SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) |X|ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended January 1, 2000 OR |_|TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________ to __________ Commission File Number 1-6853 - -------------------------------------------------------------------------------- [OBJECT OMITTED](R) Shaw Industries, Inc. (Exact name of registrant as specified in its charter) - -------------------------------------------------------------------------------- Georgia 58-1032521 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 616 East Walnut Avenue, Dalton, Georgia 30720 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: 706/278-3812 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of Each Exchange Title of Each Class On Which Registered Common Stock, No Par Value The New York Stock Exchange $1.11 Stated Value The Pacific Stock Exchange Rights to Purchase Series A Participating Preferred Stock The New York Stock Exchange $.50 Stated Value The Pacific Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No_____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[ ] Aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing sales price on The New York Stock Exchange on March 21, 2000 was: $1,201,474,573 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Title of Each Class Outstanding at March 21, 2000 Common Stock, No Par Value 132,676,198 Shares ------------- DOCUMENTS INCORPORATED BY REFERENCE 1999 Annual Report to Shareholders --- Part II. Definitive Proxy Statement for the Annual Meeting of Shareholders for fiscal 1999 on April 27, 2000 --- Part III. PART I Item I. Business Shaw Industries, Inc. ("Shaw" or the "company") is the world's largest carpet manufacturer based on both revenue and volume of production. Shaw designs and manufactures approximately 1,800 styles of tufted and woven carpet for residential and commercial use under the PHILADELPHIA, TRUSTMARK, CABIN CRAFTS, SHAW COMMERCIAL CARPETS, STRATTON, NETWORX, SHAWMARK, EVANS BLACK, SALEM, SUTTON, PATCRAFT, CUMBERLAND, DESIGNWEAVE, QUEEN CARPET, QUEEN COMMERCIAL, TUFTEX, REDBOOK, MINSTER and INVICTA trade names and under certain private labels. The company's manufacturing operations are fully integrated from the processing of yarns through the finishing of carpet. The company's carpet is sold in a broad range of prices, patterns, colors and textures with the majority of its sales in the medium to high retail price range. Shaw sells its wholesale products to retailers, distributors and commercial users throughout the United States, Canada, Mexico and Australia; through its own residential and commercial contract distribution channels to various residential and commercial end-users in the United States; and to a lesser degree, exports to additional overseas markets. The company also provides installation services and sells laminate flooring, ceramic tile and beginning in 2000, hardwood flooring. The company has a joint venture (the "Terza Joint Venture") with Grupo Industrial Alfa, S.A. de C.V. of Monterrey, Mexico, for the manufacture, distribution and marketing of carpets, rugs and related products primarily in Mexico and South America. The company's investment in the Terza Joint Venture is being accounted for using the equity method. On April 3, 1998, the company completed the disposition of Carpets International, Plc, a wholly-owned U.K. subsidiary, which resulted in a removal of certain assets of $16,566,000, net of liabilities. The disposal resulted in a charge to earnings of $20,300,000, net of tax benefit, which was recorded in the fourth quarter of the year ended January 3, 1998. On August 9, 1998, the company sold substantially all of its remaining residential retail operations to The Maxim Group, Inc. ("Maxim"), now Flooring America, Inc., in exchange for 3,150,000 shares of Maxim stock, $25,000,000 cash and a one year note of approximately $18,000,000, subject to adjustment. Retail stores not sold were closed. The company incurred a charge to record the loss on the sale of the residential retail operations, store closing costs and write-down of certain assets of $132,303,000 ($92,660,000, net of tax benefit) related to exiting its residential retail operations. In December 1999, the company recorded an additional charge for exiting the residential retail business of $4,061,000 ($2,441,000, net of tax benefit). On October 6, 1998, the company merged with Queen Carpet Corporation for consideration of approximately $579,000,000 consisting of 19,444,444 shares of common stock, 3,150,000 shares of Maxim stock, cash of approximately $36,000,000 and