Exhibit 99.1
JUNE 2005
Forward Looking Statements
Statements in this presentation, 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 by the Company. 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.
General information set forth in this presentation concerning market conditions, sales data and trends in the U.S carpet and rug markets are derived from various public and, in some cases, non-public sources. Although we believe such data and information to be accurate, we have not attempted to independently verify such information.
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Carpet and Rug Industry—$13.8 Billion
(2003 Dollars in Billions)
Area Rugs $2.4 17%
Broadloom Carpet $11.4 83%
20% new residential construction, 30% commercial and 50% residential replacement
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Broadloom Carpet Not Import Sensitive
Efficient scale—U. S. has approximately 50% share of world’s broadloom carpet production
Retail placement and distribution
Service
Hundreds of SKUs and numerous colors
Retailers reluctant to carry inventory
24 hr. to 48 hr. delivery expected
Labor cost content
7% to 11% of sales price
Freight cost
Carpet too bulky and heavy to ship cost effectively
Shipping cost overseas can equal or exceed labor cost
Technology
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Carpet vs. Traditional Textile Industry
20 Largest Public Textile Companies in 1980
1. Burlington (1), (2) 11. Fieldcrest (1), (2)
2. J. P. Stevens (1), (2) 12. Reigel (2)
3. West Point (1), (2) 13. Graniteville (2)
4. Springs (1) 14. Avondale
5. Cone (2) 15. Bibb (2)
6. Cannon (2) 16. Ti-Caro (2)
7. UM & M (2) 17. Guilford Mills (2)
8. M. Lowenstein (1), (2) 18. Dixie Yarns (3)
9. Dan River (1), (2) 19. Shaw Industries (3)
10. Collins & Aikman (1), (2) 20. Mohasco (Mohawk) (3)
1 – In the carpet business at one time
2 – Have gone through bankruptcy or no longer in business 3 – Principally in floorcovering business today
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Broadloom Carpet Raw Material
65% to 70% of cost of broadloom carpet is raw material
Raw material includes fiber, yarn and backing materials which are almost100% petroleum based
Raw material prices affected by:
Changes in petroleum prices
Industry demand
Recovery of raw material cost increases
The industry has generally been successful passing major raw material increases through to its customers
There tends to be a lag from the time costs increase until higher selling prices are fully implemented, partially due to LIFO inventories
Longer-term major fiber cost increases are opportunities to recover other cost increases and improve margins
Branded vs. unbranded fiber
Unbranded fiber generally used with lower-end products
Unbranded fiber self extruded
Branded fiber costs similar with all competitors
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Dixie Strategic Positioning
Grew floorcovering business from 1993 and exited textiles in 1999 – now 100% floorcovering
Eight acquisitions from 1993 through 2000
Demise of factory-built housing 65%
Commitment to brands and upper-end market led to the sale of our North Georgia operations
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Shaw Transaction
Sold North Georgia carpet and yarn operations to Shaw for $212 million in November 2003
One-time P & L charge $16.2 million
Debt reduced $150 million
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Dixie Today
Smaller, more profitable, growing company with strong balance sheet and strong brands in the upper-end market
Vastly improved risk profile
Financially Customer base
Top 20 carpet customers – 16% of total carpet sales
Top 40 carpet customers – 20% of total carpet sales
Carpet sales up 2nd Qtr. and YTD 5-21-05 vs. prior year:
Residential Carpet Sales – 2nd Qtr. 19%—YTD 19%
Contract Carpet Sales – 2nd Qtr. 20%—YTD 17%
Total Carpet Sales – 2nd Qtr. 19%—YTD 18%
Total sales expected to improve 15% for the year 2005
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Dixie Carpet and Rug Sales by End Market
