10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549

Form 10-Q

(Mark One)

R    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission File Number: 0-2585

THE DIXIE GROUP, INC.

(Exact name of Registrant as specified in its charter)

Tennessee		62-0183370
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
475 Reed Road, Dalton, Georgia	30720	(706) 876-5800
(Address of principal executive offices)	(zip code)	(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  R Yes  o No

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). R Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.  

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	R
			Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) o Yes R No

The number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date.

Class	Outstanding as of April 26, 2018
Common Stock, $3 Par Value	15,482,073 shares
Class B Common Stock, $3 Par Value	936,804 shares
Class C Common Stock, $3 Par Value	0 shares

Table of Contents1

THE DIXIE GROUP, INC.

Table of Contents

PART I.  FINANCIAL INFORMATION			Page
	Item 1.	Financial Statements	3
		Consolidated Condensed Balance Sheets - March 31, 2018 (Unaudited) and December 30, 2017	3
		Consolidated Condensed Statements of Operations (Unaudited) - Three Months Ended March 31, 2018 and April 1, 2017	4
		Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) - Three Months Ended March 31, 2018 and April 1, 2017	5
		Consolidated Condensed Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2018 and April 1, 2017	6
		Notes to Consolidated Condensed Financial Statements (Unaudited)	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
	Item 4.	Controls and Procedures	26
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	27
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 3.	Defaults Upon Senior Securities	30
	Item 4.	Mine Safety Disclosures	30
	Item 5.	Other information	30
	Item 6.	Exhibits	30
		Signatures	32

Table of Contents2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE DIXIE GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(amounts in thousands, except share data)

	March 31, 2018			December 30, 2017
ASSETS	(Unaudited)			(As Adjusted)
CURRENT ASSETS
Cash and cash equivalents	$	21		$	19
Receivables, net	47,883			46,480
Inventories, net	116,988			113,657
Prepaids and other current assets	5,780			4,669
TOTAL CURRENT ASSETS	170,672			164,825
PROPERTY, PLANT AND EQUIPMENT, NET	91,522			93,785
GOODWILL AND OTHER INTANGIBLES	5,774			5,850
OTHER ASSETS	19,383			19,447
TOTAL ASSETS	$	287,351		$	283,907
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	23,232		$	18,541
Accrued expenses	31,076			31,360
Current portion of long-term debt	9,113			9,811
TOTAL CURRENT LIABILITIES	63,421			59,712
LONG-TERM DEBT	125,592			123,446
OTHER LONG-TERM LIABILITIES	20,786			21,486
TOTAL LIABILITIES	209,799			204,644
COMMITMENTS AND CONTINGENCIES (See Note 18)
STOCKHOLDERS' EQUITY
Common Stock ($3 par value per share): Authorized 80,000,000 shares, issued and outstanding - 15,482,073 shares for 2018 and 15,279,812 shares for 2017	46,446			45,839
Class B Common Stock ($3 par value per share): Authorized 16,000,000 shares, issued and outstanding - 936,804 shares for 2018 and 861,499 shares for 2017	2,810			2,584
Additional paid-in capital	156,478			157,139
Accumulated deficit	(127,907		)	(125,000		)
Accumulated other comprehensive income (loss)	(275		)	(1,299		)
TOTAL STOCKHOLDERS' EQUITY	77,552			79,263
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	287,351		$	283,907

See accompanying notes to the consolidated condensed financial statements.

Table of Contents3

THE DIXIE GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

(amounts in thousands, except per share data)

	Three Months Ended
	March 31, 2018			April 1, 2017
				(As Adjusted)
NET SALES	$	98,858		$	97,541
Cost of sales	77,278			72,380
GROSS PROFIT	21,580			25,161
Selling and administrative expenses	23,120			24,486
Other operating (income) expense, net	(241		)	52
Facility consolidation and severance expenses, net	216			—
OPERATING (LOSS) INCOME	(1,515		)	623
Interest expense	1,533			1,362
Other expense (income), net	2			(1		)
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES	(3,050		)	(738		)
Income tax benefit	(166		)	(163		)
LOSS FROM CONTINUING OPERATIONS	(2,884		)	(575		)
Loss from discontinued operations, net of tax	(23		)	(29		)
NET LOSS	$	(2,907	)	$	(604	)
BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations	$	(0.18	)	$	(0.04	)
Discontinued operations	(0.00		)	(0.00		)
Net loss	$	(0.18	)	$	(0.04	)
BASIC SHARES OUTSTANDING	15,715			15,673
DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations	$	(0.18	)	$	(0.04	)
Discontinued operations	(0.00		)	(0.00		)
Net loss	$	(0.18	)	$	(0.04	)
DILUTED SHARES OUTSTANDING	15,715			15,673
DIVIDENDS PER SHARE:
Common Stock	$	—		$	—
Class B Common Stock	—			—

See accompanying notes to the consolidated condensed financial statements.