assumed debt of approximately $216,000,000. As a result of the sale of the 3,150,000 shares of Maxim stock during the fourth quarter ended January 2, 1999, the company incurred a loss on the sale of equity securities of approximately $22,247,000 ($13,370,000, net of tax benefit). In December 1999, the company closed a yarn processing facility and recorded a nonrecurring charge of $1,834,000 ($1,102,000, net of tax benefit). The company has a 75% interest in Nylon Polymer Company, L.L.C., a Georgia corporation, which polymerizes nylon chips for use in the company's nylon extrusion operations. The results of operations for Nylon Polymer company, L.L.C. are consolidated with the company's results of operations. The company supplies the Australian, Pacific Rim and other international markets with a range of products targeted to the needs of those markets. For 1999, 1998 and 1997, international operations accounted for 3.1, 4.8, and 9.2 percent, respectively, of the company's net sales. Geographical information about the company's sales and long-lived assets is incorporated by reference to page 20 of Exhibit 13 to this report. In 1998, the company adopted EVA(R) ("EVA" is a registered trademark of Stern, Stewart & Company), a financial measurement tool which is designed to emphasize profitability, effective asset allocation, the cost of capital and the creation of shareholder wealth. During 1999, the company produced a positive EVA of approximately $90,600,000 which represents essentially the company's net operating income, net of tax, in excess of a charge for the cost of capital utilized in the company's business. 2 On March 27, 2000, the company reached an agreement in principle to sell Shaw Industries, Pty. Ltd., its wholly-owned Australian subsidiary for approximately $73,000,000 including the assumption of debt. The sale is expected to be completed during the company's second quarter of 2000. Products and Marketing Substantially all carpet manufactured by the company is tufted carpet made from nylon, polypropylene, polyester and wool. In the tufting process, yarn is inserted by multiple needles into a synthetic backing, forming loops which may be cut or left uncut, depending on the desired texture or construction. According to industry estimates, tufted carpet accounted for 89.9% of unit volume shipments of carpet manufactured in the United States during 1999. Substantially all carpet manufactured in the United States is made from synthetic fibers, with nylon accounting for 59.4% of the total, polypropylene 33.4%, polyester 6.8% and wool 0.4%. During 1999, the company processed approximately 97% of its requirements for carpet yarn in its own yarn processing facilities. The company believes that its significant investment in modern, state-of-the-art equipment has been an important factor in achieving and maintaining its leadership position in the marketplace. During the past five fiscal years, the company has invested approximately $598 million (including acquisitions) in property additions. The company continually seeks opportunities for increasing its sales volume and market share. For example, the company continues to expand its product lines of carpet manufactured from polypropylene fiber, including fibers produced by the company's own extrusion equipment. The company also has a manufacturing facility for the production of carpet tiles for the commercial market to facilitate the company's growing demand for its tile products. The overall level of sales for the company and the carpet industry is influenced by a number of factors, including consumer confidence and spending for durable goods, turnover in housing, the condition of the residential construction industry and the overall strength of the economy. The company's international operations are also impacted by the markets in which they operate. The marketing of carpet is influenced significantly by current trends in style and fashion, principally color trends. The company believes it has been a leader in the development of color technology in the carpet industry and that its dyeing facilities are among the most modern and versatile in the industry. The company maintains an in-house product development department to identify developing color and style trends which are expected to affect its customers' buying decisions. This department is strengthened by the company's Research and Development Center. This state-of-the-art complex includes a 75,000 square foot pilot plant featuring sample extrusion, yarn processing, tufting, dyeing, coating and shearing equipment, and three fiber and dye development laboratories. Sales and