|                                                                |        |                                                      |
|----------------------------------------------------------------|--------|------------------------------------------------------|
| Tennessee                                                      |   | 62-0183370                                           |
| (State or other jurisdiction of incorporation of organization) |   | (I.R.S. Employer Identification No.)                 |
|                                                           |   |                                                 |
| 104 Nowlin Lane, Suite 101, Chattanooga, TN  37421             |   | (423) 510-7000                                       |
| (Address of principal executive offices and zip code)          |   | (Registrant's telephone number, including area code) |
|                                                           |   |                                                 |
| Securities registered pursuant to Section 12(b) of the Act:    |   |                                                 |
| Title of Class                                                 |   | Name of each exchange on which registered            |
| None                                                           |   | None                                                 |
|                                                           |   |                                                 |
| Securities registered pursuant to Section 12(g) of the Act:    |   |                                                 |
| Title of class                                                 |   |                                                 |
| Common Stock, $3.00 par value                                  |   |                                                 |

|                                       |        |                                     |        |        |
|---------------------------------------|--------|-------------------------------------|--------|--------|
| Class                                 |   | Outstanding as of February 18, 2011 |
| Common Stock, $3.00 Par Value         |   | 11,975,153                          |   | shares |
| Class B Common Stock, $3.00 Par Value |   | 867,761                             |   | shares |
| Class C Common Stock, $3.00 Par Value |   | 0                                   |   | shares |

----

|                                   |                                                                                                                                                                  |    |
|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
| PART I                            | Page                                                                                                                                                             |
|                              | Item1.  Business                                                                                                                                       | 4  |
|                              | Item 1A.  Risk Factors                                                                                                                                 | 6  |
|                              | Item 1B.  Unresolved Staff Comments                                                                                                                              | 8  |
|                              | Item 2.  Properties                                                                                                                                    | 8  |
|                              | Item 3.  Legal Proceedings                                                                                                                             | 8  |
|                              | Item 4.  [Removed and Reserved]                                                                                                                        | 8  |
|                              | Executive Officers of the Registrant                                                                                                                             | 9  |
| PART II                           |                                                                                                                                                             |
|                              | Item 5.  Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer     Purchases of Equity Securities | 10 |
|                              | Item 6.  Selected Financial Data                                                                                                                       | 12 |
|                              | Item 7.  Management's Discussion and Analysis of Results of Operations and Financial Condition                                                         | 13 |
|                              | Item 7A.  Quantitative and Qualitative Disclosures About Market Risk                                                                                   | 20 |
|                              | Item 8.  Financial Statements and Supplementary Data                                                                                                   | 20 |
|                              | Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                                          | 20 |
|                              | Item 9A.  Controls and Procedures                                                                                                                      | 20 |
|                              | Item 9B.  Other Information                                                                                                                            | 21 |
| PART III                          |                                                                                                                                                             |
|                              | Item 10.  Directors, Executive Officers and Corporate Governance                                                                                       | 22 |
|                              | Item 11.  Executive Compensation                                                                                                                       | 22 |
|                              | Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related     Stockholder Matters.                 | 22 |
|                              | Item 13.  Certain Relationships and Related Transactions and Director Independence                                                                     | 22 |
|                              | Item 14.  Principal Accounting Fees and Services                                                                                                       | 22 |
| PART IV                           |                                                                                                                                                             |
|                              | Item 15.  Exhibits and Financial Statement Schedules                                                                                                   | 23 |
| SIGNATURES                        | 23                                                                                                                                                               |
| CONSOLIDATED FINANCIAL STATEMENTS |                                                                                                                                                             |
|                              | Report of Independent Registered Public Accounting Firm                                                                                                          | 26 |
|                              | Consolidated Balance Sheets - December 25, 2010 and December 26, 2009                                                                                            | 27 |
|                              | Consolidated Statements of Operations - Years ended December 25, 2010, December 26, 2009, and December 27, 2008                                                  | 28 |
|                              | Consolidated Statements of Cash Flows - Years ended December 25, 2010, December 26, 2009, and December 27, 2008                                                  | 29 |
|                              | Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) - Years ended December 25, 2010, December 26, 2009, and December 27, 2008        | 30 |
|                              | Notes to Consolidated Financial Statements                                                                                                                       | 33 |
|                              | Exhibit Index                                                                                                                                                    | 58 |

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Table of contents

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|                                 |          |
|---------------------------------|----------|
| Item 1.     | BUSINESS |

Table of contents

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|                                                                 |      |        |        |        |      |        |    |   |
|-----------------------------------------------------------------|------|--------|--------|--------|------|--------|----|---|
|                                                            | 2010 |   | 2009   |   | 2008 |
| Residential floorcovering products                              | 67   | %      |   | 65     | %    |   | 60 | % |
| Commercial floorcovering products                               | 30   | %      |   | 32     | %    |   | 37 | % |
| Carpet yarn processing and carpet dyeing and finishing services | 3    | %      |   | 3      | %    |   | 3  | % |

Table of contents

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|                            |                              |
|----------------------------|------------------------------|
| 1.     | annual reports on Form 10-K; |

|                            |                                 |
|----------------------------|---------------------------------|
| 2.     | quarterly reports on Form 10-Q; |

|                            |                                  |
|----------------------------|----------------------------------|
| 3.     | current reports on Form 8-K; and |

|                            |                                      |
|----------------------------|--------------------------------------|
| 4.     | amendments to the foregoing reports. |

|                                  |              |
|----------------------------------|--------------|
| Item 1A.     | RISK FACTORS |

Table of contents

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|                                |                      |
|--------------------------------|----------------------|
| •     | consumer confidence; |

|                                |                 |
|--------------------------------|-----------------|
| •     | housing demand; |

|                                |                         |
|--------------------------------|-------------------------|
| •     | financing availability; |

|                                |                                         |
|--------------------------------|-----------------------------------------|
| •     | national and local economic conditions; |

|                                |                 |
|--------------------------------|-----------------|
| •     | interest rates; |

|                                |                    |
|--------------------------------|--------------------|
| •     | employment levels; |

|                                |                               |
|--------------------------------|-------------------------------|
| •     | changes in disposable income; |

|                                |                                      |
|--------------------------------|--------------------------------------|
| •     | commercial rental vacancy rates; and |

|                                |                                        |
|--------------------------------|----------------------------------------|
| •     | federal and state income tax policies. |

|                                |                              |
|--------------------------------|------------------------------|
| •     | Discharges to air and water; |

|                                |                                                                        |
|--------------------------------|------------------------------------------------------------------------|
| •     | Handling and disposal of solid and hazardous substances and waste; and |

|                                |                                                                                                                       |
|--------------------------------|-----------------------------------------------------------------------------------------------------------------------|
| •     | Remediation of contamination from releases of hazardous substances in our facilities and off-site disposal locations. |

Table of contents

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|                                  |                           |
|----------------------------------|---------------------------|
| Item 1B.     | UNRESOLVED STAFF COMMENTS |

|                                 |            |
|---------------------------------|------------|
| Item 2.     | PROPERTIES |

|                                 |        |                                         |        |                         |        |
|---------------------------------|--------|-----------------------------------------|--------|-------------------------|--------|
| Location                        |   | Type of Operation                       |   | Approximate Square Feet |
| Administrative:                 |   |                                    |   |                    |
| Dalton, GA*                     |   | Administrative                          |   | 16,000                  |   |
| Saraland, AL                    |   | Administrative                          |   | 29,000                  |   |
| Santa Ana, CA*                  |   | Vacant                                  |   | 10,500                  |   |
| Santa Ana, CA                   |   | Administrative                          |   | 4,000                   |   |
| Chattanooga, TN*                |   | Administrative                          |   | 3,500                   |   |
|                            |   | Total Administrative                    |   | 63,000                  |   |
|                            |   |                                    |   |                    |
| Manufacturing and Distribution: |   |                                    |   |                    |
| Atmore, AL                      |   | Carpet Manufacturing, Distribution      |   | 610,000                 |   |
| Saraland, AL                    |   | Carpet Tile Manufacturing, Distribution |   | 384,000                 |   |
| Saraland, AL*                   |   | Samples/Rug Manufacturing, Distribution |   | 132,000                 |   |
| Roanoke, AL                     |   | Carpet Yarn Processing                  |   | 204,000                 |   |
| Santa Ana, CA*                  |   | Vacant                                  |   | 98,000                  |   |
| Santa Ana, CA                   |   | Carpet/Rug Manufacturing, Distribution  |   | 200,000                 |   |
| Eton, GA                        |   | Carpet Manufacturing, Distribution      |   | 408,000                 |   |
|                            |   | Total Manufacturing and Distribution    |   | 2,036,000               |   |
|                            |   |                                    |   |                    |
| *  Leased properties            |   | TOTAL                                   |   | 2,099,000               |   |

|                                 |                   |
|---------------------------------|-------------------|
| Item 3.     | LEGAL PROCEEDINGS |

|                                 |                        |
|---------------------------------|------------------------|
| Item 4.     | [REMOVED AND RESERVED] |

Table of contents

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|                                                                                    |                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                              |
|------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Name, Age and Position                                                             |                                                                           | Business Experience During Past Five Years                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| Daniel K. Frierson, 69Chairman of the Board, and Chief Executive Officer, Director |               | Director since 1973, Chairman of the Board since 1987 and Chief Executive Officer since 1980. He serves on the Company's Executive Committee and is Chairman of the Company's Retirement Plans Committee.  He also serves as Director of Astec Industries, Inc. headquartered in Chattanooga, Tennessee; and Louisiana-Pacific Corporation headquartered in Nashville, TN.                              |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| D. Kennedy Frierson, Jr., 44Vice President and Chief Operating Officer             |                                                                           | Vice President and Chief Operating Officer since August 2009. Vice President and President Masland Residential from February 2006 to July 2009. President Masland Residential from December 2005 to January 2006. Executive Vice President and General Manager, Dixie Home, 2003 to 2005.  Business Unit Manager, Bretlin, 2002 to 2003.                                                                |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| Jon A. Faulkner, 50Vice President and Chief Financial Officer                      |                                                                           | Vice President and Chief Financial Officer since October 2009.  Vice President of Planning and Development from February 2002 to September 2009. Executive Vice President of Sales and Marketing for Steward, Inc. from 1997 to 2002.                                                                                                                                                                   |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| Paul B. Comiskey, 59Vice President and President, Dixie Residential                |                                                                           | Vice President and President of Dixie Residential since August 2009.  Vice President and President, Dixie Home from February 2007 to July 2009.  President, Dixie Home from December 2006 to January 2007.  Senior Vice President of Residential Sales, Mohawk Industries, Inc. from 1998 to 2006.  Executive Vice President of Sales and Marketing for World Carpets from 1996 to 1998. |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| Kenneth L. Dempsey, 52Vice President and President, Masland Contract               |                                                                           | Vice President and President, Masland Contract since February 2005.  Vice President and President, Masland Carpets, 1997 to 2005. Vice President of Marketing, Masland, 1991 to 1996.                                                                                                                                                                                                                   |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| W. Derek Davis, 60Vice President, Human Resources                                  |                                                                           | Vice President of Human Resources since January 1991. Corporate Employee Relations Director, 1990 to 1991.                                                                                                                                                                                                                                                                                                   |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| Terry W. Clark, 60Vice President Manufacturing                                     |                                                                           | Vice President of Manufacturing since June 2007.  Group Plant Manager at Shaw Industries, Inc. from 2003 to 2007.  Vice President of Manufacturing, The Dixie Group, Inc. from 1972 to 2003.                                                                                                                                                                                                       |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| D. Eugene Lasater, 60Controller                                                    |                                                                           | Controller since 1988.                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                               |                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                         |
| Starr T. Klein, 68Secretary                                                        |                                                                           | Secretary since November 1992. Assistant Secretary, 1987 to 1992.                                                                                                                                                                                                                                                                                                                                            |

Table of contents

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|                                 |                                                                                                                  |
|---------------------------------|------------------------------------------------------------------------------------------------------------------|
| Item 5.     | MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |

|                                             |        |                                |        |                            |        |                                                                                                  |        |                                                                             |        |           |         |        |       |        |
|---------------------------------------------|--------|--------------------------------|--------|----------------------------|--------|--------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|-----------|---------|--------|-------|--------|
| Fiscal Month Ending                         |   | Total Numberof SharesPurchased |   | AveragePrice PaidPer Share |   | MaximumNumber (orapproximatedollar value) ofShares That MayYet BePurchased UnderPlans orPrograms |   | TotalNumber ofSharesPurchasedas Part ofPubliclyAnnouncedPlans orPrograms(1) |
| October 30, 2010                            |   | —                        |   |                       | $      | —                                                                                          |   |                                                                        |   |      | — |   |
| November 27, 2010                           |   | 2,459                          |   |                       | 3.48   |                                                                                             |   |                                                                        |   | 2,459     |    |
| December 25, 2010                           |   | 1,298                          |   |                       | 3.37   |                                                                                             |   |                                                                        |   | 1,298     |    |
| Three Fiscal Months Ended December 25, 2010 |   | 3,757                          |   |                       | $      | 3.44                                                                                             |   |                                                                        | $      | 4,805,104 |    |   | 3,757 |   |

|                             |                                                                                                |
|-----------------------------|------------------------------------------------------------------------------------------------|
| (1)     | On August 8, 2007, we announced a program to repurchase up to $10 million of our Common Stock. |

Table of contents

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|                                                                     |        |         |        |        |         |        |        |             |        |        |         |        |        |   |        |        |
|---------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|-------------|--------|--------|---------|--------|--------|---|--------|--------|
| THE DIXIE GROUP, INC.                                               |
| QUARTERLY FINANCIAL DATA, DIVIDENDS AND PRICE RANGE OF COMMON STOCK |
| (unaudited)                                                         |
| (dollars in thousands, except per share data)                       |
| 2010 (1)                                                            |   | 1ST     |   | 2ND    |    | 3RD    |   | 4TH         |
| Net sales                                                           |   | $       | 50,454 |   |    | $      | 59,058 |        |   | $      | 56,676  |   |   | $ | 65,134 |   |
| Gross profit                                                        |   | 12,353  |   |   | 15,237  |   |   | 12,579      |   |   | 16,482  |   |
| Operating income (loss)                                             |   | (2,286  | )      |   | 59      |   |   | (1,937      | )      |   | 1,594   |   |
| Income (loss) from continuing operations                            |   | (2,459  | )      |   | (684    | )      |   | (1,869      | )      |   | 638     |   |
| Loss from discontinued operations                                   |   | (70     | )      |   | (60     | )      |   | (28         | )      |   | (122    | )      |
| Net income (loss)                                                   |   | (2,529  | )      |   | (744    | )      |   | (1,897      | )      |   | 516     |   |
| Basic earnings (loss) per share:                                    |   |    |   |   |    |   |   |        |
| Continuing operations                                               |   | (0.20   | )      |   | (0.05   | )      |   | (0.15       | )      |   | 0.05    |   |
| Discontinued operations                                             |   | — |   |   | (0.01   | )      |   | —     |   |   | (0.01   | )      |
| Net income (loss)                                                   |   | (0.20   | )      |   | (0.06   | )      |   | (0.15       | )      |   | 0.04    |   |
| Diluted earnings (loss) per share:                                  |   |    |   |   |    |   |   |        |
| Continuing operations                                               |   | (0.20   | )      |   | (0.05   | )      |   | (0.15       | )      |   | 0.05    |   |
| Discontinued operations                                             |   | — |   |   | (0.01   | )      |   | —     |   |   | (0.01   | )      |
| Net income (loss)                                                   |   | (0.20   | )      |   | (0.06   | )      |   | (0.15       | )      |   | 0.04    |   |
| Dividends:                                                          |   |    |   |   |    |   |   |        |
| Common Stock                                                        |   | — |   |   | — |   |   | —     |   |   | — |   |
| Class B Common Stock                                                |   | — |   |   | — |   |   | —     |   |   | — |   |
| Common Stock Prices:                                                |   |    |   |   |    |   |   |        |
| High                                                                |   | 4.59    |   |   | 5.20    |   |   | 4.19        |   |   | 3.95    |   |
| Low                                                                 |   | 2.21    |   |   | 3.51    |   |   | 2.99        |   |   | 2.80    |   |
|                                                                |   |    |   |   |    |   |   |        |
|                                                                |   |    |   |   |    |   |   | As Restated |
| 2009 (2)                                                            |   | 1ST (3) |   | 2ND    |    | 3RD    |   | 4TH (4)     |
| Net sales                                                           |   | $       | 47,639 |   |    | $      | 52,572 |        |   | $      | 50,487  |   |   | $ | 52,782 |   |
| Gross profit                                                        |   | 9,615   |   |   | 14,341  |   |   | 13,576      |   |   | 14,574  |   |
| Operating loss                                                      |   | (39,163 | )      |   | (458    | )      |   | (1,711      | )      |   | (4,058  | )      |
| Loss from continuing operations                                     |   | (35,441 | )      |   | (984    | )      |   | (2,017      | )      |   | (3,417  | )      |
| Income (loss) from discontinued operations                          |   | (116    | )      |   | (83     | )      |   | 23          |   |   | (206    | )      |
| Net loss                                                            |   | (35,557 | )      |   | (1,067  | )      |   | (1,994      | )      |   | (3,623  | )      |
| Basic earnings (loss) per share:                                    |   |    |   |   |    |   |   |        |
| Continuing operations                                               |   | (2.90   | )      |   | (0.08   | )      |   | (0.16       | )      |   | (0.27   | )      |
| Discontinued operations                                             |   | (0.01   | )      |   | (0.01   | )      |   | —     |   |   | (0.02   | )      |
| Net loss                                                            |   | (2.91   | )      |   | (0.09   | )      |   | (0.16       | )      |   | (0.29   | )      |
| Diluted earnings (loss) per share:                                  |   |    |   |   |    |   |   |        |
| Continuing operations                                               |   | (2.90   | )      |   | (0.08   | )      |   | (0.16       | )      |   | (0.27   | )      |
| Discontinued operations                                             |   | (0.01   | )      |   | (0.01   | )      |   | —     |   |   | (0.02   | )      |
| Net loss                                                            |   | (2.91   | )      |   | (0.09   | )      |   | (0.16       | )      |   | (0.29   | )      |
| Dividends:                                                          |   |    |   |   |    |   |   |        |
| Common Stock                                                        |   | — |   |   | — |   |   | —     |   |   | — |   |
| Class B Common Stock                                                |   | — |   |   | — |   |   | —     |   |   | — |   |
| Common Stock Prices:                                                |   |    |   |   |    |   |   |        |
| High                                                                |   | 2.12    |   |   | 4.07    |   |   | 3.50        |   |   | 3.41    |   |
| Low                                                                 |   | 0.75    |   |   | 1.03    |   |   | 2.25        |   |   | 2.31    |   |

