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Form 10-Q
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Tennessee
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|
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62-0183370
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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475 Reed Road, Dalton, Georgia
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30720
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(706) 876-5800
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(Address of principal executive offices)
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(zip code)
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(Registrant's telephone number, including area code)
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Not Applicable
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||||
(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer
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o
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|
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Accelerated filer
|
o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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R
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|
|
|
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Emerging growth company
|
o
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Class
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Outstanding as of July 30, 2020
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Common Stock, $3 Par Value
|
|
14,933,373 shares
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Class B Common Stock, $3 Par Value
|
|
880,313 shares
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Class C Common Stock, $3 Par Value
|
|
0 shares
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PART I. FINANCIAL INFORMATION
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Page
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Item 1.
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|||
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Item 2.
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Item 3.
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Item 4.
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PART II. OTHER INFORMATION
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|||
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Item 1.
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|||
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Item 1A.
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|||
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Item 2.
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|||
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Item 3.
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|||
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Item 4.
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|||
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Item 5.
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|||
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Item 6.
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|||
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Three Months Ended
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Six Months Ended
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||||||||||||
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June 27, 2020
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June 29, 2019
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June 27, 2020
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June 29, 2019
|
||||||||
NET SALES
|
$
|
60,824
|
|
|
$
|
100,394
|
|
|
$
|
141,401
|
|
|
$
|
189,001
|
|
Cost of sales
|
48,580
|
|
|
76,901
|
|
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110,164
|
|
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146,589
|
|
||||
GROSS PROFIT
|
12,244
|
|
|
23,493
|
|
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31,237
|
|
|
42,412
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and administrative expenses
|
16,523
|
|
|
21,114
|
|
|
36,920
|
|
|
42,774
|
|
||||
Other operating expense, net
|
100
|
|
|
80
|
|
|
8
|
|
|
111
|
|
||||
Facility consolidation and severance expenses, net
|
1,246
|
|
|
1,725
|
|
|
1,270
|
|
|
3,816
|
|
||||
OPERATING INCOME (LOSS)
|
(5,625
|
)
|
|
574
|
|
|
(6,961
|
)
|
|
(4,289
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
1,357
|
|
|
1,717
|
|
|
2,642
|
|
|
3,437
|
|
||||
Other expense (income), net
|
(3
|
)
|
|
4
|
|
|
(7
|
)
|
|
(38
|
)
|
||||
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES
|
(6,979
|
)
|
|
(1,147
|
)
|
|
(9,596
|
)
|
|
(7,688
|
)
|
||||
Income tax (benefit) provision
|
—
|
|
|
34
|
|
|
(4
|
)
|
|
134
|
|
||||
LOSS FROM CONTINUING OPERATIONS
|
(6,979
|
)
|
|
(1,181
|
)
|
|
(9,592
|
)
|
|
(7,822
|
)
|
||||
Loss from discontinued operations, net of tax
|
(81
|
)
|
|
(35
|
)
|
|
(157
|
)
|
|
(66
|
)
|
||||
NET LOSS
|
$
|
(7,060
|
)
|
|
$
|
(1,216
|
)
|
|
$
|
(9,749
|
)
|
|
$
|
(7,888
|
)
|
|
|
|
|
|
|
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|
||||||||
BASIC EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.46
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.63
|
)
|
|
$
|
(0.49
|
)
|
Discontinued operations
|
(0.01
|
)
|
|
(0.00
|
)
|
|
(0.01
|
)
|
|
0.00
|
|
||||
Net loss
|
$
|
(0.47
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(0.49
|
)
|
|
|
|
|
|
|
|
|
||||||||
BASIC SHARES OUTSTANDING
|
15,331
|
|
|
15,885
|
|
|
15,344
|
|
|
15,847
|
|
||||
|
|
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|
||||||||
DILUTED EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.46
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.63
|
)
|
|
$
|
(0.49
|
)
|
Discontinued operations
|
(0.01
|
)
|
|
(0.00
|
)
|
|
(0.01
|
)
|
|
0.00
|
|
||||
Net loss
|
$
|
(0.47
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(0.49
|
)
|
|
|
|
|
|
|
|
|
||||||||
DILUTED SHARES OUTSTANDING
|
15,331
|
|
|
15,885
|
|
|
15,344
|
|
|
15,847
|
|
||||
|
|
|
|
|
|
|
|
||||||||
DIVIDENDS PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Common Stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Class B Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Amounts for cash flow hedges reclassified from accumulated other comprehensive income (loss) to net loss were included in interest expense in the Company's Consolidated Condensed Statements of Operations.
