|
Form 10-Q
|
|
Tennessee
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|
|
|
62-0183370
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(State or other jurisdiction of incorporation or organization)
|
|
|
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(I.R.S. Employer Identification No.)
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104 Nowlin Lane, Suite 101, Chattanooga, TN
|
|
37421
|
|
(423) 510-7000
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(Address of principal executive offices)
|
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(zip code)
|
|
(Registrant's telephone number, including area code)
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Not Applicable
|
||||
(Former name, former address and former fiscal year, if changed since last report)
|
o
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Large accelerated filer
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|
o
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Accelerated filer
|
o
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Non-accelerated filer (Do not check if a smaller reporting company)
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|
R
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Smaller reporting company
|
Class
|
|
Outstanding as of October 21, 2013
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Common Stock, $3 Par Value
|
|
12,429,669 shares
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Class B Common Stock, $3 Par Value
|
|
872,562 shares
|
Class C Common Stock, $3 Par Value
|
|
0 shares
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PART I. FINANCIAL INFORMATION
|
Page
|
|||
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Item 1.
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|||
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|||
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|||
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|||
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|||
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Item 2.
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|||
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Item 3.
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|||
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Item 4.
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|||
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PART II. OTHER INFORMATION
|
|
|||
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Item 1.
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|||
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Item 1A.
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|||
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Item 2.
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|||
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Item 3.
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|||
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Item 4.
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|||
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Item 5.
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|||
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Item 6.
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|||
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Three Months Ended
|
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Nine Months Ended
|
||||||||||||
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September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
NET SALES
|
$
|
90,210
|
|
|
$
|
65,822
|
|
|
$
|
249,267
|
|
|
$
|
195,238
|
|
Cost of sales
|
68,110
|
|
|
49,265
|
|
|
186,453
|
|
|
147,260
|
|
||||
GROSS PROFIT
|
22,100
|
|
|
16,557
|
|
|
62,814
|
|
|
47,978
|
|
||||
|
|
|
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|
