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                       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
      For the fiscal year ended December 31, 1996
                         or
/ /   Transition Report  Pursuant  to Section  13  or 15(d)  of  the  Securities
      Exchange Act of 1934
      Commission file number 1-9457
 
                        SHELBY WILLIAMS INDUSTRIES, INC.
 
             (Exact name of registrant as specified in its charter)
 
                 Delaware                                62-0974443
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
      incorporation or organization)
 
         11-111 Merchandise Mart                           60654
            Chicago, Illinois                            (Zip Code)
 (Address of principal executive offices)
 
              Registrant's telephone number, including area code:
                                 (312) 527-3593
 
          Securities registered pursuant to Section 12(b) of the Act:
 
                                                   NAME OF EACH EXCHANGE
           TITLE OF EACH CLASS                      ON WHICH REGISTERED
------------------------------------------  ------------------------------------
       Common Stock, $.05 par value               New York Stock Exchange
 
        Securities registered pursuant to Section 12(g) of the Act: None
 
    Indicate  by check  mark whether  the registrant  (1) has  filed all reports
required to be filed 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. _X_
 
    At February 13, 1997, there were 8,743,863 shares of the registrant's common
stock  outstanding. As  of said  date the aggregate  market value  of the voting
stock held by  non-affiliates of the  registrant (computed by  reference to  the
closing sale price on such date) was approximately $83,280,000.
 
    Documents incorporated by reference:
 
                                                    PART OF FORM 10-K INTO WHICH
                     DOCUMENT                         DOCUMENT IS INCORPORATED
--------------------------------------------------  ----------------------------
Registrant's annual report to stockholders for
 1996.............................................  Part II, Items 5-8
 
Registrant's definitive proxy statement to be
 filed for 1997 annual meeting....................  Part III, Items 10-13
 
--------------------------------------------------------------------------------
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<PAGE>
                                     PART I
 
ITEM 1. BUSINESS.
 
    The  registrant, Shelby Williams Industries,  Inc. ("Shelby Williams" or the
"Company"), a  Delaware  corporation  incorporated in  February,  1976,  is  the
successor  to  a business  formed in  Chicago, Illinois  in 1954.  Its principal
executive offices  are located  at 11-111  Merchandise Mart,  Chicago,  Illinois
60654,   telephone  (312)  527-3593.  The   Company  has  additional  executive,
operational and administrative offices at 150 Shelby Williams Drive, Morristown,
Tennessee 37813, telephone (423) 586-7000.
 
    In the third  quarter of  1996, the Company  sold the  business and  related
manufacturing facility of its "Preview" line of contemporary upholstered seating
products  at its  approximate carrying  value. See  "Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations"  and  Note  to
Consolidated Financial Statements captioned "Restructuring Charge."
 
INDUSTRY
 
    The  contract furniture industry in which Shelby Williams primarily operates
serves the hospitality (including lodging, gaming, interval vacation and country
club), food  service, university,  healthcare and  other institutional  markets.
Approximately  80% of the Company's  1996 net sales were  to the hospitality and
food service markets.
 
    Shelby Williams estimates, based  upon its experience  and knowledge of  its
markets,  that demand for  seating products in the  hospitality and food service
industries is primarily for the refurbishment of existing facilities rather than
seating in new facilities. Shelby  Williams estimates that food service  seating
(including   seating  for  food  service   facilities  in  hotels)  is  replaced
approximately every eight to  12 years and seating  for hotel guest rooms  every
ten  to  15 years.  In light  of the  significant level  of acquisitions  in the
lodging industry  over  the last  two  years and  the  trend of  new  owners  to
refurbish  and  reposition following  an  acquisition, industry  analysts expect
strong levels of  refurbishing. In  addition, increased profits  in the  lodging
industry  resulting from high occupancy  levels, coupled with increasing average
daily rates, have made additional funds available for refurbishing. According to
industry research, profitability  levels in the  United States lodging  industry
are expected to remain strong over the next few years.
 
    New   construction  activity  also  provides  opportunities  for  additional
contract seating sales. According to independent industry analysts, over 100,000
rooms were constructed  in 1996, a  20.8% increase over  the previous year.  New
construction  activity  reflects high  profits in  the  lodging industry  due to
strong occupancy levels and increasing average daily rates.
 
    Based  on  net   sales,  management  estimates   that  Shelby  Williams   is
approximately  three times larger than the next largest manufacturer of contract
seating products for the  hospitality and food  service industries. The  markets
for the seating products in which Shelby Williams competes are served by a small
number   of  relatively   large,  privately-held  companies   and  divisions  of
publicly-held companies and a large  number of relatively small,  privately-held
regional  manufacturers. Shelby Williams believes that its size provides it with
certain advantages relative to its competitors.
 
