SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) June 3, 1996
DIXIE YARNS, INC.
(Exact Name of Registrant as specified in its Charter)
Tennessee 0-2585 62-0183370
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
1100 SOUTH WATKINS STREET, CHATTANOOGA, TN 37404
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (423) 698-2501
Item 2. Acquisition or Disposition of Assets
On June 3, 1996, Dixie Yarns, Inc. ("DIXIE"), sold to American & Efird,
Inc. ("A & E"), substantially all of the assets employed by Dixie's Threads
USA Division in its industrial sewing threads business ("the BUSINESS"),
including real estate, plant, property and equipment, raw materials,
supplies, in-process inventories and the trade name "Threads USA" and
certain other trade names, corporate names and trademarks used in the
Business, but excluding cash, accounts receivable, greige yarn and finished
goods inventory, computer mainframe equipment and other systems and assets
used by Dixie on a company-wide basis. Dixie's Threads USA Division was
operated by subsidiaries T-C Threads, Inc. d/b/a Threads USA, Threads of
Puerto Rico, Inc., Productos Para la Industria de la Maquila, S. A. Prima
and Hilos Y Accessorios, S. A. de C. V. (collectively "THREADS"). There is
no material relationship between A & E and Dixie or any of Dixie's
affiliates, directors or officers or any of their associates.
A & E has agreed to sell the finished goods inventory of Threads, for the
account of Dixie in the ordinary course of business for a period following
the closing as defined in the agreement and to produce and sell products of
Threads USA during that period of time. Additionally, A & E has agreed to
purchase the greige yarn inventory of Threads, as determined at closing,
for the manufacture of Threads USA products sold during such period. A & E
has also agreed to assist Dixie in collecting the outstanding accounts
receivable of Threads during a period following the closing, as defined in
the agreement.
Dixie agreed not to solicit for employment nor hire any person employed by
A & E as a nonhourly worker nor to directly or indirectly compete with
A & E in the business formerly conducted by the Threads USA Division for a
period of five (5) years from the date of the sale.
The purchase price for the assets sold at closing was paid in cash and was
approximately $27,347,000. Net proceeds from the transaction, including
the ongoing transactions discussed above, are anticipated to be
approximately $50,000,000.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information
PRO FORMA CONDENSED BALANCE SHEET
The following unaudited Pro Forma Condensed Balance Sheet as of March 30,
1996 gives effect to the sale of substantially all of the operating assets
of Threads USA and the assumed subsequent sale of greige yarn and finished
goods and the assumed collection of outstanding accounts receivable for
aggregate proceeds of approximately $50,000,000. The Company's historical
consolidated balance sheet has been adjusted to reflect the deletion of the
operating assets and liabilities of Threads USA as described in the
accompanying notes as if these transactions had been completed on March 30,
1996.
DIXIE YARNS, INC.
PRO FORMA CONDENSED BALANCE SHEET
(dollars in thousands)
(unaudited)
PRO FORMA
Historical Dixie Yarns,
Dixie Yarns, Inc. without
Inc. Threads USA
March 30, March 30,
1996 Adjustments 1996
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,788 $ 3,788
Accounts receivable - -net 30,383 (1) $(13,902) 16,481
Inventories 101,292 (2) (20,494) 80,798
Assets held for sale 21,669 (3) (21,669) --
Other current assets 7,152 (4) (2,230) 4,922
TOTAL CURRENT ASSETS 164,284 (58,295) 105,989
PROPERTY, PLANT AND EQUIPMENT - NET 191,226 (5) (123) 191,103
INTANGIBLE ASSETS - NET 35,509 35,509
OTHER ASSETS 11,131 (6) (65) 11,066
TOTAL ASSETS $402,150 $(58,483) $343,667
<FN>
See notes to Pro Forma Condensed Balance Sheet (Unaudited).