Table of Contents4

THE DIXIE GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(amounts in thousands)

	Three Months Ended
	March 31, 2018			April 1, 2017
NET LOSS	$	(2,907	)	$	(604	)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain on interest rate swaps	804			57
Income taxes	—			22
Unrealized gain on interest rate swaps, net	804			35
Reclassification of loss into earnings from interest rate swaps (1)	228			359
Income taxes	—			136
Reclassification of loss into earnings from interest rate swaps, net	228			223
Reclassification of net actuarial gain into earnings from postretirement benefit plans (2)	(7		)	(8		)
Income taxes	—			(3		)
Reclassification of net actuarial gain into earnings from postretirement benefit plans, net	(7		)	(5		)
Reclassification of prior service credits into earnings from postretirement benefit plans (2)	(1		)	(1		)
Income taxes	—			—
Reclassification of prior service credits into earnings from postretirement benefit plans, net	(1		)	(1		)
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX	1,024			252
COMPREHENSIVE LOSS	$	(1,883	)	$	(352	)

(1) Amounts for cash flow hedges reclassified from accumulated other comprehensive income (loss) to net loss were included in interest expense in the Company's Consolidated Condensed Statements of Operations.

(2) Amounts for postretirement plans reclassified from accumulated other comprehensive income (loss) to net loss were included in selling and administrative expenses in the Company's Consolidated Condensed Statements of Operations.

See accompanying notes to the consolidated condensed financial statements.

Table of Contents5

THE DIXIE GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(amounts in thousands)

	Three Months Ended
	March 31, 2018			April 1, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from continuing operations	$	(2,884	)	$	(575	)
Loss from discontinued operations	(23		)	(29		)
Net loss	(2,907		)	(604		)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,143			3,211
Provision (benefit) for deferred income taxes	7			(141		)
Stock-based compensation expense	227			288
Bad debt expense	60			30
Changes in operating assets and liabilities:
Receivables	(1,463		)	(7,589		)
Inventories	(3,331		)	(6,305		)
Other current assets	(1,111		)	(179		)
Accounts payable and accrued expenses	2,145			3,696
Other operating assets and liabilities	375			(463		)
NET CASH USED IN OPERATING ACTIVITIES	(2,855		)	(8,056		)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(762		)	(3,720		)
NET CASH USED IN INVESTING ACTIVITIES	(762		)	(3,720		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on revolving credit facility	3,784			14,251
Payments on notes payable - buildings	(183		)	(183		)
Payments on notes payable related to acquisitions	—			(294		)
Borrowings on notes payable - equipment and other	—			405
Payments on notes payable - equipment and other	(1,114		)	(1,130		)
Payments on capital leases	(1,074		)	(848		)
Change in outstanding checks in excess of cash	2,262			(306		)
Repurchases of Common Stock	(56		)	(116		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	3,619			11,779
INCREASE IN CASH AND CASH EQUIVALENTS	2			3
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	19			140
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	21		$	143
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	1,441		$	1,285
Income taxes paid, net	73			99
Equipment purchased under notes payable	—			59

See accompanying notes to the consolidated condensed financial statements.

Table of Contents6

THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial statements which do not include all the information and notes required by such accounting principles for annual financial statements. In the opinion of management, all adjustments (generally consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the accompanying financial statements. The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 30, 2017. Operating results for the three-month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the entire 2018 year.

Based on applicable accounting standards, the Company has determined that it has one reportable segment, Floorcovering comprising of two operating segments, Residential and Commercial. Pursuant to accounting standards, the Company has aggregated the two operating segments into one reporting segment because they have similar economic characteristics, and the operating segments are similar in all of the following areas: (a) the nature of the products and services; (b) the nature of the production processes; (c) the type or class of customer for their products and services; (d) the methods used to distribute their products or provide their services; and (e) the nature of the regulatory environment.

NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Adopted in Fiscal 2018

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". The ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU and all subsequently issued clarifying ASUs replaced most existing revenue recognition guidance in U.S. GAAP. The ASU was effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The standard permits the use of either the retrospective or cumulative effect transition method. The ASU also required expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required for customer contracts, significant judgments and changes in judgments. The Company adopted the new standard effective December 31, 2017, the first day of the Company's fiscal year, using the full retrospective method approach and expanded its financial statement disclosures in order to comply with the ASU. (See Note 3.) The adoption of this ASU did not have a significant impact on the Company's consolidated financial statements. The majority of the Company's revenue arrangements generally consist of a single performance obligation to transfer promised goods or services. Based on the Company's evaluation process and review of its contracts with customers, the timing (point in time) and amount of revenue recognized previously is consistent with how revenue is recognized under the new standard.

Therefore, no changes were required to its reported revenues as a result of the adoption. However, the adoption resulted in the recognition of an asset related to certain product returns by increasing the returns liability for December 30, 2017 and recognizing a corresponding asset for the estimated value of the returns from customers; this gross up had no corresponding impact on the Consolidated Condensed Statement of Operations. The Consolidated Balance Sheet as of December 30, 2017 has been adjusted to reflect retrospective application of the new accounting standard as follows:

	December 30, 2017
	As Previously Reported		Adjustments		As Adjusted
ASSETS
Prepaids and other current assets	$	3,600	$	1,069	$	4,669
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses	$	30,291	$	1,069	$	31,360

As part of the adoption of the ASU, the Company elected to use the following practical expedients (i) to exclude disclosures of transaction prices allocated to remaining performance obligations when the Company expects to recognize such revenue for all periods prior to the date of initial application of the ASU; (ii) not to adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between the Company's transfer

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

of a promised product or service to a customer and when the customer pays for that product or service will be one year or less; (iii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less; (iv) not to recast revenues for contracts that begin and end in the same fiscal year; and (v) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. The Company's revenue is recognized at a point in time based on the transfer of control whereby the Company does not invest in contract costs that are recoverable. In addition, performance obligations and customer payments are within one year or less. For these reasons, there is not a significant impact as a result of electing these practical expedients.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses the recognition, measurement, presentation and disclosure of financial assets and liabilities. This ASU primarily affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, this ASU clarifies the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. This ASU is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this ASU did not have a significant impact on the financial statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which provides clarification guidance on certain cash flow presentation issues that have developed due to diversity in practice. These issues include certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interests obtained in a financial asset securitization. ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. For public entities, ASU 2016-15 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU did not have a significant impact on the financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which clarifies guidance on the classification and presentation of restricted cash in the statement of cash flows. Under the ASU, changes in restricted cash and restricted cash equivalents would be included along with those of cash and cash equivalents in the statement of cash flows. In addition, a reconciliation between the balance sheet and the statement of cash flows would be disclosed when the balance sheet includes more than one line item for cash and cash equivalents and restricted cash and cash equivalents. For public entities, ASU 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted. Entities are required to apply the standard’s provisions on a retrospective basis. Since the Company has no restricted cash, the adoption of this ASU did not have an impact on the financial statements.

In February 2017, the FASB issued ASU No. 2017-05, "Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets." This ASU clarifies the scope and application of ASC 610-20 on the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. The amendments are effective at the same time as the new revenue standard. For public entities, the amendments are effective for fiscal years beginning after December 15, 2017, including interim reporting periods within those fiscal years. The adoption of this ASU did not have a significant impact on the financial statements.

In March 2017, the FASB issued ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which changed the presentation of net periodic benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Service cost are included within the same income statement line item as other compensation costs arising from services rendered during the period, while other components of net periodic benefit pension cost are presented separately outside of operating income. Additionally, only service costs may be capitalized in assets. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Effective December 31, 2017, the first day of the Company's fiscal year, the Company adopted this ASU. The Company adopted this ASU retrospectively, utilizing the practical expedient by using the amounts disclosed in the postretirement plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. which resulted in an immaterial amount being reclassified between selling and administrative expenses and other (income) expense, net in the Company's Consolidated Condensed Statements of Operations.

In May 2017, the FASB issued ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting." This ASU provides amendments to the current guidance on determining which changes to the terms and conditions of share-based payment awards require the application of modification accounting. The effects of a modification should be accounted for unless there are no changes between the fair value, vesting conditions, and classification of the modified award and the original award immediately before the original award is modified. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU did not have an impact on the financial statements.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

Accounting Standards Yet to Be Adopted

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires lessees to recognize on the balance sheet a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is continuing to evaluate the impact of the adoption of this ASU on its financial statements. The Company has developed a project team relative to the process of adopting this ASU and is currently completing a detailed review of the Company’s leasing arrangements, which consist primarily of building and equipment leases, to determine the impact.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which amends the impairment model to utilize an expected loss methodology in place of the current incurred loss methodology, which will result in the more timely recognition of losses. For public entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company does not believe the adoption of this ASU will have a significant impact on the financial statements due to the nature of the Company's customers and the limited amount of write-offs in past years.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The amendments in this ASU update current guidance by more closely aligning the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company does not believe the adoption of this ASU will have a significant impact on the financial statements.

