The Dixie Group Posts Loss
Chattanooga, TN, Feb. 17--The Dixie Group reported a loss from continuing operations of $11.7 million, or $0.99 per diluted share, for the fourth quarter ended December 27, 2003, compared with income from continuing operations of $4.4 million, or $0.37 per diluted share, for the prior-year period. Net sales from continuing operations increased 19% to $64.6 million for the fourth quarter of 2003 from $54.1 million in the year-earlier period.
For the year ended December 27, 2003, the company reported a loss from continuing operations of $9.0 million, or $0.77 per diluted share, compared with income from continuing operations of $11.4 million, or $0.97 per diluted share, for 2002. Net sales from continuing operations increased 5% to $234.1 million in 2003 from $223.3 million in 2002.
The company's results reflect the previously announced sales of the company's North Georgia operations. As a result of these sales, The Dixie Group has changed significantly. It now manufactures higher-end residential and commercial carpet under the Fabrica, Masland and Dixie Home brands. The asset sales allowed the company to substantially reduce its long-term debt and repositioned the company in one of the strongest growth segments of the floorcovering industry.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "Our business is now concentrated in the upper end of the carpet market, where innovative styling, design, color and product differentiation are demanded and rewarded. All of our carpet brands reported strong sales gains in 2003, with carpet sales from continuing operations up over 10% for the year and over 21% in the fourth quarter, compared with the year-earlier periods. Those sales trends have continued in the first quarter of 2004. Fabrica and Masland accounted for more than half of the sales growth in the 2003 periods and continue to do so in the first quarter of 2004.
"Our newest line of residential carpeting, the Dixie Home collection, continues to gain momentum with sales in the fourth quarter of 2003 running at an annualized rate of approximately $25.0 million. We are substantially expanding the collection in 2004 and expect sales will reach an annualized run rate of more than double the current rate by the end of 2004. While the infrastructure and start-up costs of this growth initiative reduced pre-tax earnings by approximately $2.9 million in the fourth quarter of 2003 and $8.4 million for the full year, we believe the negative effect of this investment on our earnings will significantly decline as we move through the year.
"In essence, we are entering 2004 as a new company--one that is focused on its core competencies, in a much stronger financial position, and well positioned to take advantage of the improving economy."
Results from continuing operations were reduced by impairments and other charges of $21.1 million pre-tax ($13.4 million after-tax, or $1.14 per diluted share) in the fourth quarter. The impairments and other charges were principally costs related to the early extinguishment of debt and write-downs of assets impaired as a result of the sale of discontinued operations. Approximately $16.1 million of the charges were non-cash.
Excluding the impairments and other charges, earnings from continuing operations for the fourth quarter of 2003 were $1.7 million, or $0.15 per diluted share. For the full year 2003, earnings from continuing operations, excluding the impairments and other charges, were $4.4 million, or $0.37 per diluted share. Management believes that earnings from continuing operations, excluding these impairments and other charges--a non-GAAP financial measure--is a meaningful tool with which to assess the profitability of the company's ongoing operations.
Related Topics:Masland Carpets & Rugs, The Dixie Group