|
Form 10-Q
|
|
Tennessee
|
|
|
|
62-0183370
|
(State or other jurisdiction of incorporation or organization)
|
|
|
|
(I.R.S. Employer Identification No.)
|
104 Nowlin Lane, Suite 101, Chattanooga, TN
|
|
37421
|
|
(423) 510-7000
|
(Address of principal executive offices)
|
|
(zip code)
|
|
(Registrant's telephone number, including area code)
|
Not Applicable
|
||||
(Former name, former address and former fiscal year, if changed since last report)
|
o
|
Large accelerated filer
|
|
R
|
Accelerated filer
|
o
|
Non-accelerated filer (Do not check if a smaller reporting company)
|
|
o
|
Smaller reporting company
|
Class
|
|
Outstanding as of October 23, 2015
|
Common Stock, $3 Par Value
|
|
15,145,474 shares
|
Class B Common Stock, $3 Par Value
|
|
861,493 shares
|
Class C Common Stock, $3 Par Value
|
|
0 shares
|
PART I. FINANCIAL INFORMATION
|
Page
|
|||
|
|
|
|
|
|
Item 1.
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
Item 2.
|
|||
|
Item 3.
|
|||
|
Item 4.
|
|||
|
|
|
|
|
PART II. OTHER INFORMATION
|
|
|||
|
|
|
|
|
|
Item 1.
|
|||
|
Item 1A.
|
|||
|
Item 2.
|
|||
|
Item 3.
|
|||
|
Item 4.
|
|||
|
Item 5.
|
|||
|
Item 6.
|
|||
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||||
NET SALES
|
$
|
108,908
|
|
|
$
|
109,006
|
|
|
$
|
314,721
|
|
|
$
|
302,014
|
|
Cost of sales
|
81,643
|
|
|
82,407
|
|
|
234,811
|
|
|
230,643
|
|
||||
GROSS PROFIT
|
27,265
|
|
|
26,599
|
|
|
79,910
|
|
|
71,371
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and administrative expenses
|
25,267
|
|
|
23,801
|
|
|
76,215
|
|
|
68,179
|
|
||||
Other operating expense, net
|
131
|
|
|
230
|
|
|
684
|
|
|
601
|
|
||||
Facility consolidation expenses
|
614
|
|
|
1,632
|
|
|
2,264
|
|
|
2,654
|
|
||||
Impairment of assets
|
—
|
|
|
104
|
|
|
—
|
|
|
759
|
|
||||
OPERATING INCOME (LOSS)
|
1,253
|
|
|
832
|
|
|
747
|
|
|
(822
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
1,203
|
|
|
991
|
|
|
3,603
|
|
|
3,161
|
|
||||
Other (income) expense, net
|
4
|
|
|
(23
|
)
|
|
45
|
|
|
(60
|
)
|
||||
Gain on purchase of business
|
—
|
|
|
(173
|
)
|
|
—
|
|
|
(11,110
|
)
|
||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES
|
46
|
|
|
37
|
|
|
(2,901
|
)
|
|
7,187
|
|
||||
Income tax provision (benefit)
|
(38
|
)
|
|
45
|
|
|
(1,121
|
)
|
|
2,884
|
|
||||
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
84
|
|
|
(8
|
)
|
|
(1,780
|
)
|
|
4,303
|
|
||||
Loss from discontinued operations, net of tax
|
(18
|
)
|
|
(177
|
)
|
|
(118
|
)
|
|
(505
|
)
|
||||
NET INCOME (LOSS)
|
$
|
66
|
|
|
$
|
(185
|
)
|
|
$
|
(1,898
|
)
|
|
$
|
3,798
|
|
|
|
|
|
|
|
|
|
||||||||
BASIC EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.01
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.29
|
|
Discontinued operations
|
(0.00
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.04
|
)
|
||||
Net income (loss)
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
||||||||
BASIC SHARES OUTSTANDING
|
15,573
|
|
|
15,394
|
|
|
15,518
|
|
|
14,040
|
|
||||
|
|
|
|
|
|
|
|
||||||||
DILUTED EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.01
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.29
|
|
Discontinued operations
|
(0.00
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.04
|
)
|
||||
Net income (loss)
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
||||||||
DILUTED SHARES OUTSTANDING
|
15,666
|
|
|
15,394
|
|
|
15,518
|
|
|
14,216
|
|
||||
|
|
|
|
|
|
|
|
||||||||
DIVIDENDS PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Common Stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Class B Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Amounts for cash flow hedges reclassified from accumulated other comprehensive income (loss) to net income (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 income (loss) were included in selling and administrative expenses in the Company's Consolidated Condensed Statement of Operations.
|
|
Nine Months Ended
|
||||||
|
September 26,
2015 |
|
September 27,
2014 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
Income (loss) from continuing operations
|
$
|
(1,780
|
)
|
|
$
|
4,303
|
|
Loss from discontinued operations
|
(118
|
)
|
|
(505
|
)
|
||
Net income (loss)
|
(1,898
|
)
|
|
3,798
|
|
||
|
|
|
|
||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities, net of acquisitions:
|
|
|
|
||||
Depreciation and amortization - continuing operations
|
10,954
|
|
|
9,533
|
|
||
Depreciation and amortization - discontinued operations
|
—
|
|
|
48
|
|
||
Provision (benefit) for deferred income taxes
|
(1,403
|
)
|
|
2,681
|
|
||
Net gain on property, plant and equipment disposals
|
(187
|
)
|
|
(18
|
)
|
||
Impairment of assets
|
—
|
|
|
759
|
|
||
Gain on purchase of business
|
—
|
|
|
(11,110
|
)
|
||
Stock-based compensation expense
|
1,071
|
|
|
900
|
|
||
Excess tax benefits from stock-based compensation
|
(287
|
)
|
|
(367
|
)
|
||
Bad debt expense
|
110
|
|
|
325
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
(3,301
|
)
|
|
(7,686
|
)
|
||
Inventories
|
(10,649
|
)
|
|
(2,974
|
)
|
||
Other current assets
|
(649
|
)
|
|
1,627
|
|
||
Accounts payable and accrued expenses
|
9,876
|
|
|
1,902
|
|
||
Other operating assets and liabilities
|
(863
|
)
|
|
(495
|
)
|
||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
2,774
|
|
|
(1,077
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Net proceeds from sales of property, plant and equipment
|
66
|
|
|
369
|
|
||
Deposits on property, plant and equipment
|
—
|
|
|
(119
|
)
|
||
Purchase of property, plant and equipment
|
(5,266
|
)
|
|
(6,753
|
)
|
||
Proceeds from sale of equity investment
|
—
|
|
|
870
|
|
||
Net cash paid in business acquisitions
|
—
|
|
|
(17,657
|
)
|
||
NET CASH USED IN INVESTING ACTIVITIES
|
(5,200
|
)
|
|
(23,290
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Net borrowings on revolving credit facility
|
1,182
|
|
|
4,331
|
|
||
Borrowings on notes payable - buildings
|
6,290
|
|
|
—
|
|
||
Payments on notes payable - buildings
|
(522
|
)
|
|
—
|
|
||
Payments on notes payable related to acquisitions
|
(1,572
|
)
|
|
(1,513
|
)
|
||