|
(2)
|
Amounts for postretirement plans reclassified from accumulated other comprehensive income (loss) to net loss were included in selling and administrative expenses in the Company's Consolidated Condensed Statements of Operations.
|
|
Six Months Ended
|
||||||
|
June 27,
2020 |
|
June 29,
2019 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
Loss from continuing operations
|
$
|
(9,592
|
)
|
|
$
|
(7,822
|
)
|
Loss from discontinued operations
|
(157
|
)
|
|
(66
|
)
|
||
Net loss
|
(9,749
|
)
|
|
(7,888
|
)
|
||
|
|
|
|
||||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
5,595
|
|
|
5,906
|
|
||
Provision for deferred income taxes
|
—
|
|
|
64
|
|
||
Net loss (gain) on property, plant and equipment disposals
|
(37
|
)
|
|
62
|
|
||
Stock-based compensation expense
|
173
|
|
|
287
|
|
||
Bad debt expense
|
69
|
|
|
131
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
5,062
|
|
|
(4,952
|
)
|
||
Inventories
|
5,550
|
|
|
1,029
|
|
||
Prepaids and other current assets
|
(594
|
)
|
|
(1,325
|
)
|
||
Accounts payable and accrued expenses
|
4,572
|
|
|
10,826
|
|
||
Other operating assets and liabilities
|
400
|
|
|
(514
|
)
|
||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
11,041
|
|
|
3,626
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Net proceeds from sales of property, plant and equipment
|
40
|
|
|
4
|
|
||
Purchase of property, plant and equipment
|
(979
|
)
|
|
(2,043
|
)
|
||
NET CASH USED IN INVESTING ACTIVITIES
|
(939
|
)
|
|
(2,039
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Net payments on revolving credit facility
|
(9,841
|
)
|
|
(2,956
|
)
|
||
Payments on notes payable - buildings
|
(139
|
)
|
|
(5,266
|
)
|
||
Payments on notes payable - equipment and other
|
(1,201
|
)
|
|
(1,955
|
)
|
||
Payments on finance leases
|
(1,747
|
)
|
|
(2,089
|
)
|
||
Borrowings on finance leases
|
2,220
|
|
|
11,500
|
|
||
Change in outstanding checks in excess of cash
|
427
|
|
|
(530
|
)
|
||
Repurchases of Common Stock
|
(207
|
)
|
|
(12
|
)
|
||
Payments for debt issuance costs
|
—
|
|
|
(277
|
)
|
||
NET CASH USED IN FINANCING ACTIVITIES
|
(10,488
|
)
|
|
(1,585
|
)
|
||
|
|
|
|
||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(386
|
)
|
|
2
|
|
||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
769
|
|
|
18
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
383
|
|
|
$
|
20
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Interest paid
|
$
|
1,738
|
|
|
$
|
2,714
|
|
Interest paid for financing leases
|
691
|
|
|
685
|
|
||
Income taxes paid, net of tax refunds
|
(108
|
)
|
|
77
|
|
||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
626
|
|
|
397
|
|
||
Right-of-use assets obtained in exchange for new finance lease liabilities
|
—
|
|
|
52
|
|
||
Equipment purchased under notes payable
|
1,314
|
|
|
—
|
|
||
Accrued purchases of equipment
|
205
|
|
|
—
|
|
|
Common Stock
|
|
Class B Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Stockholders' Equity