|
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|
||||||||
Selling and administrative expenses
|
20,228
|
|
|
15,785
|
|
|
55,964
|
|
|
46,530
|
|
||||
Other operating (income) expense, net
|
42
|
|
|
(48
|
)
|
|
72
|
|
|
48
|
|
||||
OPERATING INCOME
|
1,830
|
|
|
820
|
|
|
6,778
|
|
|
1,400
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
896
|
|
|
781
|
|
|
2,760
|
|
|
2,270
|
|
||||
Other (income) expense, net
|
3
|
|
|
(189
|
)
|
|
21
|
|
|
(281
|
)
|
||||
Refinancing expenses
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES
|
931
|
|
|
228
|
|
|
3,903
|
|
|
(589
|
)
|
||||
Income tax provision (benefit)
|
(501
|
)
|
|
(41
|
)
|
|
142
|
|
|
(349
|
)
|
||||
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
1,432
|
|
|
269
|
|
|
3,761
|
|
|
(240
|
)
|
||||
Loss from discontinued operations, net of tax
|
(20
|
)
|
|
(167
|
)
|
|
(67
|
)
|
|
(272
|
)
|
||||
NET INCOME (LOSS)
|
$
|
1,412
|
|
|
$
|
102
|
|
|
$
|
3,694
|
|
|
$
|
(512
|
)
|
|
|
|
|
|
|
|
|
||||||||
BASIC EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
$
|
0.28
|
|
|
$
|
(0.02
|
)
|
Discontinued operations
|
(0.00
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.02
|
)
|
||||
Net income (loss)
|
$
|
0.11
|
|
|
$
|
0.01
|
|
|
$
|
0.27
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
||||||||
BASIC SHARES OUTSTANDING
|
12,760
|
|
|
12,650
|
|
|
12,722
|
|
|
12,630
|
|
||||
|
|
|
|
|
|
|
|
||||||||
DILUTED EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
$
|
0.28
|
|
|
$
|
(0.02
|
)
|
Discontinued operations
|
(0.00
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.02
|
)
|
||||
Net income (loss)
|
$
|
0.11
|
|
|
$
|
0.01
|
|
|
$
|
0.27
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
||||||||
DILUTED SHARES OUTSTANDING
|
12,899
|
|
|
12,713
|
|
|
12,828
|
|
|
12,630
|
|
||||
|
|
|
|
|
|
|
|
||||||||
DIVIDENDS PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Common Stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Class B Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Nine Months Ended
|
||||||
|
September 28,
2013 |
|
September 29,
2012 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
Income (loss) from continuing operations
|
$
|
3,761
|
|
|
$
|
(240
|
)
|
Loss from discontinued operations
|
(67
|
)
|
|
(272
|
)
|
||
Net income (loss)
|
3,694
|
|
|
(512
|
)
|
||
|
|
|
|
||||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
7,821
|
|
|
7,137
|
|
||
Provision (benefit) for deferred income taxes
|
(291
|
)
|
|
(546
|
)
|
||
Net gain on property, plant and equipment disposals
|
—
|
|
|
(186
|
)
|
||
Stock-based compensation expense
|
669
|
|
|
750
|
|
||
Excess tax benefits from stock-based compensation
|
(126
|
)
|
|
—
|
|
||
Write-off of deferred financing costs
|
94
|
|
|
—
|
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Receivables
|
(15,573
|
)
|
|
(2,817
|
)
|
||
Inventories
|
(16,283
|
)
|
|
(7,052
|
)
|
||
Other current assets
|
(979
|
)
|
|
(1,725
|
)
|
||
Accounts payable and accrued expenses
|
16,479
|
|
|
943
|
|
||
Other operating assets and liabilities
|
(381
|
)
|
|
(267
|
)
|
||
NET CASH USED IN OPERATING ACTIVITIES
|
(4,876
|
)
|
|
(4,275
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Net proceeds from sales of property, plant and equipment
|
13
|
|
|
186
|
|
||
Purchase of property, plant and equipment
|
(8,738
|
)
|
|
(1,987
|
)
|
||
Net cash paid in business acquisitions
|
(2,170
|
)
|
|
—
|
|
||
NET CASH USED IN INVESTING ACTIVITIES
|
(10,895
|
)
|
|
(1,801
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Net borrowings on revolving credit line
|
25,814
|
|
|
6,002
|
|
||
Payments on mortgage note payable
|
(10,141
|
)
|
|
(553
|
)
|
||
Payments on note payable related to acquisition
|
(623
|
)
|
|
—
|
|
||
Borrowings on equipment financing
|
4,128
|
|
|
2,503
|
|
||