Borrowings on notes payable - equipment and other
|
998
|
|
|
2,195
|
|
||
Payments on notes payable - equipment and other
|
(3,370
|
)
|
|
(2,072
|
)
|
||
Payments on capital leases
|
(2,050
|
)
|
|
(966
|
)
|
||
Change in outstanding checks in excess of cash
|
1,278
|
|
|
(1,848
|
)
|
||
Proceeds from equity offering, net of issuance costs
|
—
|
|
|
24,559
|
|
||
Proceeds from exercise of stock options
|
274
|
|
|
145
|
|
||
Repurchases of Common Stock
|
(584
|
)
|
|
(518
|
)
|
||
Excess tax benefits from stock-based compensation
|
287
|
|
|
367
|
|
||
Payments for debt issuance costs
|
—
|
|
|
(84
|
)
|
||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
2,211
|
|
|
24,596
|
|
||
|
|
|
|
||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(215
|
)
|
|
229
|
|
||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
394
|
|
|
255
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
179
|
|
|
$
|
484
|
|
|
|
|
|
||||
|
|
|
|
|
Nine Months Ended
|
||||||
|
September 26,
2015 |
|
September 27,
2014 |
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Interest paid
|
$
|
3,246
|
|
|
$
|
2,799
|
|
Income taxes paid, net of tax refunds
|
104
|
|
|
325
|
|
||
Equipment purchased under capital leases
|
87
|
|
|
8,709
|
|
||
Equipment purchased under notes payable
|
2,850
|
|
|
—
|
|
||
Deposits utilized on purchased equipment, net
|
1,857
|
|
|
—
|
|
||
Assets acquired in acquisitions, net of cash acquired
|
—
|
|
|
36,349
|
|
||
Liabilities assumed in acquisitions
|
—
|
|
|
(6,397
|
)
|
||
Accrued consideration for working capital adjustment in acquisitions
|
—
|
|
|
(298
|
)
|
||
Accrued consideration for holdbacks in acquisition
|
—
|
|
|
(887
|
)
|
||
Deposits on property, plant & equipment financed
|
—
|
|
|
3,977
|
|
||
Shortfall of tax benefits from stock-based compensation
|
(93
|
)
|
|
(607
|
)
|
||
Note receivable on sale of equipment
|
93
|
|
|
—
|
|
|
September 26,
2015 |
|
December 27,
2014 |
||||
Customers, trade
|
$
|
49,279
|
|
|
$
|
46,422
|
|
Other receivables
|
4,984
|
|
|
4,552
|
|
||
Gross receivables
|
54,263
|
|
|
50,974
|
|
||
Less allowance for doubtful accounts
|
(455
|
)
|
|
(450
|
)
|
||
Receivables, net
|
$
|
53,808
|
|
|
$
|
50,524
|
|
|
September 26,
2015 |
|
December 27,
2014 |
||||
Raw materials
|
$
|
40,983
|
|
|
$
|
40,649
|
|
Work-in-process
|
23,346
|
|
|
19,976
|
|
||
Finished goods
|
61,488
|
|
|
57,913
|
|
||
Supplies and other
|
236
|
|
|
126
|
|
||
LIFO reserve
|
(11,197
|
)
|
|
(14,457
|
)
|
||
Inventories
|
$
|
114,856
|
|
|
$
|
104,207
|
|
|
September 26,
2015 |
|
December 27,
2014 |
||||
Land and improvements
|
$
|
7,385
|
|
|
$
|
7,327
|
|
Buildings and improvements
|
62,504
|
|
|
61,557
|
|
||
Machinery and equipment
|
175,328
|
|
|
171,586
|
|
||
|
245,217
|
|
|
240,470
|
|
||
Accumulated depreciation
|
(143,148
|
)
|
|
(137,981
|
)
|
||
Property, plant and equipment, net
|
$
|
102,069
|
|
|
$
|
102,489
|
|
|
September 26,
2015 |
|
December 27,
2014 |
||||
Compensation and benefits
|
$
|
9,407
|
|
|
$
|
8,894
|
|
Provision for customer rebates, claims and allowances
|
9,196
|
|
|
7,960
|
|
||
Advanced customer deposits
|
5,362
|
|
|
3,501
|
|
||
Outstanding checks in excess of cash
|
2,468
|
|
|
1,190
|
|
||
Other
|
8,284
|
|
|
7,762
|
|
||
Accrued expenses
|
$
|
34,717
|
|
|
$
|
29,307
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||||
Product warranty reserve at beginning of period
|
$
|
2,115
|
|
|
$
|
2,210
|
|
|
$
|
2,214
|
|
|
$
|
1,850
|
|
Warranty reserve assumed in business combination
|
—
|
|
|
—
|
|
|
—
|
|
|
209
|
|
||||
Warranty liabilities accrued
|
1,430
|
|
|
1,180
|
|
|
4,707
|
|
|
3,372
|
|
||||
Warranty liabilities settled
|
(1,880
|
)
|
|
(1,266
|
)
|
|
(6,682
|
)
|
|
(3,715
|
)
|
||||
Changes for pre-existing warranty liabilities
|
616
|
|
|
204
|
|
|
2,042
|
|
|
612
|
|
||||
Product warranty reserve at end of period
|
$
|
2,281
|
|
|
$
|
2,328
|
|
|
$
|
2,281
|
|
|
$
|
2,328
|
|
|
September 26,
2015 |
|
December 27,
2014 |
||||
Revolving credit facility - Tranche A
|
$
|
84,080
|
|
|
$
|
82,897
|
|
Notes payable - buildings
|
14,063
|
|
|
8,295
|
|
||
Acquisition note payable - Obligation to Development Authority of Gordon County
|
2,595
|
|
|
3,413
|
|
||
Acquisition note payable - Robertex
|
2,308
|
|
|
3,062
|
|
||
Notes payable - equipment and other
|
15,101
|
|
|
14,623
|
|
||
Capital lease obligations
|
13,034
|
|
|
14,998
|
|
||
Total long-term debt
|
131,181
|
|
|
127,288
|
|
||
Less: current portion of long-term debt
|
(9,337
|
)
|
|
(9,078
|
)
|
||
Long-term debt
|
$
|
121,844
|
|
|
$
|
118,210
|
|
|
September 26,
2015 |
|
December 27,
2014 |
|
Fair Value Hierarchy Level
|
||||
Assets:
|
|
|
|
|
|
||||
Rabbi Trust (1)
|
$
|
14,404
|
|
|
$
|
15,316
|
|
|
Level 2
|
Interest rate swaps (2)
|
—
|
|
|
34
|
|
|
Level 2
|
||
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
||||
Interest rate swaps (2)
|
$
|
5,072
|
|
|
$
|
3,040
|
|
|
Level 2
|
Deferred compensation plan (3)
|
13,412
|
|
|
14,331
|
|
|
Level 2
|
||
Contingent consideration (4)
|
1,093
|
|
|
1,855
|
|
|
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 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 volatility in underlying interest rates, which are driven by market conditions and the duration of the instrument. Credit adjustments could have a significant impact on the valuations due to changes in credit ratings of the Company or its counterparties.
|
(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 the Colormaster and Crown Rug acquisitions in 2012 and the Robertex acquisition in 2013, the Company recorded contingent consideration liabilities at fair value. These fair value measurements were based on calculations that utilize significant inputs not observable in the market including forecasted revenues, gross margins and discount rates and thus represent Level 3 measurements. These fair value measurements are directly impacted by the Company's estimates. Accordingly, if the estimates are higher or lower than the estimates within the fair value measurement, the Company would record additional charges or benefits, respectively, as appropriate.