|
||||||||||||
Balance at December 28, 2019
|
$
|
45,075
|
|
|
$
|
2,510
|
|
|
$
|
157,547
|
|
|
$
|
(131,113
|
)
|
|
$
|
(808
|
)
|
|
$
|
73,211
|
|
Repurchases of Common Stock - 176,477 shares
|
(529
|
)
|
|
—
|
|
|
325
|
|
|
—
|
|
|
—
|
|
|
(204
|
)
|
||||||
Restricted stock grants issued - 131,867 shares
|
264
|
|
|
131
|
|
|
(395
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
93
|
|
|
—
|
|
|
—
|
|
|
93
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,689
|
)
|
|
—
|
|
|
(2,689
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(937
|
)
|
|
(937
|
)
|
||||||
Balance at March 28, 2020
|
$
|
44,810
|
|
|
$
|
2,641
|
|
|
$
|
157,570
|
|
|
$
|
(133,802
|
)
|
|
$
|
(1,745
|
)
|
|
$
|
69,474
|
|
Repurchases of Common Stock - 3,460 shares
|
(10
|
)
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,060
|
)
|
|
—
|
|
|
(7,060
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
219
|
|
|
219
|
|
||||||
Balance at June 27, 2020
|
$
|
44,800
|
|
|
$
|
2,641
|
|
|
$
|
157,657
|
|
|
$
|
(140,862
|
)
|
|
$
|
(1,526
|
)
|
|
$
|
62,710
|
|
|
Common Stock
|
|
Class B Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Stockholders' Equity
|
||||||||||||
Balance at December 29, 2018
|
$
|
46,568
|
|
|
$
|
2,518
|
|
|
$
|
156,390
|
|
|
$
|
(146,384
|
)
|
|
$
|
(108
|
)
|
|
$
|
58,984
|
|
Repurchases of Common Stock - 11,299 shares
|
(34
|
)
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||||
Restricted stock grants forfeited - 6,681 shares
|
(20
|
)
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||||
Class B converted into Common Stock - 2,635 shares
|
8
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
168
|
|
|
—
|
|
|
—
|
|
|
168
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,672
|
)
|
|
—
|
|
|
(6,672
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(361
|
)
|
|
(361
|
)
|
||||||
Balance at March 30, 2019
|
$
|
46,522
|
|
|
$
|
2,510
|
|
|
$
|
156,589
|
|
|
$
|
(153,056
|
)
|
|
$
|
(469
|
)
|
|
$
|
52,096
|
|
Common Stock issued under Directors' Stock Plan - 29,001
|
87
|
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
130
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,216
|
)
|
|
—
|
|
|
(1,216
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(620
|
)
|
|
(620
|
)
|
||||||
Balance at June 29, 2019
|
$
|
46,609
|
|
|
$
|
2,510
|
|
|
$
|
156,632
|
|
|
$
|
(154,272
|
)
|
|
$
|
(1,089
|
)
|
|
$
|
50,390
|
|
•
|
Identification of the contract with a customer
|
•
|
Identification of the performance obligations in the contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, the performance obligation is satisfied
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Residential floorcovering products
|
$
|
45,070
|
|
|
$
|
73,092
|
|
|
$
|
104,572
|
|
|
$
|
136,518
|
|
Commercial floorcovering products
|
15,453
|
|
|
26,708
|
|
|
36,082
|
|
|
51,218
|
|
||||
Other services
|
301
|
|
|
594
|
|
|
747
|
|
|
1,265
|
|
||||
Total net sales
|
$
|
60,824
|
|
|
$
|
100,394
