordinated Non-Negotiable Revolving Note. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 17, 1998 (File No. 1-6853).]
10(t) [Reserved.]
10(u) Amendment No. 1 dated as of April 23, 1999 to Transfer and Administration Agreement dated as of September 3, 1998 among the Registrant, Shaw Funding Company, Enterprise Funding Corporation, NationsBank, N.A. and the financial institutions from time to time parties thereto. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 17, 1999 (File No. 1-6853).]
10(v) First Amendment dated as of July 29,1999 to Amended and Restated Rights Agreement dated as of April 10, 1999 between the Registrant and EquiServe Trust Company, N.A., as successor rights agent to Wachovia Bank, N.A. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 17, 1999 (File 1-6853).]
10(w) Fourth Amendment to the Amended and Restated Credit Agreement dated as of August 20, 1999 among Shaw Industries, Inc., the lenders appearing on the signature pages thereto and Bank of America, N.A. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 16, 1999 (File 1-6853).]
10(x) Fifth Amendment to the Amended and Restated Credit Agreement dated as of October 15, 1999 among Shaw Industries, Inc., the lenders appearing on the signature page thereto, Bank of America and SunTrust Bank, Atlanta. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 16, 1999 (File 1-6853).]
10(y) $200,000,000 Credit Agreement dated as of November 5, 1999 by and among the Registrant, the lenders named therein, Bank of America, N.A., as administrative agent, and SunTrust Bank, Atlanta, as documentation agent, together with Form of Syndicate Note, Form of Guaranty and Form of Assignment and Assumption Agreement. [Incorporated herein by reference to Exhibit 99.3 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange commission on November 16, 1999 (File No. 1-6853).]
10(z) Guaranty dated as of November 5, 1999, delivered by Shaw Contract Flooring Services, Inc. in favor of Bank of America, N.A. [Incorporated herein by reference to Exhibit 99.4 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 16, 1999 (File 1-6853).]
13 Items Incorporated by Reference from the Annual Report to Shareholders for the fiscal year ended January 1, 2000.
21 List of Subsidiaries.
23 Consent of independent public accountants.
27 Financial Data Schedule.
*Compensatory plan or management contract required to be filed as an exhibit to Item 14 (c) of Form 10-K.
Shareholders may obtain copies of Exhibits without charge upon written request to the Corporate Secretary, Shaw Industries, Inc., Mail Drop 061-18, P.O. Drawer 2128, Dalton, Georgia 30722-2128.
(b)1. A report on Form 8-K was filed on April 6, 1999, announcing the amendment and restatement the Registrant's Shareholders' Rights Plan.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SHAW INDUSTRIES, INC.
Date: March 28, 2000 By:/s/ ROBERT E. SHAW ------------------ Robert E. Shaw Chairman, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: March 28, 2000 /s/ ROBERT E. SHAW ------------------ Robert E. Shaw Chairman, Chief Executive Officer and Director (Principal Executive Officer)
Date: March 28, 2000 /s/ KENNETH G. JACKSON ---------------------- Kenneth G. Jackson Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
Date: March 28, 2000 /s/ J. C. SHAW -------------- J.C. Shaw Chairman Emeritus and Director
Date: March 28, 2000 /s/ W. NORRIS LITTLE -------------------- W. Norris Little Vice Chairman and Director
Date: March 28, 2000 /s/ JULIAN D. SAUL ------------------ Julian D. Saul President and Director
Date: March 28, 2000 /s/ WILLIAM C. LUSK, JR. ----------------------- William C. Lusk, Jr. Director
Date: March 28, 2000 /s/ ROBERT R. HARLIN -------------------- Robert R. Harlin Director
Date: March 28, 2000 /s/ THOMAS G. COUSINS --------------------- Thomas G. Cousins Director
Date: March 28, 2000 /s/ S.TUCKER GRIGG ------------------ S. Tucker Grigg Director
Date: March 28, 2000 /s/ ROBERT J. LUNN ------------------ Robert J. Lunn Director
Date: March 28, 2000 /s/ J. HICKS LANIER ------------------- J. Hicks Lanier Director
Date: March 28, 2000 /s/ R. JULIAN McCAMY -------------------- R. Julian McCamy Director
Date: March 28, 2000 /s/ ROBERTO GARZA DELGADO ------------------------- Roberto Garza Delgado Director
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Shareholders of Shaw Industries, Inc.:
We have audited in accordance with auditing standards generally accepted in the United States, the financial statements of SHAW INDUSTRIES, INC. included in the Annual Report to Shareholders incorporated by reference in this Form 10-K and have issued our report thereon dated February 11, 2000. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia February 11, 2000