Dixie Reports 3rd Quarter Results; Completes Sale
Chattanooga, TN, Nov. 12, 2003--The Dixie Group, Inc. today announced financial results for the three- and nine-month periods ended September 27, 2003.
The Company also announced that it has completed the sale of its factory-built housing, needlebond and carpet recycling businesses and related assets to Shaw Industries Group, Inc.
The Dixie Group reported income from continuing operations of $371,000, or $0.03 per diluted share, for the third quarter ended September 27, 2003, compared with income from continuing operations of $2.9 million, or $0.24 per diluted share, for the prior-year period.
Sales from continuing operations were $60.9 million for the third quarter of 2003 compared with $58.7 million in the year-earlier period.
For the first nine months of 2003, the Company reported income from continuing operations of $3.6 million, or $0.30 per diluted share, compared with income from continuing operations of $6.9 million, or $0.58 per diluted share, for the same period in 2002. Year-to-date sales from continuing operations were $176.8 million in 2003, compared with $177.3 million in the prior year.
"Much of our focus this year has been to develop the Dixie Home collection of products and to enhance the sales and marketing infrastructure to service this business and gain its acceptance at retail," commented Daniel K. Frierson, chairman and chief executive officer of The Dixie Group.
"The acceptance of these products by retailers has been exceptional, and we now have samples placed with most of our target customers.
Although many of these samples have only recently been installed at these retail stores, Dixie Home sales showed a marked improvement in the third quarter of 2003. With most of our samples now in place, sales rates have continued to increase in the first six weeks of the fourth quarter.
While start-up costs for this initiative had a negative impact on our operating results during the third quarter (approximately $2.7 million) and the first nine months of this year (approximately $6.3 million), we remain optimistic that Dixie Home sales will continue to improve and provide a positive contribution next year.
"Our high-end sales at Masland and Fabrica have continued to grow this year," Frierson continued. "This growth, together with the Dixie Home sales increases, has resulted in year-over-year gains of almost 7% for the first nine months of 2003, over 10% in the third quarter, and over 20% in the first six weeks of the fourth quarter for carpet sales from our continuing operations."
The previously announced sales agreement with Shaw Industries Group, Inc., executed on September 4, 2003, provided for a cash purchase price of $205.0 million, which, net of liabilities retained by the Company, resulted in a net value for the transaction of approximately $180.0 million. Proceeds received at closing, which are subject to certain adjustments, were used to retire approximately $143.0 million of the Company's debt, to fund an $8.0 million escrow reserve, and to pay certain debt pre-payment premiums and transaction-related expenses.
Approximately $47.0 million was invested in short-term securities and will be used to pay the retained liabilities when they become due and income taxes related to the transaction.
The assets sold included the Company's yarn, tufting, dyeing, finishing, needlebond, distribution and logistics facilities in Calhoun, Georgia, its needlebond facility in Dalton, Georgia, and its carpet recycling facility in Lafayette, Georgia. Approximately 1,100 associates are employed in these facilities.
The transaction is not expected to result in a material net gain or loss; however, the Company will incur costs to extinguish debt retired with the sale proceeds.
Related Topics:The Dixie Group, Shaw Industries Group, Inc., Masland Carpets & Rugs