|
|
|
$
|
141,401
|
|
|
$
|
189,001
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Beginning contract liability
|
$
|
5,199
|
|
|
$
|
5,089
|
|
|
$
|
4,685
|
|
|
$
|
6,013
|
|
Revenue recognized from contract liabilities included in the beginning balance
|
(3,239
|
)
|
|
(3,326
|
)
|
|
(3,590
|
)
|
|
(4,817
|
)
|
||||
Increases due to cash received, net of amounts recognized in revenue during the period
|
2,604
|
|
|
3,536
|
|
|
3,469
|
|
|
4,103
|
|
||||
Ending contract liability
|
$
|
4,564
|
|
|
$
|
5,299
|
|
|
$
|
4,564
|
|
|
$
|
5,299
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Customers, trade
|
$
|
30,277
|
|
|
$
|
34,285
|
|
Other receivables
|
1,940
|
|
|
3,115
|
|
||
Gross receivables
|
32,217
|
|
|
37,400
|
|
||
Less: allowance for doubtful accounts
|
(210
|
)
|
|
(262
|
)
|
||
Receivables, net
|
$
|
32,007
|
|
|
$
|
37,138
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Raw materials
|
$
|
31,555
|
|
|
$
|
32,377
|
|
Work-in-process
|
12,835
|
|
|
18,642
|
|
||
Finished goods
|
64,196
|
|
|
64,978
|
|
||
Supplies and other
|
201
|
|
|
260
|
|
||
LIFO reserve
|
(18,828
|
)
|
|
(20,748
|
)
|
||
Inventories, net
|
$
|
89,959
|
|
|
$
|
95,509
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Land and improvements
|
$
|
3,422
|
|
|
$
|
3,422
|
|
Buildings and improvements
|
51,479
|
|
|
51,432
|
|
||
Machinery and equipment
|
179,758
|
|
|
179,993
|
|
||
Assets under construction
|
3,166
|
|
|
1,459
|
|
||
|
237,825
|
|
|
236,306
|
|
||
Accumulated depreciation
|
(175,373
|
)
|
|
(170,864
|
)
|
||
Property, plant and equipment, net
|
$
|
62,452
|
|
|
$
|
65,442
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Compensation and benefits
|
$
|
8,998
|
|
|
$
|
8,804
|
|
Provision for customer rebates, claims and allowances
|
6,887
|
|
|
7,682
|
|
||
Advanced customer deposits
|
4,564
|
|
|
4,685
|
|
||
Outstanding checks in excess of cash
|
1,014
|
|
|
—
|
|
||
Other
|
5,485
|
|
|
4,247
|
|
||
Accrued expenses
|
$
|
26,948
|
|
|
$
|
25,418
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Product warranty reserve at beginning of period
|
$
|
899
|
|
|
$
|
1,035
|
|
|
|
$
|
1,002
|
|
|
$
|
1,069
|
|
Warranty liabilities accrued
|
165
|
|
|
634
|
|
|
|
443
|
|
|
1,143
|
|
||||
Warranty liabilities settled
|
(154
|
)
|
|
(563
|
)
|
|
|
(535
|
)
|
|
(1,091
|
)
|
||||
Changes for pre-existing warranty liabilities
|
—
|
|
|
(24
|
)
|
|
|
—
|
|
|
(39
|
)
|
||||
Product warranty reserve at end of period
|
$
|
910
|
|
|
$
|
1,082
|
|
|
|
$
|
910
|
|
|
$
|
1,082
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Revolving credit facility
|
$
|
49,852
|
|
|
$
|
59,693
|
|
Notes payable - buildings
|
6,074
|
|
|
6,213
|
|
||
Notes payable - equipment and other
|
3,646
|
|
|
3,533
|
|
||
Finance lease - buildings
|
11,258
|
|
|
11,296
|
|
||
Finance lease obligations
|
8,697
|
|
|
8,187
|
|
||
Deferred financing costs, net
|
(474
|
)
|
|
(571
|
)
|
||
Total long-term debt
|
79,053
|
|
|
88,351
