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Carpet maker Dixie reports loss of $2.50 per diluted share in 2008
25 Feb '09
5 min read
“Our cost reduction initiatives, higher selling prices and lower raw material costs should permit us to return to profitable operations in 2009. If necessary, and if industry conditions continue to deteriorate, we are prepared to take additional steps to aggressively reduce expenses and improve liquidity.
“We reduced capital expenditures to $10.0 million in 2008 and we plan to spend $7.0 million this year, which is roughly half of our depreciation and amortization expense. Inventories were reduced over $2.0 million in the fourth quarter of 2008, and our goal is to substantially improve our utilization of inventories in 2009. Depending on business activity levels, this reduction could be as much as $15.0 million.
We expect $5.1 million of income tax refunds in the first half of 2009 from utilizing net operating loss carrybacks and from overpayments of estimated income taxes. The income tax refunds, lower levels of capital spending and inventory reductions should improve our liquidity in 2009. The possible sale of our California real estate would also permit us to significantly reduce debt.
Our senior loan and security agreement does not have financial covenants, and we intend to position our balance sheet to endure the current economic downturn, positioning us to take advantage of improvements in economic conditions, as and when they occur.
“The outlook for business remains unclear. Sales in the first part of 2009 are considerably below the same period a year ago. The severe weakness in the housing industry, slowing commercial markets and difficult credit conditions likely will continue to have an impact on demand for residential and commercial carpet products throughout this year.
While it is difficult to predict the length of the current economic downturn and its impact on the markets we serve, we believe our position in the upper-end of the market will permit us to benefit from improved conditions and grow our sales at a rate that will exceed the carpet industry's growth rate, as economic conditions improve,” Frierson concluded.
During the fourth quarter of 2008, the Company purchased 42,461 shares of its Common Stock at an average per share price of $2.79 pursuant to the program authorized by the Board of Directors to repurchase up to $10.0 million of the Company's Common Stock. The Company is not currently purchasing shares of its Common Stock.
“We reduced capital expenditures to $10.0 million in 2008 and we plan to spend $7.0 million this year, which is roughly half of our depreciation and amortization expense. Inventories were reduced over $2.0 million in the fourth quarter of 2008, and our goal is to substantially improve our utilization of inventories in 2009. Depending on business activity levels, this reduction could be as much as $15.0 million.
We expect $5.1 million of income tax refunds in the first half of 2009 from utilizing net operating loss carrybacks and from overpayments of estimated income taxes. The income tax refunds, lower levels of capital spending and inventory reductions should improve our liquidity in 2009. The possible sale of our California real estate would also permit us to significantly reduce debt.
Our senior loan and security agreement does not have financial covenants, and we intend to position our balance sheet to endure the current economic downturn, positioning us to take advantage of improvements in economic conditions, as and when they occur.
“The outlook for business remains unclear. Sales in the first part of 2009 are considerably below the same period a year ago. The severe weakness in the housing industry, slowing commercial markets and difficult credit conditions likely will continue to have an impact on demand for residential and commercial carpet products throughout this year.
While it is difficult to predict the length of the current economic downturn and its impact on the markets we serve, we believe our position in the upper-end of the market will permit us to benefit from improved conditions and grow our sales at a rate that will exceed the carpet industry's growth rate, as economic conditions improve,” Frierson concluded.
During the fourth quarter of 2008, the Company purchased 42,461 shares of its Common Stock at an average per share price of $2.79 pursuant to the program authorized by the Board of Directors to repurchase up to $10.0 million of the Company's Common Stock. The Company is not currently purchasing shares of its Common Stock.
Dixie Group Inc
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