NOTE 3 - REVENUE

Revenue Recognition Policy

The Company derives its revenues primarily from the sale of floorcovering products and processing services. Revenues are recognized when control of these products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products and services. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. The Company determined revenue recognition through the following steps:

• Identification of the contract with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, the performance obligation is satisfied

Disaggregation of Revenue from Contracts with Customers

The following table disaggregates the Company’s revenue by end-user markets for the three months ended March 31, 2018 and April 1, 2017:

	Three Months Ended
	March 31, 2018		April 1, 2017
Residential floorcovering products	$	67,095	$	62,539
Commercial floorcovering products	31,287		34,516
Other services	476		486
Total net sales	$	98,858	$	97,541

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

Residential floorcovering products. Residential floorcovering products include broadloom carpet, rugs, luxury vinyl flooring and engineered hardwood. These products are sold into the designer, retailer, mass merchant and builder markets.

Commercial floorcovering products. Commercial floorcovering products include broadloom carpet, carpet tile, rugs, and luxury vinyl flooring. These products are sold into the corporate, hospitality, healthcare, government, education markets through the use of designers and architects.

Other services. Other services include carpet yarn processing and carpet dyeing services.

Contract Balances

Other than receivables that represent an unconditional right to consideration, which are presented separately (See Note 4), the Company does not recognize any contract assets which give conditional rights to receive consideration, as the Company does not incur costs to obtain customer contracts that are recoverable. The Company often receives cash payments from customers in advance of the Company’s performance for limited production run orders resulting in contract liabilities. These contract liabilities are classified in accrued expenses in the Consolidated Condensed Balance Sheet based on the timing of when the Company expects to recognize revenue, which is typically less than a year. The decrease in the contract liabilities is primarily driven by the timing of cash payments received in advance of satisfying the Company's performance obligations and a decline in sales, partially offset by revenues recognized that were included in the contract liability balance at the beginning of the period. The activity in the advanced deposits for the three months ended March 31, 2018 and April 1,2017 is as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Beginning contract liability	$	5,717		$	8,212
Revenue recognized from contract liabilities included in the beginning balance	(4,484		)	(6,311		)
Increases due to cash received, net of amounts recognized in revenue during the period	4,063			5,671
Ending contract liability	$	5,296		$	7,572

Performance Obligations

For performance obligations related to residential floorcovering and commercial floorcovering products, control transfers at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer and the customer must have the significant risks and rewards of ownership. The Company’s principal terms of sale are FOB Shipping Point and FOB Destination and the Company transfers control and records revenue for product sales either upon shipment or delivery to the customer, respectively. Revenue is allocated to each performance obligation based on its relative stand-alone selling prices. Stand-alone selling prices are based on observable prices at which the Company separately sells the products or services.

Variable Consideration

The nature of the Company’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.

Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.

Warranties

The Company generally provides product warranties related to manufacturing defects and specific performance standards for its products for a period up to two years. The Company accrues for estimated future assurance warranty costs in the period in which the sale is recorded. The costs are included in Cost of Sales in the Consolidated Condensed Statements of Operations and the product warranty reserve is included in accrued expenses in the Consolidated Condensed Balance Sheets. The Company calculates its accrual using the portfolio approach based upon historical experience and known trends. (See Note 9.) The Company does not provide an additional service-type warranty.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

Bill-and-Hold Arrangement

At the customer's request, the Company had a bill-and-hold arrangement with one customer during the three months ended March 31, 2018. The Company recognized revenue of $630 but retained physical possession of the inventory. The Company segregated the inventory and no longer had the ability to use or direct it to another customer. The inventory was available to be physically transferred to the customer. None of the inventory had been shipped as of March 31, 2018.

NOTE 4 - RECEIVABLES, NET

Receivables are summarized as follows:

	March 31, 2018			December 30, 2017
Customers, trade	$	45,286		$	43,683
Other receivables	2,768			2,930
Gross receivables	48,054			46,613
Less: allowance for doubtful accounts	(171		)	(133		)
Receivables, net	$	47,883		$	46,480

Bad debt expense was $60 and $30 for the three months ended March 31, 2018 and April 1, 2017, respectively.