|
|
||
Less: current portion of long-term debt
|
5,965
|
|
|
6,684
|
|
||
Long-term debt
|
$
|
73,088
|
|
|
$
|
81,667
|
|
|
Balance Sheet Location
|
June 27, 2020
|
|
December 28, 2019
|
||||
Operating Leases:
|
|
|
|
|
||||
Operating lease right-of-use assets
|
Operating lease right-of-use assets
|
$
|
23,741
|
|
|
$
|
24,835
|
|
|
|
|
|
|
||||
Current portion of operating lease liabilities
|
Current portion of operating lease liabilities
|
3,336
|
|
|
3,172
|
|
||
Noncurrent portion of operating lease liabilities
|
Operating lease liabilities
|
20,968
|
|
|
22,123
|
|
||
Total operating lease liabilities
|
|
$
|
24,304
|
|
|
$
|
25,295
|
|
|
|
|
|
|
||||
Finance Leases:
|
|
|
|
|
||||
Finance lease right-of-use assets (1)
|
Property, plant, and equipment, net
|
$
|
15,913
|
|
|
$
|
15,152
|
|
|
|
|
|
|
||||
Current portion of finance lease liabilities (1)
|
Current portion of long-term debt
|
3,858
|
|
|
4,011
|
|
||
Noncurrent portion of finance lease liabilities (1)
|
Long-term debt
|
16,097
|
|
|
15,472
|
|
||
|
|
$
|
19,955
|
|
|
$
|
19,483
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 27, 2020
|
|
June 29, 2019
|
|
June 27, 2020
|
|
June 29, 2019
|
||||||||
Operating lease cost
|
|
$
|
1,307
|
|
|
$
|
815
|
|
|
$
|
2,599
|
|
|
$
|
1,723
|
|
|
|
|
|
|
|
|
|
|
||||||||
Finance lease cost:
|
|
|
|
|
|
|
|
|
||||||||
Amortization of lease assets (1)
|
|
790
|
|
|
750
|
|
|
1,580
|
|
|
1,498
|
|
||||
Interest on lease liabilities (1)
|
|
348
|
|
|
335
|
|
|
691
|
|
|
685
|
|
||||
Total finance lease costs (1)
|
|
$
|
1,138
|
|
|
$
|
1,085
|
|
|
$
|
2,271
|
|
|
$
|
2,183
|
|
|
|
June 27, 2020
|
|
|
June 29, 2019
|
|
Weighted average remaining lease term (in years):
|
|
|
|
|
||
Operating leases
|
|
8.02
|
|
|
6.20
|
|
Finance leases (1)
|
|
11.53
|
|
|
11.62
|
|
|
|
|
|
|
||
Weighted average discount rate:
|
|
|
|
|
||
Operating leases
|
|
6.93
|
%
|
|
8.47
|
%
|
Finance leases (1)
|
|
9.19
|
%
|
|
6.65
|
%
|
|
|
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
||
Operating cash flows from operating leases
|
|
2,330
|
|
|
1,762
|
|
Operating cash flows from finance leases (1)
|
|
691
|
|
|
685
|
|
Financing cash flows from finance leases (1)
|
|
1,747
|
|
|
2,089
|
|
Fiscal Year
|
|
Operating Leases
|
Finance Leases
|
||
2020
|
|
2,509
|
|
2,186
|
|
2021
|
|
4,683
|
|
5,457
|
|
2022
|
|
4,182
|
|
3,323
|
|
2023
|
|
3,247
|
|
2,284
|
|
2024
|
|
2,940
|
|
1,045
|
|
Thereafter
|
|
14,529
|
|
16,039
|
|
Total future minimum lease payments (undiscounted)
|
|
32,090
|
|
30,334
|
|
Less: Present value discount
|
|
7,786
|
|
10,379
|
|
Total lease liability
|
|
24,304
|
|
19,955
|
|
|
June 27,
2020 |
|
December 28,
2019 |
|
Fair Value Hierarchy Level
|
||||
Liabilities:
|
|
|
|
|
|
||||
Interest rate swaps (1)
|
$
|
2,419
|
|
|
$
|
1,653
|
|
|
Level 2
|
(1)
|
The Company uses certain external sources in deriving the fair value of the interest rate swaps. 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.