|                             |                                                                                                                                                                                              |
|-----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)     | Includes facility consolidation and severance costs of $211, or $143 net of tax, in Q1, $122, or $83 net of tax, in Q2, $304, or $204 net of tax, in Q3 and $918, or $577 net of tax, in Q4. |

|                             |                                                                                                                                                                                                      |
|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)     | Includes facility consolidation and severance costs of $1,615, or $1,095 net of tax, in Q1, $117, or $78 net of tax, in Q2, $563, or $389 net of tax, in Q3 and $1,796, or $1,147 net of tax, in Q4. |

|                             |                                                                                   |
|-----------------------------|-----------------------------------------------------------------------------------|
| (3)     | Includes impairment of goodwill of $31,406, or $28,414 net of tax, in Q1 of 2009. |

|                             |                                                                             |
|-----------------------------|-----------------------------------------------------------------------------|
| (4)     | Includes impairment of assets of $1,459, or $932 net of tax, in Q4 of 2009. |

Table of contents

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|                                 |                         |
|---------------------------------|-------------------------|
| Item 6.     | SELECTED FINANCIAL DATA |

|                                                       |        |            |         |             |            |             |         |             |        |             |            |        |        |            |         |        |        |        |         |        |
|-------------------------------------------------------|--------|------------|---------|-------------|------------|-------------|---------|-------------|--------|-------------|------------|--------|--------|------------|---------|--------|--------|--------|---------|--------|
| The Dixie Group, Inc.                                 |
| Historical Summary                                    |
| (dollars in thousands, except per share data)         |
|                                                  |   |       |    | As Restated |       | As Restated |    | As Restated |   | As Restated |
| FISCAL YEARS                                          |   | 2010 (1)   |    | 2009 (2)    |       | 2008 (3)    |    | 2007 (4)    |   | 2006 (5)    |
| OPERATIONS                                            |   |       |    |        |       |        |    |        |   |        |
| Net sales                                             |   | $          | 231,322 |        |       | $           | 203,480 |        |   | $           | 282,710    |   |   | $          | 320,795 |   |   | $      | 331,100 |   |
| Gross profit                                          |   | 56,651     |    |        | 52,106     |        |    | 78,088      |   |        | 97,217     |   |   | 95,826     |    |
| Operating income (loss)                               |   | (2,570     | )       |        | (45,389    | )           |    | (28,460     | )      |        | 16,707     |   |   | 16,545     |    |
| Income (loss) from continuing operations before taxes |   | (6,977     | )       |        | (50,729    | )           |    | (34,099     | )      |        | 10,453     |   |   | 9,659      |    |
| Income tax provision (benefit)                        |   | (2,604     | )       |        | (8,870     | )           |    | (2,931      | )      |        | 3,686      |   |   | 1,776      |    |
| Income (loss) from continuing operations              |   | (4,373     | )       |        | (41,859    | )           |    | (31,168     | )      |        | 6,767      |   |   | 7,883      |    |
| Depreciation and amortization                    |   | 11,575     |    |        | 13,504     |        |    | 13,752      |   |        | 12,941     |   |   | 11,500     |    |
| Dividends                                             |   | —    |    |        | —    |        |    | —     |   |        | —    |   |   | —    |    |
| Capital expenditures                                  |   | 1,771      |    |        | 2,436      |        |    | 9,469       |   |        | 16,659     |   |   | 16,450     |    |
| FINANCIAL POSITION                                    |   |       |    |        |       |        |    |        |   |        |
| Assets                                                |   | $          | 178,102 |        |       | $           | 179,117 |        |   | $           | 252,698    |   |   | $          | 290,251 |   |   | $      | 277,678 |   |
| Working capital                                       |   | 56,496     |    |        | 52,616     |        |    | 77,484      |   |        | 75,337     |   |   | 73,031     |    |
| Long-term debt:                                       |   |       |    |        |       |        |    |        |   |        |
| Senior indebtedness                                   |   | 48,408     |    |        | 47,187     |        |    | 70,355      |   |        | 62,666     |   |   | 61,717     |    |
| Convertible subordinated debentures         |   | 9,662      |    |        | 12,162     |        |    | 14,662      |   |        | 17,162     |   |   | 19,662     |    |
| Stockholders' equity                                  |   | 62,430     |    |        | 66,349     |        |    | 106,573     |   |        | 141,177    |   |   | 134,760    |    |
| PER SHARE                                             |   |       |    |        |       |        |    |        |   |        |
| Income (loss) from continuing operations:             |   |       |    |        |       |        |    |        |   |        |
| Basic                                                 |   | (0.35      | )       |        | (3.39      | )           |    | $           | (2.50  | )           |       | $      | 0.52   |       |    | $      | 0.62   |   |
| Diluted                                               |   | (0.35      | )       |        | (3.39      | )           |    | (2.50       | )      |        | 0.51       |   |   | 0.60       |    |
| Dividends:                                            |   |       |    |        |       |        |    |        |   |        |
| Common Stock                                          |   | —    |    |        | —    |        |    | —     |   |        | —    |   |   | —    |    |
| Class B Common Stock                                  |   | —    |    |        | —    |        |    | —     |   |        | —    |   |   | —    |    |
| Book value                                            |   | 4.86       |    |        | 5.20       |        |    | 8.45        |   |        | 10.90      |   |   | 10.42      |    |
| GENERAL                                               |   |       |    |        |       |        |    |        |   |        |
| Weighted-average common shares outstanding: |   |       |    |        |       |        |    |        |   |        |
| Basic                                                 |   | 12,524,358 |    |        | 12,330,648 |        |    | 12,448,704  |   |        | 13,041,679 |   |   | 12,816,219 |    |
| Diluted                                               |   | 12,524,358 |    |        | 12,330,648 |        |    | 12,448,704  |   |        | 13,214,898 |   |   | 13,073,323 |    |
| Number of shareholders (6)                            |   | 1,750      |    |        | 1,860      |        |    | 2,850       |   |        | 3,300      |   |   | 4,850      |    |
| Number of associates                                  |   | 1,150      |    |        | 1,050      |        |    | 1,250       |   |        | 1,500      |   |   | 1,500      |    |

|                             |                                                                                                            |
|-----------------------------|------------------------------------------------------------------------------------------------------------|
| (1)     | Includes expenses of $1,556, or $1,008 net of tax, for facility consolidation and severance costs in 2010. |

|                             |                                                                                                                                                                   |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)     | Includes expenses of $36,956, or $32,055 net of tax, for the impairment of goodwill and long-lived assets and facility consolidation and severance costs in 2009. |

|                             |                                                                                                                                                                   |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3)     | Includes expenses of $29,916, or $27,685 net of tax, for the impairment of goodwill and long-lived assets and facility consolidation and severance costs in 2008. |

|                             |                                                                                                                                        |
|-----------------------------|----------------------------------------------------------------------------------------------------------------------------------------|
| (4)     | Includes expenses of $1,518, or $1,023 net of tax, to merge a defined benefit pension plan into a multi-employer pension plan in 2007. |

|                             |                                                                                                         |
|-----------------------------|---------------------------------------------------------------------------------------------------------|
| (5)     | Includes expenses of $3,249, or $2,057 net of tax, to terminate a defined benefit pension plan in 2006. |

|                             |                                                                                                                                                                                                                                                                                                                                       |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6)     | The approximate number of record holders of our Common Stock for 2006 through 2010 includes Management's estimate of shareholders who held our Common Stock in nominee names as follows:  2006 - 4,300 shareholders; 2007 - 2,800 shareholders; 2008 - 2,350 shareholders; 2009 - 1,300 shareholders; 2010 - 1,250 shareholders. |

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|                                 |                                                                                       |
|---------------------------------|---------------------------------------------------------------------------------------|
| Item 7.     | MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION |

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|                                              |                        |         |                        |        |                        |        |       |         |
|----------------------------------------------|------------------------|---------|------------------------|--------|------------------------|--------|-------|---------|
|                                         | Fiscal Year Ended      |
|                                         | December 25, 2010 |    | December 26, 2009 |   | December 27, 2008 |
| Net sales                                    | 100.0                  |  % |                   | 100.0  |  %                |   | 100.0 |  % |
| Cost of sales                                | 75.5                   |  % |                   | 74.4   |  %                |   | 72.4  |  % |
| Gross profit                                 | 24.5                   |  % |                   | 25.6   |  %                |   | 27.6  |  % |
| Selling and administrative expenses          | 24.8                   |  % |                   | 29.7   |  %                |   | 26.9  |  % |
| Other operating income                       | (0.1                   | )%      |                   | (0.3   | )%                     |   | (0.2  | )%      |
| Other operating expense                      | 0.2                    |  % |                   | 0.4    |  %                |   | 0.3   |  % |
| Facility consolidation and severance expense | 0.7                    |  % |                   | 2.0    |  %                |   | 0.8   |  % |
| Impairment of assets                         | —                |  % |                   | 0.7    |  %                |   | 1.6   |  % |
| Impairment of goodwill                       | —                |  % |                   | 15.4   |  %                |   | 8.2   |  % |
| Operating loss                               | (1.1                   | )%      |                   | (22.3  | )%                     |   | (10.0 | )%      |

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|                                |                                                                                                                              |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------|
| •     | Amounts reported for assets and liabilities in our Consolidated Balance Sheets at the dates of the financial statements, and |

|                                |                                                                                                                                 |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
| •     | Amounts reported for revenues and expenses in our Consolidated Statements of Operations during the reporting periods presented. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Revenue recognition.  Revenues, including shipping and handling amounts, are recognized when the following criteria are met:  there is persuasive evidence that a sales agreement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collection is reasonably assured.  Delivery is not considered to have occurred until the customer takes title to products shipped and assumes the risks and rewards of ownership, which is generally on the date of shipment.  At the time revenue is recognized, we record a provision for the estimated amount of future returns based primarily on historical experience and any known trends or conditions. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Accounts receivable.  We provide allowances for expected cash discounts, returns, claims and doubtful accounts based upon historical experience and periodic evaluations of the financial condition of our customers.  If the financial conditions of our customers were to significantly deteriorate, or other factors impair their ability to pay their debts, credit losses could differ from allowances recorded in our Consolidated Financial Statements. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Customer claims and product warranties.  We provide product warranties related to manufacturing defects and specific performance standards for our products.  We record reserves for the estimated costs of defective products and failure to meet applicable performance standards.  The levels of reserves are established based primarily upon historical experience and our evaluation of pending claims.  Because our evaluations are based on historical experience and conditions at the time our financial statements are prepared, actual results could differ from the reserves in our Consolidated Financial Statements. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Inventories.  Inventories are stated at the lower of cost or market.  Cost is determined using the last-in, first-out method (LIFO), which generally matches current costs of inventory sold with current revenues, for substantially all inventories.  Reserves are also established to adjust inventories that are off-quality, aged or obsolete to their estimated net realizable value.  Additionally, rates of recoverability per unit of off-quality, obsolete or excessive inventory are estimated based on historical rates of recoverability and other known conditions or circumstances that may affect future recoverability.  Actual results could differ from assumptions used to value our inventory. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Self-insured accruals.  We estimate costs required to settle claims related to our self-insured medical, dental and workers' compensation plans.  These estimates include costs to settle known claims, as well as incurred and unreported claims.  The estimated costs of known and unreported claims are based on historical experience.  Actual results could differ from assumptions used to estimate these accruals. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Deferred income tax assets and liabilities.  We recognize deferred income tax assets and liabilities for the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.  Deferred income tax assets and liabilities are measured using statutory income tax rates that are expected to be applicable in future periods when temporary differences are expected to be recovered or paid.  The effect on deferred income tax assets and liabilities of changes in income tax rates is recognized in earnings in the period that a change in income tax rates is enacted.  Taxing jurisdictions could disagree with our tax treatment of various items in a manner that could affect the tax treatment of such items in the future.  Accounting rules require these future effects to be evaluated using existing laws, rules and regulations, each of which is subject to change. |

|                                |                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •     | Loss contingencies.  We periodically assess our exposure related to legal matters, environmental matters, product liabilities or any other claims against our assets that may arise in the normal course of business.  If we determine that it is probable a loss has been incurred, the amount of the loss, or an amount within the range of loss, that can be reasonably estimated will be recorded. |

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|                                  |                                                                                   |
|----------------------------------|-----------------------------------------------------------------------------------|
| Item 7A.     | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Dollars in thousands) |

|                                 |                                             |
|---------------------------------|---------------------------------------------|
| Item 8.     | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |

|                                 |                                                                                      |
|---------------------------------|--------------------------------------------------------------------------------------|
| Item 9.     | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |

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|                                  |                   |
|----------------------------------|-------------------|
| Item 9B.     | OTHER INFORMATION |