Payments on equipment financing
|
(836
|
)
|
|
(1,002
|
)
|
||
Payments on capitalized leases
|
(461
|
)
|
|
(95
|
)
|
||
Borrowings on notes payable
|
—
|
|
|
795
|
|
||
Payments on notes payable
|
(632
|
)
|
|
(583
|
)
|
||
Change in outstanding checks in excess of cash
|
(1,051
|
)
|
|
(923
|
)
|
||
Proceeds from stock option exercises
|
141
|
|
|
—
|
|
||
Repurchases of Common Stock
|
(207
|
)
|
|
(199
|
)
|
||
Excess tax benefits from stock-based compensation
|
126
|
|
|
—
|
|
||
Payments for debt issuance costs
|
(388
|
)
|
|
(53
|
)
|
||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
15,870
|
|
|
5,892
|
|
||
|
|
|
|
||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
99
|
|
|
(184
|
)
|
||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
491
|
|
|
298
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
590
|
|
|
$
|
114
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Interest paid
|
$
|
2,308
|
|
|
$
|
2,042
|
|
Income taxes paid, net of tax refunds
|
35
|
|
|
1,315
|
|
||
Assets purchased under capital leases
|
1,787
|
|
|
631
|
|
||
Fair value of assets acquired in acquisition, net of cash received
|
8,391
|
|
|
—
|
|
||
Liabilities assumed in acquisition
|
(836
|
)
|
|
—
|
|
||
Note payable related to acquisition
|
(3,749
|
)
|
|
—
|
|
||
Accrued consideration related to acquisition
|
(1,636
|
)
|
|
—
|
|
|
September 28,
2013 |
|
December 29,
2012 |
||||
Customers, trade
|
$
|
46,293
|
|
|
$
|
31,043
|
|
Other receivables
|
2,062
|
|
|
1,642
|
|
||
Gross receivables
|
48,355
|
|
|
32,685
|
|
||
Less allowance for doubtful accounts
|
(198
|
)
|
|
(216
|
)
|
||
Net receivables
|
$
|
48,157
|
|
|
$
|
32,469
|
|
|
September 28,
2013 |
|
December 29,
2012 |
||||
Raw materials
|
$
|
30,830
|
|
|
$
|
23,002
|
|
Work-in-process
|
18,739
|
|
|
13,786
|
|
||
Finished goods
|
54,445
|
|
|
49,251
|
|
||
Supplies, repair parts and other
|
567
|
|
|
470
|
|
||
LIFO reserve
|
(14,111
|
)
|
|
(14,264
|
)
|
||
Total inventories
|
$
|
90,470
|
|
|
$
|
72,245
|
|
|
September 28,
2013 |
|
December 29,
2012 |
||||
Land and improvements
|
$
|
7,071
|
|
|
$
|
6,950
|
|
Buildings and improvement
|
50,519
|
|
|
50,293
|
|
||
Machinery and equipment
|
147,807
|
|
|
137,432
|
|
||
|
205,397
|
|
|
194,675
|
|
||
Accumulated depreciation
|
(131,128
|
)
|
|
(125,192
|
)
|
||
Property, plant and equipment, net
|
$
|
74,269
|
|
|
$
|
69,483
|
|
Cash paid
|
$
|
2,278
|
|
Seller-financed note
|
3,749
|
|
|
Deferred payments to seller
|
205
|
|
|
Contingent consideration
|
1,431
|
|
|
Total purchase price
|
$
|
7,663
|
|
Cash
|
$
|
108
|
|
Accounts receivable
|
115
|
|
|
Inventory
|
1,942
|
|
|
Other current assets
|
1
|
|
|
Property, plant and equipment
|
1,863
|
|
|
Definite-lived intangible assets
|
2,222
|
|
|
Goodwill
|
2,248
|
|
|
Accounts payable
|
(643
|
)
|
|
Accrued expenses
|
(193
|
)
|
|
Total purchase price
|
$
|
7,663
|
|
|
Goodwill
|
|
Accumulated Impairment Losses
|
|
Net
|
||||||
Balance at December 29, 2012
|
$
|
1,680
|
|
|
$
|
—
|
|
|
$
|
1,680
|
|
Additional goodwill recognized during the period (1)
|
2,248
|
|
|
—
|
|
|
2,248
|
|
|||
Impairment losses recognized during the period
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other changes in the carrying amounts during the period
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at September 28, 2013
|
$
|
3,928
|
|
|
$
|
—
|
|
|
$
|
3,928
|
|
|
September 28,
2013 |
|
December 29,
2012 |
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Customer relationships
|
$
|
1,062
|
|
|
$
|
(24
|
)
|
|
$
|
1,038
|
|
|
$
|
208
|
|
|
$
|
—
|
|
|
$
|
208
|
|
Rug design coding
|
144
|
|
|
(11
|
)
|
|
133
|
|
|
144
|
|
|
—
|
|
|
144
|
|
||||||
Trade Names
|
1,368
|
|
|
(17
|
)
|
|
1,351
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
2,574
|
|
|
$
|
(52
|
)
|
|
$
|
2,522
|
|
|
$
|
352
|
|
|
$
|
—