GENERAL
 
    Shelby Williams is  the leading  designer, manufacturer  and distributor  of
seating  products used in  the hospitality (including  lodging, gaming, interval
vacation and country club) and food service industries. The Company produces and
markets under  the SHELBY  WILLIAMS  brand name  an  extensive line  of  seating
products  including wood,  metal and rattan  chairs, barstools,  sofas and sleep
sofas and stacking chairs,  as well as banquet-related  products under the  KING
ARTHUR  brand name  including folding  tables, food  service carts  and portable
dance floors.  In addition,  Shelby Williams  designs and  manufactures  seating
products  under the THONET  brand name for the  university, healthcare and other
institutional markets. The Company also manufactures vinyl wallcovering products
for residential, hotel  and office use  and markets other  textile products  and
floor  coverings to  the architectural and  design community and  end users. The
Company markets these products
 
                                       2
<PAGE>
under the brand names SELLERS & JOSEPHSON and PHF, respectively. Shelby Williams
manufactures approximately 350 standard  furniture products for the  hospitality
and  food service  industries, and approximately  200 standard  products for the
university, healthcare and  other institutional markets.  The majority of  these
products  are  supplied  under special  order  and finished  and  upholstered to
customer specifications.
 
    Shelby Williams estimates  that, of its  1996 net sales  of $172.4  million,
approximately  80%  were  to the  hospitality  and food  service  industries and
approximately  13%  were  to  university,  healthcare  and  other  institutional
markets.  Representative  users of  the  Company's products  include Doubletree,
Embassy Suites,  Four Seasons,  Hampton Inns,  Hilton, Holiday  Inns, Hyatt,  La
Quinta,  Marriott, Ritz  Carton and Sheraton,  in the  lodging industry; Caesars
Palace, Circus Circus, Grand Casino, MGM Grand, Mirage and Sun International, in
the gaming industry; Fairfield Communities, Marriott Vacation, Signature Resorts
and  Vacation  Break  USA,  in  the  interval  vacation  industry;  and  Brinker
International  (Corner Bakery,  Macaroni Grill,  Maggiano's), Darden Restaurants
(Olive Garden and Red  Lobster), Hard Rock Cafe,  Lettuce Entertain You,  Luby's
Cafeteria,  Morton's  of Chicago,  Pizza  Hut, Planet  Hollywood,  Starbucks and
Wendy's in  the  food service  industry.  The Company's  ten  largest  customers
accounted  for  approximately 17%  of  1996 net  sales,  and no  single customer
accounted for more than 3% of 1996 net sales.
 
    The Company's  sales  and  marketing staff  consists  of  approximately  105
full-time  employees,  of  which 65  are  field sales  personnel.  The Company's
products are marketed  to hospitality and  food service chains  or their  buying
agencies and to other customers through interior designers, architects, contract
furniture,  food service and  office furniture dealers.  Shelby Williams markets
its products through  14 showrooms and  sales offices in  the United States  and
approximately  40  distributors  internationally. In  addition,  Shelby Williams
publishes four  extensive catalog  systems  displaying the  Company's  products.
Customers  may order standard  products directly from  these catalogs or request
changes to meet their design specifications.
 
    Shelby Williams believes that the following factors distinguish it from  its
competitors and have contributed to its leading position:
 
    BREADTH  OF PRODUCTS.   Management believes that  Shelby Williams offers the
widest range of  seating products  in the  contract furniture  industry for  the
hospitality  and food service markets. Shelby Williams believes that its ability
to provide a customer with all of its seating requirements (i.e., banquet, guest
room, casino, restaurant  and public spaces)  from a single  source provides  it
with  a competitive advantage. In addition,  Shelby Williams believes that it is
uniquely positioned  to  take  advantage  of  the  trend  among  large  national
hospitality and food service companies to consolidate supplier relationships.
 
    CUSTOMER  SERVICE.    Management  believes  that  Shelby  Williams  offers a
superior level  of  customer service  resulting  in  a high  level  of  customer
satisfaction  and enhanced  opportunities for  repeat business.  As part  of its
customer service program, Shelby Williams employs a dedicated sales force of  65
field  sales personnel knowledgeable about Shelby Williams' products and attuned
to customers' requirements. Shelby  Williams believes that  its sales force  and
the  high quality of ongoing service and  support it provides have enabled it to
establish strong relationships with its customers.
 
    QUALITY AND RELIABILITY.   Shelby  Williams' strong  reputation for  product
quality,  reliability and  timely delivery has  been an important  factor in its
success and positions the Company favorably in competing for business. Moreover,
Shelby Williams' reputation  for quality  has enabled  the Company  to lead  the
industry  in setting  standards for  safety, quality  and durability. Management
believes that its  SHELBY WILLIAMS, THONET  and KING ARTHUR  brands are  leading
tradenames in their respective markets.
 
    DESIGN AND MANUFACTURING CAPABILITIES.  Shelby Williams distinguishes itself
from  other industry participants based on its manufacturing flexibility and its
ability to customize orders to customer specifications. Approximately 90% of the
Company's products  are  catalog items,  finished  and upholstered  to  customer
specifications.  In  addition, Shelby  Williams often  works with  designers and
architects to design new products and  customize standard products on behalf  of
end users.
 
                                       3
<PAGE>
PRODUCTS
 
    Shelby Williams' product lines consist primarily of: (i) seating for dining,
gaming,  guest  room, conference  and  banquet facilities,  (ii)  healthcare and
university seating, and (iii)  desks, credenzas and  seating for general  office
and  institutional use. To  complement its major  product lines, Shelby Williams
also manufactures and distributes banquet folding tables, portable dance  floors
and  platforms, food service  carts and other  function furniture, as  well as a
full range of vinyl wallcoverings and floor coverings. Shelby Williams' products
are primarily  sold: (i)  directly to  hospitality and  food service  providers,
gaming  establishments, universities  and other  institutions, (ii)  to interior
designers, architects and other buying agencies  that in turn sell the  products
to  the end users, and (iii) to rental companies that store Company products and
rent them to their customers.
 