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|                                  |                                                        |
|----------------------------------|--------------------------------------------------------|
| Item 10.     | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |

|                                  |                        |
|----------------------------------|------------------------|
| Item 11.     | EXECUTIVE COMPENSATION |

|                                  |                                                                                                 |
|----------------------------------|-------------------------------------------------------------------------------------------------|
| Item 12.     | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |

|                                                        |                                                                                                 |        |                                                                             |        |                                                                                                                                            |        |     |         |        |
|--------------------------------------------------------|-------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|--------|-----|---------|--------|
|                                                   | (a)                                                                                             |   | (b)                                                                         |   | (c)                                                                                                                                        |
| Plan Category                                          | Number of securities to be issued upon exercise of the outstanding options, warrants and rights |   | Weighted-average exercise price of outstanding options, warrants and rights |   | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) |
| Equity Compensation Plans approved by security holders | 859,100                                                                                         |   | (1)                                                                         | $      | 10.57                                                                                                                                      |   | (2) | 638,412 |   |

|                             |                                                                                                                                                                                             |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)     | Does not include 301,179 shares of unvested Common Stock pursuant to restricted stock grants under our 2006 Stock Awards Plan, with a weighted-average grant date value of $8.61 per share. |

|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)     | Includes the aggregate weighted-average of (i) the exercise price per share for outstanding options to purchase 647,728 shares of Common Stock under our 2000 Stock Incentive Plan and 139,000 shares of Common Stock under our 2006 Stock Awards Plan and (ii) the price per share of the Common Stock on the grant date for each of 72,372 Performance Units issued under the Directors' Stock Plan (each unit equivalent to one share of Common Stock). |

|                                  |                                                                          |
|----------------------------------|--------------------------------------------------------------------------|
| Item 13.     | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |

|                                  |                                        |
|----------------------------------|----------------------------------------|
| Item 14.     | PRINCIPAL ACCOUNTING FEES AND SERVICES |

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|                                  |                                             |
|----------------------------------|---------------------------------------------|
| Item 15.     | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |

|                             |                                                                                                 |
|-----------------------------|-------------------------------------------------------------------------------------------------|
| (a)     | (1)  The response to this portion of Item 15 is submitted as a separate section of this report. |

|                             |                                                                                                                                       |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
| (b)     | Exhibits - The response to this portion of Item 15 is submitted as a separate section of this report.  See Item 15(a) (3) above. |

|                      |                                            |                                                                       |
|----------------------|--------------------------------------------|-----------------------------------------------------------------------|
| Date: March 14, 2011 |                                       | The Dixie Group, Inc.                                                 |
|                 |                                       |                                                                  |
|                 |                                       | /s/ DANIEL K. FRIERSON                  |
|                 |         | By: Daniel K. Frierson                                                |
|                 |                                       | Chairman of the Board                     and Chief Executive Officer |

|                         |                                                             |                |
|-------------------------|-------------------------------------------------------------|----------------|
| /s/ DANIEL K. FRIERSON  | Chairman of the Board, Director and Chief Executive Officer | March 14, 2011 |
| Daniel K. Frierson      |                                                        |           |
|                    |                                                        |           |
| /s/ JON A. FAULKNER     | Vice President, Chief Financial Officer                     | March 14, 2011 |
| Jon A. Faulkner         |                                                        |           |
|                    |                                                        |           |
| /s/ D. EUGENE LASATER   | Controller                                                  | March 14, 2011 |
| D. Eugene Lasater       |                                                        |           |
|                    |                                                        |           |
| /s/ J. DON BROCK        | Director                                                    | March 14, 2011 |
| J. Don Brock            |                                                        |           |
|                    |                                                        |           |
| /s/ PAUL K. FRIERSON    | Director                                                    | March 14, 2011 |
| Paul K. Frierson        |                                                        |           |
|                    |                                                        |           |
| /s/ WALTER W. HUBBARD   | Director                                                    | March 14, 2011 |
| Walter W. Hubbard       |                                                        |           |
|                    |                                                        |           |
| /s/ LOWRY F. KLINE      | Director                                                    | March 14, 2011 |
| Lowry F. Kline          |                                                        |           |
|                    |                                                        |           |
| /s/ JOHN W. MURREY, III | Director                                                    | March 14, 2011 |
| John W. Murrey, III     |                                                        |           |

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|                                                                                                                                                           |        |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Table of Contents                                                                                                                                         | Page   |
| Report of Independent Registered Public Accounting Firm                                                                                                   | 26     |
|                                                                                                                                                      |   |
| Consolidated balance sheets - December 25, 2010 and December 26, 2009                                                                                     | 27     |
|                                                                                                                                                      |   |
| Consolidated statements of operations - Years ended December 25, 2010, December 26, 2009, and December 27, 2008                                           | 28     |
|                                                                                                                                                      |   |
| Consolidated statements of cash flows - Years ended December 25, 2010, December 26, 2009, and December 27, 2008                                           | 29     |
|                                                                                                                                                      |   |
| Consolidated statements of stockholders' equity and comprehensive income (loss) - Years ended December 25, 2010, December 26, 2009, and December 27, 2008 | 30     |
|                                                                                                                                                      |   |
| Notes to consolidated financial statements                                                                                                                | 33     |

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|                                                                                                                                           |                        |         |                        |         |        |         |        |
|-------------------------------------------------------------------------------------------------------------------------------------------|------------------------|---------|------------------------|---------|--------|---------|--------|
|                                                                                                                                      |                   |    | As Restated            |
|                                                                                                                                      | December 25, 2010 |    | December 26, 2009 |
| ASSETS                                                                                                                                    |                   |    |                   |
| CURRENT ASSETS                                                                                                                            |                   |    |                   |
| Cash and cash equivalents                                                                                                                 | $                      | 244     |                   |    | $      | 56      |   |
| Receivables (less allowance for doubtful accounts of $466 for 2010 and $737 for 2009)                                                     | 28,550                 |    |                   | 26,150  |   |
| Inventories                                                                                                                               | 58,289                 |    |                   | 55,156  |   |
| Other current assets                                                                                                                      | 6,943                  |    |                   | 4,744   |   |
| TOTAL CURRENT ASSETS                                                                                                                      | 94,026                 |    |                   | 86,106  |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                                                             |                   |    |                   |
| Land and improvements                                                                                                                     | 6,088                  |    |                   | 6,088   |   |
| Buildings and improvements                                                                                                                | 47,244                 |    |                   | 47,215  |   |
| Machinery and equipment                                                                                                                   | 124,687                |    |                   | 124,157 |   |
|                                                                                                                                      | 178,019                |    |                   | 177,460 |   |
| Less accumulated depreciation and amortization                                                                                            | (107,773               | )       |                   | (97,704 | )      |
| NET PROPERTY, PLANT AND EQUIPMENT                                                                                                         | 70,246                 |    |                   | 79,756  |   |
| OTHER ASSETS                                                                                                                              |                   |    |                   |
| Other long-term assets                                                                                                                    | 13,830                 |    |                   | 13,255  |   |
| TOTAL OTHER ASSETS                                                                                                                        | 13,830                 |    |                   | 13,255  |   |
| TOTAL ASSETS                                                                                                                              | $                      | 178,102 |                   |    | $      | 179,117 |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                      |                   |    |                   |
| CURRENT LIABILITIES                                                                                                                       |                   |    |                   |
| Accounts payable                                                                                                                          | $                      | 11,939  |                   |    | $      | 10,854  |   |
| Accrued expenses                                                                                                                          | 18,446                 |    |                   | 14,202  |   |
| Current portion of long-term debt                                                                                                         | 7,145                  |    |                   | 8,434   |   |
| TOTAL CURRENT LIABILITIES                                                                                                                 | 37,530                 |    |                   | 33,490  |   |
| LONG-TERM DEBT                                                                                                                            |                   |    |                   |
| Senior indebtedness                                                                                                                       | 47,876                 |    |                   | 46,480  |   |
| Capital lease obligations                                                                                                                 | 532                    |    |                   | 707     |   |
| Convertible subordinated debentures                                                                                                       | 9,662                  |    |                   | 12,162  |   |
| TOTAL LONG-TERM DEBT                                                                                                                      | 58,070                 |    |                   | 59,349  |   |
| DEFERRED INCOME TAXES                                                                                                                     | 4,759                  |    |                   | 5,182   |   |
| OTHER LONG-TERM LIABILITIES                                                                                                               | 15,313                 |    |                   | 14,747  |   |
| COMMITMENTS AND CONTINGENCIES (Note N)                                                                                                    | —                |    |                   | — |   |
| STOCKHOLDERS' EQUITY                                                                                                                      |                   |    |                   |
| Common Stock ($3 par value per share): Authorized 80,000,000 shares, issued - 15,922,480 shares for 2010 and 15,830,854 shares for 2009   | 47,767                 |    |                   | 47,493  |   |
| Class B Common Stock ($3 par value per share): Authorized 16,000,000 shares, issued - 867,761 shares for 2010 and 858,447 shares for 2009 | 2,604                  |    |                   | 2,575   |   |
| Additional paid-in capital                                                                                                                | 137,235                |    |                   | 136,710 |   |
| Accumulated deficit                                                                                                                       | (66,750                | )       |                   | (62,096 | )      |
| Accumulated other comprehensive income (loss)                                                                                             | (31                    | )       |                   | 4       |   |
|                                                                                                                                      | 120,825                |    |                   | 124,686 |   |
| Less Common Stock in treasury at cost - 3,947,327 shares for 2010 and 3,926,435 shares for 2009                                           | (58,395                | )       |                   | (58,337 | )      |
| TOTAL STOCKHOLDERS' EQUITY                                                                                                                | 62,430                 |    |                   | 66,349  |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                | $                      | 178,102 |                   |    | $      | 179,117 |   |

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|                                               |                        |         |                        |         |                        |         |         |        |   |         |        |
|-----------------------------------------------|------------------------|---------|------------------------|---------|------------------------|---------|---------|--------|---|---------|--------|
|                                          | Year Ended             |
|                                          |                   |    | As Restated            |    | As Restated            |
|                                          | December 25, 2010 |    | December 26, 2009 |    | December 27, 2008 |
| Net sales                                     | $                      | 231,322 |                   |    | $                      | 203,480 |    |   | $ | 282,710 |   |
| Cost of sales                                 | 174,671                |    |                   | 151,374 |                   |    | 204,622 |   |
|                                          |                   |    |                   |    |                   |
| Gross profit                                  | 56,651                 |    |                   | 52,106  |                   |    | 78,088  |   |
| Selling and administrative expenses           | 57,362                 |    |                   | 60,425  |                   |    | 76,115  |   |
| Other operating income                        | (220                   | )       |                   | (642    | )                      |    | (428    | )      |
| Other operating expense                       | 523                    |    |                   | 756     |                   |    | 945     |   |
| Facility consolidation and severance expenses | 1,556                  |    |                   | 4,091   |                   |    | 2,317   |   |
| Impairment of assets                          | —                |    |                   | 1,459   |                   |    | 4,478   |   |
| Impairment of goodwill                        | —                |    |                   | 31,406  |                   |    | 23,121  |   |
|                                          |                   |    |                   |    |                   |
| Operating loss                                | (2,570                 | )       |                   | (45,389 | )                      |    | (28,460 | )      |
| Interest expense                              | 4,124                  |    |                   | 5,521   |                   |    | 5,965   |   |
| Other income                                  | (42                    | )       |                   | (357    | )                      |    | (379    | )      |
| Other expense                                 | 325                    |    |                   | 176     |                   |    | 53      |   |
|                                          |                   |    |                   |    |                   |
| Loss from continuing operations before taxes  | (6,977                 | )       |                   | (50,729 | )                      |    | (34,099 | )      |
| Income tax benefit                            | (2,604                 | )       |                   | (8,870  | )                      |    | (2,931  | )      |
|                                          |                   |    |                   |    |                   |
| Loss from continuing operations               | (4,373                 | )       |                   | (41,859 | )                      |    | (31,168 | )      |
| Loss from discontinued operations, net of tax | (281                   | )       |                   | (382    | )                      |    | (313    | )      |
| Net loss                                      | $                      | (4,654  | )                      |    | $                      | (42,241 | )       |   | $ | (31,481 | )      |
|                                          |                   |    |                   |    |                   |
| BASIC EARNINGS (LOSS) PER SHARE:              |                   |    |                   |    |                   |
| Continuing operations                         | $                      | (0.35   | )                      |    | $                      | (3.39   | )       |   | $ | (2.50   | )      |
| Discontinued operations                       | (0.02                  | )       |                   | (0.03   | )                      |    | (0.03   | )      |
| Net loss                                      | $                      | (0.37   | )                      |    | $                      | (3.42   | )       |   | $ | (2.53   | )      |
|                                          |                   |    |                   |    |                   |
| BASIC SHARES OUTSTANDING                      | 12,524                 |    |                   | 12,331  |                   |    | 12,449  |   |
|                                          |                   |    |                   |    |                   |
| DILUTED EARNINGS (LOSS) PER SHARE:            |                   |    |                   |    |                   |
| Continuing operations                         | $                      | (0.35   | )                      |    | $                      | (3.39   | )       |   | $ | (2.50   | )      |
| Discontinued operations                       | (0.02                  | )       |                   | (0.03   | )                      |    | (0.03   | )      |
| Net loss                                      | $                      | (0.37   | )                      |    | $                      | (3.42   | )       |   | $ | (2.53   | )      |
|                                          |                   |    |                   |    |                   |
| DILUTED SHARES OUTSTANDING                    | 12,524                 |    |                   | 12,331  |                   |    | 12,449  |   |
|                                          |                   |    |                   |    |                   |
| DIVIDENDS PER SHARE:                          |                   |    |                   |    |                   |
| Common Stock                                  | —                |    |                   | — |                   |    | — |   |
| Class B Common Stock                          | —                |    |                   | — |                   |    | — |   |

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|                                                                                 |                        |        |                        |         |                        |         |         |        |   |         |        |
|---------------------------------------------------------------------------------|------------------------|--------|------------------------|---------|------------------------|---------|---------|--------|---|---------|--------|
|                                                                            | Year Ended             |
|                                                                            |                   |   | As Restated            |    | As Restated            |
|                                                                            | December 25, 2010 |   | December 26, 2009 |    | December 27, 2008 |
| CASH FLOWS FROM OPERATING ACTIVITIES                                            |                   |   |                   |    |                   |
| Loss from continuing operations                                                 | $                      | (4,373 | )                      |    | $                      | (41,859 | )       |   | $ | (31,168 | )      |
| Loss from discontinued operations                                               | (281                   | )      |                   | (382    | )                      |    | (313    | )      |
| Net loss                                                                        | (4,654                 | )      |                   | (42,241 | )                      |    | (31,481 | )      |
| Adjustments to reconcile net loss to net cash provided by operating activities: |                   |   |                   |    |                   |
| Depreciation and amortization                                                   | 11,575                 |   |                   | 13,504  |                   |    | 13,752  |   |
| Change in deferred income taxes                                                 | (3,307                 | )      |                   | (2,051  | )                      |    | 750     |   |
| Net loss (gain) on property, plant and equipment disposals                      | 22                     |   |                   | 72      |                   |    | (185    | )      |
| Impairment of assets                                                            | —                |   |                   | 1,459   |                   |    | 4,478   |   |
| Impairment of goodwill                                                          | —                |   |                   | 31,406  |                   |    | 23,121  |   |
| Write-off of deferred financing costs                                           | —                |   |                   | 133     |                   |    | — |   |
| Gain on sale of available-for-sale securities                                   | —                |   |                   | (292    | )                      |    | (222    | )      |
| Stock-based compensation expense                                                | 888                    |   |                   | 1,193   |                   |    | 1,322   |   |
| Changes in operating assets and liabilities:                                    |                   |   |                   |    |                   |
| Receivables                                                                     | (2,400                 | )      |                   | 6,826   |                   |    | (108    | )      |
| Inventories                                                                     | (3,133                 | )      |                   | 20,011  |                   |    | 761     |   |
| Other current assets                                                            | 685                    |   |                   | (1      | )                      |    | 50      |   |
| Other assets                                                                    | (774                   | )      |                   | (2,545  | )                      |    | 3,264   |   |
| Accounts payable and accrued expenses                                           | 4,546                  |   |                   | (2,208  | )                      |    | (4,367  | )      |
| Other liabilities                                                               | 470                    |   |                   | 1,244   |                   |    | (2,736  | )      |
| NET CASH PROVIDED BY OPERATING ACTIVITIES                                       | 3,918                  |   |                   | 26,510  |                   |    | 8,399   |   |
|                                                                            |                   |   |                   |    |                   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                            |                   |   |                   |    |                   |
| Net proceeds from sales of property, plant and equipment                        | 10                     |   |                   | 1,925   |                   |    | 598     |   |
| Purchase of property, plant and equipment                                       | (1,771                 | )      |                   | (2,436  | )                      |    | (9,469  | )      |
| Net proceeds from sale of available-for-sale securities                         | —                |   |                   | 292     |                   |    | 222     |   |
| NET CASH USED IN INVESTING ACTIVITIES                                           | (1,761                 | )      |                   | (219    | )                      |    | (8,649  | )      |
|                                                                            |                   |   |                   |    |                   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                            |                   |   |                   |    |                   |
| Net borrowings (payments) on credit line                                        | 5,225                  |   |                   | (17,511 | )                      |    | 13,336  |   |
| Payments on term loan                                                           | (1,506                 | )      |                   | (1,506  | )                      |    | (1,675  | )      |
| Payments on equipment financing                                                 | (2,766                 | )      |                   | (3,167  | )                      |    | (2,969  | )      |
| Payments on capitalized leases                                                  | (1,123                 | )      |                   | (1,393  | )                      |    | (1,313  | )      |
| Payments on subordinated indebtedness                                           | (2,500                 | )      |                   | (2,500  | )                      |    | (2,500  | )      |
| Payments on mortgage note payable                                               | (286                   | )      |                   | (266    | )                      |    | (250    | )      |
| Borrowings on notes payable                                                     | 748                    |   |                   | 763     |                   |    | — |   |
| Payments on notes payable                                                       | (487                   | )      |                   | (486    | )                      |    | — |   |
| Common stock issued under stock option plans                                    | —                |   |                   | — |                   |    | 25      |   |
| Change in outstanding checks in excess of cash                                  | 784                    |   |                   | (230    | )                      |    | (729    | )      |
| Common stock acquired for treasury                                              | (58                    | )      |                   | (37     | )                      |    | (3,531  | )      |
| Payments for debt issuance costs                                                | —                |   |                   | (15     | )                      |    | (458    | )      |
| NET CASH USED IN FINANCING ACTIVITIES                                           | (1,969                 | )      |                   | (26,348 | )                      |    | (64     | )      |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                | 188                    |   |                   | (57     | )                      |    | (314    | )      |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                  | 56                     |   |                   | 113     |                   |    | 427     |   |
| CASH AND CASH EQUIVALENTS AT END OF YEAR                                        | $                      | 244    |                   |    | $                      | 56      |    |   | $ | 113     |   |
|                                                                            |                   |   |                   |    |                   |
| Equipment purchased under capital leases                                        | $                      | 127    |                   |    | $                      | — |    |   | $ | 575     |   |
|                                                                            |                   |   |                   |    |                   |
| See accompanying notes to the consolidated financial statements.                |                   |   |                   |    |                   |