Distribution The company's wholesale products are marketed domestically by approximately 1,420 salaried and commissioned sales personnel in its various marketing divisions directly to retailers and distributors and to large national accounts. The company's eleven (11) regional warehouse facilities and thirteen (13) redistribution centers, along with its centralized management information system, enable it to provide prompt delivery of its products to both its retail customers and wholesale distributors. The company's substantial investment in management information systems permits efficient production scheduling and control of inventory levels. The company sells its wholesale products to approximately 53,300 retailers, distributors and national accounts located throughout the United States, Australia, Mexico, and Canada. Retailers and national accounts, on a combined basis, accounted for approximately 97.1% of the company's carpet sales for 1999. Shaw also sells to approximately 40 wholesale distributors. Approximately 2.9% of the company's carpet sales in 1999 were to distributors. Sales of Shaw products in foreign markets, including the sales of its foreign subsidiary, accounted for approximately 3.1% of total sales in 1999. No other single customer accounted for more than 4% of the company's sales during 1999. Competition The floor covering industry is highly competitive with more than 200 companies engaged in the manufacture and sale of carpet in the United States and numerous manufacturers engaged in hard surface floor covering production and sales. According to industry estimates, carpet accounts for approximately 70% of the total United States production of all flooring types. The principal methods of competition within the floor covering industry are quality, style, price and service. The company believes its strategically located regional warehouse 3 facilities and redistribution centers, together with its contract distribution network, provide a competitive advantage by enabling it to supply its products on a timely basis to customers. The company's long-standing practice of investing in modern, state-of-the-art equipment contributes significantly to its ability to compete effectively on the basis of quality, style and price. Raw Materials The principal raw materials used by the company are nylon and polypropylene fiber and filament, and synthetic backing; additional raw materials include polyester, wool fibers and filaments, latex and dye. During 1999, the company experienced no significant shortages of raw materials. Employees At January 1, 2000, the company had approximately 30,000 full-time employees. In the opinion of management, employee relations are good. Employees are involved in the Quality Improvement Process, which began in 1985 as a program designed to improve the company's products and services through education and training. A small number of the company's commercial contractor employees in the United States are represented by unions. Certain employees of foreign subsidiaries are represented by unions. Environmental Matters Management believes the company is currently in compliance in all material respects with applicable federal, state and local statutes and ordinances regulating the discharge of materials into the environment and otherwise relating to the protection of the environment. Management does not believe the company will be required to expend any material amounts in order to remain in compliance with these laws and regulations, or that compliance will materially affect its capital expenditures, earnings or competitive position. However, management's expectations could change if regulatory conditions change. The company continued its commitment to the environment during 1999. Because of this commitment to finding new ways of using mill waste, the company is aggressively pursuing an environmentally friendly use for all of its waste products. For example, future possibilities for use of fiber reinforced concrete include road and bridge construction, military applications, building foundations, tile, brick and concrete blocks. Patents, Trademarks, etc. Patent protection has not been significant to the company's business, although the company does hold several patents covering machinery used in a specific carpet coloring process. Item 2. Properties The company's executive offices are located in Dalton, Georgia. At January 1, 2000, the company operated additional facilities as follows: Domestic Facilities (wholesale) Alabama Redistribution, yarn spinning and yarn extrusion Arizona Yarn processing California Administrative, coating, dyeing, tufting