“The quarter had a gross profit margin of 26.7% and an operating income of 3.9% of net sales. Our growth initiatives begun in 2012 resulted in increased operating utilization but also added expense as we responded quickly to the increased demand. The additional costs from our Roanoke yarn expansion, the Crown Rug and Colormaster continuous dye house integrations, and the higher sampling costs as we accelerated our investment in new products in 2013, negatively impacted our operating income by over $1 million during the quarter. Our tax rate was 27% for the period.

“Working capital increased by $8,851,000 during the quarter due to higher receivables and inventory to support our higher level of sales. Our inventory turns improved 11% versus the same period in the prior year. Capital leases and expenditures were $3,441,000, while depreciation and amortization was $2,559,000 for the period. We anticipate capital leases and expenditures to be $13,500,000 and depreciation and amortization to be $10,300,000 for the entire year of 2013. Total debt increased $7,873,000 during the quarter. Availability under our credit lines was $25.0 million at quarter end. Subsequent to quarter end, we amended and extended our senior credit facility to accommodate the growth in working capital as we continue to grow our sales. In addition, in early July we completed the acquisition of Robertex Associates, a maker of fine wool products.

“We are pleased to see residential industry growth in the second quarter as this signals to us that the recovery in the housing sector has finally impacted the carpet market. Despite potential macro-economic issues, we believe that conditions in the upper-end residential portion of our industry will continue to improve during 2013. The commercial market appears to be stable with the highest growth in the modular carpet tile segment. We continue our commitment to growing our market share with innovative products, refinement of our manufacturing processes and investment in our people,” Frierson concluded.

The Company's loss from discontinued operations was $32,000, or $0.00 per diluted share, for the second quarter of 2013, compared with a loss from discontinued operations of $29,000, or $0.00 per diluted share, for the prior year. Including discontinued operations, the Company reported a net income of $1,645,000, or $0.13 per diluted share, for the second quarter of 2013, compared with a net loss of $433,000, or $0.03 per diluted share, for the year-earlier period.