|
|
September 26,
2015 |
|
September 27,
2014 |
||||
Beginning balance
|
$
|
1,855
|
|
|
$
|
2,751
|
|
Fair value adjustments
|
(387
|
)
|
|
(264
|
)
|
||
Settlements
|
(375
|
)
|
|
(214
|
)
|
||
Ending balance
|
$
|
1,093
|
|
|
$
|
2,273
|
|
|
September 26,
2015 |
|
December 27,
2014 |
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
179
|
|
|
$
|
179
|
|
|
$
|
394
|
|
|
$
|
394
|
|
Notes receivable, including current portion
|
282
|
|
|
282
|
|
|
282
|
|
|
282
|
|
||||
Interest rate swaps
|
—
|
|
|
—
|
|
|
34
|
|
|
34
|
|
||||
Financial Liabilities:
|
|
|
|
|
|
|
|
||||||||
Long-term debt and capital leases, including current portion
|
131,181
|
|
|
128,304
|
|
|
127,288
|
|
|
119,776
|
|
||||
Interest rate swaps
|
5,072
|
|
|
5,072
|
|
|
3,040
|
|
|
3,040
|
|
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
|
Interest rate swap
|
$
|
7,983
|
|
(1)
|
November 7, 2014 through November 7, 2024
|
4.500%
|
1 Month LIBOR
|
Interest rate swap
|
$
|
5,661
|
|
(2)
|
January 7, 2017 through January 7, 2025
|
4.300%
|
1 Month LIBOR
|
|
Location on Consolidated Balance Sheets
|
Fair Value
|
||||||
|
September 26,
2015 |
|
December 27,
2014 |
|||||
Asset Derivatives:
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
||||
Interest rate swaps
|
Other Assets
|
$
|
—
|
|
|
$
|
34
|
|
Total Asset Derivatives
|
|
$
|
—
|
|
|
$
|
34
|
|
|
|
|
|
|
||||
Liability Derivatives:
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
||||
Interest rate swaps, current portion
|
Accrued Expenses
|
$
|
1,200
|
|
|
$
|
650
|
|
Interest rate swaps, long-term portion
|
Other Long-Term Liabilities
|
3,872
|
|
|
2,390
|
|
||
Total Liability Derivatives
|
|
$
|
5,072
|
|
|
$
|
3,040
|
|
|
Amount of Gain or (Loss) Recognized in AOCIL on the effective portion of the Derivative
|
||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges - interest rate swaps
|
$
|
(1,923
|
)
|
|
$
|
(24
|
)
|
|
$
|
(2,466
|
)
|
|
$
|
(2,003
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Amount of Gain or (Loss) Reclassified from AOCIL on the effective portion into Income (1)(2)(3)
|
||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges - interest rate swaps
|
$
|
(187
|
)
|
|
$
|
(86
|
)
|
|
$
|
(453
|
)
|
|
$
|
(259
|
)
|
(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 26, 2015 is
$1,200
.
|
(3)
|
The amount of gain (loss) recognized in income on any ineffective portion of interest rate swaps is included in other (income) expense, net on the Company's Consolidated Condensed Statements of Operations. There was
no
ineffective portion for the periods presented.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
84
|
|
|
$
|
(8
|
)
|
|
$
|
(1,780
|
)
|
|
$
|
4,303
|
|
Less: Allocation of earnings to participating securities
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(197
|
)
|
||||
Income (loss) from continuing operations available to common shareholders - basic
|
$
|
82
|
|
|
$
|
(8
|
)
|
|
$
|
(1,780
|
)
|
|
$
|
4,106
|
|
Basic weighted-average shares outstanding (1)
|
15,573
|
|
|
15,394
|
|
|
15,518
|
|
|
14,040
|
|
||||
Basic earnings (loss) per share - continuing operations
|
$
|
0.01
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations available to common shareholders - basic
|
$
|
82
|
|
|
$
|
(8
|
)
|
|
$
|
(1,780
|
)
|
|
$
|
4,106
|
|
Add: Undistributed earnings reallocated to unvested shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Income (loss) from continuing operations available to common shareholders - basic
|
$
|
82
|
|
|
$
|
(8
|
)
|
|
$
|
(1,780
|
)
|
|
$
|
4,109
|
|
Basic weighted-average shares outstanding (1)
|
15,573
|
|
|
15,394
|
|
|
15,518
|
|
|
14,040
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options (2)
|
37
|
|
|
—
|
|
|
—
|
|
|
111
|
|
||||
Directors' stock performance units (2)
|
56
|
|
|
—
|
|
|
—
|
|
|
65
|
|
||||
Diluted weighted-average shares outstanding (1)(2)
|
15,666
|
|
|
15,394
|
|
|
15,518
|
|
|
14,216
|
|
||||
Diluted earnings (loss) per share - continuing operations
|
$
|
0.01
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.29
|
|
(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 during the relevant period and directors' stock performance units have been excluded. Aggregate shares excluded for the three and nine months ended September 26, 2015 were
220
and
308
, respectively, and for the three and nine months ending September 27, 2014 were
552
and
432
, respectively.