and warehousing Colorado Warehousing, redistribution Florida Redistribution Georgia Administrative, distribution, carpet manufacturing, yarn processing, yarn spinning, tufting, dyeing, coating, finishing, rug manufacturing, sample manufacturing, warehousing, design center and research and development center. Illinois Warehousing Massachusetts Warehousing Michigan Redistribution Minnesota Warehousing Missouri Redistribution 4 New Jersey Warehousing North Carolina Redistribution, primary backing manufacturing Ohio Redistribution Pennsylvania Redistribution South Carolina Yarn spinning Tennessee Carpet manufacturing, yarn spinning Texas Warehousing Virginia Redistribution Washington Warehousing Domestic Facilities (commercial distribution - number of locations in parenthesis) Arizona Warehousing, administrative (1) California Warehousing, administrative (6) Colorado Warehousing, administrative (1) Florida Warehousing, administrative (7) Georgia Retail store, warehousing, administrative (5) Illinois Retail store, warehousing, administrative (2) Kansas Warehousing, administrative (1) Maryland Retail store, warehousing, administrative (1) Massachusetts Warehousing, administrative (3) Michigan Warehousing, administrative (2) Minnesota Retail store, warehousing, administrative (3) New Jersey Administrative (1) New York Warehousing, administrative (4) Ohio Warehousing, administrative (4) Oregon Warehousing, administrative (1) Pennsylvania Warehousing, administrative (3) Texas Warehousing, administrative (4) Utah Warehousing, administrative (1) Virginia Warehousing, administrative (1) Washington Warehousing, administrative (2) Wisconsin Warehousing, administrative (1) Foreign Facilities (facilities are located in or near the area listed) Victoria, Australia Yarn extrusion, yarn processing, tufting, dyeing, coating, distribution and administrative offices The company maintains leased full-service warehouses in or near Dallas; Los Angeles; La Mirada, California; Seattle; Chicago; Minneapolis; Boston; and Cranbury, New Jersey. Each leased warehouse facility includes a sales showroom. The company believes that current facilities are adequately insured and well maintained, substantially used and provide adequate capacity for current and anticipated future operations. Item 3. Legal Proceedings The company is a party to several lawsuits incidental to its various activities and incurred in the ordinary course of business. The company believes that it has meritorious claims and defenses in each case. After consultation with counsel, it is the opinion of management that, although there can be no assurance given, none of the associated claims, when resolved, will have a material adverse effect upon the company. The company is a defendant in certain litigation alleging personal injury resulting from personal exposure to volatile organic compounds found in carpet produced by the company. The complaints seek injunctive relief and unspecified money damages on all claims. The company has denied any liability. The company believes that it has meritorious defenses and that the litigation will not have a material adverse effect on the company's financial condition or results of operations. In December 1995, the company learned that it was one of six carpet companies named as additional defendants in a pending antitrust suit filed in the United States District Court of Rome, Georgia. The amended complaint alleges 5 price-fixing regarding certain types of carpet products in violation of Section 1 of the Sherman Act. The amount of damages sought is not specified. If any damages were to be awarded, they may be trebled under the applicable statute. The company has filed an answer to the complaint that denies plaintiffs' allegations and sets forth several defenses. In September 1997, the Court issued an order certifying a nationwide plaintiff class of persons and entities who purchased "mass production" polypropylene carpet directly from any of the defendants from June 1, 1991 through June 30, 1995, excluding, among others, any persons or entities whose only purchases were from any of the company's retail establishments. Discovery began in November 1997 and recently concluded. The company believes that it has meritorious defenses to plaintiffs' claims in the lawsuits described in this paragraph and intends to vigorously defend these actions. After consultation with counsel, it is the opinion of management that, although there can be no assurance given, none of the claims described in this paragraph, when resolved, will have a material adverse effect upon the company. On October 3, 1998, the company learned