High-End Commercial 32%
High-End Residential 68%
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Growth Initiatives
Masland Residential—Doubling rate of new product introductions
Dixie Home—Launch Dixie Home business
Fabrica
2003 hire new director of product development
2004 Increase rate of new product introductions
Masland Contract
2002 Launch Energy line
2005 Invest in modular / carpet tile manufacturing equipment.
2002 through 2005—Invest in new tufting technology to support product innovation
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Dixie’s Broadloom and Area Rug Carpet sales have Out Performed the U.S. carpet market in recent years
In 2002, Dixie grew at 1% while the market grew at 2.6%
2002 growth initiatives In 2003 and 2004, Dixie grew 11% and 26%; respectively, while the carpet market grew at an estimated 1% in 2003 and 9% for 2004
In the 1st QT 2005 Dixie grew at 18% while the market grew at 9%
BROADLOOM AND AREA RUG CARPET SALES
CHANGE INDEX (2001=Base year)
Indexed versus 2001
Began Growth Initatives
170 160 150 140 130 120 110 100
2001 2002 2003 2004 1st QT 2005
Dixie
Industry
2003 Sales Industry—$13.8 Billion Dixie—$234 Million (1.7%)
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Dixie Profit Margin, Sales and Administrative Expenses as a % of Sales
40.0% 35.0% 30.0% 25.0% 20.0%
34.6%
34.1% 34.1% (2)
31.9%
30.6%
28.1% (1) 25.9%
25.3% 24.7% 25.1%
2001 2002 2003 2004 1st QT 2005
Gross Profit Selling and Adm. Exp.
(1)—Launch Dixie Home business
(2)—LIFO liquidation – Increased gross profit by .8%
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Dixie Sales Continuing Operations
($ in millions)
$231
$37
$194
$223
$26
$197
$234 $17
$217
$292
$18 (1)
$274
2001 2002 2003 2004
Carpet Sales Yarn Sales
(1)—Includes sales related to disposal of North GA operations
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Dixie Sales Continuing Operations
($ in millions)
$ 64 $6.0 (1) $58.0
$ 72 $4.0
$68.0
1st QT 2004 1st QT 2005
Carpet Sales Yarn Sales
(1)—Includes sales related to disposal of North GA operations
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Dixie Operating Income
($ in millions)
$25.6 $24.1 (1)
$14.0
$2.8 (2)
2001 2002 2003 2004
(1)—Includes $3.2 million net gains from the sale of facilities and impairments (2)—Includes $11.4 million of impairments and charges
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Dixie Operating Income
($ in millions)
$4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0
$4.3 $3.9 (1)
1st Qtr. 2004 1st Qtr. 2005
(1)—Includes $1.7 million from LIFO liquidation and non-repeating other income items
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Dixie Capital Structure
($ in millions)
March 26 2005
Debt:
Senior Debt $ 46.8
Subordinated Debt 27.2
74.0
Equity 113.8
Total Capitalization $ 187.8
Debt to Total Capitalization:
Senior Debt 25%
Subordinated Debt 14%
Total Debt 39%
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Residential Positioning of The Dixie Group
ESTIMATED TOTAL WHOLESALE MARKET
FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS
Positioning of Dixie Brands by Price Point Segment
BROADLOOM RESIDENTIAL SALES = $7.6 Billion
ESTIMATED DATA
TOTAL MARKET: SQUARE YARDS OR SALES DOLLARS
Dixie Home
Masland
Fabrica
$6 $14 $21 $28 $35 $42 $49 $0
INDUSTRY AVERAGE
PRICE/ SQ YD
Note: Industry average price is based on sales reported through industry sources.
Excerpt from KSA Study dated May 6, 2004, Titled “KSA Assessment of Dixie’s Residential and Contract Carpet Businesses”, commissioned by The Dixie Group, Inc.