PRO FORMA
Historical Dixie Yarns,
Dixie Yarns, Inc. without
Inc. Threads USA
March 30, March 30,
1996 Adjustments 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 27,342 (7) $ (2,253) $ 25,089
Accrued expenses 25,041 (8) (2,703) 22,338
Current portion of long-term debt 2,168 2,168
TOTAL CURRENT LIABILITIES 54,551 (4,956) 49,595
LONG-TERM DEBT
Senior indebtedness 95,062 (9) (51,109) 43,953
Subordinated notes 50,000 50,000
Convertible subordinated debentures 44,782 44,782
TOTAL LONG-TERM DEBT 189,844 (51,109) 138,735
OTHER LIABILITIES 11,351 11,351
DEFERRED INCOME TAXES 29,083 (10) (2,418) 26,665
STOCKHOLDERS' EQUITY
Common Stock 41,608 41,608
Class B Common Stock 2,206 2,206
Additional paid-in capital 131,620 131,620
Retained earnings 1,456 1,456
Minimum pension liability adjustment (4,116) (4,116)
172,774 172,774
Less Common Stock in treasury at cost 55,453 55,453
TOTAL STOCKHOLDERS' EQUITY 117,321 117,321
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $402,150 $(58,483) $343,667
<FN>
See notes to Pro Forma Condensed Balance Sheet (Unaudited).
NOTES TO PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED)
(1) Adjusted to reflect the collection of outstanding accounts
receivable of Threads.
(2) Adjusted to reflect the subsequent sale of all Threads greige
yarn and finished goods inventories.
(3) Adjusted to reflect the sale of property, plant and equipment
classified as assets held for sale at Threads.
(4) Adjusted to reflect the elimination of other current assets at
Threads and the reclassification of deferred taxes.
(5) Adjusted to reflect the sale of property, plant and equipment
at Threads not previously classified as "Assets held for sale."
(6) Adjusted to reflect the collection of deposits classified in
other assets at Threads.
(7) Adjusted to reflect the payment of outstanding accounts
payable at Threads.
(8) Adjusted to reflect the payment of outstanding accrued
expenses at Threads.
(9) Adjusted to reflect the reduction in outstanding borrowings
by the amount of net cash proceeds.
(10) Adjusted to reflect the reclassification of deferred taxes.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
The following unaudited Pro Forma Condensed Statements of Operations for
the year ended December 30, 1995 and the quarter ended March 30, 1996 give
effect to the sale of substantially all of the operating assets of Threads
USA and the assumed subsequent sale of greige yarn and finished goods and
the assumed collection of outstanding accounts receivable for aggregate
proceeds of approximately $50,000,000. The Company's historical
consolidated results of operations have been adjusted to reflect the
deletion of the operating results of Threads USA as described in the
accompanying notes. The Pro Forma results are presented as if the
transactions had occured as of the beginning of the periods presented and
are not necessarily indicative of the results which would have occured had
the sale been effective at the beginning of such periods or of future
results of operations of the Company.
DIXIE YARNS, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
PRO FORMA
Historical Dixie Yarns,
Dixie Yarns, Inc. without
Inc. Threads USA
Year Ended Year Ended
December 30, December 30,
1995 Adjustments 1995
Net sales $670,842 (A) $(94,572) $576,270
Cost of sales 572,762 (B) (79,093) 493,669
GROSS PROFIT 98,080 (15,479) 82,601
Selling and administrative expenses 82,624 (C) (13,391) 69,233
Asset valuation losses 63,425 (D) (41,480) 21,945
Other (income) expense - net 1,112 (E) (1,849) (737)
INCOME (LOSS) BEFORE INTEREST AND TAXES (49,081) 41,241 (7,840)
Interest expense 15,591 (F) (3,525) 12,066
INCOME (LOSS) BEFORE INCOME TAXES (64,672) 44,766 (19,906)
Income tax provision (benefit) (12,493) (G) 7,325 (5,168)
NET INCOME (LOSS) $(52,179) $ 37,441 $(14,738)
Net income (loss) per common
and common equivalent share $ (4.44) $ (1.25)
Weighted average number of common and
common equivalent shares outstanding 11,744 11,744
<FN>
See notes to Pro Forma Condensed Statements of Operations (Unaudited).