|
|
|
$
|
352
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Customer relationships
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
—
|
|
Rug design coding
|
4
|
|
|
—
|
|
|
11
|
|
|
—
|
|
||||
Trade Names
|
17
|
|
|
—
|
|
|
17
|
|
|
—
|
|
||||
Amortization expense
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
September 28,
2013 |
|
December 29,
2012 |
||||
Compensation and benefits
|
$
|
7,647
|
|
|
$
|
5,637
|
|
Provision for customer rebates, claims and allowances
|
5,766
|
|
|
4,389
|
|
||
Advanced customer deposits
|
2,801
|
|
|
1,828
|
|
||
Outstanding checks in excess of cash
|
1,472
|
|
|
2,523
|
|
||
Other
|
6,145
|
|
|
4,770
|
|
||
Total accrued expenses
|
$
|
23,831
|
|
|
$
|
19,147
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Warranty reserve at beginning of period
|
$
|
1,566
|
|
|
$
|
1,208
|
|
|
$
|
1,297
|
|
|
$
|
1,219
|
|
Warranty liabilities accrued
|
1,225
|
|
|
803
|
|
|
3,179
|
|
|
2,349
|
|
||||
Warranty liabilities settled
|
(1,111
|
)
|
|
(740
|
)
|
|
(2,888
|
)
|
|
(2,367
|
)
|
||||
Changes for pre-existing warranty liabilities
|
40
|
|
|
(50
|
)
|
|
132
|
|
|
20
|
|
||||
Warranty reserve at end of period
|
$
|
1,720
|
|
|
$
|
1,221
|
|
|
$
|
1,720
|
|
|
$
|
1,221
|
|
|
September 28,
2013 |
|
December 29,
2012 |
||||
Revolving credit facility
|
$
|
85,936
|
|
|
$
|
60,122
|
|
Mortgage note payable
|
—
|
|
|
10,141
|
|
||
Obligation to Development Authority of Gordon County
|
4,696
|
|
|
5,339
|
|
||
Note payable - Robertex acquisition
|
3,769
|
|
|
—
|
|
||
Equipment notes payable
|
8,364
|
|
|
5,071
|
|
||
Notes payable
|
—
|
|
|
632
|
|
||
Capital lease obligations
|
4,245
|
|
|
2,920
|
|
||
Total long-term debt
|
107,010
|
|
|
84,225
|
|
||
Less: current portion of long-term debt
|
(4,259
|
)
|
|
(4,059
|
)
|
||
Total long-term debt, less current portion
|
$
|
102,751
|
|
|
$
|
80,166
|
|
|
September 28,
2013 |
|
December 29,
2012 |
|
Fair Value Hierarchy Level
|
||||
Assets:
|
|
|
|
|
|
||||
Rabbi trust (1)
|
$
|
13,475
|
|
|
$
|
11,894
|
|
|
Level 2
|
Interest rate swaps (2)
|
209
|
|
|
—
|
|
|
Level 2
|
||
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
||||
Interest rate swaps (2)
|
$
|
1,206
|
|
|
$
|
1,086
|
|
|
Level 2
|
Deferred compensation plan (3)
|
12,433
|
|
|
11,066
|
|
|
Level 1
|
||
Contingent consideration (4)
|
3,211
|
|
|
1,928
|
|
|
Level 3
|
(1)
|
The Company maintains a rabbi trust that serves as an investment designed to offset its deferred compensation plan liability. The investment assets of the trust consist of company-owned life insurance policies for which the Company recognizes income or expense based upon changes in cash surrender value.
|
(2)
|
The fair value of the interest rate swaps was obtained from external sources. The interest rate swaps were valued using observable inputs (e.g., LIBOR yield curves, credit spreads). Valuations of interest rate swaps may fluctuate considerably from period-to-period due to
|
(3)
|
Senior management and other highly compensated associates may defer a specified percentage of their compensation into a non-qualified deferred compensation plan. Changes in the value of the deferred compensation under this plan are recognized each period based on the fair value of the underlying measurement funds.
|
(4)
|
As a result of acquisitions in 2013 and 2012, the Company recorded contingent consideration liabilities at fair value. These fair value measurements were based on significant inputs related to future sales volumes in the Crown Rug and Colormaster acquisitions and incremental growth in gross margins of selected products of the Company in the Robertex acquisition and thus represent Level 3 measurements. Accordingly, changes in management's judgments or estimations could result in additional charges or benefits, respectively, as appropriate.