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|                                                                                     |                                   |        |                          |         |                                      |         |                                            |        |                        |         |                          |         |         |        |        |         |        |         |   |        |   |        |        |
|-------------------------------------------------------------------------------------|-----------------------------------|--------|--------------------------|---------|--------------------------------------|---------|--------------------------------------------|--------|------------------------|---------|--------------------------|---------|---------|--------|--------|---------|--------|---------|---|--------|---|--------|--------|
|                                                                                | CommonStock andClass BCommonStock |   | AdditionalPaid-InCapital |    | (AccumulatedDeficit)RetainedEarnings |    | AccumulatedOtherComprehensiveIncome (Loss) |   | CommonStock inTreasury |    | TotalStockholders'Equity |
| Balance at December 26, 2009 - As Restated                                          | $                                 | 50,068 |                     |    | $                                    | 136,710 |                                       |   | $                      | (62,096 | )                        |    | $       | 4      |   |    | $      | (58,337 | ) |   | $ | 66,349 |   |
| Common Stock acquired for treasury - 20,892 shares                                  | —                           |   |                     | — |                                 |    | —                                    |   |                   | — |                     |    | (58     | )      |   | (58     | )      |
| Restricted stock grants issued - 100,940 shares                                     | 303                               |   |                     | (303    | )                                    |    | —                                    |   |                   | — |                     |    | — |   |   | — |   |
| Stock-based compensation expense                                                    | —                           |   |                     | 828     |                                 |    | —                                    |   |                   | — |                     |    | — |   |   | 828     |   |
| Comprehensive Income (Loss):                                                        |                              |   |                     |    |                                 |    |                                       |   |                   |    | —                  |    |
| Net loss                                                                            | —                           |   |                     | — |                                 |    | (4,654                                     | )      |                   | — |                     |    | — |   |   | (4,654  | )      |
| Unrealized loss on interest rate swap agreements, net of tax of $297                | —                           |   |                     | — |                                 |    | —                                    |   |                   | (484    | )                        |    | — |   |   | (484    | )      |
| Reclassification into earnings on interest rate swap agreements, net of tax of $344 | —                           |   |                     | — |                                 |    | —                                    |   |                   | 560     |                     |    | — |   |   | 560     |   |
| Postretirement benefit plans:                                                       | —                           |   |                     |    |                                 |    |                                       |   |                   |    |                     | — |    |
| Unrecognized net actuarial gain, net of tax of $1                                   | —                           |   |                     | — |                                 |    | —                                    |   |                   | 2       |                     |    | — |   |   | 2       |   |
| Recognition of net actuarial gain, net of tax of $36                                | —                           |   |                     | — |                                 |    | —                                    |   |                   | (59     | )                        |    | — |   |   | (59     | )      |
| Amortization of prior service credits, net of tax of $34                            | —                           |   |                     | — |                                 |    | —                                    |   |                   | (54     | )                        |    | — |   |   | (54     | )      |
| Total Comprehensive Loss                                                            | —                           |   |                     | — |                                 |    | (4,654                                     | )      |                   | (35     | )                        |    | — |   |   | (4,689  | )      |
| Balance at December 25, 2010                                                        | $                                 | 50,371 |                     |    | $                                    | 137,235 |                                       |   | $                      | (66,750 | )                        |    | $       | (31    | )      |    | $      | (58,395 | ) |   | $ | 62,430 |   |

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|                                                                                     |                                   |        |                          |         |                                      |         |                                            |        |                        |         |                          |         |         |        |        |         |        |         |   |        |   |         |        |
|-------------------------------------------------------------------------------------|-----------------------------------|--------|--------------------------|---------|--------------------------------------|---------|--------------------------------------------|--------|------------------------|---------|--------------------------|---------|---------|--------|--------|---------|--------|---------|---|--------|---|---------|--------|
|                                                                                | CommonStock andClass BCommonStock |   | AdditionalPaid-InCapital |    | (AccumulatedDeficit)RetainedEarnings |    | AccumulatedOtherComprehensiveIncome (Loss) |   | CommonStock inTreasury |    | TotalStockholders'Equity |
| Balance at December 27, 2008 - As Restated                                          | $                                 | 50,110 |                     |    | $                                    | 136,015 |                                       |   | $                      | (19,855 | )                        |    | $       | (509   | )      |    | $      | (59,188 | ) |   | $ | 106,573 |   |
| Common Stock acquired for treasury - 21,122 shares                                  | —                           |   |                     | — |                                 |    | —                                    |   |                   | — |                     |    | (37     | )      |   | (37     | )      |
| Re-issuance of Common Stock in Treasury - 181,233 shares                            | —                           |   |                     | (337    | )                                    |    | —                                    |   |                   | — |                     |    | 888     |   |   | 551     |   |
| Restricted stock grants forfeited - 13,988 shares                                   | (42                               | )      |                     | 42      |                                 |    | —                                    |   |                   | — |                     |    | — |   |   | — |   |
| Tax expense from exercise of stock options                                          | —                           |   |                     | (177    | )                                    |    | —                                    |   |                   | — |                     |    | — |   |   | (177    | )      |
| Stock-based compensation expense                                                    | —                           |   |                     | 1,167   |                                 |    | —                                    |   |                   | — |                     |    | — |   |   | 1,167   |   |
| Comprehensive Income (Loss):                                                        |                              |   |                     |    |                                 |    |                                       |   |                   |    | —                  |    |
| Net loss                                                                            | —                           |   |                     | — |                                 |    | (42,241                                    | )      |                   | — |                     |    | — |   |   | (42,241 | )      |
| Unrealized loss on interest rate swap agreements, net of tax of $131                | —                           |   |                     | — |                                 |    | —                                    |   |                   | (214    | )                        |    | — |   |   | (214    | )      |
| Reclassification into earnings on interest rate swap agreements, net of tax of $603 | —                           |   |                     | — |                                 |    | —                                    |   |                   | 983     |                     |    | — |   |   | 983     |   |
| Unrealized gain on available-for-sale securities, net of tax of $22                 | —                           |   |                     | — |                                 |    | —                                    |   |                   | 36      |                     |    | — |   |   | 36      |   |
| Realized gain on sale of available-for-sale securities, net of tax of $111          | —                           |   |                     | — |                                 |    | —                                    |   |                   | (181    | )                        |    | — |   |   | (181    | )      |
| Postretirement benefit plans:                                                       | —                           |   |                     |    |                                 |    |                                       |   |                   |    |                     | — |    |
| Unrecognized net actuarial gain, net of tax of $0                                   | —                           |   |                     | — |                                 |    | —                                    |   |                   | 1       |                     |    | — |   |   | 1       |   |
| Recognition of net actuarial gain, net of tax of $35                                | —                           |   |                     | — |                                 |    | —                                    |   |                   | (57     | )                        |    | — |   |   | (57     | )      |
| Amortization of prior service credits, net of tax of $33                            | —                           |   |                     | — |                                 |    | —                                    |   |                   | (55     | )                        |    | — |   |   | (55     | )      |
| Total Comprehensive Income (Loss)                                                   | —                           |   |                     | — |                                 |    | (42,241                                    | )      |                   | 513     |                     |    | — |   |   | (41,728 | )      |
| Balance at December 26, 2009 -As Restated                                           | $                                 | 50,068 |                     |    | $                                    | 136,710 |                                       |   | $                      | (62,096 | )                        |    | $       | 4      |   |    | $      | (58,337 | ) |   | $ | 66,349  |   |

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|                                                                                     |                                   |        |                          |         |                                      |         |                                            |        |                        |         |                          |        |         |        |        |         |        |         |   |        |   |         |        |
|-------------------------------------------------------------------------------------|-----------------------------------|--------|--------------------------|---------|--------------------------------------|---------|--------------------------------------------|--------|------------------------|---------|--------------------------|--------|---------|--------|--------|---------|--------|---------|---|--------|---|---------|--------|
|                                                                                | CommonStock andClass BCommonStock |   | AdditionalPaid-InCapital |    | (AccumulatedDeficit)RetainedEarnings |    | AccumulatedOtherComprehensiveIncome (Loss) |   | CommonStock inTreasury |    | TotalStockholders'Equity |
| Balance at December 29, 2007 - As Previously Reported                               | $                                 | 49,529 |                     |    | $                                    | 135,449 |                                       |   | $                      | 12,563  |                     |   | $       | 230    |   |    | $      | (55,657 | ) |   | $ | 142,114 |   |
| Correction for environmental reserve                                                | —                           |   |                     | — |                                 |    | (919                                       | )      |                   | — |                     |   | — |   |   | (919    | )      |
| Correction for accrued import duties                                                | —                           |   |                     | — |                                 |    | (18                                        | )      |                   | — |                     |   | — |   |   | (18     | )      |
| Balance at December 29, 2007 - As Restated                                          | $                                 | 49,529 |                     |    | $                                    | 135,449 |                                       |   | $                      | 11,626  |                     |   | $       | 230    |   |    | $      | (55,657 | ) |   | $ | 141,177 |   |
| Common Stock acquired for treasury - 530,294 shares                                 | —                           |   |                     | — |                                 |    | —                                    |   |                   | — |                     |   | (3,531  | )      |   | (3,531  | )      |
| Common Stock and Class B issued under stock option plan - 6,250 shares              | 19                                |   |                     | 6       |                                 |    | —                                    |   |                   | — |                     |   | — |   |   | 25      |   |
| Restricted stock grants issued - 187,417 shares                                     | 562                               |   |                     | (562    | )                                    |    | —                                    |   |                   | — |                     |   | — |   |   | — |   |
| Tax benefit from exercise of stock options                                          | —                           |   |                     | (140    | )                                    |    | —                                    |   |                   | — |                     |   | — |   |   | (140    | )      |
| Stock-based compensation expense                                                    | —                           |   |                     | 1,262   |                                 |    | —                                    |   |                   | — |                     |   | — |   |   | 1,262   |   |
| Comprehensive Income (Loss):                                                        |                              |   |                     |    |                                 |    |                                       |   |                   |    | —                  |   |
| Net loss                                                                            | —                           |   |                     | — |                                 |    | (31,481                                    | )      |                   | — |                     |   | — |   |   | (31,481 | )      |
| Unrealized loss on interest rate swap agreements, net of tax of $748                | —                           |   |                     | — |                                 |    | —                                    |   |                   | (1,220  | )                        |   | — |   |   | (1,220  | )      |
| Reclassification into earnings on interest rate swap agreements, net of tax of $255 | —                           |   |                     | — |                                 |    | —                                    |   |                   | 416     |                     |   | — |   |   | 416     |   |
| Unrealized gain on available-for-sale securities, net of tax of $173                | —                           |   |                     | — |                                 |    | —                                    |   |                   | 282     |                     |   | — |   |   | 282     |   |
| Realized gain on sale of available-for-sale securities, net of tax of $85           | —                           |   |                     | — |                                 |    | —                                    |   |                   | (137    | )                        |   | — |   |   | (137    | )      |
| Postretirement benefit plans:                                                       |                              |   |                     |    |                                 |    |                                       |   |                   |    | —                  |   |
| Unrecognized net actuarial gain, net of tax of $8                                   | —                           |   |                     | — |                                 |    | —                                    |   |                   | 12      |                     |   | — |   |   | 12      |   |
| Recognition of net actuarial gain, net of tax of $23                                | —                           |   |                     | — |                                 |    | —                                    |   |                   | (38     | )                        |   | — |   |   | (38     | )      |
| Amortization of prior service credits, net of tax of $34                            | —                           |   |                     | — |                                 |    | —                                    |   |                   | (54     | )                        |   | — |   |   | (54     | )      |
| Total Comprehensive Loss                                                            | —                           |   |                     | — |                                 |    | (31,481                                    | )      |                   | (739    | )                        |   | — |   |   | (32,220 | )      |
| Balance at December 27, 2008 - As Restated                                          | $                                 | 50,110 |                     |    | $                                    | 136,015 |                                       |   | $                      | (19,855 | )                        |   | $       | (509   | )      |    | $      | (59,188 | ) |   | $ | 106,573 |   |

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|                                  |        |        |        |        |        |        |        |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                             | 2010   |   | 2009   |
| Raw materials                    | $      | 18,144 |   |   | $      | 17,048 |   |
| Work-in-process                  | 11,417 |   |   | 9,357  |   |
| Finished goods                   | 36,959 |   |   | 35,288 |   |
| Supplies, repair parts and other | 326    |   |   | 361    |   |
| LIFO reserve                     | (8,557 | )      |   | (6,898 | )      |
| Total inventories                | $      | 58,289 |   |   | $      | 55,156 |   |

