8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

                             

FORM 8-K
                             

CURRENT REPORT
Pursuant To Section 13 OR 15(d) Of The Securities Exchange Act Of 1934


Date of Report (Date of earliest event reported): May 2, 2006

THE DIXIE GROUP, INC.
(Exact name of Registrant as specified in its charter)

                Tennessee                 
(State or other jurisdiction of incorporation)        0-2585        
(Commission File Number)         62-0183370      
(I.R.S. Employer Identification No.)

345-B Nowlin Lane, Chattanooga, Tennessee (Address of principal executive offices)	37421    (zip code)
(423) 510-7010
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.	Results of Operations and Financial Condition.
	On May 2, 2006, The Dixie Group, Inc. issued a press release reporting results for the first quarter ended April 1, 2006.
Item 9.01.	Financial Statements and Exhibits.
	(c)	Exhibits
		(99.1)	Press Release, dated May 2, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:    May 2, 2006	THE DIXIE GROUP, INC.
	By: /s/ Gary A. Harmon                Gary A. Harmon Chief Financial Officer

EX-99.1

EXHIBIT 99.1

CONTACT:

Gary A. Harmon

Chief Financial Officer

(706) 876-5851

gary.harmon@dixiegroup.com

THE DIXIE GROUP REPORTS FIRST QUARTER RESULTS

CHATTANOOGA, Tenn. (May 2, 2006) – The Dixie Group, Inc. (Nasdaq/NM:DXYN) today reported income from continuing operations of $926,000, or $0.07 per diluted share, for the first quarter ended April 1, 2006, compared with income from continuing operations of $1,872,000, or $0.15 per diluted share, for the first quarter of 2005.  Sales for the first quarter of 2006 were $79,173,000, up 10% from sales of $72,034,000 in the year-earlier quarter.

Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "First quarter results reflected an 11% gain in our sales of carpet products, driven by a 16% increase in revenue from commercial carpet products and a 9% increase in revenue from residential carpet products.  All of our carpet businesses grew during the first quarter; however, a significant portion of the revenue growth was split equally between our commercial and Dixie Home products.

"Our first quarter profit performance continued to be negatively affected by issues associated with the rapid growth over the past several years that over-taxed our operating capabilities beginning in the second half of 2005.  Outsourcing of tufting production during the start-up of our new North Georgia tufting operation and its related cost and quality issues, expenses associated with the start-up of our new tufting and tile manufacturing operations, and higher fixed costs all had a negative impact on first quarter 2006 results.  

“The installation of the equipment at our North Georgia tufting operation was completed in April of this year, and this facility should be running on a full schedule before the end of May.  The new tufting operation already has simplified operations, improved service and quality and allowed us to introduce and sample new products in a more timely manner.  Our need to outsource tufting will be significantly reduced when this new tufting operation is running at full capacity.  The new tufting operations should begin to lower manufacturing costs during the second quarter of 2006, with the full benefit seen in the last half of the year.

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“The emphasis we have placed on introduction and sampling of new products early in 2006 – including product introductions delayed in the last half of 2005, should continue to fuel sales growth. Our order entry rate is increasing, making us optimistic that our revenue growth this year will continue at a rate well above that of the carpet industry as a whole.  We still expect total sales to increase in the 7% to 12% range this year," Frierson concluded.

Results related to discontinued operations reflected a loss of $91,000, or $0.01 per diluted share, in the first quarter of 2006 compared with income of $422,000, or $0.03 per diluted share, in the first quarter of 2005.  Including discontinued operations, the Company reported net income of $835,000, or $0.06 per diluted share, in the first quarter of 2006 compared with net income of $2,294,000, or $0.18 per diluted share, in the first quarter of 2005.

A listen-only Internet simulcast and replay of Dixie's conference call may be accessed with appropriate software at the Company's web site or at www.earnings.com.  The simulcast will begin at approximately 10:00 a.m. Eastern Time on May 2, 2006.  A replay will be available approximately two hours later and will continue for approximately 30 days.  If Internet access is unavailable, a listen only telephonic conference will be available by dialing 719-457-2629 at least ten minutes before the appointed time. A seven-day telephonic replay will be available two hours after the call ends by dialing 719-457-0820 and entering 4668087 when prompted for the access code.

The Dixie Group (www.thedixiegroup.com) is a leading marketer and manufacturer of carpet and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets and Dixie Home brands.

Statements in this news release, which relate to the future, are subject to risk factors and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements.  Such factors include the levels of demand for the products produced by the Company.  Other factors that could affect the Company's results include, but are not limited to, raw material and transportation costs related to petroleum prices, the cost and availability of capital, and general economic and competitive conditions related to the Company's business. Issues related to the availability and price of energy may adversely affect the Company's operations.  Additional information regarding these and other risk factors and uncertainties may be found in the Company's filings with the Securities and Exchange Commission.

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THE DIXIE GROUP, INC.

Consolidated Condensed Statements of Operations

(unaudited; in thousands, except earnings per share)

			Three Months Ended
			April 1, 2006		March 26, 2005
NET SALES		$	79,173	$	72,034
	Cost of sales		56,974		49,991
GROSS PROFIT			22,199		22,043
	Selling and administrative expenses		19,216		17,799
	Other operating income		(342)		(85)
	Other operating expense		157		36
OPERATING INCOME			3,168		4,293
	Interest expense		1,767		1,402
	Other income		(12)		(92)
	Other expense		3		20
Income from continuing operations before income taxes			1,410		2,963
	Income tax provision		484		1,091
Income from continuing operations			926		1,872
Loss from discontinued operations, net of tax			(91)		(412)
Income on disposal of discontinued operations, net of tax			---		834
NET INCOME		$	835	$	2,294
BASIC EARNINGS (LOSS) PER SHARE:
	Continuing operations	$	0.07	$	0.15
	Discontinued operations		(0.00)		(0.03)
	Disposal of discontinued operations		---		0.07
	Net income	$	0.07	$	0.19
DILUTED EARNINGS (LOSS) PER SHARE:
	Continuing operations	$	0.07	$	0.15
	Discontinued operations		(0.01)		(0.03)
	Disposal of discontinued operations		---		0.06
	Net income	$	0.06	$	0.18
Weighted-average shares outstanding:
	Basic		12,632		12,270
	Diluted		12,935		12,853

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THE DIXIE GROUP, INC.

Consolidated Condensed Balance Sheets

(in thousands)

				April 1, 2006		December 31, 2005
ASSETS				(Unaudited)
Current Assets
	Cash and cash equivalents		$	1,393	$	---
	Accounts receivable, net			37,802		31,633
	Inventories			76,569		72,871
	Other			11,105		10,577
		Total Current Assets		126,869		115,081
Net Property, Plant and Equipment				96,579		92,948
Goodwill				57,177		57,177
Other Assets				12,847		11,797
TOTAL ASSETS			$	293,472	$	277,003
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
	Accounts payable and accrued expenses		$	39,655	$	33,224
	Current portion of long-term debt			6,964		6,341
		Total Current Liabilities		46,619		39,565
Long-Term Debt
	Senior indebtedness			68,992		60,987
	Capital lease obligations			4,436		4,727
	Convertible subordinated debentures			22,162		22,162
Deferred Income Taxes				10,954		10,768
Other Liabilities				15,073		15,310
Stockholders' Equity				125,236		123,484
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	293,472	$	277,003

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