Dixie Group Sees Higher Third Quarter Loss

Chattanooga, TN, Oct. 27, 2009--The Dixie Group reported a third quarter loss from continuing operations of $2,017,000, or $0.16 per diluted share, compared with a loss of $732,000, or $0.06 per share a year ago.

Sales for the third quarter were $50,487,000, down 31% from $72,917,000 in the year-earlier quarter.

For the nine months ended Sept. 26, the loss from continuing operations was $38,442,000, or $3.13 per diluted share, compared with income from continuing operations of $633,000, or $0.05 per diluted share for the nine-month period in 2008.

Sales for the year-to-date period in 2009 were $150,698,000, down 32% from $220,794,000 reported in the prior-year period.

Results for this year's third quarter were affected by $563,000 of pre-tax costs for facility consolidations and severance expenses.

Daniel K. Frierson, chairman and chief executive officer, said, "The third quarter performance was similar to the second, with carpet sales down in the 30% range. We experienced improvement in the residential market during the quarter but continued weakness in the commercial sector. As we have stated previously, our objective is to reduce costs and return to profitability at the current business activity level.

Frierson said the company has cut its workforce by 28%, which should result in cost reductions of approximately $23 million to $25 million by 2010.

Frierson said its first cost cutting step was the consolidation of its East Coast and West Coast tufting facilities along with other cost-cutting efforts, which should be completed by the end of the year.

“The second phase of our cost reduction initiative realigned our three residential units into one business unit with three distinct brands," Frierson said.

"This action is progressing well, and we expect to begin seeing savings from this realignment in the fourth quarter – with the full effect to be felt early next year."

Frierson said he can't predict how long the current economic downturn will last or its impact on its business.