EXHIBIT 99.1
CONTACT:
|
Gary A. Harmon
Chief Financial Officer
(706) 625-7990
gary.harmon@dixiegroup.com
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THE DIXIE GROUP REPORTS THIRD QUARTER RESULTS
COMPLETES SALE OF ASSETS TO SHAW INDUSTRIES GROUP, INC.
CHATTANOOGA, Tenn. (November 12, 2003) -- The Dixie Group, Inc. (Nasdaq/NM:DXYN) 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 contri bution 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 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 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 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. The Company is also evaluating certain assets that will be impaired as a result of the sale of these businesses. These items and charges, estimated at approximately $12.0 million to $15.0 million after-tax, are expected to have a negative impact on results for the fourth quarter of 2003.
The assets that were a part of the operations sold are classified as assets held for sale on the Company's balance sheets, and results for the operations that were sold have been classified as discontinued operations for all periods presented.
Frierson added, "The sale of these assets allowed us to substantially reduce our debt -- particularly our most costly debt -- and has provided the financial resources to fund growth of our Dixie Home brand and our high-end residential and commercial business through our Masland and Fabrica brands."
Results of the discontinued operations reflected a loss of $1.8 million, or $0.15 per diluted share, in the third quarter of 2003, compared with a loss of $474,000, or $0.04 per diluted share, in the third quarter of 2002. For the first nine months of 2003, discontinued operations reflected a loss of $3.9 million, or $0.33 per diluted share, compared with a loss of $1.0 million, or $0.08 per diluted share, for the corresponding period in the prior year. Including discontinued operations, the Company reported a net loss of $1.4 million, or $0.12 per diluted share, for the third quarter of 2003, compared with net income of $2.4 million, or $0.20 per diluted share, in the third quarter of 2002. For the nine months ended September 27, 2003, the net loss was $346,000, or $0.03 per diluted share, compared with net income of $5.9 million, or $0.50 per diluted share, for the same period in 2002.
A listen-only Internet simulcast and replay of Dixie's conference call may be accessed with appropriate software at the Company's web site or at (www.fulldisclosure.com). The simulcast will begin at approximately 2:00 p.m. Eastern Time on November 13, 2003. A replay will be available approximately two hours later and will continue for approximately 30 days. If Internet access is unavailable, a listen only telephonic conference will be available by dialing 913-981-4903 at least ten minutes before the appointed time. A seven-day telephonic replay will be available two hours after the call ends by dialing 719-457-0820 and entering 696682 when prompted for the access code.
The Dixie Group (www.thedixiegroup.com) is a leading carpet and rug manufacturer and supplier to higher-end residential and commercial customers serviced by Fabrica International, Masland Carpets and to consumers through major retailers under the Dixie Home name. Dixie's Candlewick Yarns serves specialty carpet yarn customers.
Statements in this news release, which relate to the future, are subject to risk factors and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Such factors include the levels of demand for the products produced in each of the Company's business segments. Other factors that could affect the Company's results include, but are not limited to, raw material and transportation costs related to petroleum prices, the cost and availability of capital, and general economic and competitive conditions related to the Company's business. Issues related to the availability and price of energy may adversely affect the Company's operations. Additional information regarding these and other risk factors and uncertainties may be found in the Company's filings with the Securities and Exchange Commission.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited; in thousands, except earnings per share
| | | | |
| | Three Months Ended | Nine Months Ended |
| Sept. 27,
2003 | Sept. 28,
2002 | Sept. 27,
2003 | Sept. 28,
2002 |
| | | | |
NET SALES
Cost of sales | $ 60,921
40,374 | $ 58,745
39,064 | $ 176,750
116,859 | $ 177,285
118,933 |
| | | | |
GROSS PROFIT
Selling and administrative expenses
Other (income) expense - net | $20,547
17,967
(113) | $ 19,681
14,099
(197) | 59,891
49,135
(843) | 58,352
43,778
(681) |
| | | | |
Income before interest and taxes
Interest expense | $2,693
2,101 | 5,779
1,194 | 11,599
5,855 | 15,255
4,180 |
| | | | |
Income before income taxes
Provision for income taxes | 592
221 | 4,585
1,699 | 5,744
2,177 | 11,075
4,164 |
| | | | |
Income from continuing operations
Loss from discontinued operations | 371
(1,778) | 2,886
(474) | 3,567
(3,913) | 6,911
(967) |
| | | | |
| | | | | |
NET INCOME (LOSS) | $ (1,407) | $ 2,412 | $ (346) | $ 5,944 |
| | | | |
| | | | |
| | | | |
Basic earnings (loss) per share:
Income from continuing operations
Loss from discontinued operations |
$ 0.03
(0.15)
|
$ 0.25
(0.04)
|
$ 0.30
(0.33)
|
$ 0.59
(0.08)
|
| | | | |
| | | | | |
BASIC EARNING (LOSS) PER SHARE | $ (0.12) | $ 0.21 | $ (0.03) | $ 0.51 |
| | | | |
| | | | |
| | | | |
| | | | | |
Diluted earnings (loss) per share:
Income from continuing operations
Loss from discontinued operations |
$0.03
(0.15)
|
$0.24
(0.04)
|
$0.30
(0.33)
|
0.58
(0.08)
|
| | | | |
| | | | |
| | | | |
| | | | | |
DILUTED EARINGS (LOSS) PER SHARE | $(0.12) | $0.20 | $(0.03) | $0.50 |
| | | | |
| | | | |
| | | | |
Weighted average shares outstanding
Basic
Diluted |
11,748
11,779
|
11,741
11,798
|
11,751
11,761
|
11,715
11,845
|
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
| | | |
| | |
| | September 27, 2003 | December 28, 2002 |
| | |
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable
Inventories
Assets held for sale
Other | (Unaudited)
$ 2,111
20,005
52,301
204,851
8,161 |
$ 2,440
18,770
42,748
200,407
8,592
|
| | |
Total Current Assets | 287,429 | 272,957 |
| | | |
Net Property, Plant and Equipment
Goodwill
Investment in Affiliate
Other Assets | 59,781
52,582
11,936
16,572 | 65,410
52,316
13,458
12,505 |
| | |
| | | |
TOTAL ASSETS | $ 428,300 | $ 416,646 |
| | |
| | |
| | |
| | | |
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses
Current portion of long-term debt |
$ 73,381
149,988
|
$ 65,451
13,294
|
| | |
Total Current Liabilities | 223,369 | 78,745 |
| | |
| | | |
Long-Term Debt
Senior indebtedness
Subordinated notes
Convertible subordinated debentures
Accrued Purchase Consideration
Other Liabilities
Deferred Income Taxes
Stockholders' Equity |
27,929
- ---
27,237
- ---
15,831
22,276
111,658
|
75,408
30,952
29,737
50,000
16,529
23,923
111,352
|
| | |
| | | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 428,300 | $ 416,646 |
| | |
| | |
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