|
|
September 28,
2013 |
|
September 29,
2012 |
||||
Beginning balance
|
$
|
1,928
|
|
|
$
|
—
|
|
Contingent consideration liabilities recorded at fair value at acquisition
|
1,431
|
|
|
—
|
|
||
Change in fair value of contingent consideration liabilities
|
102
|
|
|
—
|
|
||
Settlements
|
(250
|
)
|
|
—
|
|
||
Ending balance
|
$
|
3,211
|
|
|
$
|
—
|
|
|
September 28, 2013
|
|
December 29, 2012
|
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
590
|
|
|
$
|
590
|
|
|
$
|
491
|
|
|
$
|
491
|
|
Notes receivable, including current portion
|
282
|
|
|
282
|
|
|
307
|
|
|
307
|
|
||||
Interest rate swaps
|
209
|
|
|
209
|
|
|
—
|
|
|
—
|
|
||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Long-term debt and capital leases, including current portion
|
107,010
|
|
|
102,090
|
|
|
84,225
|
|
|
80,174
|
|
||||
Interest rate swaps
|
1,206
|
|
|
1,206
|
|
|
1,086
|
|
|
1,086
|
|
Type
|
Notional Amount
|
|
Effective Date
|
Fixed Rate
|
Variable Rate
|
||
Interest rate swap
|
$
|
10,000
|
|
|
October 3, 2011 through September 1, 2016
|
1.330%
|
1 Month LIBOR
|
Interest rate swap
|
$
|
10,000
|
|
|
March 1, 2013 through September 1, 2016
|
1.620%
|
1 Month LIBOR
|
Interest rate swap
|
$
|
5,000
|
|
|
June 1, 2013 through September 1, 2016
|
1.700%
|
1 Month LIBOR
|
Interest rate swap
|
$
|
25,000
|
|
|
September 1, 2016 through September 1, 2021
|
3.105%
|
1 Month LIBOR
|
Interest rate swap
|
$
|
25,000
|
|
|
September 1, 2015 through September 1, 2021
|
3.304%
|
1 Month LIBOR
|
|
Location on Consolidated Condensed Balance Sheets
|
Fair Value
|
||||||
|
September 28,
2013 |
|
December 29,
2012 |
|||||
Asset Derivatives:
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
||||
Interest rate swaps
|
Other Assets
|
$
|
209
|
|
|
$
|
—
|
|
Total Asset Derivatives
|
|
$
|
209
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Liability Derivatives:
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
||||
Interest rate swaps, current portion
|
Accrued Expenses
|
$
|
327
|
|
|
$
|
439
|
|
Interest rate swaps, long term portion
|
Other Long-Term Liabilities
|
879
|
|
|
647
|
|
||
Total Liability Derivatives
|
|
$
|
1,206
|
|
|
$
|
1,086
|
|
|
Amount of Gain or (Loss) Recognized in AOCIL on the effective portion of the Derivative
|
||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges - interest rate swaps
|
$
|
(674
|
)
|
|
$
|
(230
|
)
|
|
$
|
(275
|
)
|
|
$
|
(748
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Amount of Gain or (Loss) Reclassified from AOCIL on the effective portion into Income (1)(2)
|
||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges - interest rate swaps
|
$
|
(84
|
)
|
|
$
|
(155
|
)
|
|
$
|
(357
|
)
|
|
$
|
(467
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Amount of Gain or (Loss) Recognized on the ineffective portion in Income on Derivative (3)
|
||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges - interest rate swaps
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Amount of Gain or (Loss) Recognized in Income on Derivative (4)
|
||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaptions
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
87
|
|
(1)
|
The amount of gain (loss) reclassified from AOCIL is included in interest expense on the Company's Consolidated Condensed Statements of Operations.
|
(2)
|
The amount of loss expected to be reclassified from AOCIL into earnings during the next 12 months subsequent to September 28, 2013 is
$327
.
|
(3)
|
The amount of gain (loss) recognized in income on the ineffective portion of interest rate swaps, if any, is included in other (income) expense, net on the Company's Consolidated Condensed Statements of Operations.