DIXIE YARNS, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
PRO FORMA
(H) Historical Dixie Yarns,
Dixie Yarns, Inc. without
Inc. Threads USA
Quarter Ended Quarter Ended
March 30, March 30,
1996 (H) Adjustments 1996
Net sales $161,520 (I) $(23,882) $137,638
Cost of sales 137,260 (J) (19,415) 117,845
GROSS PROFIT 24,260 (4,467) 19,793
Selling and administrative expenses 20,806 (K) (3,099) 17,707
Other (income) expense - net 693 (L) 8 701
INCOME (LOSS) BEFORE INTEREST AND TAXES 2,761 (1,376) 1,385
Interest expense 3,977 (M) (828) 3,149
INCOME (LOSS) BEFORE INCOME TAXES (1,216) (548) (1,764)
Income tax provision (benefit) (225) (N) (201) (426)
NET INCOME (LOSS) $ (991) $ (347) $ (1,338)
Net income (loss) per common
and common equivalent share $ (0.09) $ (0.12)
Weighted average number of common and
common equivalent shares outstanding 11,196 11,196
<FN>
See notes to Pro Forma Condensed Statements of Operations (Unaudited).
NOTES TO PRO FORMA CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(A) Net sales has been adjusted to eliminate the sales made by Threads.
(B) Cost of sales has been adjusted to elimate the cost of Threads sales.
(C) Selling and administrative expenses have been adjusted to eliminate
the selling and administrative expenses of Threads and to reflect an
estimated reduction in the level of corporate expenses remaining after
the sale of Threads.
(D) Asset valuation losses have been adjusted to eliminate the valuation
losses attributable to Threads.
(E) Other (income) expense - net has been adjusted to eliminate the other
expenses of Threads.
(F) Interest expense has been adjusted to reflect estimated interest
savings (at 7.05%, the historical incremental borrowing rate paid
by the Company) due to the assumed reduction in outstanding long-term
debt of $50,000,000.
(G) Income tax provision (benefit) has been adjusted to reflect the tax
deductible portion of the pro forma adjustments at the approximate
combined Federal and State income tax rates for the period presented
The overall effective income tax rate applicable to the pro forma
adjustments differs from the statuatory income tax rate due primarily
to the non-deductibe write-off of intangible assets included in the
asset valuation losses.
(H) Under the provisions of FAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
depreciation expense is not recorded for assets held for sale during
the holding period. Accordingly, the historical results of operations
and the pro forma adjustments for the quarter ended March 30, 1996
excluded depreciation expense of approximately $1,321,000 and
therefore are not necessarily indicative of results from continuing
operations.
(I) Net sales has been adjusted to eliminate the sales made by Threads.
(J) Cost of sales has been adjusted to elimate the cost of Threads sales.
(K) Selling and administrative expenses have been adjusted to eliminate
the selling and administrative expenses of Threads and to reflect an
estimated reduction in the level of corporate expenses remaining after
the sale of Threads.
(L) Other (income) expense - net has been adjusted to eliminate the other
income of Threads.
(M) Interest expense has been adjusted to reflect estimated interest
savings (at 6.62%, the historical incremental borrowing rate paid
by the Company) due to the assumed reduction in outstanding long-term
debt of $50,000,000.
(N) Income tax provision (benefit) has been adjusted to reflect the tax
deductible portion of the pro forma adjustments at the approximate
combined Federal and State income tax rates for the period presented.
(c) Exhibits
Exhibits (2a), (2b), (2d) and (2e) listed below omit certain
schedules and exhibits, which are listed therein. The
Registrant hereby undertakes to furnish a copy of any such
omitted schedule or exhibit supplementally upon request of the
Commission's Staff.
(1) Exhibits Incorporated by Reference:
None.
(2) Exhibits Filed with this Report:
(2a) Asset Purchase Agreement dated May 23, 1996, by
and among T-C Threads, Inc. d/b/a Threads USA,
Threads of Puerto Rico, Inc., Productos para la
Industria de la Maquila, S. A., PRIMA, Hilos y
Accessorios, S. A. de C. V., and Dixie Yarns, Inc.
and American & Efird, Inc.
(2b) Amendment, dated May 31, 1996, to Asset Purchase
Agreement dated May 23, 1996, by and among T-C
Threads, Inc. d/b/a Threads USA, Threads of Puerto
Rico, Inc., Productos para la Industria de la
Maquila, S. A., PRIMA, Hilos y Accessorios, S. A. de
C. V., and Dixie Yarns, Inc. and American & Efird,
Inc.