    Approximately  350  standard   furniture  products  are   marketed  to   the
hospitality  and food  service industries; approximately  200 standard furniture
products are marketed  for healthcare, university  and other institutional  use;
and approximately 25 standard furniture products are marketed for office use. In
addition to offering a standard line of products, Shelby Williams focuses on the
specific  requirements  of  its customers  and  end users  and  has considerable
customization  capabilities.  Substantially  all  products  are  supplied  under
special  order and  are finished  and upholstered  to customers' specifications.
Shelby Williams'  products are  marketed through  an extensive  catalog  system,
through  which customers  may order standard  Company products  or devise custom
designs to suit their specific needs.
 
    Shelby Williams' products are manufactured in hardwoods, such as maple,  elm
and  beech, as well as in rattan and  metal, and are available in a wide variety
of finishes. Products are made of solid wood or a combination of woods, and many
are constructed with  bentwood components, which  provides extended  durability.
All  wooden  products are  finished on  a  conveyorized line  which incorporates
forced drying cycles.  The sealer coat  and final conversion  varnish coats  are
applied  by  means of  a state-of-the-art  electrostatic finishing  system which
insures uniform application resulting in a durable chip-resistant finish. Chairs
may be covered with fabric upholstery or vinyl, pursuant to customer design  and
specification.  Metal products are also produced in a wide variety of styles and
finishes.
 
    In  addition  to  its  seating   products,  Shelby  Williams  produces   and
distributes   certain  function-room  furniture  items,   such  as  banquet  and
conference tables,  stages  and food  service  equipment. Shelby  Williams  also
designs,  produces  and  distributes furniture  utilized  by  private healthcare
practitioners, such as reclining chairs, as well as standard dormitory furniture
utilized by  universities.  In addition,  Shelby  Williams designs  and  markets
approximately  50 standard patterns of  textile products. These textile products
are manufactured by  outside suppliers and  are both used  on the Company's  own
seating  products and distributed through dealers and interior designers for use
by other manufacturers. Shelby  Williams also distributes a  wide line of  floor
coverings in the Pacific Basin which are manufactured by outside sources.
 
    Management  believes that  it provides one  of the widest  ranges of seating
products in the contract furniture  industry, as well as superior  custom-design
capabilities.  Due to its component-manufacturing facility in Zacatecas, Mexico,
its 200,000  square foot  storage warehouse  in Morristown,  Tennessee, and  its
considerable  in-house production capabilities, the  Company believes it is able
to provide a shorter lead time on  orders than many of its competitors, most  of
whom  import components from European sources. Shelby Williams believes that all
of these qualities are  instrumental in attracting the  large orders of  hotels,
restaurants and casinos that seek the convenience and pricing of a single-source
provider.
 
MARKETING
 
    The  Company's marketing  strategy is based  upon a higher  degree of direct
sales relative to its  competitors which tend to  conduct sales through  factory
representatives and with minimal sales forces. The Company's sales and marketing
staff  consists of  approximately 105  full-time employees,  approximately 65 of
which are exclusively involved in field sales. This dedicated sales force is  an
integral  component  of the  Company's  customer service  and  support strategy.
Management believes the high quality of ongoing service and support provided  by
the   sales  force  results  in   strong  customer  relationships  and  enhanced
opportunities for repeat business.
 
                                       4
<PAGE>
    Each of the Company's  sales persons sells  products and services  customers
within  an  assigned territory.  The  Company's sales  persons  promote customer
satisfaction with  periodic service  calls in  addition to  scheduled  follow-up
visits.  Sales  persons receive  a base  salary, plus  commissions based  on net
sales. All orders are subject to acceptance by the Company's management.
 
    Shelby Williams  markets  its  products  to  a  wide  variety  of  customers
including:  (i) hospitality and food service chains or their buying agencies and
(ii) other  users through  interior designers,  architects, contract  furniture,
food service and furniture dealers.
 
    Shelby  Williams  markets its  products through  advertising in  major trade
publications and illustrating  the Company's  products in  its catalogs.  Shelby
Williams   publishes  four  extensive  catalogs   displaying  its  products  and
distributes  catalogs  to  architects,  designers  and  dealers.  Catalogs   are
periodically  supplemented as new  products are introduced.  Customers may order
standard products directly from these catalogs or request changes to meet  their
design specifications.
 
DISTRIBUTION
 
    Shelby   Williams   distributes   its   products   both   domestically   and
internationally. Shelby Williams has showrooms and sales offices in 14 cities in
the United States,  as well  as distributors in  32 foreign  countries. Many  of
these  distributors are concentrated in Europe  and Asia, and Shelby Williams is
expanding its  presence in  Latin America  and the  Middle East.  The  Company's
design  resource center  in Honolulu,  Hawaii, serves  customers in  the Pacific
Basin and Far East. In addition,  Shelby Williams utilizes its local  facilities
and  existing distribution channels  to assemble and  distribute products in the
United States imported from European  sources. Shelby Williams also exhibits  at
major national and international trade shows.
 