|
|
June 27,
2020 |
|
December 28,
2019 |
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
383
|
|
|
$
|
383
|
|
|
$
|
769
|
|
|
$
|
769
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Long-term debt, including current portion
|
59,098
|
|
|
59,610
|
|
|
68,868
|
|
|
72,115
|
|
||||
Finance leases, including current portion
|
19,955
|
|
|
20,204
|
|
|
19,483
|
|
|
20,361
|
|
||||
Operating leases, including current portion
|
24,304
|
|
|
24,304
|
|
|
25,295
|
|
|
25,295
|
|
||||
Interest rate swaps
|
2,419
|
|
|
2,419
|
|
|
1,653
|
|
|
1,653
|
|
Type
|
Notional Amount
|
|
Effective Date
|
Fixed Rate
|
Variable Rate
|
||
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
|
$
|
6,005
|
|
(1)
|
November 7, 2014 through November 7, 2024
|
4.500%
|
1 Month LIBOR
|
|
Location on Consolidated Balance Sheets
|
|
Fair Value
|
||||||
|
|
June 27,
2020 |
|
December 28,
2019 |
|||||
Liability Derivatives:
|
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||
Interest rate swaps, current portion
|
Accrued expenses
|
|
$
|
1,680
|
|
|
$
|
841
|
|
Interest rate swaps, long-term portion
|
Other long-term liabilities
|
|
739
|
|
|
812
|
|
||
Total Liability Derivatives
|
|
|
$
|
2,419
|
|
|
$
|
1,653
|
|
|
Amount of Gain or (Loss) Recognized in AOCIL on the effective portion of the Derivative
|
||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges - interest rate swaps
|
$
|
(139
|
)
|
|
$
|
(705
|
)
|
|
$
|
(1,276
|
)
|
|
$
|
(1,104
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Amount of Gain (Loss) Reclassified from AOCIL on the effective portion into Earnings (1)(2)
|
||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges - interest rate swaps
|
$
|
(365
|
)
|
|
$
|
(93
|
)
|
|
$
|
(573
|
)
|
|
$
|
(149
|
)
|
(1)
|
The amount of gain (loss) reclassified from AOCIL is included in interest expense on the Company's consolidated condensed financial statements.
|
(2)
|
The amount of loss expected to be reclassified from AOCIL into earnings during the next 12 months subsequent to June 27, 2020 is $1,680.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Loss from continuing operations
|
$
|
(6,979
|
)
|
|
$
|
(1,181
|
)
|
|
$
|
(9,592
|
)
|
|
$
|
(7,822
|
)
|
Less: Allocation of earnings to participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Loss from continuing operations available to common shareholders - basic
|
$
|
(6,979
|
)
|
|
$
|
(1,181
|
)
|
|
$
|
(9,592
|
)
|
|
$
|
(7,822
|
)
|
Basic weighted-average shares outstanding (1)
|
15,331
|
|
|
15,885
|
|
|
15,344
|
|
|
15,847
|
|
||||
Basic earnings (loss) per share - continuing operations
|
$
|
(0.46
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.63
|
)
|
|
$
|
(0.49
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Loss from continuing operations available to common shareholders - basic
|
$
|
(6,979
|
)
|
|
$
|
(1,181
|
)
|
|
$
|
(9,592
|
)
|
|
$
|
(7,822
|
)
|
Add: Undistributed earnings reallocated to unvested shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Loss from continuing operations available to common shareholders - basic
|
$
|
(6,979
|
)
|
|
$
|
(1,181
|
)
|
|
$
|
(9,592
|
)
|
|
$
|
(7,822
|
)
|
Basic weighted-average shares outstanding (1)
|
15,331
|
|
|
15,885
|
|
|
15,344
|
|
|
15,847
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Directors' stock performance units (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted weighted-average shares outstanding (1)(2)
|
15,331
|
|
|
15,885
|
|
|
15,344
|
|
|
15,847
|
|
||||
Diluted earnings (loss) per share - continuing operations
|
$
|
(0.46
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.63
|
)
|
|
$
|
(0.49
|
)
|
(1)
|
Includes Common and Class B Common shares, excluding unvested participating securities of 480 thousand as of June 27, 2020 and 476 thousand as of June 29, 2019.
|
(2)
|
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 to the extent they are anti-dilutive. Aggregate shares excluded for the three and six months ended June 27, 2020 were 296 thousand and for the three and six months ended June 29, 2019 were 383 thousand.