NOTE 5 - INVENTORIES, NET

Inventories are summarized as follows:

	March 31, 2018			December 30, 2017
Raw materials	$	40,884		$	39,264
Work-in-process	22,510			24,454
Finished goods	67,060			65,172
Supplies and other	155			143
LIFO reserve	(13,621		)	(15,376		)
Inventories, net	$	116,988		$	113,657

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consists of the following:

	March 31, 2018			December 30, 2017
Land and improvements	$	7,886		$	7,886
Buildings and improvements	63,226			62,852
Machinery and equipment	189,980			188,971
Assets under construction	1,811			2,443
	262,903			262,152
Accumulated depreciation	(171,381		)	(168,367		)
Property, plant and equipment, net	$	91,522		$	93,785

Depreciation of property, plant and equipment, including amounts for capital leases, totaled $3,015 in the three months ended March 31, 2018 and $3,083 in the three months ended April 1, 2017.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

NOTE 7 - GOODWILL AND OTHER INTANGIBLES

The carrying amount of goodwill is $3,389 as of March 31, 2018 and December 30, 2017. The Company has a net carrying amount of $2,385 and $2,461 as of March 31, 2018 and December 30, 2017, respectively, for certain intangible assets subject to amortization. Amortization expense was $76 for the three months ended March 31, 2018 and April 1, 2017, respectively.

NOTE 8 - ACCRUED EXPENSES

Accrued expenses are summarized as follows:

	March 31, 2018		December 30, 2017
			(As Adjusted)
Compensation and benefits	$	8,817	$	9,276
Provision for customer rebates, claims and allowances	8,063		9,820
Advanced customer deposits	5,296		5,717
Outstanding checks in excess of cash	2,641		379
Other	6,259		6,168
Accrued expenses	$	31,076	$	31,360

NOTE 9 - PRODUCT WARRANTY RESERVES

The Company generally provides product warranties related to manufacturing defects and specific performance standards for its products. Product warranty reserves are included in accrued expenses in the Company's Consolidated Condensed Financial Statements. The following is a summary of the Company's product warranty activity:

	Three Months Ended
	March 31, 2018			April 1, 2017
				(As adjusted)
Product warranty reserve at beginning of period	$	1,356		$	1,439
Warranty liabilities accrued	614			404
Warranty liabilities settled	(691		)	(416		)
Changes for pre-existing warranty liabilities	(31		)	(70		)
Product warranty reserve at end of period	$	1,248		$	1,357

NOTE 10 - LONG-TERM DEBT AND CREDIT ARRANGEMENTS

Long-term debt consists of the following:

	March 31, 2018			December 30, 2017
Revolving credit facility	$	101,493		$	97,708
Notes payable - buildings	12,236			12,419
Acquisition note payable - Robertex	795			791
Notes payable - equipment and other	7,355			8,474
Capital lease obligations	13,446			14,530
Deferred financing costs, net	(620		)	(665		)
Total long-term debt	134,705			133,257
Less: current portion of long-term debt	9,113			9,811
Long-term debt	$	125,592		$	123,446

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

Revolving Credit Facility

The revolving credit facility provides for a maximum of $150,000 of revolving credit, subject to borrowing base availability. The borrowing base is currently equal to specified percentages of the Company's eligible accounts receivable, inventories, fixed assets and real property less reserves established, from time to time, by the administrative agent under the facility. The revolving credit facility matures on September 23, 2021. The revolving credit facility is secured by a first priority lien on substantially all of the Company's assets.

At the Company's election, advances of the revolving credit facility bear interest at annual rates equal to either (a) LIBOR for one, two or three-month periods, as selected by the Company, plus an applicable margin ranging between 1.50% and 2.00%, or (b) the higher of the prime rate, the Federal Funds rate plus 0.5%, or a daily LIBOR rate plus 1.00%, plus an applicable margin ranging between 0.50% and 1.00%. The applicable margin is determined based on availability under the revolving credit facility with margins increasing as availability decreases. As of March 31, 2018, the applicable margin on our revolving credit facility was 1.75%. The Company pays an unused line fee on the average amount by which the aggregate commitments exceed utilization of the revolving credit facility equal to 0.375% per annum. The weighted-average interest rate on borrowings outstanding under the revolving credit facility was 4.26% at March 31, 2018 and 4.12% at December 30, 2017.

The revolving credit facility includes certain affirmative and negative covenants that impose restrictions on the Company's financial and business operations. The revolving credit facility restricts the Company's borrowing availability if its fixed charge coverage ratio is less than 1.1 to 1.0. During any period that the fixed charge coverage ratio is less than 1.1 to 1.0, the Company's borrowing availability is reduced by $16,500. As of March 31, 2018, the unused borrowing availability under the revolving credit facility was $28,794; however, since the Company's fixed charge coverage ratio was less than 1.1 to 1.0, the unused availability accessible by the Company was $12,294 (the amount above $16,500) at March 31, 2018.