(2c) Second Amendment, dated June 3, 1996, to Asset
Purchase Agreement dated May 23, 1996, by and among
T-C Threads, Inc. d/b/a Threads USA, Threads of
Puerto Rico, Inc., Productos para la Industria de la
Maquila, S. A., PRIMA, Hilos y Accessorios, S. A. de
C. V., and Dixie Yarns, Inc. and American & Efird,
Inc.
(2d) Yarn and Finished Goods Agreement dated as of June 3,
1996, by and among T-C Threads, Inc. d/b/a Threads
USA, Threads of Puerto Rico, Inc., Productos para la
Industria de la Maquila, S. A., PRIMA, Hilos y
Accessorios, S. A. de C. V., and Dixie Yarns, Inc.
and American & Efird, Inc.
(2e) Accounts Receivable Agreement dated as of June 3,
1996, by and among T-C Threads, Inc. d/b/a Threads
USA, Threads of Puerto Rico, Inc., Productos para la
Industria de la Maquila, S. A., PRIMA, Hilos y
Accessorios, S. A. de C. V., and Dixie Yarns, Inc.
and American & Efird, Inc.
(2f) Noncompetition Agreement dated as of June 3, 1996, by
and among T-C Threads, Inc. d/b/a Threads USA,
Threads of Puerto Rico, Inc., Productos para la
Industria de la Maquila, S. A., PRIMA, Hilos y
Accessorios, S. A. de C. V., and Dixie Yarns, Inc.
and American & Efird, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
DIXIE YARNS, INC.
_________________________
(Registrant)
By:/s/D. EUGENE LASATER
______________________
D. Eugene Lasater
Controller
Date: June 17, 1996
____________________
DIXIE YARNS, INC.
CURRENT REPORT ON FORM 8-K
EXHIBIT INDEX
Exhibit No. Description
(2a) Asset Purchase Agreement dated May 23, 1996, by and
among T-C Threads, Inc. d/b/a Threads USA, Threads of
Puerto Rico, Inc., Productos para la Industria de la
Maquila, S. A., PRIMA, Hilos y Accessorios, S. A. de
C.V., and Dixie Yarns, Inc. and American & Efird, Inc.
(2b) Amendment, dated May 31, 1996, to Asset Purchase
Agreement dated May 23, 1996, by and among T-C Threads,
Inc. d/b/a Threads USA, Threads of Puerto Rico, Inc.,
Productos para la Industria de la Maquila, S. A.,
PRIMA, Hilos y Accessorios, S. A. de C. V., and Dixie
Yarns, Inc. and American & Efird, Inc.
(2c) Second Amendment, dated June 3, 1996, to Asset Purchase
Agreement dated May 23, 1996, by and among T-C Threads,
Inc., d/b/a Threads USA, Threads of Puerto Rico, Inc.,
Productos para la Industria de la Maquila, S. A.,
PRIMA, Hilos y Accessorios, S. A. de C. V., and Dixie
Yarns, Inc. and American & Efird, Inc.
(2d) Yarn and Finished Goods Agreement dated as of June 3,
1996, by and among T-C Threads, Inc. d/b/a Threads USA,
Threads of Puerto Rico, Inc., Productos para la
Industria de la Maquila, S. A., PRIMA, Hilos y
Accessorios, S. A. de C. V., and Dixie Yarns, Inc. and
American & Efird, Inc.
(2e) Accounts Receivable Agreement dated as of June 3, 1996,
by and among T-Threads, Inc. d/b/a Threads USA, Threads
of Puerto Rico, Inc., Productos para la Industria de la
Maquila, S. A., PRIMA, Hilos y Accessorios, S. A. de
C. V., and Dixie Yarns, Inc. and American & Efird, Inc.
(2f) Noncompetition Agreement dated as of June 3, 1996, by
and among T-C Threads, Inc. d/b/a Threads USA, Threads
of Puerto Rico, Inc., Productos para la Industria de la
Maquila, S. A., PRIMA, Hilos y Accessorios, S. A. de
C. V., and Dixie Yarns, Inc. and American & Efird, Inc.