The Dixie Group Reports Third Quarter Results.CHATTANOOGA Chattanooga (chăt'ən  `gə), city (1990 pop. 152,466), seat of Hamilton co., E Tenn., on both sides of the Tennessee River near the Georgia line; inc. 1839. , Tenn. -- The Dixie Dixiepopular name for Southern states in U.S. and for song. [Am. Hist.: EB, III: 587] See : Southern States Group, Inc. (Nasdaq/NM:DXYN) today reported financial results for the third quarter and nine months ended September September: see month. 24, 2005. For the third quarter, income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $1,253,000, or $0.10 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with income from continuing operations of $3,554,000, or $0.28 per diluted share, for the third quarter of 2004. Sales for the third quarter of 2005 were $76,661,000, up 3% from sales of $74,108,000 in the year-earlier quarter. For the first nine months of fiscal 2005, income from continuing operations was $6,709,000, or $0.52 per diluted share, compared with income from continuing operations of $9,017,000, or $0.72 per diluted share, for the first nine months of 2004. Sales for the first nine months of 2005 were $230,768,000, up 10% from sales of $209,329,000 in the prior-year period. Commenting on the results, Daniel Daniel, book of the Bible Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. K. Frierson, chairman and chief executive officer, said, "Operations in the third quarter 2005 were affected by a number of issues. The growth we experienced during the past several years, combined with extremely high levels of order entry in April 2005, overtaxed our manufacturing and distribution capabilities. This rapid growth significantly increased the complexity of our operations and had a negative impact on customer service, product quality and manufacturing efficiency. To improve service to our customers, we added associates, lengthened length·en tr. & intr.v. length·ened, length·en·ing, length·ens To make or become longer. length  en·er n. operating schedules and
increased production outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. . Also during the quarter, we completed
the staffing and movement of inventory into a new distribution facility
in North Georgia North Georgia is the mountainous northern region of the U.S. state of Georgia. At the time of the arrival of settlers from Europe, it was inhabited largely by the Cherokee. The counties of North Georgia were often scenes of important events in the history of Georgia. , relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. our West Coast distribution operation from a leased facility to an owned facility and began the installation of modular/carpet tile tile, one of the ceramic products used in building, to which group brick and terra-cotta also belong. The term designates the finished baked clay—the material of a wide variety of units used in architecture and engineering, such as wall slabs or blocks, floor equipment to expand our commercial product offerings. While these actions are intended to improve results in the future, much of the cost for these improvements was incurred during the third quarter. In addition, natural gas costs increased significantly during the quarter. Furthermore, our distribution and carpet manufacturing facilities located in Saraland and Atmore, Alabama Atmore is a city in Escambia County, Alabama, United States. At the 2000 census the population was 7,676. According to the 2005 U.S. Census estimates, the city had a population of 7,530. [1] The city was named for Mr. C.P. Atmore. , were evacuated e·vac·u·ate v. e·vac·u·at·ed, e·vac·u·at·ing, e·vac·u·ates v.tr. 1. a. To empty or remove the contents of. b. To create a vacuum in. 2. three times during the quarter as a result of tropical storm tropical storm n. A cyclonic storm having winds ranging from approximately 48 to 121 kilometers (30 to 75 miles) per hour. tropical storm Cindy and hurricanes Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the and Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area . Although the storms caused only minor damage to these facilities, their operations were interrupted in·ter·rupt v. in·ter·rupt·ed, in·ter·rupt·ing, in·ter·rupts v.tr. 1. To break the continuity or uniformity of: Rain interrupted our baseball game. 2. for a total of approximately five days during the quarter. "As a result of these issues, our rate of sales growth moderated in the third quarter, while manufacturing and distribution costs distribution costs distribute npl → Vertriebskosten pl increased significantly. We estimate that the negative impact on gross margins of the weather-related events was approximately $1.0 million to $1.5 million during the third quarter. "We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that sales revenue and results will improve in the fourth quarter of this year and beyond. October October: see month. order entry and sales levels have improved significantly compared with the third quarter levels. We now expect fourth quarter 2005 sales to improve 15% to 19% compared with the third quarter of this year and 6% to 10% compared with the strong fourth quarter a year ago. The moves to the new distribution facilities on both the East and West Coasts are now completed, which should improve customer service and reduce distribution costs. In the fourth quarter, we have begun installing tufting Tufting is an ancient technique for making warm garments, especially mittens. After the knitting is done, short U-shaped loops of extra yarn are introduced through the fabric from the outside so that their ends point inwards (e.g., towards the