|
|
Interest Rate Swaps
|
|
Post-Retirement Liabilities
|
|
Total
|
||||||
Balance at December 27, 2014
|
(1,841
|
)
|
|
328
|
|
|
(1,513
|
)
|
|||
Unrealized gain (loss) on interest rate swaps, net of tax of $937
|
(1,529
|
)
|
|
—
|
|
|
(1,529
|
)
|
|||
Reclassification of loss into earnings from interest rate swaps, net of tax of $172
|
281
|
|
|
—
|
|
|
281
|
|
|||
Reclassification of net actuarial gain into earnings from postretirement benefit plans, net of tax of $12
|
—
|
|
|
(16
|
)
|
|
(16
|
)
|
|||
Reclassification of prior service credits into earnings from postretirement benefit plans, net of tax of $28
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
|||
Balance at September 26, 2015
|
$
|
(3,089
|
)
|
|
$
|
274
|
|
|
$
|
(2,815
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Other operating (income) expense, net:
|
|
|
|
|
|
|
|
||||||||
Gain on property, plant and equipment disposals
|
$
|
(79
|
)
|
|
$
|
(15
|
)
|
|
$
|
(187
|
)
|
|
$
|
(18
|
)
|
Loss on currency exchanges
|
85
|
|
|
116
|
|
|
530
|
|
|
342
|
|
||||
Amortization of intangibles
|
76
|
|
|
105
|
|
|
229
|
|
|
255
|
|
||||
Retirement expenses
|
83
|
|
|
48
|
|
|
173
|
|
|
94
|
|
||||
Miscellaneous (income) expense
|
(34
|
)
|
|
(24
|
)
|
|
(61
|
)
|
|
(72
|
)
|
||||
Other operating (income) expense, net
|
$
|
131
|
|
|
$
|
230
|
|
|
$
|
684
|
|
|
$
|
601
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||||
Other (income) expense, net:
|
|
|
|
|
|
|
|
||||||||
Earnings from equity investments
|
$
|
—
|
|
|
$
|
(24
|
)
|
|
$
|
14
|
|
|
$
|
(67
|
)
|
Miscellaneous (income) expense
|
4
|
|
|
1
|
|
|
31
|
|
|
7
|
|
||||
Other (income) expense, net
|
$
|
4
|
|
|
$
|
(23
|
)
|
|
$
|
45
|
|
|
$
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
As of September 26, 2015
|
||||||||||||||
|
Accrued Balance at December 27, 2014
|
|
2015 Expenses To Date
|
|
2015 Cash Payments
|
|
Accrued Balance at September 26, 2015
|
|
Total Costs Incurred To Date
|
|
Total Expected Costs
|
||||||||||||
Warehousing, Distribution & Manufacturing Consolidation Plan
|
$
|
—
|
|
|
$
|
1,786
|
|
|
$
|
(1,786
|
)
|
|
$
|
—
|
|
|
$
|
5,832
|
|
|
$
|
6,574
|
|
Atlas Integration Plan
|
—
|
|
|
202
|
|
|
(202
|
)
|
|
—
|
|
|
1,670
|
|
|
1,670
|
|
||||||
Corporate Office Consolidation Plan
|
—
|
|
|
276
|
|
|
(82
|
)
|
|
194
|
|
|
276
|
|
|
716
|
|
||||||
Totals
|
$
|
—
|
|
|
$
|
2,264
|
|
(1)
|
$
|
(2,070
|
)
|
|
$
|
194
|
|
|
$
|
7,778
|
|
(1)
|
$
|
8,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset impairments
|
|
|
$
|
—
|
|
(2)
|
|
|
|
|
|
$
|
1,133
|
|
(2)
|
$
|
1,133
|
|
|
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales - Carousel operations
|
$
|
—
|
|
|
$
|
353
|
|
|
$
|
417
|
|
|
$
|
829
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from Carousel operations
|
$
|
(12
|
)
|
|
$
|
(304
|
)
|
|
$
|
(89
|
)
|
|
$
|
(680
|
)
|
Workers' compensation costs from former textile operations
|
$
|
(12
|
)
|
|
$
|
(8
|
)
|
|
$
|
(48
|
)
|
|
$
|
(54
|
)
|
Environmental remediation costs from former textile operations
|
(13
|
)
|
|
(25
|
)
|
|
(56
|
)
|
|
(106
|
)
|
||||
Loss from discontinued operations, before taxes
|
(37
|
)
|
|
(337
|
)
|
|
(193
|
)
|
|
(840
|
)
|
||||
Income tax benefit
|
(19
|
)
|
|
(160
|
)
|
|
(75
|
)
|
|
(335
|
)
|
||||
Loss from discontinued operations, net of tax
|
$
|
(18
|
)
|
|
$
|
(177
|
)
|
|
$
|
(118
|
)
|
|
$
|
(505
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 26,
2015 |
|
September 27,
2014 |
|
September 26,
2015 |
|
September 27,
2014 |
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
75.0
|
%
|
|
75.6
|
%
|
|
74.6
|
%
|
|
76.4
|
%
|
Gross profit
|
25.0
|
%
|
|
24.4
|
%
|
|
25.4
|
%
|
|
23.6
|
%
|
Selling and administrative expenses
|
23.2
|
%
|
|
21.8
|
%
|
|
24.2
|
%
|
|
22.6
|
%
|
Other operating expense, net
|
0.1
|
%
|
|
0.2
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
Facility consolidation expenses
|
0.5
|
%
|
|
1.5
|
%
|
|
0.7
|
%
|
|
0.9
|
%
|
Impairment of assets
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
0.2
|
%
|
Operating income (loss)
|
1.2
|
%
|
|
0.8
|
%
|
|
0.2
|
%
|
|
(0.3
|
)%
|
•
|
Discharge 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 1, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
||
August 29, 2015
|
|
3,876
|
|
|
10.98
|
|
|
3,876
|
|
|
|||
September 26, 2015
|
|
1,205
|
|
|
10.02
|
|
|
1,205
|
|
|
|||
Three Months Ended September 26, 2015
|
|
5,081
|
|
|
$
|
10.75
|
|
|
5,081
|
|
$
|
2,496,241
|
|
(a.)
|
Exhibits
|
10.1
|
Thornton Edge LLC Lease for Reed Road Facility
|
10.2
|
Thornton Edge LLC First Lease Amendment for Reed Road Facility
|
10.3
|
Thornton Edge LLC Second Lease Amendment for Reed Road Facility
|
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 4, 2015
|
|
By: /s/ JON A. FAULKNER
|
|
|
Jon A. Faulkner
Vice President and Chief Financial Officer
|
|
|
|
1.
|
Landlord, for and in consideration of the rents, covenants,
agreements
and
stipulations
hereinafter mentioned,
provided for and
contained
to be paid, kept
and
performed by Tenant, leases and rents unto
Tenant, and Tenant
hereby leases and takes upon the terms and
conditions
which hereinafter appear, the following described property (hereinafter called the "Premises"), to wit:
|
2.
|
The Tenant shall have and hold the Premises for a term of 180 months beginning on the 1st day of September 2015 and ending on the 31st
day
of August 2030
at
midnight, unless
sooner
terminated
as
hereinafter
provided
.
|
3.
|
Beginning on September 1
st
, 2016, and on each September 1
st
thereafter during the term of this Lease, Tenant agrees to pay additional rental equal to 2% of the prior year
'
s
rental (payable as
additional
·
monthly rental), for purposes of increased
rentals
under this paragraph.
|
4.
|
If Landlord fails to
receive all or any
portion of a
rent payment
within five (5) days after it becomes due, Tenant shall pay Landlord, as
additional
rental,
a
late
charge equal
to Five percent (5%) of the overdue amount. The parties
agree
that
such
late
charge
represents a fair
and
reasonable
estimate
of the
costs
Landlord will incur by reason of such late payment. Landlord will accept ACH
bank
payments
as
method of payment.
|
5.
|
Tenant
shall
deposit with Landlord upon execution
of
this Lease $24,960.83
as a
security
deposit
which shall be held by
Landlord
in
a
segregated interest bearing
trust
account, without liability to Tenant for
any
interest thereon,
|
6.
|
Landlord agrees to separate or sub meter the utilities for the Premises at Landlord's sole cost. Tenant shall pay directly all utility bills, including, but not limited to water, sewer, gas, electricity, fuel, light, telephone, data services and heat bills for the Premises and Tenant shall pay all charges for garbage collection or other sanitary services. Except for Landlord's default in its obligations hereunder, Landlord shall not be liable to furnish these defined services, or any cessation thereof, resulting from causes beyond the control of Landlord, and except for a default by Landlord, any such failure of utility services shall not render Landlord liable in any respect for damage to either person or property, shall not be construed as an eviction of Tenant, shall not work an abatement of rent, nor relieve Tenant from fulfillment of any covenant of this Lease. Should any of the equipment or machinery break down, or for any cause cease to function properly, Landlord shall use reasonable diligence to repair the same promptly, but Tenant shall have no claim for rebate of rent or damages on account of any interruptions in service occasioned from the repairs unless such continues for a period of five (5) business. days, or occurs more than twice in any calendar month.
|
7.
|
If the Premises are part of a larger building or group of buildings, Tenant shall pay as additional rental monthly, in advance, its pro rata share of common area maintenance costs ("CAM") as hereinafter more particularly set forth in the Special Stipulations. The Rules and Regulations attached hereto are made a part of this Lease. Tenant agrees to perform and abide by those Rules and Regulations and such other Rules and Regulations as may be reasonably amended from time to time by Landlord.