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|                                         |                                          |        |                                      |        |                                      |         |                               |        |        |         |        |        |   |       |        |
|-----------------------------------------|------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|---------|-------------------------------|--------|--------|---------|--------|--------|---|-------|--------|
| Consolidated Balance Sheet              | As Previously Reported December 26, 2009 |   | Correction for Environmental Reserve |   | Correction for Accrued Import Duties |    | As Restated December 26, 2009 |
| Other current assets                    | $                                        | 4,683  |                                 |   | $                                    | — |                          |   | $      | 61      |   |   | $ | 4,744 |   |
| Accrued expenses                        | 13,891                                   |   |                                 | 151    |                                 |    | 160                           |   |   | 14,202  |   |
| Deferred income taxes                   | 5,830                                    |   |                                 | (648   | )                                    |    | —                       |   |   | 5,182   |   |
| Other long-term liabilities             | 13,191                                   |   |                                 | 1,556  |                                 |    | —                       |   |   | 14,747  |   |
| Retained earnings (accumulated deficit) | (60,938                                  | )      |                                 | (1,059 | )                                    |    | (99                           | )      |   | (62,096 | )      |

|                                              |                                          |         |                                      |         |                                      |         |                               |        |        |         |        |        |   |         |        |
|----------------------------------------------|------------------------------------------|---------|--------------------------------------|---------|--------------------------------------|---------|-------------------------------|--------|--------|---------|--------|--------|---|---------|--------|
| Consolidated Statement of Operations         | As Previously Reported December 26, 2009 |    | Correction for Environmental Reserve |    | Correction for Accrued Import Duties |    | As Restated December 26, 2009 |
| Cost of sales                                | $                                        | 151,308 |                                 |    | $                                    | — |                          |   | $      | 66      |   |   | $ | 151,374 |   |
| Gross profit                                 | 52,172                                   |    |                                 | — |                                 |    | (66                           | )      |   | 52,106  |   |
| Operating loss                               | (45,323                                  | )       |                                 | — |                                 |    | (66                           | )      |   | (45,389 | )      |
| Loss from continuing operations before taxes | (50,663                                  | )       |                                 | — |                                 |    | (66                           | )      |   | (50,729 | )      |
| Income tax benefit                           | (8,845                                   | )       |                                 | — |                                 |    | (25                           | )      |   | (8,870  | )      |
| Loss from continuing operations              | (41,818                                  | )       |                                 | — |                                 |    | (41                           | )      |   | (41,859 | )      |
| Loss from discontinued operations            | (280                                     | )       |                                 | (102    | )                                    |    | —                       |   |   | (382    | )      |
| Net loss                                     | (42,098                                  | )       |                                 | (102    | )                                    |    | (41                           | )      |   | (42,241 | )      |
|                                         |                                     |    |                                 |    |                                 |    |                          |
| Diluted loss per share:                      |                                     |    |                                 |    |                                 |    |                          |
| Continuing operations                        | $                                        | (3.39   | )                                    |    | $                                    | — |                          |   | $      | — |   |   | $ | (3.39   | )      |
| Discontinued operations                      | (0.02                                    | )       |                                 | (0.01   | )                                    |    | —                       |   |   | (0.03   | )      |
| Net loss                                     | $                                        | (3.41   | )                                    |    | $                                    | (0.01   | )                             |   | $      | — |   |   | $ | (3.42   | )      |

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|                                              |                                          |         |                                      |         |                                      |         |                               |        |        |         |        |        |   |         |        |
|----------------------------------------------|------------------------------------------|---------|--------------------------------------|---------|--------------------------------------|---------|-------------------------------|--------|--------|---------|--------|--------|---|---------|--------|
| Consolidated Statement of Operations         | As Previously Reported December 27, 2008 |    | Correction for Environmental Reserve |    | Correction for Accrued Import Duties |    | As Restated December 27, 2008 |
| Cost of sales                                | $                                        | 204,558 |                                 |    | $                                    | — |                          |   | $      | 64      |   |   | $ | 204,622 |   |
| Gross profit                                 | 78,152                                   |    |                                 | — |                                 |    | (64                           | )      |   | 78,088  |   |
| Operating loss                               | (28,396                                  | )       |                                 | — |                                 |    | (64                           | )      |   | (28,460 | )      |
| Loss from continuing operations before taxes | (34,035                                  | )       |                                 | — |                                 |    | (64                           | )      |   | (34,099 | )      |
| Income tax benefit                           | (2,907                                   | )       |                                 | — |                                 |    | (24                           | )      |   | (2,931  | )      |
| Loss from continuing operations              | (31,128                                  | )       |                                 | — |                                 |    | (40                           | )      |   | (31,168 | )      |
| Loss from discontinued operations            | (275                                     | )       |                                 | (38     | )                                    |    | —                       |   |   | (313    | )      |
| Net loss                                     | (31,403                                  | )       |                                 | (38     | )                                    |    | (40                           | )      |   | (31,481 | )      |
|                                         |                                     |    |                                 |    |                                 |    |                          |
| Diluted loss per share:                      |                                     |    |                                 |    |                                 |    |                          |
| Continuing operations                        | $                                        | (2.50   | )                                    |    | $                                    | — |                          |   | $      | — |   |   | $ | (2.50   | )      |
| Discontinued operations                      | (0.02                                    | )       |                                 | (0.01   | )                                    |    | —                       |   |   | (0.03   | )      |
| Net loss                                     | $                                        | (2.52   | )                                    |    | $                                    | (0.01   | )                             |   | $      | — |   |   | $ | (2.53   | )      |

|                                      |        |        |        |        |        |        |        |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                 | 2010   |   | 2009   |
| Customers, trade                     | $      | 27,084 |   |   | $      | 18,522 |   |
| Income taxes                         | 102    |   |   | 6,953  |   |
| Other                                | 1,830  |   |   | 1,412  |   |
| Gross receivables                    | 29,016 |   |   | 26,887 |   |
| Less allowance for doubtful accounts | (466   | )      |   | (737   | )      |
| Net receivables                      | $      | 28,550 |   |   | $      | 26,150 |   |

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|                                           |         |         |        |         |   |         |        |
|-------------------------------------------|---------|---------|--------|---------|---|---------|--------|
|                                      | 2010    |    | 2009   |
| Balance at beginning of year              | $       | — |   |    | $ | 33,406  |   |
| Reductions related to deferred tax assets | — |    |   | (2,000  | ) |
| Impairment loss                           | — |    |   | (31,406 | ) |
| Balance at end of year                    | $       | — |   |    | $ | — |   |

|                                                       |       |        |        |        |        |        |        |
|-------------------------------------------------------|-------|--------|--------|--------|--------|--------|--------|
|                                                  | 2010  |   | 2009   |
| Compensation and benefits (1)                         | $     | 4,587  |   |   | $      | 3,949  |   |
| Provision for customer claims, rebates and allowances | 5,053 |   |   | 3,895  |   |
| Outstanding checks in excess of cash                  | 2,363 |   |   | 1,579  |   |
| Other                                                 | 6,443 |   |   | 4,779  |   |
|                                                  | $     | 18,446 |   |   | $      | 14,202 |   |

|                             |                                                                                                                                                                                               |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)     | Includes a liability related to the Company's self-insured Workers' Compensation program.  This program is collateralized by letters of credit in the aggregate amount of $2,606.   |

|                                               |        |        |        |        |        |       |        |
|-----------------------------------------------|--------|--------|--------|--------|--------|-------|--------|
|                                          | 2010   |   | 2009   |
| Warranty reserve beginning of year            | $      | 755    |   |   | $      | 1,363 |   |
| Warranty liabilities accrued                  | 3,428  |   |   | 2,713  |   |
| Warranty liabilities settled                  | (2,797 | )      |   | (2,518 | )      |
| Changes for pre-existing warranty liabilities | 86     |   |   | (803   | )      |
| Warranty reserve end of year                  | $      | 1,472  |   |   | $      | 755   |   |

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|                                                    |        |        |        |        |        |        |        |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                               | 2010   |   | 2009   |
| Senior indebtedness:                               |   |   |   |
| Credit line borrowings                             | $      | 30,503 |   |   | $      | 25,278 |   |
| Term loan                                          | 11,324 |   |   | 12,830 |   |
| Equipment financing                                | 4,142  |   |   | 6,908  |   |
| Capital lease obligations                          | 810    |   |   | 1,806  |   |
| Mortgage note payable                              | 5,736  |   |   | 6,022  |   |
| Notes payable                                      | 538    |   |   | 277    |   |
| Total senior indebtedness                          | 53,053 |   |   | 53,121 |   |
| Convertible subordinated debentures                | 12,162 |   |   | 14,662 |   |
| Total long-term debt                               | 65,215 |   |   | 67,783 |   |
| Less: current portion of long-term debt            | (6,867 | )      |   | (7,335 | )      |
| Less: current portion of capital lease obligations | (278   | )      |   | (1,099 | )      |
| Total long-term debt, less current portion         | $      | 58,070 |   |   | $      | 59,349 |   |

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|              |               |        |                |         |        |        |         |        |   |        |        |
|--------------|---------------|--------|----------------|---------|--------|--------|---------|--------|---|--------|--------|
|         | Long-TermDebt |   | Capital Leases |    | Total  |
| (See Note N) |          |
| 2011         | $             | 6,867  |           |    | $      | 278    |    |   | $ | 7,145  |   |
| 2012         | 12,930        |   |           | 192     |   |   | 13,122  |   |
| 2013         | 44,410        |   |           | 118     |   |   | 44,528  |   |
| 2014         | 198           |   |           | 108     |   |   | 306     |   |
| 2015         | —       |   |           | 114     |   |   | 114     |   |
| Thereafter   | —       |   |           | — |   |   | — |   |
| Total        | $             | 64,405 |           |    | $      | 810    |    |   | $ | 65,215 |   |

|                     |        |                            |        |                            |        |         |         |         |        |   |     |        |        |   |         |        |
|---------------------|--------|----------------------------|--------|----------------------------|--------|---------|---------|---------|--------|---|-----|--------|--------|---|---------|--------|
|                |   |                       |   | Fair Value Hierarchy Level |
|                |   | Balance atDecember 25,2010 |   | Level 1                    |   | Level 2 |    | Level 3 |
| Liabilities:        |   |                       |   |                       |   |    |    |    |
| Interest rate swaps |   | $                          | 873    |                       |   | $       | — |    |   | $ | 873 |   |   | $ | — |   |

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|                                                              |                |        |           |        |                |        |           |        |        |        |        |        |   |        |        |
|--------------------------------------------------------------|----------------|--------|-----------|--------|----------------|--------|-----------|--------|--------|--------|--------|--------|---|--------|--------|
|                                                         | 2010           |   | 2009      |
|                                                         | CarryingAmount |   | FairValue |   | CarryingAmount |   | FairValue |
| Financial assets:                                            |           |   |      |   |           |   |      |
| Cash and cash equivalents                                    | $              | 244    |      |   | $              | 244    |      |   | $      | 56     |   |   | $ | 56     |   |
| Notes receivable, including current portion                  | 419            |   |      | 419    |           |   | 419       |   |   | 419    |   |
| Financial Liabilities:                                       |           |   |      |   |           |   |      |
| Long-term debt and capital leases, including current portion | $              | 65,215 |      |   | $              | 67,609 |      |   | $      | 67,783 |   |   | $ | 70,882 |   |
| Interest rate swaps                                          | 873            |   |      | 873    |           |   | 1,031     |   |   | 1,031  |   |

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|                                         |                       |        |        |        |        |       |        |
|-----------------------------------------|-----------------------|--------|--------|--------|--------|-------|--------|
|                                    | Liability Derivatives |
|                                    | 2010                  |   | 2009   |
| Cash flow hedges - interest rate swaps: |                  |   |   |
| Accrued expenses                        | $                     | 495    |   |   | $      | 590   |   |
| Other long-term liabilities             | 378                   |   |   | 441    |   |
| Total                                   | $                     | 873    |   |   | $      | 1,031 |   |

|                                                |                                                                                |        |        |        |        |      |   |        |   |        |   |
|------------------------------------------------|--------------------------------------------------------------------------------|--------|--------|--------|--------|------|---|--------|---|--------|---|
|                                           | Amount of Gain or (Loss) Recognized in AOCIL on Derivative (effective portion) |
|                                           | 2010                                                                           |   | 2009   |   | 2008   |
| Derivatives designated as hedging instruments: |                                                                           |   |   |   |   |
|                                           |                                                                           |   |   |   |   |
| Cash flow hedges - interest rate swaps         | $                                                                              | (781   | )      |   | $      | (345 | ) |   | $ | (1,968 | ) |

|                                                |                                                                                          |        |        |        |        |        |   |        |   |      |   |
|------------------------------------------------|------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|---|--------|---|------|---|
|                                           | Amount of Gain or (Loss) Reclassified from AOCIL into Income (effective portion) (1) (2) |
|                                           | 2010                                                                                     |   | 2009   |   | 2008   |
| Derivatives designated as hedging instruments: |                                                                                     |   |   |   |   |
|                                           |                                                                                     |   |   |   |   |
| Cash flow hedges - interest rate swaps         | $                                                                                        | (904   | )      |   | $      | (1,586 | ) |   | $ | (671 | ) |

|                                                |                                                                                       |        |        |        |        |         |        |        |   |         |        |
|------------------------------------------------|---------------------------------------------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---|---------|--------|
|                                           | Amount of Gain or (Loss) Recognized in Income on Derivative (ineffective portion) (3) |
|                                           | 2010                                                                                  |   | 2009   |   | 2008   |
| Derivatives designated as hedging instruments: |                                                                                  |   |   |   |   |
|                                           |                                                                                  |   |   |   |   |
| Cash flow hedges - interest rate swaps         | $                                                                                     | (4     | )      |   | $      | — |   |   | $ | — |   |

|                                                    |                                                                 |        |        |        |        |         |        |        |   |         |        |
|----------------------------------------------------|-----------------------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---|---------|--------|
|                                               | Amount of Gain or (Loss) Recognized in Income on Derivative (4) |
|                                               | 2010                                                            |   | 2009   |   | 2008   |
| Derivatives not designated as hedging instruments: |                                                            |   |   |   |   |
|                                               |                                                            |   |   |   |   |
| Interest rate swap                                 | $                                                               | (300   | )      |   | $      | — |   |   | $ | — |   |

|                             |                                                                                                                                    |
|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------|
| (1)     | The amount of loss reclassified from AOCIL is included in interest expense on the Company's Consolidated Statements of Operations. |

|                             |                                                                                                                                            |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|
| (2)     | The amount of loss expected to be reclassified from AOCIL into earnings during the next 12 months subsequent to December 25, 2010 is $495. |

|                             |                                                                                                                                                                                |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3)     | The amount of loss recognized in income on the ineffective portion of interest rate swaps is included in other expense on the Company's Consolidated Statements of Operations. |

|                             |                                                                                                                                                                                           |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4)     | The amount of loss recognized in income on interest rate swaps not designated as hedging instruments is included in other expense on the Company's Consolidated Statements of Operations. |

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|                                                |         |        |        |         |        |      |        |
|------------------------------------------------|---------|--------|--------|---------|--------|------|--------|
|                                           | 2010    |   | 2009   |
| Change in benefit obligation:                  |    |   |   |
| Benefit obligation at beginning of year        | $       | 845    |   |    | $      | 853  |   |
| Service cost                                   | 6       |   |   | 4       |   |
| Interest cost                                  | 42      |   |   | 46      |   |
| Participant contributions                      | 22      |   |   | 26      |   |
| Actuarial gain                                 | (97     | )      |   | (61     | )      |
| Benefits paid                                  | (27     | )      |   | (30     | )      |
| Medicare Part D subsidy                        | 5       |   |   | 7       |   |
| Benefit obligation at end of year              | 796     |   |   | 845     |   |
|                                           |    |   |   |
| Change in plan assets:                         |    |   |   |
| Fair value of plan assets at beginning of year | — |   |   | — |   |
| Employer contributions                         | — |   |   | (2      | )      |
| Participant contributions                      | 22      |   |   | 26      |   |
| Benefits paid                                  | (27     | )      |   | (31     | )      |
| Medicare Part D subsidy                        | 5       |   |   | 7       |   |
| Fair value of plan assets at end of year       | — |   |   | — |   |
| Funded status                                  | $       | (796   | )      |    | $      | (845 | )      |

|                             |      |        |        |        |        |     |        |
|-----------------------------|------|--------|--------|--------|--------|-----|--------|
|                        | 2010 |   | 2009   |
| Accrued expenses            | $    | 24     |   |   | $      | 25  |   |
| Other long-term liabilities | 772  |   |   | 820    |   |
| Total liability             | $    | 796    |   |   | $      | 845 |   |