CUSTOMERS AND END USERS
 
    Some  of the Company's major hospitality  and food service customers and end
users:
 
HOTELS
Boykin Lodging Co.
Bristol Hotel Co.
Cap Star Hotels
Ciga Hotels
Doubletree Hotel Corp.
Four Seasons Hotel, Inc.
John Q. Hammons Hotel, Inc.
Hilton Hotel Corp.
Hyatt Hotel Co.
Holiday Inns, Inc.
Intercontinental Hotels
Interstate Hotel Corp.
La Quinta Inns, Inc.
Loews Hotel Corp.
Marcus Corp. (Budgetel Inns)
Marriott Hotel Corp.
Prime Hospitality Corp.
Promus Companies Inc.
 (Embassy Suites, Hampton Inns
 Homewood Suites)
Renaissance Hotel Corp.
The Ritz Carlton Hotel Co.
The Sheraton Corp.
Starwood Lodging Trust
Westin Hotels
Wyndham Hotels
 
RESTAURANTS
Applebees Restaurants
Au Bon Pain Restaurants
Brinker International Inc.
 (The Corner Bakery,
 Macaroni Grill, Maggiano's)
Champs Restaurants
Club Corporation of America
Darden Restaurants Inc.
 (The Olive Garden and
 Red Lobster Restaurants)
The Hard Rock Cafe
Luby's Cafeteria Inc.
Morton's of Chicago Restaurant
Nick's Fishmarkets
Pizza Hut Inc.
Planet Hollywood Int'l Inc.
Sirloin Stockade
Starbucks Coffee Company
Sullivan Steak Houses
T.G.I. Friday's
Veladi Ranch Steakhouses
Wendy's International Inc.
 
GAMING
Boyd Gaming Corp.
 (Stardust Resort & Casino)
Bally's Casino Resort
Carnival Hotel & Casino
Caesars Palace
Circus Circus Enterprises, Inc.
Cow Creek Indian Gaming Center
Churchill Downs Race Track
Delaware Park Race Track & Casino
Grand Casino, Inc.
Harrah's Entertainment Inc.
Menominee Tribal Gaming
MGM Grand Hotel & Casino
The Mirage Resorts
Sheraton Casino
Showboat Marina Casino
Soaring Eagle Indian Casino
Sun International Hotels
INTERVAL VACATION
 (TIME SHARE)
Embassy Vacation Resort
 Properties, Inc.
Fairfield Communities, Inc.
Hilton Grand Vacations
Hyatt Vacation Club
Marriott Vacation Club Int'l.
Nevada Resort Properties
The Shell Group
Signature Resorts Inc.
Trendwest Resorts, Inc.
Vacation Break USA, Inc.
Vistana Resorts
 
    Some of  the Company's  major healthcare  and university,  wallcovering  and
floorcovering and other customers and end users:
 
                                       5
<PAGE>
HEALTHCARE AND
 UNIVERSITIES
Albert Einstein Medical Center
Assisted Living Concepts
 (Columbia/HCA Hospitals)
Georgia Institute of Technology
Georgia State University
Kaiser Foundation Hospitals
Manor Care Inc.
Michigan State University
Roosevelt University
Rutgers University
Sterling House
The University of Chicago
 Hospitals
University of California at Davis
University of Tennessee
Wake Forest University
 
WALLCOVERING AND
 FLOORCOVERING
Duron Paints
Island Flooring
Patton Wallcoverings, Inc.
Seabrook Wallcoverings Co. Inc.
Thybony Wallcoverings Co. Inc.
The Warner Company
 
OTHER
Allstate Insurance Co.
AFNAF (Air Force Non-
 Appropriated Funds)
Clinique Cosmetics Departments
The Eckerd Corporation
The General Services Administration
May Department Stores
J.C. Penney Company
Sears, Roebuck & Co.
The Walgreen Co.
 
    The  Company's past business  relationship with the  above customers and end
users is  not intended  to imply  that such  relationship will  continue in  the
future.
 
    In 1996, the Company also sold products to over 220 country clubs.
 
    The  Company's ten largest customers accounted  for approximately 17% of net
sales in 1996, and  no single customer  accounted for more than  3% of 1996  net
sales.  Approximately 90%  of the  Company's products  are manufactured  to fill
specific orders.
 
TRADEMARKS AND TRADENAMES
 
    The Company  sells  its hospitality  and  food service  products  under  the
trademarks SHELBY WILLIAMS-Registered Trademark-, KING
ARTHUR-Registered   Trademark-   and   STERNO-Registered   Trademark-   and  its
healthcare, dormitory  and other  institutional  furniture under  the  trademark
THONET-Registered  Trademark-.  The  Company  markets  cutting  room  tables and
accessories under the  PHILLOCRAFT-Registered Trademark-  name, fabric  products
under  the SW  TEXTILES-Registered Trademark-  name and  wallcoverings under the
SELLERS & JOSEPHSON-REGISTERED TRADEMARK- name. The Company distributes wall and
floor coverings,  fabrics,  textiles and  furniture  in Hawaii  and  the  entire
Pacific Basin under the name PHF-Registered Trademark-.
 