that it was one of five defendants in a pending antitrust suit filed in the United States District Court in Rome, Georgia. The complaint alleges price fixing regarding certain types of carpet products in violation of Section 1 of the Sherman Act. The amount of damages sought is not specified. If any damages were to be awarded, they may be trebled under the applicable statute. The company has filed an answer to the complaint that denies plaintiff's allegations and sets forth several defenses. Discovery has recently begun and is ongoing. The company believes it has meritorious defenses to plaintiffs' claims in the lawsuit described in this paragraph and intends to vigorously defend these actions. After consultation with counsel, it is the opinion of management that, although there can be no assurance given, none of the claims described in this paragraph, when resolved, will have a material adverse effect on the company. The company is also a party to four consolidated lawsuits pending in the Superior Court of the State of California, City and County of San Francisco, all of which were brought on behalf of a purported class of indirect purchasers of carpet in the State of California and which seek damages for alleged violations of California antitrust and fair competition laws. The company believes that it has meritorious defenses to plaintiffs' claims in the lawsuits described in this paragraph and intends to vigorously defend these actions. After consultation with counsel, it is the opinion of management that, although there can be no assurance given, none of the claims described in this paragraph, when resolved, will have a material adverse effect upon the company. The company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous materials used in its manufacturing processes. Failure by the company to comply with present and future regulations could subject it to future liabilities. In addition, such regulations could require the company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. The company is not involved in any material environmental proceedings. At the end of fiscal year 1999, there were no other pending legal proceedings to which the company was a party or to which any of its property was subject which, in the opinion of management, were likely to have a material adverse effect on the company's business, financial condition or results of operations. Item 4. Submission of Matters to Vote of Security Holders Not applicable. Item 4(A). Executive Officers of the Registrant Officer Name Age Since Position Robert E. Shaw 68 1967 Chairman, Chief Executive Officer and Director W. Norris Little 68 1978 Vice Chairman and Director Julian D. Saul 59 1998 President and Director Vance D. Bell 48 1983 Executive Vice President, Operations Kenneth G. Jackson 42 1996 Executive Vice President and Chief Financial Officer Julius C. Shaw, Jr. 46 1999 Executive Vice President, Investor Relations 6 Carl P. Rollins 56 1991 Vice President, Administration Bennie M. Laughter 48 1986 Vice President, Secretary and General Counsel Douglas H. Hoskins 65 1978 Controller Officers of the company are elected annually by the Board of Directors. All of the executive officers of the company except for Messrs. Saul, Jackson and Julius C. Shaw, Jr. have served as executive officers for the company for more than the past five years. Mr. Jackson joined the company in February 1996. Prior to February 1996, Mr. Jackson had been a partner with Arthur Andersen LLP in Atlanta, Georgia. Mr. Saul joined the company in October 1998. Prior to October 1998, Mr. Saul was the Chief Executive Officer and Chairman of the Board of Queen Carpet Corporation. Mr. Julius C. Shaw, Jr. joined the company in 1976. Prior to 1999, Mr. Shaw held several executive positions in marketing and investor relations with the company. 7 PART II Item 5. Market for the Registrant's Common Stock and Related Shareholder Matters The high and low sales prices for the company's common stock as reported by the New York Stock Exchange the amount of dividends paid by quarter for the last three fiscal years are set forth on page 23 of Exhibit 13. Reference is made to Note 2 of the Notes to Consolidated Financial Statements on page 13 of Exhibit 13 for information concerning restrictions on the payments, as defined, including cash dividends. At March 21, 2000, there were 3,166 holders of record of the company's common stock. Item 6. Selected Financial Data This information is set forth on page 22 of the Exhibit 13 under the caption "Five-Year Financial Review." Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This information is set forth on pages 1-5 of Exhibit 13 to this report. Item 7 (a). Quantitative and Qualitative Disclosures About Market Risk This information is set forth on page 2 of Exhibit 13 to this report, under the caption "Market Risk Exposure and Derivative Financial Instruments." Item 8. Financial Statements and Supplementary Data This information is set forth on pages 6-23 of Exhibit 13. Item 9. Disagreements on Accounting and Financial Disclosure None. 8 PART III Item 10. Directors and Executive Officers of the Registrant Information concerning directors is incorporated by reference to "Election of Class of Directors" on pages 3-4 of the Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2000. Reference is also made to Item 4A of Part I of this report, "Executive Officers of the Registrant," which information is incorporated herein. Item 11. Executive Compensation This information is incorporated by reference to "Executive Compensation" on pages 6-8 of the Proxy Statement for the Annual Meeting of Shareholders. Item 12. Security Ownership of Certain Beneficial Owners and Management This information is incorporated by reference to "Voting Rights and Principal Shareholders" and "Election of Directors" on pages 2 and 3-4 respectively, of the Proxy Statement for the Annual Meeting of Shareholders. 9 PART IV Item 13. Certain Relationships and Related Transactions This information is incorporated by reference to "Certain Relationships" on page 4 of the Proxy Statement for the Annual Meeting of Shareholders. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) The following documents are filed as part of this report: 1. Financial Statements o Exhibit 13 to this Form 10-K, contains the consolidated balance sheets as of January 1, 2000 and January 2, 1999, the related consolidated statements of income, shareholders' investment and cash flow for each of the three years in the period ended January 1, 2000, and the related report of Arthur Andersen LLP. These financial statements and the report of Arthur Andersen LLP are incorporated herein by reference. The financial statements incorporated by reference include the following: o Consolidated Balance Sheets - January 1, 2000 and January 2, 1999 o Consolidated Statements of Income for the years ended January 1, 2000, January 2, 1999 and January 3, 1998. o Consolidated Statements of Shareholders' Investment for the years ended January 1, 2000, January 2, 1999 and January 3, 1998. o Consolidated Statements of Cash Flow for the years ended January 1, 2000, January 2, 1999 and January 3, 1998. 2. Financial Statement Schedules o Report of Independent Public Accountants on Financial Statement Schedule o Schedule II - Valuation and Qualifying Accounts for the Years Ended January 1, 2000, January 2, 1999 and January 3, 1998. 10 3. Exhibits incorporated by reference or filed with this report. Number Description 3(a) Amended and Restated Articles of Incorporation. [Incorporated herein by reference to Exhibit 3(a) to Registrant's Registration Statement filed with the commission on December 28, 1993 (File No. 33-51719).] 3(b) Bylaws. [Incorporated herein by reference to Exhibit 3(b) to Registrant's Registration Statement filed with the commission on December 28, 1993 (File No. 33-51714).] 4(a) Specimen form of Common Stock Certificate. [Incorporated herein by reference to Exhibit 2 to Registrant's Report on Form 8-A filed with the Securities and Exchange Commission on May 12, 1989 (File No. 1-6853).] 4(b) Restated Articles of Incorporation, filed as Exhibit 3(a), and the Bylaws of Registrant, filed as Exhibit 3(b), are incorporated herein by reference. 4(c) Rights Agreement dated as of April 10, 1989, between Registrant and Citizens and Southern Trust Company (Georgia), N.A., as Rights Agent. [Incorporated herein by reference to Exhibit 1 to Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 1989 (File No. 1-6853).] 10(a) Share Transfer Agreement dated as of April 3, 1998 among the Registrant, Shaw UK Holdings Limited on Form 8-K filed with the Securities and Exchange Commission on April 20, 1998 (File No. 1-6853).] 10(b)* Deferred Compensation Plan and form of Deferred Compensation Agreement of Registrant as adopted in April, 1980. [Incorporated herein by reference to the Registrant's July 2, 1994 Form 10-K filed with the Securities and Exchange Commission (File No. 1-6853).] 10(c) Agreement and Plan of Merger dated as of June 23, 1998 among the Registrant, The Maxim Group, Inc., CMAX Acquisition, Inc. and Shaw Carpet Showplace, Inc., and forms of Subordinated Promissory Note and Shareholder's Agreement attached thereto as Exhibits B and C, respectively. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 26, 1998 (File No. 1-6853).] 10(d) Amendment, dated August 9, 1998, to Agreement and Plan of Merger dated as of June 23, 1998 among the Registrant, The Maxim Group, Inc., CMAX Acquisition, Inc. and Shaw Carpet Showplace, Inc. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2,1 998 (File No. 1-6853).] 10(e) Agreement and Plan of Merger dated as of August 13, 1998 among the registrant, Chessman Acquisition Corp., Queen Carpet Corporation, Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust, and Linda Saul Schejola Family Trust. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 28, 1998 (File no. 1-6853).] 10(f) First Amendment to Agreement and Plan of Merger dated as of October 6, 1998 among the Registrant, Chessman Acquisition Corp., Queen Carpet Corporation, Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust, and Linda Saul Schejola Family Trust. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 998 (File No. 1-6853).] 10(g)* Employment Agreement dated as of October 6, 1998 between the Registrant and Julian D. Saul. 10(h) [Reserved.] 10(i)* Form of Shaw Industries, Inc. Outside Directors Stock Plan. [Incorporated herein by reference to Exhibit 99 to the Registrant's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on September 1, 1998 (Reg. No. 333-62645).] 10(j) [Reserved.] 11 10(k)* 1992 Incentive Stock Option Plan of the Registrant. [Incorporated herein by reference to Exhibit A to Registrant's 1992 Proxy (File No. 1-6853).] Statement, dated September 18, 1992 (File No.1-6853).] 10(l) 1997 Stock Incentive Plan of the Registrant [Incorporated herein by reference to Exhibit A to Registrant's 1997 Proxy (File no. 1-6853).] 10(m) Amended and Restated Credit Agreement dated as of March 16, 1998, among the Registrant, the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. 10(n)* Form of Shaw Industries, Inc. Nonqualified Retirement Savings Plan. [Incorporated herein by reference to Exhibit 4(c) to the Registrant's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on September 4, 1998 (Reg. No. 333-62915).] 10(o) First Amendment to the Amended and Restated Credit Agreement dated as of August 7, 1998 among the Registrant, the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. [Incorporated herein by reference to Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 1998 (File No. 1-6853).] 10(p) Second Amendment to the Amended and Restated Credit Agreement dated as of October 6, 1998 among the Registrant, the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. [Incorporated herein by reference to Exhibit 99.4 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 1998 (File No. 1-6853).] 10(q) Third Amendment to the Amended and Restated Credit Agreement dated as of October 15, 1998 among the Registrant, the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. [Incorporated herein by reference to Exhibit 99.5 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 1998 (File No. 1-6853).] 10(r) Transfer and Administration Agreement dated as of September 3, 1998 among the Registrant, Shaw Funding Company, Enterprise Funding Corporation, NationsBank, N.A. and the financial institutions from time to time parties thereto. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 17, 1998 (File No. 1-6853).] 10(s) Receivables Purchase Agreement dated as of September 3, 1998 between the Registrant and Shaw Funding Company and Form of Subordinated Non-Negotiable Revolving Note. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 17, 1998 (File No. 1-6853).] 10(t) [Reserved.] 10(u) Amendment No. 1 dated as of April 23, 1999 to Transfer and Administration Agreement dated as of September 3, 1998 among the Registrant, Shaw Funding Company, Enterprise Funding Corporation, NationsBank, N.A. and the financial institutions from time to time parties thereto. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 17, 1999 (File No. 1-6853).] 10(v) First Amendment dated as of July 29,1999 to Amended and Restated Rights Agreement dated as of April 10, 1999 between the Registrant and EquiServe Trust Company, N.A., as successor rights agent to Wachovia Bank, N.A. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 17, 1999 (File 1-6853).] 10(w) Fourth Amendment to the Amended and Restated Credit Agreement dated as of August 20, 1999 among Shaw Industries, Inc., the lenders appearing on the signature pages thereto and Bank of America, N.A. [Incorporated herein by reference to Exhibit 99.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 16, 1999 (File 1-6853).] 