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|             |                     |        |        |
|-------------|---------------------|--------|--------|
| Years       | PostretirementPlans |
| 2011        | $                   | 24     |   |
| 2012        | 23                  |   |
| 2013        | 23                  |   |
| 2014        | 23                  |   |
| 2015        | 23                  |   |
| 2016 - 2020 | 124                 |   |

|                                              |        |        |        |      |   |
|----------------------------------------------|--------|--------|--------|------|---|
|                                         | 2010   |   | 2009   |
| Weighted-average assumptions as of year-end: |   |   |   |
| Discount rate (benefit obligations)          | 3.79   | %      |   | 4.90 | % |

|                                                    |      |        |        |       |   |
|----------------------------------------------------|------|--------|--------|-------|---|
|                                               | 2010 |   | 2009   |
| Health care cost trend assumed for next year       | 9.00 | %      |   | 10.00 | % |
| Rate to which the cost trend is assumed to decline | 5.00 | %      |   | 5.00  | % |
| Year that the rate reaches the ultimate trend rate | 2017 |   | 2016   |

|                                               |             |        |             |        |             |        |             |        |   |   |        |        |   |    |   |
|-----------------------------------------------|-------------|--------|-------------|--------|-------------|--------|-------------|--------|---|---|--------|--------|---|----|---|
|                                          | 2010        |   | 2009        |
|                                          | 1% Increase |   | 1% Decrease |   | 1% Increase |   | 1% Decrease |
| Accumulated postretirement benefit obligation | $           | 10     |        |   | $           | (9     | )           |   | $ | 9 |   |   | $ | (8 | ) |

|                                       |        |        |        |        |        |        |        |        |   |      |        |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|---|------|--------|
|                                  | 2010   |   | 2009   |   | 2008   |
| Postretirement benefit plans:         |   |   |   |   |   |
| Service cost                          | $      | 6      |   |   | $      | 4      |   |   | $ | 4    |   |
| Interest cost                         | 42     |   |   | 46     |   |   | 47     |   |
| Amortization of prior service credits | (88    | )      |   | (88    | )      |   | (88    | )      |
| Recognized net actuarial gain         | (95    | )      |   | (92    | )      |   | (61    | )      |
| Settlement gain                       | (94    | )      |   | (60    | )      |   | (32    | )      |
| Net periodic benefit credit           | $      | (229   | )      |   | $      | (190   | )      |   | $ | (130 | )      |

|                              |                              |        |                          |        |   |      |   |
|------------------------------|------------------------------|--------|--------------------------|--------|---|------|---|
|                         | Postretirement Benefit Plans |
|                         | Balanceat2010                |   | 2011ExpectedAmortization |
| Prior service credits        | $                            | (453   | )                        |   | $ | (88  | ) |
| Unrecognized actuarial gains | (318                         | )      |                     | (28    | ) |
| Totals                       | $                            | (771   | )                        |   | $ | (116 | ) |

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|                                                                    |         |        |        |         |        |        |        |        |   |     |        |
|--------------------------------------------------------------------|---------|--------|--------|---------|--------|--------|--------|--------|---|-----|--------|
|                                                               | 2010    |   | 2009   |    | 2008   |
| Balance at beginning of year                                       | $       | 52     |   |    | $      | 332    |   |   | $ | 419 |   |
| Additions based on tax positions taken during a prior period       | 17      |   |   | — |   |   | 37     |   |
| Reductions related to settlement of tax matters                    | — |   |   | (216    | )      |   | (15    | )      |
| Reductions related to a lapse of applicable statute of limitations | (22     | )      |   | (64     | )      |   | (109   | )      |
| Balance at end of year                                             | $       | 47     |   |    | $      | 52     |   |   | $ | 332 |   |

|                    |        |        |        |        |        |        |        |        |   |        |   |
|--------------------|--------|--------|--------|--------|--------|--------|--------|--------|---|--------|---|
|               | 2010   |   | 2009   |   | 2008   |
| Current            |   |   |   |   |   |
| Federal            | $      | (98    | )      |   | $      | (4,149 | )      |   | $ | (3,807 | ) |
| State              | (8     | )      |   | (356   | )      |   | (326   | )      |
| Total current      | (106   | )      |   | (4,505 | )      |   | (4,133 | )      |
|               |   |   |   |   |   |
| Deferred           |   |   |   |   |   |
| Federal            | (2,301 | )      |   | (4,020 | )      |   | 1,107  |   |
| State              | (197   | )      |   | (345   | )      |   | 95     |   |
| Total deferred     | (2,498 | )      |   | (4,365 | )      |   | 1,202  |   |
| Income tax benefit | $      | (2,604 | )      |   | $      | (8,870 | )      |   | $ | (2,931 | ) |

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|                                                |         |        |        |        |        |        |        |
|------------------------------------------------|---------|--------|--------|--------|--------|--------|--------|
|                                           | 2010    |   | 2009   |
| Deferred tax liabilities:                      |    |   |   |
| Property, plant and equipment                  | $       | 13,175 |   |   | $      | 13,937 |   |
| Other                                          | — |   |   | 313    |   |
| Total deferred tax liabilities                 | 13,175  |   |   | 14,250 |   |
|                                           |    |   |   |
| Deferred tax assets:                           |    |   |   |
| Inventories                                    | 1,773   |   |   | 1,339  |   |
| Retirement benefits                            | 3,774   |   |   | 3,757  |   |
| Other employee benefits                        | 632     |   |   | 614    |   |
| Exit cost reserve                              | 618     |   |   | 603    |   |
| Federal/State net operating losses             | 3,124   |   |   | 3,153  |   |
| Federal/State tax credit carryforwards         | 1,603   |   |   | 2,179  |   |
| Allowances for bad debts, claims and discounts | 2,194   |   |   | 1,814  |   |
| Other                                          | 4,751   |   |   | 3,395  |   |
| Total deferred tax assets                      | 18,469  |   |   | 16,854 |   |
| Valuation allowance                            | (4,526  | )      |   | (5,143 | )      |
| Net deferred tax asset                         | 13,943  |   |   | 11,711 |   |
| Net deferred tax assets (liabilities)          | $       | 768    |   |   | $      | (2,539 | )      |

|                                                               |       |        |        |        |        |        |        |
|---------------------------------------------------------------|-------|--------|--------|--------|--------|--------|--------|
| Balance sheet classification:                                 | 2010  |   | 2009   |
| Current deferred tax assets, included in other current assets | $     | 5,527  |   |   | $      | 2,643  |   |
| Non-current deferred tax liabilities                          | 4,759 |   |   | 5,182  |   |
| Total net deferred tax assets (liabilities)                   | $     | 768    |   |   | $      | (2,539 | )      |

|                                                           |         |        |        |         |        |         |         |        |   |         |   |
|-----------------------------------------------------------|---------|--------|--------|---------|--------|---------|---------|--------|---|---------|---|
|                                                      | 2010    |   | 2009   |    | 2008   |
| Federal statutory rate                                    | 35      | %      |   | 35      | %      |    | 34      | %      |
| Statutory rate applied to loss from continuing operations | $       | (2,442 | )      |    | $      | (17,757 | )       |   | $ | (11,596 | ) |
| Plus state income taxes net of federal tax effect         | (185    | )      |   | 103     |   |    | 581     |   |
| Total statutory benefit                                   | (2,627  | )      |   | (17,654 | )      |    | (11,015 | )      |
| Increase (decrease) attributable to:                      |    |   |   |    |   |
| Impairment of goodwill                                    | — |   |   | 8,000   |   |    | 7,861   |   |
| Tax contingency reserve                                   | — |   |   | — |   |    | (71     | )      |
| Refunds from utilization of tax credits                   | — |   |   | (89     | )      |    | (93     | )      |
| APIC charge                                               | 149     |   |   | 204     |   |    | — |   |
| Change in valuation allowance                             | — |   |   | 391     |   |    | 440     |   |
| Other items                                               | (126    | )      |   | 278     |   |    | (53     | )      |
| Total tax benefit                                         | $       | (2,604 | )      |    | $      | (8,870  | )       |   | $ | (2,931  | ) |

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|                                                          |         |        |        |         |        |         |         |        |   |         |   |
|----------------------------------------------------------|---------|--------|--------|---------|--------|---------|---------|--------|---|---------|---|
|                                                     | 2010    |   | 2009   |    | 2008   |
| Loss from continuing operations (1)                      | $       | (4,373 | )      |    | $      | (41,859 | )       |   | $ | (31,168 | ) |
|                                                     |    |   |   |    |   |
| Weighted-average shares outstanding (2)                  | 12,524  |   |   | 12,331  |   |    | 12,449  |   |
| Participating securities - unvested restricted stock (3) | — |   |   | — |   |    | — |   |
| Shares for basic earnings (loss) per share (2)           | 12,524  |   |   | 12,331  |   |    | 12,449  |   |
|                                                     |    |   |   |    |   |
| Effect of dilutive securities:                           |    |   |   |    |   |
| Stock options (3)                                        | — |   |   | — |   |    | — |   |
| Directors' stock performance units (3)                   | — |   |   | — |   |    | — |   |
| Shares for diluted earnings (loss) per share (2)(3)      | 12,524  |   |   | 12,331  |   |    | 12,449  |   |
|                                                     |    |   |   |    |   |
| Earnings (loss) per share:                               |    |   |   |    |   |
| Basic                                                    | $       | (0.35  | )      |    | $      | (3.39   | )       |   | $ | (2.50   | ) |
| Diluted                                                  | (0.35   | )      |   | (3.39   | )      |    | (2.50   | )      |

|                             |                                                                  |
|-----------------------------|------------------------------------------------------------------|
| (1)     | No adjustments needed in the numerator for diluted calculations. |

|                             |                                                                                                     |
|-----------------------------|-----------------------------------------------------------------------------------------------------|
| (2)     | Includes Common and Class B Common shares in thousands, less shares held in treasury, in thousands. |

|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3)     | Because their effects are anti-dilutive, shares issuable under stock option plans where the exercise price is greater than the average market price of the Company's Common Stock at the end of the relevant period, unvested restricted stock deemed to be participating securities, directors' stock performance units, and shares issuable on conversion of subordinated debentures into shares of Common Stock have been excluded.  Aggregate shares excluded were 1,628 shares in 2010, 1,658 shares in 2009, and 1,531 shares in 2008. |

Table of contents

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Table of contents

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|                                  |                 |        |                                                            |         |         |        |
|----------------------------------|-----------------|--------|------------------------------------------------------------|---------|---------|--------|
|                             | Number ofShares |   | Weighted-Average FairValue of AwardsGranted Duringthe Year |
| Outstanding at December 29, 2007 | 256,124         |   |                                                       | $       | — |   |
| Granted                          | 187,417         |   |                                                       | 8.77    |    |
| Vested                           | (50,371         | )      |                                                       | — |    |
| Forfeited                        | —         |   |                                                       | — |    |
| Outstanding at December 27, 2008 | 393,170         |   |                                                       | — |    |
| Granted                          | —         |   |                                                       | — |    |
| Vested                           | (97,526         | )      |                                                       | — |    |
| Forfeited                        | (13,988         | )      |                                                       | — |    |
| Outstanding at December 26, 2009 | 281,656         |   |                                                       | — |    |
| Granted                          | 100,940         |   |                                                       | 2.64    |    |
| Vested                           | (81,417         | )      |                                                       | — |    |
| Forfeited                        | —         |   |                                                       | — |    |
| Outstanding at December 25, 2010 | 301,179         |   |                                                       | $       | — |   |

Table of contents

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|                          |         |        |        |         |        |        |         |        |
|--------------------------|---------|--------|--------|---------|--------|--------|---------|--------|
|                     | 2010    |   | 2009   |    | 2008   |
| Expected volatility      | — | %      |   | 49.70   | %      |   | — | %      |
| Risk-free interest rate  | — | %      |   | 2.36    | %      |   | — | %      |
| Dividend yield           | — | %      |   | — | %      |   | — | %      |
| Expected life of options | — |   |   | 5 years |   |   | — |   |

|                             |                                                                                                   |
|-----------------------------|---------------------------------------------------------------------------------------------------|
| (1)     | No options were granted during the years ended December 25, 2010 and December 27, 2008. |

|                                  |                 |        |                               |         |                                                             |        |         |         |         |        |
|----------------------------------|-----------------|--------|-------------------------------|---------|-------------------------------------------------------------|--------|---------|---------|---------|--------|
|                             | Number ofShares |   | Weighted-AverageExercisePrice |    | Weighted-Average FairValue of OptionsGranted Duringthe Year |
| Outstanding at December 29, 2007 | 917,866         |   |                          | $       | 11.68                                                       |   |    | $       | — |   |
| Granted                          | —         |   |                          | — |                                                        |   | — |    |
| Exercised                        | (6,250          | )      |                          | 3.95    |                                                        |   | — |    |
| Forfeited                        | (52,675         | )      |                          | 13.50   |                                                        |   | — |    |
| Outstanding at December 27, 2008 | 858,941         |   |                          | 11.62   |                                                        |   | — |    |
| Granted above market             | 139,000         |   |                          | 5.00    |                                                        |   | 0.90    |    |
| Exercised                        | —         |   |                          | — |                                                        |   | — |    |
| Forfeited                        | (80,663         | )      |                          | 9.97    |                                                        |   | — |    |
| Outstanding at December 26, 2009 | 917,278         |   |                          | 10.76   |                                                        |   | — |    |
| Granted                          | —         |   |                          | — |                                                        |   | — |    |
| Exercised                        | —         |   |                          | — |                                                        |   | — |    |
| Forfeited                        | (130,550        | )      |                          | 9.88    |                                                        |   | — |    |
| Outstanding at December 25, 2010 | 786,728         |   |                          | $       | 10.91                                                       |   |    | $       | — |   |
|                             |            |   |                          |    |                                                        |
| Options exercisable at:          |            |   |                          |    |                                                        |
| December 27, 2008                | 854,691         |   |                          | $       | 11.62                                                       |   |    | — |    |
| December 26, 2009                | 778,278         |   |                          | 11.79   |                                                        |   | — |    |
| December 25, 2010                | 647,728         |   |                          | 12.18   |                                                        |   | — |    |

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|                          |        |                 |        |                                          |           |                                |       |        |        |
|--------------------------|--------|-----------------|--------|------------------------------------------|-----------|--------------------------------|-------|--------|--------|
| Options Outstanding      |
| Range of Exercise Prices |   | Number ofShares |   | Weighted-AverageRemainingContractualLife |      | Weighted-AverageExercise Price |
| $3.875 - $5.00           |   | 179,500         |   |                                     | 7.8 years |                           | $     | 4.90   |   |
| $6.96 - $6.96            |   | 107,418         |   |                                     | 4.4 years |                           | 6.96  |   |
| $11.85 - $17.58          |   | 499,810         |   |                                     | 4.4 years |                           | 13.92 |   |
| $3.875 - $17.58          |   | 786,728         |   |                                     | 5.2 years |                           | $     | 10.91  |   |
|                     |   |            |   |                                     |      |                           |
| Options Exercisable      |
| Range of Exercise Prices |   | Number ofShares |   | Weighted-AverageRemainingContractualLife |      | Weighted-AverageExercise Price |
| $3.875 - $5.00           |   | 40,500          |   |                                     | 4.1 years |                           | $     | 4.54   |   |
| $6.96 - $6.96            |   | 107,418         |   |                                     | 4.4 years |                           | 6.96  |   |
| $11.85 - $17.58          |   | 499,810         |   |                                     | 4.4 years |                           | 13.92 |   |
| $3.875 - $17.58          |   | 647,728         |   |                                     | 4.4 years |                           | $     | 12.18  |   |