BACKLOG
 
    The  Company's backlog of orders at December  31, 1996, was $32.0 million, a
record level,  as compared  to $28.0  million at  December 31,  1995,  excluding
Preview. The Company expects to ship substantially all of its backlog by the end
of 1997.
 
RAW MATERIALS AND SUPPLIES
 
    The  Company manufactures most of its  products to customer order from basic
raw materials.  The Company  utilizes a  wide variety  of raw  materials in  the
manufacture of its products including lumber, plywood, rattan, metal tubing, and
other  frame components, foam  cushioning, vinyl and textiles,  all of which the
Company believes  to be  in abundant  supply  and available  from a  variety  of
different sources. The Company has no long-term supply contracts with any of its
suppliers  and  it  has experienced  no  significant problems  in  obtaining raw
materials in adequate amounts for its operations.
 
                                       6
<PAGE>
MANUFACTURING AND ASSEMBLY
 
    The following table  summarizes the products  manufactured and assembled  at
each of the Company's manufacturing facilities (as of January 1, 1997):
 
<TABLE>
<CAPTION>
                      LOCATION                                        PRODUCTS
-----------------------------------------------------  ---------------------------------------
<S>                                                    <C>
Morristown, TN.......................................  Hospitality, food service and gaming
                                                       seating; banquet seating (1)
Statesville, NC......................................  Healthcare and university seating;
                                                       banquet seating and products
Canton, MS...........................................  Upholstered products
Zacatecas, MX........................................  Furniture components
Englewood, NJ........................................  Wallcoverings
Carlstadt, NJ........................................  Wallcoverings
</TABLE>
 
------------------------
 
(1)  Product information is summarized  for two manufacturing facilities located
    in Morristown, Tennessee.
 
    Shelby Williams operations primarily consist  of wood bending, wood  working
and  finishing, assembly, metal forming  and fabrication, electrostatic wood and
metal finishing. Shelby Williams also prints and laminates vinyl  wallcoverings.
For  certain chair styles, Shelby  Williams purchases components manufactured by
other companies.  These  components, which  are  manufactured to  the  Company's
specifications,  are assembled, finished and upholstered by Shelby Williams. All
outsourced components are  available domestically  except for  rattan, which  is
indigenous  to the Phillipines  and Indonesia. For many  of its standard product
offerings, Shelby  Williams  optimizes  its production  costs  by  sourcing  the
components produced at its Zacatecas, Mexico, facility.
 
    All  manufacturing operations  emphasize quality control  during the various
production processes. To provide consistency and speed to the finishing process,
the Company utilizes conveyorized paint lines with spray booths and drying ovens
positioned to allow proper  drying times between  finishing steps. In  addition,
Shelby  Williams has  recently invested in  electrostatic wood-finishing systems
which provide superior  finishing qualities  and are more  advantageous from  an
environmental  standpoint. The Company intends to invest in powder-coating lines
which provide similar advantages for the metal product lines. Management expects
to continue to invest in automated machinery and equipment.
 
COMPETITION
 
    All aspects of the  Company's business are  highly competitive. The  Company
competes  at some  level with  Falcon Products,  Inc., Gasser  Chair Co.,  L & B
Contract  Industries,  Inc.,  WinsLoew   Furniture  Inc.,  Virco   Manufacturing
Corporation  and MTS  Seating. The  Company competes  primarily on  the basis of
design, quality, service, product pricing and speed of delivery.
 
    The Company  believes that  none  of its  principal competitors  offers  the
complete  range of  seating products  that the Company  offers. There  can be no
assurance that  the Company's  principal competitors  will not  offer a  greater
range of seating products or that new entrants will not enter the market.
 
EMPLOYEES
 
    As  of  December 31,  1996, the  Company had  1,667 full-time  employees. Of
these, 1,449 were engaged in  manufacturing, 113 in administrative and  clerical
positions,  and  105  in sales  and  marketing. Those  engaged  in manufacturing
included 241 employees in Mexico.
 
    Hourly manufacturing employees  at both Morristown,  Tennessee, and  Canton,
Mississippi,  are represented  by separate bargaining  agreements with contracts
expiring in November  1999 (covering approximately  600 employees) and  November
1997  (covering approximately 200 employees), respectively. The Company believes
that its relations with its employees are good.
 
                                       7
<PAGE>
ITEM 2. PROPERTIES.
 
    At January 1, 1997, the Company  maintained facilities with an aggregate  of
approximately  1,700,000 square  feet of space  for its  operations. The Company
considers all of its  facilities to be in  good operating condition.  Currently,
the  Company's manufacturing  facilities are  operating at  approximately 85% of
capacity, with wood products facilities operating  at over 90% of capacity.  The
following  table summarizes  the principal  physical properties,  both owned and
leased, used by the Company in its operations:
 
<TABLE>
<CAPTION>
                                                           APPROXIMATE
                                                              SQUARE
             LOCATION                        USE             FOOTAGE         OWNED/LEASED       EXPIRATION DATE
-----------------------------------  --------------------  ------------  --------------------  -----------------
<S>                                  <C>                   <C>           <C>                   <C>
Chicago, IL........................  Showroom/Offices            6,750   Leased                July, 2000
 
Morristown, TN.....................  Mfg./Offices              515,960   Owned                        --
 
Morristown, TN.....................  Mfg./Warehousing          228,000   Owned                        --
 
Canton, MS.........................  Mfg./Warehousing          406,000   Owned/Leased(1)       May, 2001(1)
 
Statesville, NC....................  Mfg./Warehousing          326,670   Owned                        --
 
Zacatecas, MX......................  Mfg./Warehousing           90,000   Owned                        --
 
Englewood, NJ......................  Mfg./Warehousing           68,000   Leased                Dec., 2003(2)
 
Honolulu, HI.......................  Warehousing                45,000   Leased                Aug., 2003(2)
 
Carlstadt, NJ......................  Mfg./Warehousing           35,000   Leased                April, 2004
</TABLE>
 
------------------------
 
(1) Approximately 238,100 square feet are owned and 167,900 are leased.
 