|
8.
|
The Premises shall be used for office and showroom purposes only and no other. The Premises shall not be used for any illegal purposes, or in any manner to create any nuisance or trespass, or in any manner to vitiate the insurance or increase the rate of insurance on the Premises.
|
9.
|
Tenant agrees not to abandon or vacate the Premises during the term of this Lease and
agrees
to use the Premises for the
|
10.
|
Tenant
shall pay
upon demand
as
additional
rental
during the term of this Lease, and
any
extension or renewal thereof, it's prorata share of
the amount
by
which
all taxes (including but not limited to, ad valorem taxes,
special
assessments and
any
other governmental
charges)
on
the Premises for
each
tax year
exceed
$0.00. In the event the Premises
are
less than the
entire
property assessed for such taxes for any
such
tax year, then the tax for any such year applicable to the Premises shall be determined by proration on the basis that the rentable floor area of the Premises bears to the rentable floor area of the entire property assessed. If the first and/or final year of the
Lease
term fails to
coincide
with the tax year, then
any
excess for the tax year during which the term ends
shall
be
reduced
by the pro rata part
of
such tax year beyond the Lease term. If
such
taxes for the year
in
which the Lease terminates
are
not ascertainable
before
payment of the last month's rental, then the amount of such taxes
assessed
against the property for the previous tax year shall be used as a basis for determining the pro rata share, if
any,
to be paid
by
Tenant for that portion of the last Lease year. Tenant
shall
further
pay,
upon demand, it's pro rata share of the
excess
costs of fire and extended coverage insurance including any
and
all public liability insurance on the building over the cost for the first year of the Lease term
for
each subsequent year du
r
ing the term of this Lease. Tenant's pro rata portion of taxes or
share
of excess cost of fire and
extended coverage
and liability insurance,
as
provided herein, shall be payable within ten (10) days
after
receipt of notice from Landlord or Agent as to the amount due, subject to Tenant's review of the
evidence
of such
charges
for manifest
error.
|
12.
|
Anything in this Lease to the contrary notwithstanding, Landlord and Tenant hereby waive and release
each other
of and from any and
all
rights of recovery
,
claim, action
or cause of
action,
against
each
other, their agents, officers
and
employees, for any loss or
damage
that may occur to the Premises, improvements to the building of which the Premises are a part, or personal property (building contents) within the building, by reason of fire, the elements or any other
cause
which could be insured
against
under the terms of
standard
fire
and extended
|
13.
|
Landlord agrees to keep in good repair the roof, foundations and exterior walls of the Premises (including all glass and all exterior doors), major_repairs and replacement of the HVAC system, underground utility and sewer pipes outside the exterior walls of the building, and any paving of driveways and parking lots, and this cost shall not be included in CAM. The grounds around the building, including the mowing of grass, care of shrubs and landscaping, maintenance of outdoor lighting, and routine HVAC maintenance shall be part of CAM except repairs rendered necessary by the negligence. or intentional wrongful acts of Tenant, its employees or invitees. Tenant shall promptly report in writing to Landlord any defective condition known to it, which Landlord is required to repair and failure so to report such conditions shall make Tenant responsible to Landlord for any liability incurred by Landlord by reason of such conditions.
|
14.
|
Tenant accepts the Premises in their improved condition, a list of such improvements attached as schedule B and as suited for the uses intended by Tenant, and other improvements located thereon, except those repairs.expressly required to be made by Landlord hereunder. Tenant agrees to return the Premises to Landlord at the expiration, or prior to termination of this Lease, in as
good
condition and repair as when first received, normal wear and tear, damage by storm, fire, lightning, earthquake or other casualty excepted.
|
15.
|
Tenant shall not make any alterations, additions, or improvements to the Premises without Landlord's prior written consent. Tenant shall promptly remove any alterations, additions, or improvements constructed in violation of this Paragraph 15 upon Landlord's written request. All approved alterations, additions, and improvements will be accomplished in a good and workmanlike manner, in conformity with all applicable laws and regulations, and by a contractor reasonably approved by Landlord, free of any liens or encumbrances. Unless otherwise approved to remain when installed, Landlord may require Tenant to remove any alterations, additions or improvements (whether or not made with Landlord's consent) at the termination of this Lease and to restore the Premises to its prior condition, all at Tenant's expense. All alterations, additions and improvements which Landlord has not required Tenant to remove shall become Landlord's property and shall be surrendered to Landlord upon the termination of this Lease, except that Tenant may remove any of Tenant's machinery or equipment which can .be removed without material damage to the Premises. Tenant shall repair, at Tenant's expense, any damage to the Premises caused by the removal of any such machinery or equipment.
|
16.
|
Tenant may (if not in default hereunder) prior to the expiration of this Lease, or any extension or renewal thereof, remove all fixtures and equipment which it has placed in the Premises, provided Tenant repairs all damage to the Premises caused by such removal.
|
17.
|
If the Premises are totally destroyed by storm, fire, lightning, earthquake or other casualty, of if damaged to such an extent as to prevent, or materially interfere with, Tenant's use thereof, this Lease shall terminate as of the date of such destruction and rental shall be accounted for as between Landlord and Tenant as of that date. If the Premises are damaged but not wholly destroyed by any such casualties, rental shall abate in such proportion as use of the Premises has been destroyed and Landlord shall restore Premises to substantially the same condition as before damage as speedily as is practicable, whereupon full rental shall recommence.
|
18.
|
Landlord warrants that the Premises comply with all statutes and regulations related to office and showroom use as of the Commencement Date hereof. Tenant agrees, at his own expense, to comply promptly with any changed in the requirements of any legally constituted public authority or made necessary by reason of Tenant's occupancy of the Premises other than for office and showroom use. Landlord agrees to comply promptly with any such requirements if not made necessary by reason of Tenant's occupancy for office and showroom use. It is mutually agreed, however, between Landlord and Tenant, that if in order to comply with such requirements, the cost to Landlord or Tenant, as the case may be, shall exceed a sum equal to one year's rent, then whichever party hereto is obligated to comply with such requirements may terminate this Lease by giving written notice of termination to the other party by·certified mail, which termination shall become effective sixty (60) days after receipt of such notice and which notice shall eliminate the necessity of compliance with such requirements by giving such notice unless the party given such notice of termination shall, before termination becomes effective, pay to the party giving notice all cost of compliance in excess of one year's rent, or secure payment of said sum in manner satisfactory to the party giving notice.
|
19.
|
(a) If, during the term (or any extension or renewal) of this Lease, all or a substantial part of the Premises are taken for any public or quasi-public use under any governmental law, ordinance or regulation, or by right of eminent domain or by private purchase in lieu thereof, and the taking would prevent, or materially interfere with, Tenant's use of the Premises for the purpose for which they are then being used, this Lease shall terminate and the rent shall be abated during the unexpired portion of this Lease effective on the date physical possession is taken by the condemning authority.
|
20.
|
Tenant shall not, without the prior written consent of Landlord assign this Lease or any interest hereunder, or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than the Tenant and its affiliates. Consent to any assignment or sublease shall not impair this provision and all later assignments or subleases shall be made likewise only on the prior written consent of Landlord. The Assignee of Tenant, at option of Landlord, shall become directly liable to Landlord for all obligations of Tenant hereunder, but no sublease or assignment by Tenant shall relieve Tenant of
any
liability hereunder.
