ICS Magazine

Dixie Group Reports 3Q Loss

November 10, 2000
Chattanooga, Tenn.-- (Business Wire) -- The Dixie Group, Inc. has announced third quarter and nine-month results in line with previously announced projections. For the third quarter ended September 30, 2000, the Company reported a net loss of $3.7 million, or $.32 per diluted share, compared with net income of $3.1 million, or $.26 per diluted share, for the same period last year. For the first nine months of 2000, the Company reported a net loss of $3.6 million, or $.31 per diluted share, compared with income from continuing operations of $9.7 million, or $.83 per diluted share, for the same period in 1999. Results for the third quarter and year-to-date 2000 reflected certain unusual costs related to inventories and higher-than-expected costs to integrate manufacturing operations and information systems. These costs were somewhat offset by a gain of $2.0 million from the sale of real estate. The impact of such costs, net of the real estate gain, was approximately $4.5 million ($2.8 million after-tax), or $.24 per diluted share, for the third quarter and nine months ended September 30, 2000. The Company expects to record an additional $2.5 million to $3.0 million of such costs in the fourth quarter 2000.

Results for the first nine months of 1999 included an after-tax gain of $4.4 million from discontinued operations. Including this gain, net income for the 1999 period was $14.1 million, or $1.20 per diluted share.

While net sales were $142.6 million in the third quarter of both 2000 and 1999, carpet manufacturing sales improved 10% and base materials sales declined 40% during the most recent quarter. Year-to-date sales were $414.8 million in 2000, a 5% decline compared with sales of $435.9 million for the first nine months of 1999. During the nine-month period ended September 30, 2000, carpet manufacturing sales improved 5% and base materials sales declined 39%. Improved carpet manufacturing sales reflect strong growth in the Company's high-end residential, commercial and home center business and the acquisition of Fabrica International at the end of the second quarter 2000. These increases more than offset lower sales to the factory-built housing industry. Base material sales declined in 2000 due to greater internal uses of yarn and the sale of a yarn manufacturing plant in July 1999.