Dixie Group Sells Remaining Textile Operations

The Dixie Group Inc., Chattanooga, Tenn., recently announced it has completed the sale of its
remaining textile facilities in Chattanooga, and Mebane, N.C., to R.L. Stowe Mills Inc. This is the
last, and largest, of four separate transactions, completing the companys plan to exit the textile
business and focus exclusively on its rapidly growing floorcovering business.As previously
announced, the four transactions will generate cash proceeds totalling in excess of $65 million,
with $11 million having been received in 1998.The Dixie Group will also receive an $8 million
long-term note.It is anticipated that the completion of these transactions will result in a
one-time recovery of previous charges, which, will be reflected in Dixies non-operating
earnings.The sale of these assets allows us to focus on profitable growth in the floorcovering
business and provides cash for investment and debt reduction, said Daniel K. Frierson, Dixies
chairman and CEO.As a result of these actions, Dixie has a stronger balance sheet and more solid
earnings prospects.

August 1999