|
(4)
|
The amount of gain (loss) recognized in income for derivatives not designated as hedging instruments is included in other (income) expense, net on the Company's Consolidated Condensed Statements of Operations.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Service cost
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
6
|
|
Interest cost
|
5
|
|
|
6
|
|
|
16
|
|
|
18
|
|
||||
Amortization of prior service credits
|
(22
|
)
|
|
(22
|
)
|
|
(66
|
)
|
|
(66
|
)
|
||||
Recognized net actuarial gains
|
(10
|
)
|
|
(10
|
)
|
|
(29
|
)
|
|
(29
|
)
|
||||
Net periodic benefit cost (credit)
|
$
|
(25
|
)
|
|
$
|
(24
|
)
|
|
$
|
(73
|
)
|
|
$
|
(71
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
1,432
|
|
|
$
|
269
|
|
|
$
|
3,761
|
|
|
$
|
(240
|
)
|
Less: Allocation of earnings to participating securities
|
(57
|
)
|
|
(10
|
)
|
|
(149
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations available to common shareholders - basic
|
$
|
1,375
|
|
|
$
|
259
|
|
|
$
|
3,612
|
|
|
$
|
(240
|
)
|
Basic weighted-average shares outstanding (1)
|
12,760
|
|
|
12,650
|
|
|
12,722
|
|
|
12,630
|
|
||||
Basic earnings (loss) per share - continuing operations
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
$
|
0.28
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations available to common shareholders - basic
|
$
|
1,375
|
|
|
$
|
259
|
|
|
$
|
3,612
|
|
|
$
|
(240
|
)
|
Add: Undistributed earnings reallocated to unvested shareholders
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Income (loss) from continuing operations available to common shareholders - basic
|
$
|
1,376
|
|
|
$
|
259
|
|
|
$
|
3,613
|
|
|
$
|
(240
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average shares outstanding (1)
|
12,760
|
|
|
12,650
|
|
|
12,722
|
|
|
12,630
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options (2)
|
77
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||||
Directors' stock performance units (2)
|
62
|
|
|
63
|
|
|
61
|
|
|
—
|
|
||||
Diluted weighted-average shares outstanding (1)(2)
|
12,899
|
|
|
12,713
|
|
|
12,828
|
|
|
12,630
|
|
||||
Diluted earnings (loss) per share - continuing operations
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
$
|
0.28
|
|
|
$
|
(0.02
|
)
|
(1)
|
Includes Common and Class B Common shares in thousands.
|
(2)
|
Because their effects are anti-dilutive, shares issuable under stock option plans where the exercise price is greater than the average market price of the Company's Common Stock at the end of the relevant period and directors' stock performance units have been excluded. Aggregate shares excluded for the three and nine months ending September 28, 2013 were
450
and
530
, respectively and for the three and nine months ending September 29, 2012 were
766
and
836
, respectively.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on interest rate swaps:
|
|
|
|
|
|
|
|
||||||||
Before income taxes
|
$
|
(674
|
)
|
|
$
|
(230
|
)
|
|
$
|
(275
|
)
|
|
$
|
(748
|
)
|
Income taxes
|
(256
|
)
|
|
(88
|
)
|
|
(104
|
)
|
|
(283
|
)
|
||||
Net of taxes
|
(418
|
)
|
|
(142
|
)
|
|
(171
|
)
|
|
(465
|
)
|
||||
Reclassification of loss into earnings from interest rate swaps (1):
|
|
|
|
|
|
|
|
||||||||
Before income taxes
|
84
|
|
|
37
|
|
|
199
|
|
|
114
|
|
||||
Income taxes
|
32
|
|
|
14
|
|
|
75
|
|
|
43
|
|
||||
Net of taxes
|
52
|
|
|
23
|
|
|
124
|
|
|
71
|
|
||||
Amortization of unrealized loss on dedesignated interest rate swaps (1):
|
|
|
|
|
|
|
|
||||||||
Before income taxes
|
—
|
|
|
118
|
|
|
158
|
|
|
353
|
|
||||
Income taxes
|
—
|
|
|
45
|
|
|
60
|
|
|
134
|
|
||||
Net of taxes
|
—
|
|
|
73
|
|
|
98
|
|
|
219
|
|
||||
Reclassification of net actuarial gain into earnings from postretirement benefit plans (2):
|
|
|
|
|
|
|
|
||||||||
Before income taxes
|
(10
|
)
|
|
(10
|
)
|
|
(29
|
)
|
|
(29
|
)
|
||||
Income taxes
|
(4
|
)
|
|
(4
|
)
|
|
(11
|
)
|
|
(12
|
)
|
||||
Net of taxes
|
(6
|
)
|
|
(6
|
)
|
|
(18
|
)
|
|
(17
|
)
|
||||
Reclassification of prior service credits into earnings from postretirement benefit plans (2):
|
|
|
|
|
|
|
|
||||||||
Before income taxes
|
(22
|
)
|
|
(22
|
)
|
|
(66
|
)
|
|
(66
|
)
|
||||
Income taxes
|
(8
|
)
|
|
(8
|
)
|
|
(25
|
)
|
|
(26
|
)
|
||||
Net of taxes
|
(14
|
)
|
|
(14
|
)
|
|
(41
|
)
|
|
(40
|
)
|
||||
Other comprehensive income (loss)
|
$
|
(386
|
)
|
|
$
|
(66
|
)
|
|
$
|
(8
|
)
|
|
$
|
(232
|
)
|
(1)
|
Amounts for cash flow hedges reclassified from accumulated other comprehensive income (loss) to net earnings (loss) were included in interest expense in the Company's Consolidated Condensed Statement of Operations.
