Dixie Group Swings to Loss in First Quarter

Chattanooga, TN, April 30, 2009--The Dixie Group, Inc. reported a net loss of $35,557,000, or $2.91 per share, for the first quarter compared with net income of $13,000, or $0.00 per share, for the first quarter of 2008.

Sales for the first quarter of 2009 were $47,639,000, down 33% from $70,722,000 in the year-earlier quarter.

Dixie recorded $33,021,000 of unusual pre-tax costs as a result of impairment of goodwill, together with facility consolidation and severance expenses related to implementation of Dixie's cost reduction plans.

CEO Daniel K. Frierson said, "Sales of residential and commercial carpet deteriorated significantly during the first quarter of this year - for both the carpet industry and our business. We believe higher-end markets, where our business is concentrated, were affected more than the industry in general."

He said the company's plan to consolidate its carpet tufting operation in Eton, Georgia, into its tufting, dyeing and finishing plant in Atmore, Alabama, is now complete.

"The outlook for our business remains unclear," Frierson said.

"Although sales in April are running significantly below prior-year levels, our business has shown seasonal improvement since January of this year. April order entry levels in our residential and commercial markets continue to reflect this seasonal improvement. We are cautiously optimistic that this trend will continue; however, the severe weakness in the U.S. economy and difficult credit conditions will likely have an impact on demand for residential and commercial carpet products throughout this year."