hand inside the mitten). manufacturing equipment in our North Georgia facility. The installation of this equipment, which is expected to be completed during the second quarter of 2006, should simplify our manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. , reduce costs and diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. the geographic locations of our carpet manufacturing facilities. "Raw material prices increased in early October of this year and additional raw material price increases have been announced for November. We raised selling prices in October and have announced additional selling price increases that will go into effect with orders taken in November and December of this year. When these selling price increases are fully implemented, we believe we will recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. the higher raw material and energy costs." Results of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. reflected a loss of $32,000, or $0.01 per diluted share, for the third quarter of 2005, compared with a loss of $38,000, or less than $0.01 per diluted share, for the third quarter of 2004. For the first nine months of 2005, discontinued operations reflected a gain of $295,000, or $0.02 per diluted share, compared with a loss of $335,000, or $0.03 per diluted share, in the year-earlier period. Including results of discontinued operations, the Company reported net income of $1,221,000, or $0.09 per diluted share, for the third quarter of 2005, compared with net income of $3,516,000, or $0.28 per diluted share, for the third quarter of 2004. For the first nine months of 2005, net income was $7,004,000, or $0.54 per diluted share, compared with net income of $8,682,000, or $0.69 per diluted share, in the 2004 period. A listen-only Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the simulcast and replay of Dixie's conference call may be accessed with appropriate software at the Company's web site or at "www.earnings.com". The simulcast will begin at approximately 11:00 a.m. Eastern Time on October 26, 2005. A replay will be available approximately two hours later and will continue for approximately 30 days. If Internet access See how to access the Internet. is unavailable, a listen-only telephonic conference will be available by dialing (913) 981-5532 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 7824437 when prompted for the access code. The Dixie Group "www.thedixiegroup.com" is a leading marketer and manufacturer of carpet and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets and Dixie Home brands. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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.
THE DIXIE GROUP, INC.
Consolidated Condensed Statements of Income
(unaudited; in thousands, except earnings per share)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
2005 2004 2005 2004
-------- -------- -------- --------
NET SALES $ 76,661 $ 74,108 $230,768 $209,329
Cost of sales 54,208 49,125 160,124 138,157
-------- -------- -------- --------
GROSS PROFIT 22,453 24,983 70,644 71,172
Selling and
administrative
expenses 19,213 18,001 56,088 54,063
Other operating income (6) (22) (230) (106)
Other operating expense 85 63 398 260
-------- -------- -------- --------
OPERATING INCOME 3,161 6,941 14,388 16,955
Interest expense 1,553 1,362 4,358 3,766
Other income (9) (87) (242) (1,188)
Other expense 21 2 67 6
-------- -------- -------- --------
Income from continuing
operations before
income taxes 1,596 5,664 10,205 14,371
Income tax provision 343 2,110 3,496 5,354
-------- -------- -------- --------
Income from continuing
operations 1,253 3,554 6,709 9,017
Loss from discontinued
operations, net of tax (32) (38) (539) (414)
Income on disposal of
discontinued operations,
net of tax -- -- 834 79
-------- -------- -------- --------
NET INCOME $ 1,221 $ 3,516 $ 7,004 $ 8,682
======== ======== ======== ========
BASIC EARNINGS (LOSS)
PER SHARE:
Continuing operations $ 0.10 $ 0.29 $ 0.54 $ 0.75
Discontinued operations -- -- (0.04) (0.03)
Disposal of discontinued
operations -- -- 0.07 --
-------- -------- -------- --------
Net income $ 0.10 $ 0.29 $ 0.57 $ 0.72
======== ======== ======== ========
DILUTED EARNINGS (LOSS)
PER SHARE:
Continuing operations $ 0.10 $ 0.28 $ 0.52 $ 0.72
Discontinued operations (0.01) -- (0.04) (0.03)
Disposal of discontinued
operations -- -- 0.06 --
-------- -------- -------- --------
Net income $ 0.09 $ 0.28 $ 0.54 $ 0.69
======== ======== ======== ========
Weighted-average shares
outstanding:
Basic 12,472 12,180 12,356 12,084
Diluted 12,946 12,592 12,868 12,532
======== ======== ======== ========
THE DIXIE GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands)
Sept. 24, Dec. 25,
2005 2004
-------- --------
ASSETS (Unaudited)
Current Assets
Accounts receivable, net $ 33,323 $ 33,276
Inventories 73,202 57,992
Other 11,713 15,286
-------- --------
Total Current Assets 118,238 106,554
Net Property, Plant and Equipment 89,744 76,337
Goodwill 55,604 55,604
Other Assets 10,949 9,782
-------- --------
TOTAL ASSETS $274,535 $248,277
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 39,021 $ 38,788
Current portion of long-term debt 6,316 9,156
-------- --------
Total Current Liabilities 45,337 47,944
Long-Term Debt
Senior indebtedness 59,618 36,538
Capital lease obligations 5,014 5,539
Convertible subordinated debentures 22,162 24,737
Other Liabilities 13,248 13,087
Deferred Income Taxes 7,921 9,595
Stockholders' Equity 121,235 110,837
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $274,535 $248,277
======== ========
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