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Dixie High-End Residential Sales
Fabrica 32%
Dixie Home 22%
Masland 46%
2004
Fabrica 30%
Dixie Home 26%
Masland 44%
2005
YTD 5-21-05
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Residential Summary
Fabrica and Masland are among the most respected brands in high-end residential carpet
Fabrica’s and Masland’s combined residential sales are estimated to be about 35% of total U.S. industry sales at $22.00 per SQ YD and higher
Dixie Home at $10-$20 per SQ YD
Provides access for Dixie to a larger sector of the market
Helps Dixie become more important to upper-middle & high-end customers
Excerpt from KSA Study dated May 6, 2004, Titled “KSA Assessment of Dixie’s Residential and Contract Carpet Businesses”, commissioned by The Dixie Group, Inc.
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Residential Broadloom—Dixie Home
Fulfill market need for third player
Well-styled moderate to upper priced line
Leverage needed by fiber suppliers for market access
Branded high-styled goods – not “me too”
Support fiber suppliers’ branded products
Limited distribution strategy attractive to retailers
Drive more volume on existing capacity at Masland/Dixie
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20 Day Rolling Average—Weekly Order Entry—Dixie Home
$1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
2003 2004 2005
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Masland Residential Sales
Other 4%
Furniture 4%
Builders 20%
Designer / To The Trade Showrooms 26%
Retailers 46%
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Masland Residential
Leading high-end brand with reputation for development of products with innovative styling, design and color
Growth initiative—doubling product introductions to increase market penetration
Drive more volume on existing capacity at Masland/Dixie
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Fabrica Residential Sales
Other 1%
Furniture/ Dept. Stores 10%
Builders 6%
Specialty 18%
Retailers 24%
Decorators/ Design Trade 41%
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Fabrica Residential
Premium high-end brand
Leader in styling/patterns/color
Consistent sales and profit growth
12 years consecutive sales growth
Over 50% profit growth since July 2000 acquisition
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Masland Contract Sales
Other 18%
Healthcare 6%
Store Planning 11%
Corporate 32%
Hospitality 33%
Channels: Interior Design Specifier and Commercial End-User
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Masland Contract
Good and growing position with premium brand Designer focused Strong national account base Strong growth from new “Energy Collection”
KSA study – identified potential opportunities
Invest in carpet tile
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The Energy Line has contributed Significantly to this Strong Growth
The Energy line was started from the ground up in 2002 and generated over $13 million and $22 million; respectively, in sales for Masland during 2003 and 2004
Approximately half is sold through our residential sales force and the other half is sold through our contract sales force
Introducing 5 new products in 2005
ENERGY LINE SALES
(Dollars in thousands)
$7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2002 2003 2004 2005
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Masland Contract has Performed Higher than the U.S. Commercial Carpet Market
1998 was a great year for Masland Contract, which grew 52% that year while the market only grew 5%
From 1999 to 2002, Masland Contract performed at about the same rate as the market
In 2003, Masland Contract grew 8% while the market declined slightly
In 2004, Masland Contract grew 15% while the market grew 10%
In the 1st QT 2005, Masland Contract grew 16% while the market grew 10%
SPECIFIED COMMERCIAL CARPET SALES
CHANGE INDEX (1997=Base year)
Indexed versus 1997
220 210 200 190 180 170 160 150 140 130 120 110 100 90
1997 1998 1999 2000 2001 2002 2003 2004 1Q 2005
Masland Contract
Commercial
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Carpet Tile (Modular)
Specified commercial market $2.6 billion
Total specified commercial market is significantly depressed from its peak in 2000 and is expected to grow faster than the overall carpet market
In 2004, carpet tile grew 18% while broadloom commercial grew at 5%
Carpet tile is approximately 32% of the specified commercial market and over 50% of the corporate office market
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Focused on Internal Growth
Masland Residential – Impact beginning 3rd QT 2003 and continuing
Dixie Home – Impact beginning 3rd QT 2003 and continuing
Fabrica – Impact 3rd QT 2005
Masland Contract
Energy Collection – Introduced 2002 – continuing to add new products
Carpet Tile (Modular) – Introduced late 2005 Impact 2006 and beyond.
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