|
|
Interest Rate Swaps
|
|
Post-Retirement Liabilities
|
|
Total
|
||||||
Balance at December 28, 2019
|
$
|
(1,048
|
)
|
|
$
|
240
|
|
|
$
|
(808
|
)
|
Unrealized gain on interest rate swaps
|
(1,276
|
)
|
|
—
|
|
|
(1,276
|
)
|
|||
Reclassification of loss into earnings from interest rate swaps, net of tax of $0
|
573
|
|
|
—
|
|
|
573
|
|
|||
Reclassification of net actuarial gain into earnings from postretirement benefit plans
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
|||
Reclassification of prior service credits into earnings from postretirement benefit plans
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Balance at June 27, 2020
|
$
|
(1,751
|
)
|
|
$
|
225
|
|
|
$
|
(1,526
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Other operating expense, net
|
|
|
|
|
|
|
|
||||||||
(Gain) loss on property, plant and equipment disposals
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(37
|
)
|
|
$
|
62
|
|
Loss on currency exchanges
|
57
|
|
|
82
|
|
|
25
|
|
|
104
|
|
||||
Retirement (income) expense
|
49
|
|
|
9
|
|
|
31
|
|
|
(24
|
)
|
||||
Miscellaneous income
|
(6
|
)
|
|
(12
|
)
|
|
(11
|
)
|
|
(31
|
)
|
||||
Other operating expense, net
|
$
|
100
|
|
|
$
|
80
|
|
|
$
|
8
|
|
|
$
|
111
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Other expense (income), net:
|
|
|
|
|
|
|
|
||||||||
Post-retirement income
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
(7
|
)
|
|
(7
|
)
|
||
Interest income
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
(38
|
)
|
||||
Miscellaneous expense
|
1
|
|
|
8
|
|
|
3
|
|
|
7
|
|
||||
Other expense (income), net
|
$
|
(3
|
)
|
|
$
|
4
|
|
|
$
|
(7
|
)
|
|
$
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
As of June 27, 2020
|
|
||||||||||||||
|
Accrued Balance at December 28, 2019
|
|
2020 Expenses To Date (1)
|
|
2020 Cash Payments
|
|
Accrued Balance at June 27, 2020
|
|
Total Costs Incurred To Date
|
|
Total Expected Costs
|
|
||||||||||||
Corporate Office Consolidation Plan
|
$
|
38
|
|
|
$
|
5
|
|
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
834
|
|
|
$
|
834
|
|
|
Profit Improvement Plan
|
305
|
|
|
246
|
|
|
426
|
|
|
125
|
|
|
9,046
|
|
|
9,046
|
|
|
||||||
COVID-19 Continuity Plan
|
$
|
—
|
|
|
$
|
1,019
|
|
|
$
|
367
|
|
|
$
|
652
|
|
|
$
|
1,019
|
|
|
$
|
1,019
|
|
(2)
|
Total All Plans
|
$
|
343
|
|
|
$
|
1,270
|
|
|
$
|
836
|
|
|
$
|
777
|
|
|
$
|
10,899
|
|
|
$
|
10,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset Impairments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,323
|
|
|
$
|
3,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Accrued Balance at December 29, 2018
|
|
2019 Expenses To Date (1)
|
|
2019 Cash Payments
|
|
Accrued Balance at June 29, 2019
|
|
|
|
|
|
||||||||||||
Corporate Office Consolidation Plan
|
$
|
98
|
|
|
$
|
8
|
|
|
$
|
42
|
|
|
$
|
64
|
|
|
|
|
|
|
||||
Profit Improvement Plan
|
846
|
|
|
3,808
|
|
|
4,271
|
|
|
383
|
|
|
|
|
|
|
||||||||
Totals
|
$
|
944
|
|
|
$
|
3,816
|
|
|
$
|
4,313
|
|
|
$
|
447
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset Impairments
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Income (loss) from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Workers' compensation (costs) credits from former textile operations