(2) The Company has an  option to renew the lease  for 10 additional years at  a
    nominal rental increase.
 
    The  Company has  showrooms and  sales offices  in 14  United States cities,
including  Atlanta,  Chicago,  Dallas,  Honolulu,  Los  Angeles,  New  York  and
Plantation, Florida.
 
ITEM 3. LEGAL PROCEEDINGS.
 
    The  Company is a defendant in various product liability lawsuits arising in
the normal course of business. Management believes that the Company's  insurance
is  adequate to cover  its potential liability under  all pending and threatened
litigation.  The  Company  believes,  after  consultation  with  counsel,   that
allegations of punitive damages, which are alleged in certain cases, are without
merit.
 
    On  July 15, 1992, a case was filed in the Chancery Court for Greene County,
Tennessee, entitled Linda  Foshie, Joseph  Allen Foshie, David  Ray Foshie,  and
Michael   Scott  Foshie,  suing   individually  on  their   own  behalf  and  as
representative parties of  a class  action, plaintiffs, v.  Steve Cansler,  Fred
Cansler, Jimmy Cansler, C & C Millwright Maintenance Co., Inc., Foamex Products,
Inc.,  Recticel Foam Corporation, Foamex  L.P., Morristown Foam Corporation, and
Shelby Williams Industries, Inc., defendants. The complaint alleged, among other
things, that  defendants conspired  to transport  and store  hazardous waste  on
premises  which abutted  the home  of the  named plaintiffs,  that such activity
violated both state and federal law,  and that plaintiffs were damaged  thereby.
The  complaint sought, among other things,  compensatory damages of $2.5 million
for each of the  four named plaintiffs  and punitive damages  of $5 million  for
each  of the four named plaintiffs, and  similar damages for other alleged class
members. On August 11, 1992,  a case was filed in  the Circuit Court for  Greene
County,  Tennessee entitled  Richard Lee Cobble  and wife,  Patricia Day Cobble;
Richard Lee Cobble, Jr.; Kenneth Dwayne  Cobble; Claude Cobble and wife,  Lenora
Cobble; Gary A. Douthat and wife Julia A. Douthat; Donald Joseph Hewitt and wife
Jacqueline  Kay  Hewitt;  Robert Hensley,  Jr.  and wife  Brenda  Hensley; Penny
Hensley b/n/f  and parents,  Robert Hensley,  Jr., and  Brenda Hensley,  Stephen
Hensley  b/n/f and parents, Robert Hensley, Jr., and Brenda Hensley, plaintiffs,
v. Steve Cansler; Fred Cansler; Jimmy Cansler; C & C Milwright Maintenance  Co.,
Inc.;  Foamex Products, Inc.; Recticel Foam Corporation; Foamex L.P.; Morristown
Foam Corporation; and Shelby  Williams Industries, Inc., defendants,  containing
similar  allegations  and seeking  $5 million  in  compensatory damages  and $10
million in punitive damages for each of nine named plaintiff groups.
 
                                       8
<PAGE>
    The Company was dismissed by the  plaintiffs as a defendant in the  lawsuits
filed  July 15, 1992 and August 11, 1992 by plaintiffs Linda Foshie, and others,
and Richard Lee Cobble, and others,  respectively. The Company's only costs  for
these  claims were insignificant legal expenses. Another defendant in the Foshie
case filed a cross-complaint against the Company regarding claims against it  by
the  same plaintiffs. The  Company believes that  the cross-complaint against it
was without merit  and that the  Company had meritorious  defenses. Among  other
things,  the Company believes  that no acts  complained of by  the plaintiffs in
these cases occurred  prior to July  1979, at  which time the  Company sold  the
stock  in  its  subsidiary,  Morristown Foam  Corporation,  which  owned certain
facilities involved in these  cases, and that other  than its past ownership  of
this subsidiary, the Company had no involvement with the facilities in question.
In  December 1995, the Company was served  with a third party complaint filed by
Steve Cansler  in  an action  in  the federal  district  court for  the  eastern
district  of Tennessee  brought by Recticel  Foam Corporation  against Steve and
Fred Cansler for cost  recovery of funds spent  by Recticel Foam Corporation  in
cleaning  up  the contamination  that is  the subject  of the  actions described
above. In January  1996, the Company  was served with  an essentially  identical
third  party complaint in  the same action,  filed by Fred  Cansler. The Company
believes that these third party complaints were meritless, for the same  reasons
which led to the Company's dismissal from the tort actions described above.
 