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|                                                                        |         |        |        |         |        |         |        |        |   |         |   |
|------------------------------------------------------------------------|---------|--------|--------|---------|--------|---------|--------|--------|---|---------|---|
|                                                                   | 2010    |   | 2009   |    | 2008   |
| Net loss                                                               | $       | (4,654 | )      |    | $      | (42,241 | )      |   | $ | (31,481 | ) |
| Other comprehensive income (loss):                                     |    |   |   |    |   |
| Unrealized loss on interest rate swap agreements:                      |    |   |   |    |   |
| Before income taxes                                                    | (781    | )      |   | (345    | )      |    | (1,968 | )      |
| Income taxes                                                           | (297    | )      |   | (131    | )      |    | (748   | )      |
| Net of taxes                                                           | (484    | )      |   | (214    | )      |    | (1,220 | )      |
| Reclassification into earnings on interest rate swap agreements:       |    |   |   |    |   |
| Before income taxes                                                    | 904     |   |   | 1,586   |   |    | 671    |   |
| Income taxes                                                           | 344     |   |   | 603     |   |    | 255    |   |
| Net of taxes                                                           | 560     |   |   | 983     |   |    | 416    |   |
| Unrealized gain on available-for-sale securities:                      |    |   |   |    |   |
| Before income taxes                                                    | — |   |   | 58      |   |    | 455    |   |
| Income taxes                                                           | — |   |   | 22      |   |    | 173    |   |
| Net of taxes                                                           | — |   |   | 36      |   |    | 282    |   |
| Realized gain on sale of available-for-sale securities:                |    |   |   |    |   |
| Before income taxes                                                    | — |   |   | (292    | )      |    | (222   | )      |
| Income taxes                                                           | — |   |   | (111    | )      |    | (85    | )      |
| Net of taxes                                                           | — |   |   | (181    | )      |    | (137   | )      |
| Unrecognized net actuarial gain on postretirement benefit plans:       |    |   |   |    |   |
| Before income taxes                                                    | 3       |   |   | 1       |   |    | 20     |   |
| Income taxes                                                           | 1       |   |   | — |   |    | 8      |   |
| Net of taxes                                                           | 2       |   |   | 1       |   |    | 12     |   |
| Recognition of net actuarial gain on postretirement benefit plans:     |    |   |   |    |   |
| Before income taxes                                                    | (95     | )      |   | (92     | )      |    | (61    | )      |
| Income taxes                                                           | (36     | )      |   | (35     | )      |    | (23    | )      |
| Net of taxes                                                           | (59     | )      |   | (57     | )      |    | (38    | )      |
| Amortization of prior service credits on postretirement benefit plans: |    |   |   |    |   |
| Before income taxes                                                    | (88     | )      |   | (88     | )      |    | (88    | )      |
| Income taxes                                                           | (34     | )      |   | (33     | )      |    | (34    | )      |
| Net of taxes                                                           | (54     | )      |   | (55     | )      |    | (54    | )      |
| Comprehensive loss                                                     | $       | (4,689 | )      |    | $      | (41,728 | )      |   | $ | (32,220 | ) |

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|                                                                                          |                     |        |                               |         |                             |         |         |        |        |        |        |        |   |     |        |
|------------------------------------------------------------------------------------------|---------------------|--------|-------------------------------|---------|-----------------------------|---------|---------|--------|--------|--------|--------|--------|---|-----|--------|
|                                                                                     | Interest Rate Swaps |   | Available-for-Sale Securities |    | Post-Retirement Liabilities |    | Total   |
| Balance at December 29, 2007                                                             | $                   | (555   | )                             |    | $                           | — |    |   | $      | 785    |   |   | $ | 230 |   |
| Unrealized loss on interest rate swap agreements, net of tax of $748                     | (1,220              | )      |                          | — |                        |    | — |   |   | (1,220 | )      |
| Reclassification into earnings on interest rate swap agreements, net of tax of $255      | 416                 |   |                          | — |                        |    | — |   |   | 416    |   |
| Unrealized gain on available-for-sale securities, net of tax of $173                     | —             |   |                          | 282     |                        |    | — |   |   | 282    |   |
| Realized gain on sale of available-for-sale securities, net of tax of $85           | —             |   |                          | (137    | )                           |    | — |   |   | (137   | )      |
| Unrecognized net actuarial gain on postretirement benefit plans, net of tax of $8        | —             |   |                          | — |                        |    | 12      |   |   | 12     |   |
| Recognition of net actuarial gain on postretirement benefit plans, net of tax of $23     | —             |   |                          | — |                        |    | (38     | )      |   | (38    | )      |
| Amortization of prior service credits on postretirement benefit plans, net of tax of $34 | —             |   |                          | — |                        |    | (54     | )      |   | (54    | )      |
| Balance at December 27, 2008                                                             | (1,359              | )      |                          | 145     |                        |    | 705     |   |   | (509   | )      |
| Unrealized loss on interest rate swap agreements, net of tax of $131                     | (214                | )      |                          | — |                        |    | — |   |   | (214   | )      |
| Reclassification into earnings on interest rate swap agreements, net of tax of $603      | 983                 |   |                          | — |                        |    | — |   |   | 983    |   |
| Unrealized gain on available-for-sale securities, net of tax of $22                      | —             |   |                          | 36      |                        |    | — |   |   | 36     |   |
| Realized gain on sale of available-for-sale securities, net of tax of $111          | —             |   |                          | (181    | )                           |    | — |   |   | (181   | )      |
| Unrecognized net actuarial gain on postretirement benefit plans, net of tax of $0        | —             |   |                          | — |                        |    | 1       |   |   | 1      |   |
| Recognition of net actuarial gain on postretirement benefit plans, net of tax of $35     | —             |   |                          | — |                        |    | (57     | )      |   | (57    | )      |
| Amortization of prior service credits on postretirement benefit plans, net of tax of $33 | —             |   |                          | — |                        |    | (55     | )      |   | (55    | )      |
| Balance at December 26, 2009                                                             | (590                | )      |                          | — |                        |    | 594     |   |   | 4      |   |
| Unrealized loss on interest rate swap agreements, net of tax of $297                     | (484                | )      |                          | — |                        |    | — |   |   | (484   | )      |
| Reclassification into earnings on interest rate swap agreements, net of tax of $344      | 560                 |   |                          | — |                        |    | — |   |   | 560    |   |
| Unrecognized net actuarial gain on postretirement benefit plans, net of tax of $1        | —             |   |                          | — |                        |    | 2       |   |   | 2      |   |
| Recognition of net actuarial gain on postretirement benefit plans, net of tax of $36     | —             |   |                          | — |                        |    | (59     | )      |   | (59    | )      |
| Amortization of prior service credits on postretirement benefit plans, net of tax of $34 | —             |   |                          | — |                        |    | (54     | )      |   | (54    | )      |
| Balance at December 25, 2010                                                             | $                   | (514   | )                             |    | $                           | — |    |   | $      | 483    |   |   | $ | (31 | )      |

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|                                    |               |        |                 |         |        |       |        |
|------------------------------------|---------------|--------|-----------------|---------|--------|-------|--------|
|                               | CapitalLeases |   | OperatingLeases |
| 2011                               | $             | 324    |            |    | $      | 2,783 |   |
| 2012                               | 223           |   |            | 2,577   |   |
| 2013                               | 139           |   |            | 1,412   |   |
| 2014                               | 120           |   |            | 922     |   |
| 2015                               | 119           |   |            | 288     |   |
| Thereafter                         | —       |   |            | 529     |   |
| Total commitments                  | 925           |   |            | 8,511   |   |
| Less amounts representing interest | (115          | )      |            | — |   |
| Total                              | $             | 810    |            |    | $      | 8,511 |   |

|                                            |         |        |        |        |        |         |         |        |   |         |        |
|--------------------------------------------|---------|--------|--------|--------|--------|---------|---------|--------|---|---------|--------|
|                                       | 2010    |   | 2009   |   | 2008   |
| Other operating income:                    |    |   |   |   |   |
| Gain on sale of other operating assets     | $       | (9     | )      |   | $      | (188    | )       |   | $ | (214    | )      |
| Insurance proceeds                         | — |   |   | (62    | )      |    | — |   |
| Miscellaneous income                       | (211    | )      |   | (392   | )      |    | (214    | )      |
| Other operating income                     | $       | (220   | )      |   | $      | (642    | )       |   | $ | (428    | )      |
|                                       |    |   |   |   |   |
| Other operating expense:                   |    |   |   |   |   |
| Loss on disposal of other operating assets | $       | 31     |   |   | $      | 260     |    |   | $ | 29      |   |
| Retirement expenses                        | 366     |   |   | 334    |   |    | 546     |   |
| Miscellaneous expense                      | 126     |   |   | 162    |   |    | 370     |   |
| Other operating expense                    | $       | 523    |   |   | $      | 756     |    |   | $ | 945     |   |
|                                       |    |   |   |   |   |
| Other income:                              |    |   |   |   |   |
| Interest income                            | $       | (15    | )      |   | $      | (15     | )       |   | $ | (20     | )      |
| Sale of available-for-sale securities      | — |   |   | (292   | )      |    | (222    | )      |
| Miscellaneous income                       | (27     | )      |   | (50    | )      |    | (137    | )      |
| Other income                               | $       | (42    | )      |   | $      | (357    | )       |   | $ | (379    | )      |
|                                       |    |   |   |   |   |
| Other expense:                             |    |   |   |   |   |
| Loss on termination of interest rate swap  | $       | 300    |   |   | $      | — |    |   | $ | — |   |
| Write-off deferred financing costs         | — |   |   | 133    |   |    | — |   |
| Miscellaneous expense                      | 25      |   |   | 43     |   |    | 53      |   |
| Other expense                              | $       | 325    |   |   | $      | 176     |    |   | $ | 53      |   |

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|                                       |                       |         |                     |         |              |         |                       |        |                           |         |                    |        |       |         |        |        |        |       |        |        |   |       |        |
|---------------------------------------|-----------------------|---------|---------------------|---------|--------------|---------|-----------------------|--------|---------------------------|---------|--------------------|--------|-------|---------|--------|--------|--------|-------|--------|--------|---|-------|--------|
|                                  |                  |    |                |    |         |    |                  |   | As of December 25, 2010   |
|                                  | AccruedBalanceat 2009 |    | 2010ExpensesTo Date |    | CashPayments |    | AccruedBalanceat 2010 |   | TotalCostsIncurredTo Date |    | TotalExpectedCosts |
| Equipment and inventory relocation    | $                     | — |                |    | $            | — |                  |   | $                         | — |               |   | $     | — |   |   | $      | 3,193 |   |   | $ | 3,193 |   |
| Severance pay and employee relocation | —               |    |                | — |         |    | —               |   |                      | — |               |   | 1,095 |    |   | 1,095  |   |
| Leased facilities - obligations       | 1,588                 |    |                | 944     |         |    | (906                  | )      |                      | 1,626   |               |   | 2,215 |    |   | 2,265  |   |
| Totals                                | $                     | 1,588   |                |    | $            | 944     |                  |   | $                         | (906    | )                  |   | $     | 1,626   |   |   | $      | 6,503 |   |   | $ | 6,553 |   |

|                                       |                         |         |                       |        |               |        |                         |        |        |         |        |        |   |         |        |
|---------------------------------------|-------------------------|---------|-----------------------|--------|---------------|--------|-------------------------|--------|--------|---------|--------|--------|---|---------|--------|
|                                  | Accrued Balance at 2008 |    | 2009 Expenses To Date |   | Cash Payments |   | Accrued Balance at 2009 |
| Equipment and inventory relocation    | $                       | — |                  |   | $             | 1,338  |                    |   | $      | (1,338  | )      |   | $ | — |   |
| Severance pay and employee relocation | 281                     |    |                  | 633    |          |   | (914                    | )      |   | — |   |
| Leased facilities - obligations       | 317                     |    |                  | 1,271  |          |   | —                 |   |   | 1,588   |   |
| Totals                                | $                       | 598     |                  |   | $             | 3,242  |                    |   | $      | (2,252  | )      |   | $ | 1,588   |   |

|                                       |                         |        |                       |        |               |        |                         |        |                              |         |                      |        |     |        |        |        |        |       |        |        |   |       |        |
|---------------------------------------|-------------------------|--------|-----------------------|--------|---------------|--------|-------------------------|--------|------------------------------|---------|----------------------|--------|-----|--------|--------|--------|--------|-------|--------|--------|---|-------|--------|
|                                  |                    |   |                  |   |          |   |                    |   | As of December 25, 2010      |
|                                  | Accrued Balance at 2009 |   | 2010 Expenses To Date |   | Cash Payments |   | Accrued Balance at 2010 |   | Total Costs Incurred To Date |    | Total Expected Costs |
| Severance pay and employee relocation | $                       | 28     |                  |   | $             | 297    |                    |   | $                            | (316    | )                    |   | $   | 9      |   |   | $      | 981   |   |   | $ | 981   |   |
| Computer systems conversion cost      | 51                      |   |                  | 315    |          |   | (366                    | )      |                         | — |                 |   | 481 |   |   | 481    |   |
| Totals                                | $                       | 79     |                  |   | $             | 612    |                    |   | $                            | (682    | )                    |   | $   | 9      |   |   | $      | 1,462 |   |   | $ | 1,462 |   |

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|                                       |                       |         |                     |        |              |        |                       |        |        |      |        |        |   |    |        |
|---------------------------------------|-----------------------|---------|---------------------|--------|--------------|--------|-----------------------|--------|--------|------|--------|--------|---|----|--------|
|                                  | AccruedBalanceat 2008 |    | 2009ExpensesTo Date |   | CashPayments |   | AccruedBalanceat 2009 |
| Severance pay and employee relocation | $                     | — |                |   | $            | 684    |                  |   | $      | (656 | )      |   | $ | 28 |   |
| Computer systems conversion cost      | —               |    |                | 166    |         |   | (115                  | )      |   | 51   |   |
| Totals                                | $                     | — |                |   | $            | 850    |                  |   | $      | (771 | )      |   | $ | 79 |   |

|                                               |        |        |        |        |        |        |      |        |   |      |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|------|--------|---|------|---|
|                                          | 2010   |   | 2009   |   | 2008   |
| Loss on discontinued operations:              |   |   |   |   |   |
| Before income taxes                           | $      | (432   | )      |   | $      | (596   | )    |   | $ | (478 | ) |
| Income tax benefit                            | (151   | )      |   | (214   | )      |   | (165 | )      |
| Loss from discontinued operations, net of tax | $      | (281   | )      |   | $      | (382   | )    |   | $ | (313 | ) |

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|             |                                                                                                                                                                                                                                                                                                                                           |        |                                                                                                                                               |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| EXHIBIT NO. | EXHIBIT DESCRIPTION                                                                                                                                                                                                                                                                                                                       |   | INCORPORATION BY REFERENCE                                                                                                                    |
| (3.1)       | Text of Restated Charter of The Dixie Group, Inc. as Amended - Blackline Version.                                                                                                                                                                                                                                                         |   | Incorporated by reference to Exhibit (3.4) to Dixie's Annual Report on Form 10-K for the year ended December 27, 2003. *                      |
| (3.2)       | Amended By-Laws of The Dixie Group, Inc. as of February 22, 2007.                                                                                                                                                                                                                                                                         |   | Incorporated by reference to Exhibit 3.1 to Dixie's Current Report on Form 8-K dated February 26 2007.*                                       |
| (4.1)       | Form of Indenture, dated May 15, 1987 between Dixie Yarns, Inc. and Morgan Guaranty Trust Company of New York as Trustee.                                                                                                                                                                                                                 |   | Incorporated by reference to Exhibit 4.2 to Amendment No. 1 of Dixie's Registration Statement No. 33-14078 on Form S-3, dated May 19, 1987. * |
| (4.2)       | Master Lease Agreement for Synthetic Lease, dated October 14, 2003, between the Company and General Electric Capital Corporation.                                                                                                                                                                                                         |   | Incorporated by reference to Exhibit (10.28) to Dixie's Annual Report on Form 10-K for the year ended December 27, 2003. *                    |
| (4.3)       | Amended and Restated Loan and Security Agreement dated April 14, 2004 by and among The Dixie Group, Inc. each of its subsidiaries as guarantors, and Fleet Capital Corporation.                                                                                                                                                           |   | Incorporated by reference to Exhibit (4.13) to Dixie's Current Report on Form 8-K dated April 14, 2004. *                                     |
| (4.4)       | First Amendment to Amended and Restated Loan and Security Agreement, dated November 10, 2004 by and among The Dixie Group, Inc. each of its subsidiaries as guarantors, and Fleet Capital Corporation.                                                                                                                                    |   | Incorporated by reference to Exhibit (4.1) to Dixie's Current Report on Form 8-K dated November 8, 2004. *                                    |
| (4.5)       | Second Amendment, dated July 27, 2005, to Amended and Restated Loan and Security Agreement dated April 14, 2004 by and among The Dixie Group, Inc. each of its subsidiaries as guarantors, and Bank of America, N.A. (successor to Fleet Capital Corporation).                                                                            |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated July 27, 2005. *                                      |
| (4.6)       | Third Amendment dated May 3, 2006, to Amended and Restated Loan and Security Agreement, by and among The Dixie Group, Inc., each of its subsidiaries as guarantors, Bank of America, N.A., in its capacity as collateral and administrative agent for the Lenders, and the Lenders (as such term is defined in the Loan Agreement).       |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated May 4, 2006. *                                        |
| (4.7)       | Fourth Amendment dated October 25, 2006, to Amended and Restated Loan and Security Agreement, by and among The Dixie Group, Inc., each of its subsidiaries as guarantors, Bank of America, N.A., in its capacity as collateral and administrative agent for the Lenders, and the Lenders (as such term is defined in the Loan Agreement). |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated October 25, 2006. *                                   |