Notes Payable - Buildings

On November 7, 2014, the Company entered into a ten-year $8,330 note payable to purchase a previously leased distribution center in Adairsville, Georgia. The note payable is scheduled to mature on November 7, 2024 and is secured by the distribution center. The note payable bears interest at a variable rate equal to one-month LIBOR plus 2.0% and is payable in equal monthly installments of principal of $35, plus interest calculated on the declining balance of the note, with a final payment of $4,165 due on maturity. In addition, the Company entered into an interest rate swap with an amortizing notional amount effective November 7, 2014 which effectively fixes the interest rate at 4.50%.

On January 23, 2015, the Company entered into a ten-year $6,290 note payable to finance an owned facility in Saraland, Alabama. The note payable is scheduled to mature on January 7, 2025 and is secured by the facility. The note payable bears interest at a variable rate equal to one-month LIBOR plus 2.0% and is payable in equal monthly installments of principal of $26, plus interest calculated on the declining balance of the note, with a final payment of $3,145 due on maturity. In addition, the Company entered into an interest rate swap with an amortizing notional amount effective January 7, 2017 which effectively fixes the interest rate at 4.30%.

Acquisition Note Payable - Robertex

On July 1, 2013, the Company signed a 4.50% seller-financed note of $4,000, which was recorded at a fair value of $3,749, with Robert P. Rothman related to the acquisition of Robertex Associates, LLC ("Robertex") in Calhoun, Georgia. The note is payable in five annual installments of principal of $800 plus interest. The note matures June 30, 2018.

Notes Payable - Equipment and Other

The Company's equipment financing notes have terms ranging from 1 to 7 years, bear interest ranging from 1.00% to 7.68% and are due in monthly installments through their maturity dates. The Company's equipment financing notes are secured by the specific equipment financed and do not contain any financial covenants.

Capital Lease Obligations

The Company's capitalized lease obligations have terms ranging from 3 to 7 years, bear interest ranging from 3.55% to 7.37% and are due in monthly or quarterly installments through their maturity dates. The Company's capital lease obligations are secured by the specific equipment leased.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

NOTE 11 - FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange value of an asset or a liability in an orderly transaction between market participants. The fair value guidance outlines a valuation framework and establishes a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and disclosures. The hierarchy consists of three levels as follows:

Level 1 - Quoted market prices in active markets for identical assets or liabilities as of the reported date;

Level 2 - Other than quoted market prices in active markets for identical assets or liabilities, quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other than quoted prices for assets or liabilities and prices that are derived principally from or corroborated by market data by correlation or other means; and

Level 3 - Measurements using management's best estimate of fair value, where the determination of fair value requires significant management judgment or estimation.

The following table reflects the fair values of assets and liabilities measured and recognized at fair value on a recurring basis on the Company's Consolidated Condensed Balance Sheets as of March 31, 2018 and December 30, 2017:

	March 31, 2018		December 30, 2017		Fair Value Hierarchy Level
Assets:
Interest rate swaps (1)	$	120	$	—	Level 2
Liabilities:
Interest rate swaps (1)	$	1,304	$	2,229	Level 2
Contingent consideration (2)	25		25		Level 3

(1) The Company uses certain external sources in deriving the fair value of the interest rate swaps. The interest rate swaps were valued using observable inputs (e.g., LIBOR yield curves, credit spreads). Valuations of interest rate swaps may fluctuate considerably from period-to-period due to volatility in underlying interest rates, which are driven by market conditions and the duration of the instrument. Credit adjustments could have a significant impact on the valuations due to changes in credit ratings of the Company or its counterparties.

(2) As a result of the Robertex acquisition in 2013, the Company recorded a contingent consideration liability at fair value. This fair value measurement was based on calculations that utilize significant inputs not observable in the market including forecasted revenues, gross margins and discount rates and thus represent Level 3 measurements. This fair value measurement is directly impacted by the Company's estimates. Accordingly, if the estimates within the fair value measurement are higher or lower, the Company would record additional charges or benefits, respectively, as appropriate.

Changes in the fair value measurements using significant unobservable inputs (Level 3) during the three months ending March 31, 2018 and April 1, 2017 were as follows:

	March 31, 2018		April 1, 2017
Beginning balance	$	25	$	200
Fair value adjustments	—		3
Ending balance	$	25	$	203

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 during the three months ending March 31, 2018 or April 1, 2017. If any, the Company recognizes the transfers in or transfers out at the end of the reporting period.