    None  of  the claims  against  the Company  described  in the  preceding two
paragraphs is currently pending. In May,  1996 the Recticel case and the  claims
against  the Company in that case were dismissed without prejudice. In November,
1996 the claim  against the  Company in the  Foshie case  was dismissed  without
prejudice.  In  neither case  did the  Company  make any  payment as  damages or
settlement.
 
    In February, 1997, the Company's King Arthur division received a  complaint,
addressed  to King Arthur, Inc., in a case  pending in the Superior Court of New
Jersey, Camden County, Law Division, entitled Pennsauken Solid Waste  Management
Authority,  et al.,  vs. Ward Sand  & Material Co.,  Inc. and a  large number of
other defendants. The complaint,  which identifies King Arthur,  Inc. as one  of
the  defendants, alleges,  among other  things, that  during the  operation of a
landfill  from  the  1960's  to  1984,  the  defendants  improperly   generated,
transported  and/or  disposed of  certain  hazardous waste  materials,  and that
defendants are jointly  and severally  liable to  plaintiffs for  all costs  and
damages  incurred  by  plaintiffs  for  remediation  of  the  landfill  and  any
surrounding areas which  are found to  be contaminated. The  complaint does  not
specify  any dollar  amount of damages.  The Company acquired  certain assets of
King Arthur, Inc. in  1986. The Company  has not had an  opportunity to make  an
independent  investigation of the allegations in  the complaint, but the Company
believes, based on  its present  knowledge, that it  has valid  defenses to  the
allegations  in the complaint, and that the  Company's liability, if any, is not
material. The Company is in the process of putting its insurers on notice of the
complaint.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
    None.
 
                                       9
<PAGE>
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
 
<TABLE>
<CAPTION>
                                                  AGE AT     PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
                     NAME                         2-1-97       AND POSITION AND OFFICE WITH REGISTRANT
-----------------------------------------------  ---------  ----------------------------------------------
<S>                                              <C>        <C>
Paul N. Steinfeld..............................     42      Chairman of the Board of Directors and Chief
                                                              Executive Officer since January, 1996; Vice
                                                              Chairman of the Board and Chief Executive
                                                              Officer from May, 1991 to January, 1996;
                                                              Vice Chairman of the Board and Chief
                                                              Administrative Officer prior to May, 1991.
                                                              Director during past five years.
Robert P. Coulter..............................     54      President and Chief Operating Officer since
                                                              May, 1990; prior thereto President and
                                                              Treasurer. Director during past five years.
Manfred Steinfeld..............................     72      Chairman of Executive Committee and chairman
                                                              of executive compensation committee since
                                                              January, 1996; Chairman of the Board and
                                                              chairman of executive compensation committee
                                                              from May, 1991 to January, 1996; prior
                                                              thereto Chairman of the Board and Chief
                                                              Executive Officer. Director during past five
                                                              years.
Peter W. Barile................................     54      Executive Vice President since May, 1990.
Sam Ferrell....................................     55      Vice President, Finance, Treasurer and Chief
                                                              Financial Officer and Assistant Secretary
                                                              since May, 1990.
</TABLE>
 
    The executive officers of the registrant  are elected annually by the  Board
of Directors, hold office until their successors are chosen and qualify, and may
be removed at any time by the affirmative vote of a majority of the Board. There
are  no  written  employment  agreements with  any  executive  officers. Manfred
Steinfeld is  the  father  of  Paul  N. Steinfeld;  there  is  no  other  family
relationship between any director or executive officer of the Company.
 
                                       10
<PAGE>
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
    The  information under the heading "Common Stock Information (Unaudited)" on
page  18  of  the  Company's  1996  Annual  Report  to  Stockholders  is  hereby
incorporated by reference.
 
ITEM 6. SELECTED FINANCIAL DATA.
 
    The  information under the heading "Five  Year Summary of Selected Financial
Data" on page 3 of  the Company's 1996 Annual  Report to Stockholders is  hereby
incorporated by reference.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.
 
    The  information under the heading  "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on page 21 of the Company's  1996
Annual Report to Stockholders is hereby incorporated by reference.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
    The  information contained on pages  13 (Consolidated Statements of Income),
14-15 (Consolidated Balance Sheets), 16 (Consolidated Statements of Cash Flows),
17  (Consolidated  Statements   of  Stockholders'  Equity),   18-20  (Notes   to
Consolidated  Financial Statements) and  20 (Report of  Independent Auditors) of
the Company's  1996 Annual  Report  to Stockholders  is hereby  incorporated  by
reference.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE.
 
    Not applicable.
 
                                    PART III
 
    The  information called  for by Part  III (Item 10  (Directors and Executive
Officers of the Registrant), Item 11 (Executive Compensation), Item 12 (Security
Ownership of Certain  Beneficial Owners  and Management), and  Item 13  (Certain
Relationships  and Related Transactions))  is incorporated by  reference, to the
extent required,  from the  Company's  definitive proxy  statement to  be  filed
pursuant to Regulation 14A not later than 120 days after December 31, 1996.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
 
    (a) List of financial statements and schedules.
 