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|             |                                                                                                                                                                                                                                                                                                                                                                                       |        |                                                                                                                                     |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|
| EXHIBIT NO. | EXHIBIT DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                   |   | INCORPORATION BY REFERENCE                                                                                                          |
| (4.8)       | Letter Agreement dated July 16, 2007 to the Fourth Amendment dated October 25, 2006, to Amended and Restated Loan and Security Agreement, by and among The Dixie Group, Inc., each of its subsidiaries as guarantors, Bank of America, N.A., in its capacity as collateral and administrative agent for the Lenders, and the Lenders (as such term is defined in the Loan Agreement). |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated July 16, 2007.*                             |
| (4.9)       | Fifth Amendment dated October 23, 2007, to Amended and Restated Loan and Security Agreement, by and among The Dixie Group, Inc., each of its subsidiaries as guarantors, Bank of America, N.A., in its capacity as collateral and administrative agent for the Lenders, and the Lenders (as such term is defined in the Loan Agreement).                                              |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated October 23, 2007.*                          |
| (4.10)      | Note and Security Agreement with Bank of America Leasing & Capital, LLC                                                                                                                                                                                                                                                                                                           |   | Incorporated by reference to Exhibit (99.1) to Dixie's Current Report on Form 8-K dated November 9, 2007*                           |
| (4.11)      | Second Amended and Restated Loan and Security Agreement dated October 24, 2008, by and among The Dixie Group, Inc., each of its subsidiaries as guarantors, Bank of America, N.A., in its capacity as collateral and administrative agent for the Lenders, and the Lenders (as such term is defined in the Loan Agreement)                                                            |   | Incorporated by reference to Exhibit 4.1 to Dixie's Current Report on Form 8-K dated October 24, 2008.                              |
| (4.12)      | First Amendment to Second Amended and Restated Loan and Security Agreement dated October 24, 2008, by and among The Dixie Group, Inc. each of its subsidiaries as guarantors, and Bank of America, N.A. (successor to Fleet Capital Corporation), effective January 1, 2009.                                                                                                          |   | Incorporated by reference to Exhibit (4.1) to Dixie's Current Report on Form 8-K dated December 23, 2008.                           |
| (10.1)      | Dixie Yarns, Inc. Incentive Stock Plan as amended. **                                                                                                                                                                                                                                                                                                                                 |   | Incorporated by reference to ANNEX A to Dixie's Proxy Statement dated March 27, 1998 for its 1998 Annual Meeting of Shareholders. * |
| (10.2)      | The Dixie Group, Inc. Director's Stock Plan. **                                                                                                                                                                                                                                                                                                                                       |   | Incorporated by reference to Exhibit (10y) to Dixie's Annual Report on Form 10-K for the year ended December 27, 1997. *            |
| (10.3)      | The Dixie Group, Inc. New Non-qualified Retirement Savings Plan effective August 1, 1999. **                                                                                                                                                                                                                                                                                          |   | Incorporated by reference to Exhibit (10.1) to Dixie's Quarterly Report on Form 10-Q for the quarter ended June 26, 1999. *         |
| (10.4)      | The Dixie Group, Inc. Deferred Compensation Plan Amended and Restated Master Trust Agreement effective as of August 1, 1999. **                                                                                                                                                                                                                                                       |   | Incorporated by reference to Exhibit (10.2) to Dixie's Quarterly Report on Form 10-Q for the quarter ended June 26, 1999. *         |
| (10.5)      | Stock Purchase Agreement dated as of July 1, 2000, by and among the Company and the stockholders of Fabrica International, Inc. named therein.                                                                                                                                                                                                                                        |   | Incorporated by reference to Exhibit (2.1) to Dixie's Current Report on Form 8-K dated July 1, 2000. *                              |
| (10.6)      | Stock Purchase Agreement dated as of July 1, 2000, by and among the Company and all of the stockholders of Chroma Technologies, Inc.                                                                                                                                                                                                                                                  |   | Incorporated by reference to Exhibit (2.2) to Dixie's Current Report on Form 8-K dated July 1, 2000. *                              |
| (10.7)      | The Dixie Group, Inc. Stock Incentive Plan, as amended. **                                                                                                                                                                                                                                                                                                                            |   | Incorporated by reference to Annex A to Dixie's Proxy Statement dated April 5, 2002 for its 2002 Annual Meeting of Shareholders. *  |
|        |                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                |

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|             |                                                                                                                                                                                                                                                                   |        |                                                                                                                                            |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|
| EXHIBIT NO. | EXHIBIT DESCRIPTION                                                                                                                                                                                                                                               |   | INCORPORATION BY REFERENCE                                                                                                                 |
| (10.8)      | Amended and restated stock purchase agreement by and among The Dixie Group, Inc., and Scott D. Guenther, Royce R. Renfroe, and the Albert A. Frink and Denise Frink Charitable Remainder Unitrust and the Albert A. Frink Loving Trust dated September 8, 2000.   |   | Incorporated by reference to Exhibit (10.1) to Dixie's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. *               |
| (10.9)      | Form of Stock Option Agreement under The Dixie Group, Inc. Stock Incentive Plan. **                                                                                                                                                                               |   | Incorporated by reference to Exhibit (10.23) to Dixie's Annual Report on Form 10-K for the year ended December 29, 2001. *                 |
| (10.10)     | Form of Stock Rights and Restrictions Agreement for Restricted Stock Award under The Dixie Group, Inc. Stock Incentive Plan, as amended.**                                                                                                                        |   | Incorporated by reference to Exhibit (10.35) to Dixie's Annual Report on Form 10-K for the year ended December 25, 2004. *                 |
| (10.11)     | Form of Stock Option Agreement under The Dixie Group, Inc. Stock Incentive Plan for Non-Qualified Options Granted December 20, 2005.**                                                                                                                            |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated December 20, 2005. *                               |
| (10.12)     | Employment Agreement between The Dixie Group, Inc. and David E. Polley, dated November 20, 2002**                                                                                                                                                                 |   | Incorporated by reference to Exhibit (10.1) to Dixie's Quarterly Report on Form 10-Q for the quarter ended March 29, 2003. *               |
| (10.13)     | First Amendment dated January 26, 2004 to Employment Agreement between The Dixie Group, Inc. and David E. Polley, dated November 20, 2002.**                                                                                                                      |   | Incorporated by reference to Exhibit (10.29) to Dixie's Annual Report on Form 10-K for the year ended December 27, 2003. *                 |
| (10.14)     | Second Amendment, dated January 18, 2006, to Employment Agreement dated November 20, 2002 between The Dixie Group, Inc. and David E. Polley.**                                                                                                                    |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated January 18, 2006. *                                |
| (10.15)     | Third Amendment, dated January 6, 2007, to Employment Agreement dated November 20, 2002 between The Dixie Group, Inc. and David E. Polley.**                                                                                                                      |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated January 16, 2007. *                                |
| (10.16)     | Summary Description of the 2004 Annual Incentive Plan for The Dixie Group, Inc.**                                                                                                                                                                                 |   | Incorporated by reference to Exhibit (10.33) to Dixie's Annual Report on Form 10-K for the year ended December 25, 2004. *                 |
| (10.17)     | Summary Description of the Director Compensation Arrangements for The Dixie Group, Inc.**                                                                                                                                                                         |   | Incorporated by reference to Exhibit (10.34) to Dixie's Annual Report on Form 10-K for the year ended December 25, 2004. *                 |
| (10.18)     | Severance Agreement and Release Between Fabrica International and Royce Renfroe effective as of May 12, 2005.**                                                                                                                                                   |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated May 12, 2005. *                                    |
| (10.19)     | The Dixie Group, Inc. 2006 Stock Awards Plan. **                                                                                                                                                                                                                  |   | Incorporated by reference to Annex A to the Company's Proxy Statement for its 2006 Annual Meeting of Shareholders, filed March 20, 2006. * |
| (10.20)     | The 2006 Incentive Compensation Plan, approved February 23, 2006.**                                                                                                                                                                                               |   | Incorporated by reference to Current Report on Form 8-K dated March 1, 2006. *                                                             |
| (10.21)     | Material terms of the performance goals for the period 2007-2011, pursuant to which incentive compensation awards may be made to certain key executives of the Company based on the results achieved by the Company during such years, approved March 14, 2006.** |   | Incorporated by reference to Current Report on Form 8-K dated March 20, 2006. *                                                            |
|        |                                                                                                                                                                                                                                                              |   |                                                                                                                                       |

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|             |                                                                                                                                                                                                                                                                                                                                                                         |        |                                                                                                             |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|
| EXHIBIT NO. | EXHIBIT DESCRIPTION                                                                                                                                                                                                                                                                                                                                                     |   | INCORPORATION BY REFERENCE                                                                                  |
| (10.22)     | Form of Award of Career Shares under the 2006 Incentive Compensation Plan for Participants holding only shares of the Company's Common Stock.**                                                                                                                                                                                                                         |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated June 6, 2006. *     |
| (10.23)     | Form of Award of Career Shares under the 2006 Incentive Compensation Plan for Participants holding shares of the Company's Class B Common Stock.**                                                                                                                                                                                                                      |   | Incorporated by reference to Exhibit (10.2) to Dixie's Current Report on Form 8-K dated June 6, 2006. *     |
| (10.24)     | Form of Award of Long Term Incentive Plan Shares under the 2006 Incentive Compensation Plan for Participants holding only shares of the Company's Common Stock.**                                                                                                                                                                                                       |   | Incorporated by reference to Exhibit (10.3) to Dixie's Current Report on Form 8-K dated June 6, 2006. *     |
| (10.25)     | Form of Award of Long Term Incentive Plan Shares under the 2006 Incentive Compensation Plan for Participants holding shares of the Company's Class B Common Stock.**                                                                                                                                                                                                    |   | Incorporated by reference to Exhibit (10.4) to Dixie's Current Report on Form 8-K dated June 6, 2006. *     |
| (10.26)     | Award of 125,000 shares of Restricted Stock under the 2006 Stock Awards Plan to Daniel K. Frierson.**                                                                                                                                                                                                                                                                   |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated June 7, 2006. *     |
| (10.27)     | Summary description of The Dixie Group, Inc. 2007 Annual Compensation Plan.**                                                                                                                                                                                                                                                                                           |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated February 26, 2007.* |
| (10.28)     | Rule 10b5-1 and 10b-18 Repurchase Agreement by and between The Dixie Group, Inc. and Raymond James & Associates, Inc. dated December 11, 2007*                                                                                                                                                                                                                      |   | Incorporated by reference to Exhibit (99.1) to Dixie's Current Report on Form 8-K dated December 11, 2007*  |
| (10.29)     | Merger agreement between The Dixie Group, Inc. and Unite Here National Retirement Fund regarding the Company's Masland Bargaining Unit Defined Benefit Pension Plan.**                                                                                                                                                                                                  |   | Incorporated by reference to Exhibit (99.1) to Dixie's Current Report on Form 8-K dated December 28, 2007*  |
| (10.30)     | Summary description of The Dixie Group, Inc. 2008 Annual Incentive Plan.**                                                                                                                                                                                                                                                                                              |   | Incorporated by reference to Exhibit 10.1 to Dixie's Current Report on Form 8-K dated February 15, 2008*    |
| (10.31)     | Summary description of The Dixie Group, Inc. 2009 Annual Incentive Plan.**                                                                                                                                                                                                                                                                                              |   | Incorporated by reference to Exhibit 10.1 to Dixie's Current Report on Form 8-K dated March 26, 2009*       |
| (10.32)     | Amended and restated award of 125,000 shares of Restricted Stock under the 2006 Stock Awards Plan to Daniel K. Frierson.**                                                                                                                                                                                                                                              |   | Incorporated by reference to Exhibit 10.1 to Dixie's Current Report on Form 8-K dated May 21, 2009.*        |
| (10.33)     | Consulting agreement and non-compete agreement between Gary A. Harmon and The Dixie Group, Inc.                                                                                                                                                                                                                                                                         |   | Incorporated by reference to Exhibit 10.1 to Dixie's Current Report on Form 8-K dated July 30, 2009.*       |
| (10.34)     | Reduced revolving credit facility under its Second Amended and Restated Loan and Security Agreement dated October 24, 2008, by and among The Dixie Group, Inc., each of its subsidiaries as guarantors, Bank of America, N.A., in its capacity as collateral and administrative agent for the Lenders, and the Lenders (as such term is defined in the Loan Agreement). |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated July 30, 2009.      |
| (10.35)     | Agreement by and between Stifel, Nicolaus & Company, Inc. dated August 18, 2008, to repurchase shares of The Dixie Group, Inc.'s Common Stock                                                                                                                                                                                                                       |   | Incorporated by reference to Exhibit (99.1) to Dixie's Current Report on Form 8-K dated August 18, 2008.    |

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|             |                                                                                                                                                                                           |        |                                                                                                                      |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|
| EXHIBIT NO. | EXHIBIT DESCRIPTION                                                                                                                                                                       |   | INCORPORATION BY REFERENCE                                                                                           |
| (10.36)     | Master Lease Agreement, Corporate Guaranty and Schedule to the Master Lease Agreement by and between General Electric Capital Corporation and Masland Carpets, LLC dated August 21, 2009. |   | Incorporated by reference to Exhibit (10.1, 10.2, 10.3) to Dixie's Current Report on Form 8-K dated August 25, 2009. |
| (10.37)     | Agreement by and between Raymond James & Associates, Inc. dated November 6, 2008, to repurchase shares of The Dixie Group, Inc.'s Common Stock                                        |   | Incorporated by reference to Exhibit (99.1) to Dixie's Current Report on Form 8-K dated November 6, 2008.            |
| (10.38)     | Summary description of The Dixie Group, Inc. 2010 Incentive Compensation Plan/Range of Incentives                                                                                         |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated March 3, 2010.               |
| (10.39)     | Fixed Rate Swap Agreement between Bank of America, N.A. and The Dixie Group, Inc.                                                                                                         |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated April 19, 2010.              |
| (10.40)     | Fixed Rate Swap Areement between Bank of America, N.A. and The Dixie Group, Inc.                                                                                                          |   | Incorporated by reference to Exhibit (10.1) to Dixie's Current Report on Form 8-K dated July 8, 2010.                |
| (10.41)     | Termination of interest rate swap between Bank of America, N.A. and The Dixie Group, Inc. dated April 19, 2010                                                                            |   | Incorporated by reference to Exhibit (10.2) to Dixie's Current Report on Form 8-K dated July 8, 2010.                |
| (14)        | Code of Ethics, as amended and restated, February 15, 2010.                                                                                                                               |   | Incorporated by reference to Exhibit 14 to Dixie's Form 10-K dated March 3, 2010                                     |
| (21)        | Subsidiaries of the Registrant.                                                                                                                                                           |   | Filed herewith.                                                                                                      |
| (23)        | Consent of Independent Registered Public Accounting Firm.                                                                                                                                 |   | Filed herewith.                                                                                                      |
| (31.1)      | CEO Certification pursuant to Securities Exchange Act Rule 13a-14(a).                                                                                                                     |   | Filed herewith.                                                                                                      |
| (31.2)      | CFO Certification pursuant to Securities Exchange Act Rule 13a-14(a).                                                                                                                     |   | Filed herewith.                                                                                                      |
| (32.1)      | CEO Certification pursuant to Securities Exchange Act Rule 13a-14(b).                                                                                                                     |   | Filed herewith.                                                                                                      |
| (32.2)      | CFO Certification pursuant to Securities Exchange Act Rule 13a-14(b).                                                                                                                     |   | Filed herewith.                                                                                                      |

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