The carrying amounts and estimated fair values of the Company's financial instruments are summarized as follows:

	March 31, 2018				December 30, 2017
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	21	$	21	$	19	$	19
Notes receivable	282		282		282		282
Interest rate swaps	120		120		—		—
Financial liabilities:
Long-term debt and capital leases, including current portion	134,705		131,083		133,257		131,203
Interest rate swaps	1,304		1,304		2,229		2,229

The fair values of the Company's long-term debt and capital leases were estimated using market rates the Company believes would be available for similar types of financial instruments and represent level 2 measurements. The fair values of cash and cash equivalents and notes receivable approximate their carrying amounts due to the short-term nature of the financial instruments.

NOTE 12 - DERIVATIVES

The Company's earnings, cash flows and financial position are exposed to market risks relating to interest rates. It is the Company's policy to minimize its exposure to adverse changes in interest rates and manage interest rate risks inherent in funding the Company with debt. The Company addresses this risk by maintaining a mix of fixed and floating rate debt and entering into interest rate swaps for a portion of its variable rate debt to minimize interest rate volatility.

The following is a summary of the Company's interest rate swaps as of March 31, 2018:

Type	Notional Amount			Effective Date	Fixed Rate	Variable Rate
Interest rate swap	$	25,000		September 1, 2016 through September 1, 2021	3.105%	1 Month LIBOR
Interest rate swap	$	25,000		September 1, 2015 through September 1, 2021	3.304%	1 Month LIBOR
Interest rate swap	$	6,942	(1)	November 7, 2014 through November 7, 2024	4.500%	1 Month LIBOR
Interest rate swap	$	5,294	(2)	January 7, 2017 through January 7, 2025	4.300%	1 Month LIBOR

(1) Interest rate swap notional amount amortizes by $35 monthly to maturity.

(2) Interest rate swap notional amount amortizes by $26 monthly to maturity.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

The following table summarizes the fair values of derivative instruments included in the Company's financial statements:

	Location on Consolidated Balance Sheets	Fair Value
		March 31, 2018		December 30, 2017
Asset Derivatives:
Derivatives designated as hedging instruments:
Interest rate swaps	Other Assets	$	120	$	—
Total Asset Derivatives		$	120	$	—
Liability Derivatives:
Derivatives designated as hedging instruments:
Interest rate swaps, current portion	Accrued Expenses	$	606	$	842
Interest rate swaps, long-term portion	Other Long-Term Liabilities	698		1,387
Total Liability Derivatives		$	1,304	$	2,229

The following tables summarize the pre-tax impact of derivative instruments on the Company's financial statements:

	Amount of Gain or (Loss) Recognized in AOCIL on the effective portion of the Derivative
	Three Months Ended
	March 31, 2018			April 1, 2017
Derivatives designated as hedging instruments:
Cash flow hedges - interest rate swaps	$	804		$	57
	Amount of Gain or (Loss) Reclassified from AOCIL on the effective portion into Income (1)(2)
	Three Months Ended
	March 31, 2018			April 1, 2017
Derivatives designated as hedging instruments:
Cash flow hedges - interest rate swaps	$	(228	)	$	(359	)

(1) The amount of gain (loss) reclassified from AOCIL is included in interest expense on the Company's financial statements.

(2) The amount of loss expected to be reclassified from AOCIL into earnings during the next 12 months subsequent to March 31, 2018 is $606.

The amount of gain (loss) recognized in income on the ineffective portion of interest rate swaps, if any, is included in other expense, net on the Company's Consolidated Condensed Statements of Operations. There was no ineffective portion for the periods presented.

NOTE 13 - EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Company sponsors a 401(k) defined contribution plan that covers approximately 85% of the Company's current associates. This plan includes a mandatory Company match on the first 1% of participants' contributions. The Company matches the next 2% of participants' contributions if the Company meets prescribed earnings levels. The plan also provides for additional Company contributions above the 3% level if the Company attains certain additional performance targets. Matching contribution expense for this 401(k) plan was $264 and $233 for the three months ended March 31, 2018 and April 1, 2017, respectively.