|
21.
|
The happening of any one or more of the following events (hereinafter any one of which may be referred to as an "Event of Default") during the term of this Lease, or any renewal or extension thereof, shall constitute a breach of this Lease on the part of the Tenant (A) Tenant fails to pay the rental as provided for herein, and such failure continues for ten (10) days after written notice thereof; (B) Tenant abandons or vacates the Premises; (C) Tenant fails to comply with or abide by and perform any other obligation imposed upon Tenant under this Lease, and such failure continues for thirty (30) days after written notice thereof; provided that if such failure cannot be cured within thirty (30) days, such failure shall not constitute a default hereunder if Tenant has commenced such cure within thirty (30) days after written notice and diligently pursues such cure lei completion; (D) Tenant is adjudicated bankrupt; (E) a permanent receiver is appointed for Tenant's property and such receiver is not removed within sixty (60) days after written notice from Landlord to Tenant to obtain such removal; (F) Tenant, either voluntarily or involuntarily, takes advantage of any debt or relief proceedings under the present or future law, whereby the rent or
|
22.
|
Upon the occurrence of an Event of Default, Landlord, in addition to any and all other rights or remedies it may have at law or in equity, shall have the option of pursuing any one or more of the following remedies:
|
A.
|
Landlord may terminate this Lease by giving notice of termination, in which event this Lease shall expire and terminate on the date specified in such notice of termination, with the same force and effect as though the date so specified were the date herein originally fixed as the termination date of the term of this Lease, and all rights of Tenant under this Lease and in and to the Premises shall expire and terminate, and Tenant shall remain liable for all obligations under this Lease arising up to the date of such termination and Tenant shall surrender the Premises to Landlord on the date specified in such notice;
|
B.
|
Landlord may terminate this Lease as provided in paragraph 22(A) hereof and recover from Tenant all damages Landlord may incur by reason of Tenant's default, including, without limitation, a sum which, at the date of such termination, represents the then value of the excess, if any, of the aggregate reasonable rental value of the Premises (less reasonable brokerage commissions, attorneys' fees and other costs relating to the retelling of the Premises) for the same period, all of which excess sum shall be deemed immediately due and payable;
|
C.
|
Landlord may, without terminating this Lease, declare immediately due and payable all monthly rental and additional rent due and coming due under this Lease for the entire remaining term hereof, together with all other amounts previously due, at once; provided, however, that such payment shall not be deemed a penalty or liquidated damages but shall merely constitute payment in advance of rent for the remainder of said term; upon making such payment, Tenant shall be entitled to receive from Landlord all rents received by Landlord from other assignees, tenants and subtenants on account of the Premises during the term of this Lease, provided that the monies to which Tenant shall so become entitled shall in no event exceed the entire amount actually paid by Tenant to Landlord pursuant to this clause less all costs, expenses and attorneys' fees of Landlord incurred in connection with the retelling of the Premises; or
|
D.
|
Landlord may, from time to time without terminating this Lease, and without releasing Tenant in whole or in part from Tenant's obligation to pay monthly rental and additional rent and perform all of the covenants, conditions and agreements to be performed by Tenant as provided in this Lease, make such alterations and repairs as may be necessary in order to relet the Premises, and after making such alterations and repairs, Landlord may, but shall not be obligated to, relet the Premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable or acceptable; upon each reletting, all rentals received by Landlord from such reletting shall be applied first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord, second, to the payment of any costs and expenses of such reletting, including brokerage fees and attorneys' fees, and of. costs of such alterations and repairs, third, to the payment of the monthly rental and additional rent due and unpaid hereunder, and the residue, if any, shall be held by Landlord and applied against payments of future monthly rental and additional rent as the same may become due and payable hereunder, in no event shall Tenant be entitled to any excess rental received by Landlord over and above charges that Tenant is obligated to pay hereunder, including monthly rental and additional rent; if such rentals received from such reletting during any month are less that those to be paid during the month by Tenant hereunder, including monthly rental and additional rent, Tenant shall pay any such deficiency to Landlord, which deficiency shall be calculated and paid monthly; Tenant shall also pay Landlord as soon as ascertained and upon demand all costs and expenses incurred by Landlord in connection with such reletting and in making any alterations and repairs which are not covered by the rentals received from such reletting; notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach.
|
23.
|
Tenant shall place no signs upon the outside walls or roof of the Premises except with the w
r
itten consent of the Landlord. Landlord acknowledges that Tenant shall have the right to place a pylon sign at the entrance to th
e
driveway and a sign on the exterior of the building in which the Premises are located, but such shall be subject to the prior approval of Landlord, which shall not be unreasonably withheld or delayed
.
Any and all signs placed on the Premises by Tenant shall be maintain
e
d in compliance with governmental rules and regulations governing such signs and Tenant shall be responsible to Landlord for any damage caused by installation, use or maintenance of said signs, and all damage incidents to such removal.
·
|
24.
|
Landlord may card the Premises "For Rent'' or "For Sale" sixty (60) days before the termination of this Lease. Landlord may enter the Premises at reasonable hours to exhibit the Premises to inspect the Premises to see that Tenant is complying with all of its obligations hereunder, and to make repairs required of Landlord under the terms hereof or to make repairs to Landlord's adjoining property, if any; provided that Landlord shall not unreasonably interfere with Tenant's business
.
Upon at least one (1) business day prior notice, in which the name of the prospective purchas
e
r or tenants shall be disclosed to Tenant, Landlord shall also have the right to enter the Premises during normal business hours to show the Premises to prospective purchasers or tenants; provided that Tenant shall have the right to deny access to prospective purchasers or tenants who compete with Tenant.
|
25.
|
No termination of this Lease prior to the normal ending thereof, by lapse of time or otherwise, shall affect Landlord's right to collect rent for the period prior to termination thereof.
|
26.
|
At the option of Landlord, Tenant agrees that this Lease shall remain subject and subordinate to all present and future mortgages, deeds to secure debt or other security instruments (the
"
Security Deeds") affecting the Building or the Premises
,
and Tenant shall promptly execute and deliver to Landlord such certificate or certificates in writing as Landlord may request, showing the subordination of the Lease
·
to such Security Deeds
;
provided the lender executes an acceptable non-disturbance and attornment agreement, Tenant shall upon request from Landlord at any time and from time to time execute, acknowledge and deliver to Landlord a written statement certifying as follows: (A) that this Lease is unmodified and in full force and effect (or if there has been modification thereof, that the same is in full force and effect as modified and stating the nature thereof)
;
(B) that to the best of its knowledge there are no uncured defaults on the part of Landlord (or if any such default exists, the specific nature and extent thereof); (C) the date to which any rent and other charges have been paid in advance, if any; and (D) such other matters as Landlord may reasonably request.
|
27.
|
So long as Tenant observes and performs the covenants c:1nd agreements contained herein, it shall at all times during the Lease term peacefully and quietly have and enjoy possession of the Premises, but always subject to the terms hereof
.
|
28.
|
Upon the request of either party hereto, both parties shall execute a Memorandum of Lease, in recordable form
,
to give record notice of the basic terms of this Lease.
|
29.