|
(2)
|
Amounts for postretirement plans reclassified from accumulated other comprehensive income (loss) to net earnings (loss) were included in selling and administrative expenses in the Company's Consolidated Condensed Statement of Operations.
|
|
Interest Rate Swaps
|
|
Post-Retirement Liabilities
|
|
Total
|
||||||
Balance at December 29, 2012
|
$
|
(654
|
)
|
|
$
|
416
|
|
|
$
|
(238
|
)
|
Unrealized gain (loss) on interest rate swaps, net of tax of $104
|
(171
|
)
|
|
—
|
|
|
(171
|
)
|
|||
Reclassification of loss into earnings from interest rate swaps, net of tax of $75
|
124
|
|
|
—
|
|
|
124
|
|
|||
Amortization of unrealized loss on dedesignated interest rate swaps, net of tax of $60
|
98
|
|
|
—
|
|
|
98
|
|
|||
Reclassification of net actuarial gain into earnings from postretirement benefit plans, net of tax of $11
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
|||
Reclassification of prior service credits into earnings from postretirement benefit plans, net of tax of $25
|
—
|
|
|
(41
|
)
|
|
(41
|
)
|
|||
Balance at September 28, 2013
|
$
|
(603
|
)
|
|
$
|
357
|
|
|
$
|
(246
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Other operating (income) expense, net:
|
|
|
|
|
|
|
|
||||||||
Insurance proceeds (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(202
|
)
|
|
$
|
—
|
|
Gain on property, plant and equipment disposals
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Retirement expenses
|
20
|
|
|
28
|
|
|
139
|
|
|
164
|
|
||||
Miscellaneous (income) expense
|
32
|
|
|
(76
|
)
|
|
135
|
|
|
(116
|
)
|
||||
Other operating (income) expense, net
|
$
|
42
|
|
|
$
|
(48
|
)
|
|
$
|
72
|
|
|
$
|
48
|
|
(1)
|
The Company recognized a settlement gain of
$202
from a company-owned insurance policy during the nine months ending September 28, 2013.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Other (income) expense, net:
|
|
|
|
|
|
|
|
||||||||
(Gain) loss on non-hedged swaptions
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
(87
|
)
|
Gain on sale of non-operating assets
|
—
|
|
|
(187
|
)
|
|
—
|
|
|
(187
|
)
|
||||
Miscellaneous (income) expense
|
3
|
|
|
3
|
|
|
21
|
|
|
(7
|
)
|
||||
Other (income) expense, net
|
$
|
3
|
|
|
$
|
(189
|
)
|
|
$
|
21
|
|
|
$
|
(281
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||
Loss from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Workers' compensation costs
|
$
|
(15
|
)
|
|
$
|
(52
|
)
|
|
$
|
(42
|
)
|
|
$
|
(85
|
)
|
Environmental remediation costs
|
(13
|
)
|
|
(158
|
)
|
|
(53
|
)
|
|
(283
|
)
|
||||
Loss from discontinued operations, before taxes
|
(28
|
)
|
|
(210
|
)
|
|
(95
|
)
|
|
(368
|
)
|
||||
Income tax benefit
|
(8
|
)
|
|
(43
|
)
|
|
(28
|
)
|
|
(96
|
)
|
||||
Loss from discontinued operations, net of tax
|
$
|
(20
|
)
|
|
$
|
(167
|
)
|
|
$
|
(67
|
)
|
|
$
|
(272
|
)
|
•
|
investment in the development of new products based on new yarn systems,
|
•
|
realignment of certain of our broadloom tufting technologies from Atmore, Alabama into our North Georgia Eton facility,
|
•
|
the acquisition of a continuous dyeing facility in North Georgia,
|
•
|
the acquisition of specialized wool rug tufting equipment and its related business,
|
•
|
an opportunistic purchase of certain products from an industry competitor to incorporate into our product line
|
•
|
and changes in both manufacturing and commercial business management.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 28,
2013 |
|
September 29,
2012 |
|
September 28,
2013 |
|
September 29,
2012 |
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
75.5
|
%
|
|
74.8
|
%
|
|
74.8
|
%
|
|
75.4
|
%
|
Gross profit
|
24.5
|
%
|
|
25.2
|
%
|
|
25.2
|
%
|
|
24.6
|
%
|
Selling and administrative expense
|
22.4
|
%
|
|
24.0
|
%
|
|
22.5
|
%
|
|
23.8
|
%
|
Other operating expense, net
|
0.1
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Operating income
|
2.0
|
%
|
|
1.2
|
%
|
|
2.7
|
%
|
|
0.8
|
%
|
•
|
consumer confidence;
|
•
|
housing demand;
|
•
|
financing availability;
|
•
|
national and local economic conditions;
|
•
|
interest rates;
|
•
|
employment levels;
|
•
|
changes in disposable income;
|
•
|
commercial rental vacancy rates; and
|
•
|
federal and state income tax policies.