       (1)   Financial  statements.  The   following  financial  statements  are
           incorporated by reference in Part II, Item 8 of this report:
           Consolidated Statements of  Income for the  years ended December  31,
           1996, 1995, and 1994
           Consolidated Balance Sheets at December 31, 1996 and 1995
           Consolidated  Statements of Cash  Flows for the  years ended December
           31, 1996, 1995 and 1994
           Consolidated Statements of Stockholders'  Equity for the years  ended
           December 31, 1996, 1995 and 1994
           Notes to Consolidated Financial Statements
           Report of Independent Auditors
 
       (2) Financial statement schedules:
 
    None  since the  required information  is not present  or is  not present in
amounts sufficient  to  require  submission  of the  schedule,  or  because  the
information  required is  included in  the consolidated  financial statements or
notes thereto.
 
    (b) No reports on Form  8-K have been filed during  the last quarter of  the
period covered by this report.
 
    (c) List of exhibits: See Exhibit Index immediately preceding exhibits.
 
                                       11
<PAGE>
                                   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.
 
Date: March 3, 1997
 
                                             SHELBY WILLIAMS INDUSTRIES, INC.
 
                                          --------------------------------------
 
                                                       (Registrant)
 
                                          By          PAUL N. STEINFELD
 
                                            ------------------------------------
 
                                                     Paul N. Steinfeld
                                                   Chairman of the Board
 
    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.
 
<TABLE>
<CAPTION>
                       NAME                                     TITLE                      DATE
--------------------------------------------------  ------------------------------  ------------------
 
<C>                                                 <S>                             <C>
                PAUL N. STEINFELD                   Chairman of the Board and
     ---------------------------------------          Director (Principal
               (Paul N. Steinfeld)                    Executive Officer)
 
                ROBERT P. COULTER*                  President and Director
     ---------------------------------------
               (Robert P. Coulter)
 
                MANFRED STEINFELD*                  Chairman of the Executive
     ---------------------------------------          Committee and Director
               (Manfred Steinfeld)
 
                   SAM FERRELL*                     Vice President of Finance,
     ---------------------------------------          Treasurer and Assistant
                  (Sam Ferrell)                       Secretary (Principal
                                                      Financial and Accounting
                                                      Officer)
 
                 ROBERT L. HAAG*                    Director
     ---------------------------------------
                 (Robert L. Haag)                                                   March 3, 1997
 
                WILLIAM B. KAPLAN*                  Director
     ---------------------------------------
               (William B. Kaplan)
 
                DOUGLAS A. PARKER*                  Director
     ---------------------------------------
               (Douglas A. Parker)
 
                 HERBERT L. ROTH*                   Director
     ---------------------------------------
                (Herbert L. Roth)
 
                  TRISHA WILSON*                    Director
     ---------------------------------------
                 (Trisha Wilson)
 
*By         PAUL N. STEINFELD
       -----------------------------------
         Paul N. Steinfeld, Attorney-in-fact
</TABLE>
 
                                       9
<PAGE>
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 EXHIBIT
   NO.                                                    DESCRIPTION
---------  ---------------------------------------------------------------------------------------------------------
 
<C>        <S>
      2.1  Asset  Purchase Agreement dated September 16, 1996  between Preview Furniture Corporation, the Registrant
           and Ferguson Copeland, LLC.
 
     3(i)  Registrant's  Certificate  of  Incorporation  and  all  amendments  thereto,  filed  as  Exhibit  3.1  to
           Registrant's annual report on Form 10-K for 1987 and hereby incorporated by reference.
 
  3(ii)    Registrant's  By-Laws, as amended, filed as Exhibit 3(ii)  to Registrant's annual report on Form 10-K for
           1995 and hereby incorporated by reference.
 
       4.0 The Registrant agrees to furnish a copy of the capital lease referred to in the Registrant's Consolidated
           Financial Statements to the Commission upon request.
 
       4.1 The Registrant agrees to furnish  a copy of the  7.8% note agreement dated July  31, 1992 and payable  in
           quarterly  installments of $1,000,000 beginning  in October 1997, for  $8,000,000, to the Commission upon
           request.
 
     *10.1 1995 Senior Management Incentive Plan, filed as Exhibit  10.3 to Registrant's annual report on Form  10-K
           for 1994 and hereby incorporated by reference.
 
     *10.2 1996  Senior Management Incentive Plan, filed as Exhibit  10.3 to Registrant's annual report on Form 10-K
           for 1995 and hereby incorporated by reference.
 
     *10.3 1997 Senior Management Incentive Plan.
 
     *10.4 Registrant's 1992 Key  Employees' Incentive  Stock Option  Plan, filed  as Exhibit  10.6 to  Registrant's
           annual report on Form 10-K for 1991 and hereby incorporated by reference.
 
     *10.5 Registrant's  1995 Directors'  Stock Option  Plan, filed as  Exhibit 10.1  to Registrant's  Form 10-Q for
           quarter ended March 31, 1995 and hereby incorporated by reference.
 
      13.1 Portions of Registrant's annual report to stockholders for 1996.
 
      21.1 Subsidiaries of the Registrant.
 
      23.1 Consent of independent auditors to incorporation by reference in Form 10-K.
 
      23.2 Consent of independent auditors to incorporation by reference in Form S-8.
 
      24.1 Power of Attorney.
 
      27.1 Financial Data Schedule (EDGAR only).
</TABLE>
 
------------------------
 
*   Compensation plan.
 
                                       10