|
If Tenant remains in possession of the Pr
e
mises after expiration of the term hereof, with Landlord's acquiescence
|
30.
|
In the event Tenant defaults in the performance of any of the terms, covenants, agreements or conditions contained in this Lease, and Landlord places the enforcement of all or any part of this Lease, the collection of any rent due or to become due or recovery of the possession of the leased premises in the hands of an attorney, Tenant agrees to pay Landlord reasonable attorney's fees for the services of the attorney, whether suit is actually filed or not. If suit is filed, the prevailing party shall reimburse the prevailing party for its reasonable attorney's fees and court costs.
|
31.
|
All rights, powers and privileges conferred hereunder upon parties hereto shall be cumulative and not restrictive of those given by law.
|
32.
|
No failure of Landlord to exercise any power given Landlord hereunder or to insist upon strict compliance by Tenant of its obligations hereunder and no custom or practice of the parties at variance with the terms hereof shall constitute a waiver of Landlord's right to demand exact compliance with the terms hereof.
|
33.
|
Landlord represents to the best of its knowledge and belief, (A) the Premises are in compliance with all applicable environmental laws, and (B) there are not excessive levels (as defined by the Environmental Protection Agency) of radon, toxic waste or hazardous substances on the Premises. Before and during the term of this Lease, Landlord agrees to provide Tenant with copies of all environmental reports on the Property in order to confirm the status of any environmental issues relating to the Property as of commencement of this Lease. Tenant represents and warrants that Tenant shall comply with all applicable environmental laws and that Tenant shall not permit any of its employees, contractors or subcontractors, or any person present on the Premises to generate, manufacture, store, dispose or release on, about, or under the Premises any toxic waste or hazardous substances which would result in the Premises not complying with any applicable environmental laws.
|
34.
|
Time is of the essence of this Lease.
|
35.
|
"Landlord" as used in this Lease shall include the undersigned, its heirs, legal representatives, assigns and successors in title to the Premises. "Tenant" shall include the undersigned and its assigns and successors, and if this Lease shall be validly assigned or sublet, shall include also Tenant's assignees or subtenants as to the Premises covered by such assignment or sublease. "Landlord" and "Tenant'' include male and female, singular and plural, corporation, partnership or individual, as may fit the particular parties.
|
36.
|
All notices required or permitted under this Lease shall be in writing and shall be personally delivered or sent by
|
37.
|
This Lease,
along
with
the
Exhibits hereto contains the entire agreement of the parties hereto, and no representations, inducements, promises or agreements, oral or o
t
herwise, between the parties, not embodied herein,
shall
be of
by
force or effect. No subsequent alteration, amendment, change or addition to this Lease,
except
as to the changes or additions to the Rules and Regulations described in paragraph 7, shall be binding upon Landlord or Tenant unless reduced to writing and
signed
by Landlord and Tenant.
|
38.
|
This Lease shall be binding and inure to the benefit of Landlord and Tenant and their respective heirs, personal representatives, successors and assigns
.
It is hereby covenanted and
agreed
that should Landlord's interest in the Premises cease to
exist
for any reason during the term of the Lease,
then
notwithstanding the happening of such event this Lease nevertheless
shall remain
unimpaired and in full force and effect and Tenant hereunder agrees to attorn to the then owner of the Premises.
|
39.
|
As security for Tenant's payment of rent, damages and all other payments required to be made
by
this Lease, Tenant, hereby grants to Landlord a lien upon all property of Tenant now or subsequently located upon the Premises, subject to any prior lien Tenant has given to its existing or future lender(s), and
subject
to the terms of a Landlord subordination agreement,
substantially
in the form attached herfeto as Exhibit D ("Landlord Agreement"). Tenant's obligations under this Lease are
subject to
approval by its
existing
lender, but execution by such lender of the Landlord Agreement
·shall confirm
such lender's approval. . If Tenant abandons or vacates any substantial portion of the Premises or is in default in the payment of any rentals,
.
damage or other payments required to be made by this
Lease,
subject to the terms of any Landlord subordination agreement mentioned above, Landlord may
·
enter upon the Premises, by force if necessary,
and
take possession
·
of all or
any
part of the personal property, and may
sell all or any
part of the personal property at
a
public or private sale, in one or successive sales, with or without further notice, to the highest bidder for cash, and,
on
behalf of Tenant,
sell
and
convey
all or part of the personal property to the highest bidder, delivering to the highest bidder all of the Tenant's title and Interest in the personal property sold to him
.
The proceeds of the sale
of
the personal property
shall
be applied by Landlord toward the cost of the sale and then towc1rd the payment of
all
sums then due by Tenant to Landlord under the terms of this Lease.
|
40.
|
Landlord
shall
not be liable to Tenant's
employees, agents,
invitees, licensees or visitors, or to any
.
other person, for any injury
to
person or damage to property
on
or
about
the Premises caused by the negligence or misconduct of Tenant, its
agents,
servants or employees, or of
any
other person entering upon the Premises under express or implied invitation by Tenant,
or
caused by the building
and
improvements located on the Premises becoming out of repair, or caused by leakage of gas, oil,
water
or steam
or
by electricity
emanating
from the Premises
,
or clue to
any
other cause, unless
caused
by Landlord's gross negligence or willful misconduct. Subject to the waiver
set
forth in paragraph 12
above,
Tenant agrees to indemnify
and
hold harmless Landlord of and from any loss,
attorney's
fees,
expenses
or claims arising out of
any
such
damage
or injury.
|
41.
|
Any special stipulations are set forth below. Insofar
as
said Special Stipulations conflict with any of the foregoing provisions,
said
Special Stipulations shall control:
|
A.
|
Tenant will provide carpet tiles and rugs for the Premises to Landlord. Landlord is to install carpet tiles at no cost to Tenant.
|
B.
|
Dumpster: Tenant will supply and contract for its own dumpster & trash removal and place in an area designated by Landlord.
|
C.
|
Tenant, at its own cost and expense shall pay all charges for janitorial services including trash removal performed in the Premises during the term of this Lease.
|
D.
|
Storage trailers are not allowed on the Premises.
|
E.
|
Tenant is to pay its prorated share of 44.8 % of CAM, as identified on Exhibit E attached hereto. Such CAM, including taxes and insurance, shall be $44,322 for the first 12 month period. The Landlord warrants that the real estate taxes will not increase by more than 10% per year above the base estimate of $26,500.00. There will not be a cap on the property insurance. The CAM will be capped at 5% increase per year.
|
F.
|
Tenant must maintain the generator system connected to its electrical service. Landlord to put computer room on transfer switch (if not already on one) for generator. Tenant will provide a generator if current generator is insufficient in size.
|
G.
|
Tenant to allow Landlord access to Tenant's internet connection for fire alarm and elevator.
|
H.
|
Landlord shall be responsible for all costs of making the changes to the Premises as highlighted in yellow on the preliminary floor plan drawings attached hereto as Exhibit C, subject to Tenant's review and approval of final floor plan drawings, which will not be unreasonably withheld or delayed.
|
I.
|
Tenant and Landlord agree to retain a qualified electrical contractor for installation of Cat GE wiring in the Premises at locations identified by Tenant. Tenant shall be responsible for the labor portion of such contract, and Landlord shall be responsible for the materials portion of such contract.
|
J.