12 10(x) Fifth Amendment to the Amended and Restated Credit Agreement dated as of October 15, 1999 among Shaw Industries, Inc., the lenders appearing on the signature page thereto, Bank of America and SunTrust Bank, Atlanta. [Incorporated herein by reference to Exhibit 99.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 16, 1999 (File 1-6853).] 10(y) $200,000,000 Credit Agreement dated as of November 5, 1999 by and among the Registrant, the lenders named therein, Bank of America, N.A., as administrative agent, and SunTrust Bank, Atlanta, as documentation agent, together with Form of Syndicate Note, Form of Guaranty and Form of Assignment and Assumption Agreement. [Incorporated herein by reference to Exhibit 99.3 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange commission on November 16, 1999 (File No. 1-6853).] 10(z) Guaranty dated as of November 5, 1999, delivered by Shaw Contract Flooring Services, Inc. in favor of Bank of America, N.A. [Incorporated herein by reference to Exhibit 99.4 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 16, 1999 (File 1-6853).] 13 Items Incorporated by Reference from the Annual Report to Shareholders for the fiscal year ended January 1, 2000. 21 List of Subsidiaries. 23 Consent of independent public accountants. 27 Financial Data Schedule. *Compensatory plan or management contract required to be filed as an exhibit to Item 14 (c) of Form 10-K. Shareholders may obtain copies of Exhibits without charge upon written request to the Corporate Secretary, Shaw Industries, Inc., Mail Drop 061-18, P.O. Drawer 2128, Dalton, Georgia 30722-2128. (b)1. A report on Form 8-K was filed on April 6, 1999, announcing the amendment and restatement the Registrant's Shareholders' Rights Plan. 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHAW INDUSTRIES, INC. Date: March 28, 2000 By:/s/ ROBERT E. SHAW ------------------ Robert E. Shaw Chairman, Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: March 28, 2000 /s/ ROBERT E. SHAW ------------------ Robert E. Shaw Chairman, Chief Executive Officer and Director (Principal Executive Officer) Date: March 28, 2000 /s/ KENNETH G. JACKSON ---------------------- Kenneth G. Jackson Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: March 28, 2000 /s/ J. C. SHAW -------------- J.C. Shaw Chairman Emeritus and Director Date: March 28, 2000 /s/ W. NORRIS LITTLE -------------------- W. Norris Little Vice Chairman and Director Date: March 28, 2000 /s/ JULIAN D. SAUL ------------------ Julian D. Saul President and Director Date: March 28, 2000 /s/ WILLIAM C. LUSK, JR. ----------------------- William C. Lusk, Jr. Director Date: March 28, 2000 /s/ ROBERT R. HARLIN -------------------- Robert R. Harlin Director Date: March 28, 2000 /s/ THOMAS G. COUSINS --------------------- Thomas G. Cousins Director Date: March 28, 2000 /s/ S.TUCKER GRIGG ------------------ S. Tucker Grigg Director Date: March 28, 2000 /s/ ROBERT J. LUNN ------------------ Robert J. Lunn Director Date: March 28, 2000 /s/ J. HICKS LANIER ------------------- J. Hicks Lanier Director 14 Date: March 28, 2000 /s/ R. JULIAN McCAMY -------------------- R. Julian McCamy Director Date: March 28, 2000 /s/ ROBERTO GARZA DELGADO ------------------------- Roberto Garza Delgado Director 15 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Shareholders of Shaw Industries, Inc.: We have audited in accordance with auditing standards generally accepted in the United States, the financial statements of SHAW INDUSTRIES, INC. included in the Annual Report to Shareholders incorporated by reference in this Form 10-K and have issued our report thereon dated February 11, 2000. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Atlanta, Georgia February 11, 2000 SCHEDULE II SHAW INDUSTRIES, INC. VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED JANUARY 1, 2000, JANUARY 2, 1999 AND JANUARY 3, 1998 $ in thousands Additions Balance at Charged to Beginning Costs and Balance at of Year Expenses Deductions End of Year ---------------- --------------- ---------------- ------------------ YEAR ENDED JANUARY 3, 1998 Allowance for doubtful accounts and discounts $ 16,667 $ 117,271 $ 117,655 $ 16,283 ================ =============== ================ ================== YEAR ENDED JANUARY 2, 1999 Allowance for doubtful accounts and discounts $ 16,283 $ 123,233 * $ 118,004 $ 21,512 ================ =============== ================ ================== YEAR ENDED JANUARY 1, 2000 Allowance for doubtful accounts and discounts $ 21,512 $ 145,628 $ 148,209 $ 18,931 ================ =============== ================ ================== *Includes $6,943,000 recorded on the books of Queen Carpet Corporation at October 6, 1998, the acquisition date.