|
•
|
Discharges to air and water;
|
•
|
Handling and disposal of solid and hazardous substances and waste; and
|
•
|
Remediation of contamination from releases of hazardous substances in our facilities and off-site disposal locations.
|
Month Ending
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
|
Maximum Number (or approximate dollar value) of Shares That May Yet Be Purchased Under Plans or Programs
|
||||||
August 3, 2013
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
||
August 31, 2013
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
September 28, 2013
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
Three Months Ended September 28, 2013
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
$
|
4,268,461
|
|
(a.)
|
Exhibits
|
10.1
|
Sixth Amendment to Credit Agreement dated as of August 30, 2013, by and among The Dixie Group, Inc. certain of its subsidiaries and Wells Fargo Capital Finance, LLC, as Agent and the persons identified as Lenders therein.
|
31.1
|
CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
CFO Certification pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
THE DIXIE GROUP, INC.
|
|
|
(Registrant)
|
|
|
|
Date: November 6, 2013
|
|
By: /s/ JON A. FAULKNER
|
|
|
Jon A. Faulkner
Vice President and Chief Financial Officer
|
|
|
|
Date: November 6, 2013
|
|
By: /s/ D. EUGENE LASATER
|
|
|
D. Eugene Lasater
Controller
|
I.
|
DEFINITIONS
|
II.
|
CONDITIONS PRECEDENT
|
III.
|
MISCELLANEOUS
|
BORROWERS:
|
THE DIXIE GROUP, INC.
By:
/s/ Jon A Faulkner
Name:Jon A. Faulkner
Title:VP/CFO
|
|
CANDLEWICK YARNS, LLC
By:
/s/ Jon A Faulkner
Name:Jon A. Faulkner
Title:President
|
|
FABRICA INTERNATIONAL, INC.
By:
/s/ Jon A Faulkner
Name:Jon A. Faulkner
Title:President
|
|
TDG OPERATIONS, LLC
By:
/s/ Jon A Faulkner
Name:Jon A. Faulkner
Title:President
|
AGENT AND LENDERS:
|
WELLS FARGO CAPITAL FINANCE, LLC,
as Agent and as a Lender
By:
/s/ Gary J. Forlenza, Jr.
Name:Gary J. Forlenza, Jr.
Title:Vice President
|
|
BANK OF AMERICA, N.A.,
as a Lender
By:
/s/ Robert B. H. Moore
Name: Robert B. H. Moore
Title: Senior Vice President
|
|
C-KNIT APPAREL, INC.
By:
/s/ Jon A. Faulkner
Name:Jon A. Faulkner
Title:President
|
Date: November 6, 2013
|
|
/s/
DANIEL K. FRIERSON
|
|
|
Daniel K. Frierson
|
|
|
Chief Executive Officer
|
|
|
The Dixie Group, Inc.
|
Date: November 6, 2013
|
|
/s/
JON A. FAULKNER
|
|
|
Jon A. Faulkner
|
|
|
Chief Financial Officer
|
|
|
The Dixie Group, Inc.
|
/s/ DANIEL K. FRIERSON
|
Daniel K. Frierson, Chief Executive Officer
|
Date: November 6, 2013
|
/s/ JON A. FAULKNER
|
Jon A. Faulkner, Chief Financial Officer
|
Date: November 6, 2013
|
|