|
Tenant will pay for the kitchen appliances; Landlord will provide bathrooms and kitchens fixtures, cabinets and interior and install Tenant- provided icemakers, refrigerators and dishwashers.
|
K.
|
Provided Tenant is not in default under this Lease and no circumstances exist which, but for the passage of time would constitute an event of default by Tenant hereunder, Tenant s.hall have the right ("Right of First Offer'') to lease additional space located in the Building (the "Additional Space") if at any time during the Lease Term, Landlord receives a bona fide written offer ("an Offer'') from an unrelated third party 'to lease all or any part of the Additional Space. If Landlord receives an Offer, Landlord shall notify Tenant and the Tenant shall have (10) days after Tenant's receipt of such notice from Landlord in which to notify Landlord in writing that it elects to exercise its Right of First Offer to Lease with respect to such Additional Space and to accept such Additional Space on the same terms, conditions, and rental rate as if such expansion space were included within this original Lease, so that the term of the Additional Space shall be coterminous with the Lease Term, as well as the Landlord shall provide space in a condition consistent with the Premises delivered hereunder as defined by Exhibits B and C, proportionally reduced based on the number of months remaining in the Lease Term. If Tenant exercises such Right of First Offer in accordance with the provisions hereof, Landlord and Tenant shall thereupon execute an amendment to this Lease adding the Additional Space to this Lease in accordance with the provisions of this Section 41.K. If Tenant fails to execute said amendment within Ten (10) days after Landlord furnishes same to Tenant, then Tenant shall be deemed to have waived its Right of First Offer relative to such Additional Space. If Tenant elects not, or is deemed to have elected not, to exercise its Offer of First Offer within the time herein specified, and thereafter the lease of Additional Space to said third party is consummated substantially in accordance with the Offer presented to Landlord by said third party, said Right of First Offer shall automatically and without notice be extinguished with respect to such Additional Space identified in the Offer but not with respect to any other remaining Additional Space, and all remaining terms, covenants and conditions of this Lease shall continue in full force and effect.
|
L.
|
Expansion. During the Lease Term provided Tenant is not in default under this Lease and no circumstances exists which, but for the passage of time, would constitute an event of default by Tenant hereunder. Tenant shall have the option to expand into additional space of unleased and available space in the Building upon fair market value of similar space with not less than three (3) months' prior written notice to Landlord.
|
M.
|
Right of First Refusal to Purchase. Provided that Tenant is not in default under this Lease and no circumstances exist which, but for the passage of time would constitute an event of default by Tenant hereunder,, Landlord hereby grants to Tenant a right of first refusal to purchase the entirely of the Property on which the Premises is located (the"Purchase Right of First Refusal"). If at any time during the Lease Term, as such may be extended, Landlord
|
N.
|
Landlord Improvements and renovations to building, as set forth on Exhibits
·
att
a
ched hereto, are to be complet
e
d by Landlord prior to September 1, 2015
.
|
O.
|
Tenant renovations
,
as identified in the drawings attached hereto as Exhibit C, are to be completed by Landlord prior to September 1, 2015.
|
P.
|
Commissions. Landlord agrees to pay any and all real estate broker's fees due on this Leas
e
to NAI Chart
e
r Real Estate under a separate agreement dated September 22, 2014
.
The parties indemnify and hold each other harmless for any damages, cost, loss or injury, including attorney fees
,
suffered by either party as a result of the non-disclosure of any other broker representing the other party to this Lease
.
Tenant acknowledges L
a
ndlord has agreed to pay NAI Charter Real Estate a commission for any renewals of this Lease, or negotiate on behalf of Landlord at the time of any renewal; e
x
pansion, option or new lease, and that any su
c
h commissions shall be Landlord's sole cost
a
nd expense; provided, in the event Tenant exercises the Purchase Right of First Refusal granted above
,
Landlord shall be responsible for any commissions due from such sale, and NAI Charter Real Estate shall thereafter have no further rights to any commissions relative to the property purchased by Tenant.
|
/s/ PEGGY BIGHAM
|
|
LANDLORD:
|
Witness
|
|
Thornton Edge, LLC
|
|
|
/s/ CHARLES WHITENER
|
|
|
Managing Member Charles Whitener
|
|
|
|
|
|
TENANT:
|
|
|
TDG Operations, LLC
|
/s/ PEGGY BIGHAM
|
|
/s/ JON FAULKNER
|
Witness
|
|
Jon Faulkner, President
|
1.
|
The rentable square ft. under the Lease is hereby increased by 5,091 square feet for the additional space identified as "Lease Amendment I" space on
Exhibit A attached hereto (the "Additional Space"), so that the total Premises will consist of
forty seven thousand eight hundred eighty-one (47,881) sq. ft.
|
2.
|
The annual rent will be Three Hundred Thirty Five Thousand One Hundred Sixty Seven Dollars ($335,167.00), which shall be payable i n advance on the first (1st) day of each calendar month during the term, beginning on the later of date the Premises, the original space and the Additional Space each treated individually for the commencement of rent, are delivered to Tenant or September 1, 2015, at the monthly rate of Twenty Seven Thousand Nine Hundred Thirty and 58/100 Dollars ($27,930.58).
|
3.
|
Upon the execution of this Amendment, Tenant agrees to pay to Landlord an additional deposit of Two Thousand Nine Hundred Sixty Nine and 75/100 Dollars ($2,969.75) and additional rent for the third month of the term of Two Thousand Nine Hundred Sixty Nine and 75/100 Dollars ($2,969.75). The total due at the signing of this amendment is Five Thousand Nine Hundred Thirty Nine and 50/100 Dollars ($5,939.50).
|
4.
|
The Additional Space will be built-out within 90 days after the amendment is executed. Pursuant to the terms under the original lease.
|
LESSOR:
|
Thornton Edge, LLC
|
/s/ CHARLES WHITENER
|
Date: July 20, 2015
|
|
TENANT:
|
TDG Operations, LLC
|
/s/ JON FAULKNER
|
Date: July 20, 2015
|
1.
|
Pursuant to the First Amendment, the rentable square feet under the Lease was increased to forty seven thousand eight hundred eighty-one (47,881) sq. ft.
|
2.
|
Due to the change in square footage under the Lease, Lessee's prorated share of CAM is hereby increased to 50.1%, as identified in the revised
Exhibit E
attached hereto Such CAM, including taxes and insurance,
is
hereby be amended to $49,566.44 for the first 12 month period, adjusted for the time period the additional space is made available.
Lessor
warrants that the real estate taxes wilI not increase by more than l0% per year above the base estimate of $26,500
.
00
.
There will not be
a
cap on
the
property insurance other than Lessee's
portion
of the total CAM will be capped at
5%
increase per year
|
LESSOR:
|
Thornton Edge, LLC
|
/s/ CHARLES WHITENER
|
Date: July 23, 2015
|
|
TENANT:
|
TDG Operations, LLC
|
/s/ JON FAULKNER
|
Date: July 23, 2015
|
Date: November 4, 2015
|
|
/s/
DANIEL K. FRIERSON
|
|
|
Daniel K. Frierson
|
|
|
Chief Executive Officer
|
|
|
The Dixie Group, Inc.
|
Date: November 4, 2015
|
|
/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 4, 2015
|
/s/ JON A. FAULKNER
|
Jon A. Faulkner, Chief Financial Officer
|
Date: November 4, 2015
|
|