|
$
|
(36
|
)
|
|
$
|
3
|
|
|
(65
|
)
|
|
31
|
|
||
Environmental remediation costs from former textile operations
|
(45
|
)
|
|
(38
|
)
|
|
(92
|
)
|
|
(97
|
)
|
||||
Income (loss) from discontinued operations, before taxes
|
$
|
(81
|
)
|
|
$
|
(35
|
)
|
|
(157
|
)
|
|
(66
|
)
|
||
Income tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Income (loss) from discontinued operations, net of tax
|
$
|
(81
|
)
|
|
$
|
(35
|
)
|
|
$
|
(157
|
)
|
|
$
|
(66
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 27,
|
|
June 29,
|
|
June 27
|
|
June 29,
|
||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Net Sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of Sales
|
79.9
|
%
|
|
76.6
|
%
|
|
77.9
|
%
|
|
77.6
|
%
|
Gross Profit
|
20.1
|
%
|
|
23.4
|
%
|
|
22.1
|
%
|
|
22.4
|
%
|
Selling and Administrative Expenses
|
27.2
|
%
|
|
21.0
|
%
|
|
26.1
|
%
|
|
22.6
|
%
|
Other Operating (Income) Expenses, Net
|
0.2
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
0.1
|
%
|
Facility Consolidation and Severance Expenses, Net
|
2.0
|
%
|
|
1.7
|
%
|
|
0.9
|
%
|
|
2.0
|
%
|
Operating Income (Loss)
|
(9.4
|
)%
|
|
0.5
|
%
|
|
(4.9
|
)%
|
|
(2.4
|
)%
|
|
Future Undiscounted Payments Due by Period
|
||||||||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||
|
2020
|
2021
|
2022
|
2023
|
2024
|
Thereafter
|
Total
|
||||||||||||||
Debt
|
$
|
1.2
|
|
$
|
51.8
|
|
$
|
1.3
|
|
$
|
0.7
|
|
$
|
4.6
|
|
$
|
—
|
|
$
|
59.6
|
|
Interest - debt (1)
|
0.1
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.2
|
|
|||||||
Finance leases
|
1.6
|
|
4.2
|
|
2.4
|
|
1.5
|
|
0.3
|
|
10.0
|
|
20.0
|
|
|||||||
Interest - finance leases
|
0.6
|
1.3
|
0.9
|
0.8
|
0.7
|
6.0
|
10.3
|
||||||||||||||
Operating leases
|
1.7
|
|
3.2
|
|
2.9
|
|
2.2
|
|
2.0
|
|
12.3
|
|
24.3
|
|
|||||||
Interest - operating leases
|
0.8
|
|
1.5
|
|
1.3
|
|
1.0
|
|
0.9
|
|
2.2
|
|
7.7
|
|
|||||||
Purchase commitments
|
0.9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.9
|
|
|||||||
Totals
|
6.9
|
|
62.1
|
|
8.8
|
|
6.2
|
|
8.5
|
|
30.5
|
|
$
|
123
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||||
(1) Interest rates used for variable rate debt were those in effect at June 27, 2020
|
•
|
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.
|
Fiscal 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
|
||||||
May 2, 2020
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
||
May 30, 2020
|
|
3,460
|
|
|
0.74
|
|
|
3,460
|
|
|
|||
June 27, 2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
Three Months Ended June 27, 2020
|
|
3,460
|
|
|
$
|
0.74
|
|
|
3,460
|
|
$
|
4,878,000
|
|
(a.)
|
Exhibits
|
31.2
|
32.1
|
32.2
|
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: August 6, 2020
|
|
By: /s/ Allen L. Danzey
|
|
|
Allen L. Danzey
Vice President and Chief Financial Officer
|
|
|
|
Date: August 6, 2020
|
|
/s/ DANIEL K. FRIERSON
|
|
|
Daniel K. Frierson
|
|
|
Chief Executive Officer
|
|
|
The Dixie Group, Inc.
|
Date: August 6, 2020
|
|
/s/ ALLEN L. DANZEY
|
|
|
Allen L. Danzey
|
|
|
Chief Financial Officer
|
|
|
The Dixie Group, Inc.
|
/s/ DANIEL K. FRIERSON
|
Daniel K. Frierson, Chief Executive Officer
|
Date: August 6, 2020
|
/s/ ALLEN L. DANZEY
|
Allen L. Danzey, Chief Financial Officer
|
Date: August 6, 2020
|
|