Dixie Group To Consolidate Plant Operations

Because of a decline in third quarter earnings due to the unfavorable economic environment,
Chattanooga, Tenn.-based carpet and rug manufacturer The Dixie Group Inc. will begin to implement
cost-reduction initiatives during the fourth fiscal quarter of 2008. The initiatives include
consolidation of the company’s carpet tufting operations in Eton, Ga. into its tufting, dyeing and
finishing facility in Atmore, Ala.; and consolidation of its California tufting and custom rug
operations into its West Coast dyeing and finishing facility.

“We are in the process of quantifying the costs of completing these consolidations,” said Dan
K. Frierson, chairman and CEO, The Dixie Group. “Although the costs of these consolidations will
have a negative impact on results until they are completed in the first quarter of next year, these
actions should reduce ongoing fixed costs, improve operating efficiencies in both our East Coast
and West Coast operations, and significantly improve our operating results, with only a slight, if
any, impact on our production capacity and flexibility.”

The consolidations, along with other restructuring moves under consideration, are expected to
result in a 5- to 7-percent reduction in the company’s workforce.

October 14, 2008