Additionally, the Company sponsors a 401(k) defined contribution plan that covers approximately 15% of the Company's current associates at one facility who are under a collective-bargaining agreement. Under this plan, the Company generally matches participants' contributions, on a sliding scale, up to a maximum of 2.75% of the participant's earnings. Matching contribution expense for the collective-bargaining 401(k) plan was $29 and $18 for the three months ended March 31, 2018 and April 1, 2017, respectively.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

Non-Qualified Retirement Savings Plan

The Company sponsors a non-qualified retirement savings plan that allows eligible associates to defer a specified percentage of their compensation. The obligations owed to participants under this plan were $17,002 at March 31, 2018 and $17,010 at December 30, 2017 and are included in other long-term liabilities in the Company's Consolidated Condensed Balance Sheets. The obligations are unsecured general obligations of the Company and the participants have no right, interest or claim in the assets of the Company, except as unsecured general creditors. The Company utilizes a Rabbi Trust to hold, invest and reinvest deferrals and contributions under the plan. Amounts are invested in Company-owned life insurance in the Rabbi Trust and the cash surrender value of the policies was $18,067 at March 31, 2018 and $18,232 at December 30, 2017 and is included in other assets in the Company's Consolidated Condensed Balance Sheets.

Multi-Employer Pension Plan

The Company contributes to a multi-employer pension plan under the terms of a collective-bargaining agreement that covers its union-represented employees. Expenses related to the multi-employer pension plan were $92 and $66 for the three months ended March 31, 2018 and April 1, 2017, respectively.

NOTE 14 - INCOME TAXES

On December 22, 2017, the President signed the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. While the Company has substantially completed its provisional analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects during the fourth quarter of 2017, the charge related to the Tax Act may differ, possibly materially, due to, among other things, further refinement of its calculations, changes in interpretations and assumptions that the Company has made or additional guidance that may be issued related to the Tax Act. Pursuant to Staff Accounting Bulletin No. 118, the Company will complete its analysis over a one-year measurement period from the enactment date, and any adjustments during this measurement period will be included in income from continuing operations as an adjustment to income tax expense in the reporting period when such adjustments are determined.

The benefit rate for the three months ending March 31, 2018 was 5.4% compared with a benefit rate of 22.1% for the three months ending April 1, 2017. During the fourth quarter of 2017, the Company recorded a full valuation allowance against the deferred tax assets resulting in only refundable credits and a small of amount of state taxes being recognized in the tax benefit for the first quarter of 2018. The three months ended April 1, 2017 included $164 of tax expense related to the adoption of ASU No. 2016-09 which requires a shortfall of tax benefits related to stock compensation to be recognized in income tax expense instead of additional paid-in capital. The Company is in a net deferred tax liability position of $1,112 and $1,105 at March 31, 2018 and December 30, 2017, respectively which is included in other liabilities in Company's Consolidated Balance Sheets.

The Company accounts for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $419 and $414 at March 31, 2018 and December 30, 2017, respectively. Such benefits, if recognized, would affect the Company's effective tax rate. There were no significant interest or penalties accrued as of March 31, 2018 and December 30, 2017.

The Company and its subsidiaries are subject to United States federal income taxes, as well as income taxes in a number of state jurisdictions. The tax years subsequent to 2013 remain open to examination for U.S. federal income taxes. The majority of state jurisdictions remain open for tax years subsequent to 2013. A few state jurisdictions remain open to examination for tax years subsequent to 2012.

NOTE 15 - EARNINGS (LOSS) PER SHARE

The Company's unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are considered participating securities and are included in the computation of earnings per share. Accounting guidance requires additional disclosure of earnings (loss) per share ("EPS") for common stock and unvested share-based payment awards, separately disclosing distributed and undistributed earnings. Undistributed earnings represent earnings that were available for distribution but were not distributed. Common stock and unvested share-based payment awards earn dividends equally. All earnings were undistributed in all periods presented.

Table of Contents17

THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

The following table sets forth the computation of basic and diluted earnings (loss) per share from continuing operations:

	Three Months Ended
	March 31, 2018			April 1, 2017
Basic earnings (loss) per share:
Loss from continuing operations	$	(2,884	)	$	(575	)
Less: Allocation of earnings to participating securities	—			—
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Basic weighted-average shares outstanding (1)	15,715			15,673
Basic earnings (loss) per share - continuing operations	$	(0.18	)	$	(0.04	)
Diluted earnings (loss) per share:
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Add: Undistributed earnings reallocated to unvested shareholders	—			—
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Basic weighted-average shares outstanding (1)	15,715			15,673
Effect of dilutive securities:
Stock options (2)	—			—
Directors' stock performance units (2)	—			—
Diluted weighted-average shares outstanding (1)(2)	15,715			15,673
Diluted earnings (loss) per share - continuing operations	$	(0.18	)	$	(0.04	)

(1) Includes Common and Class B Common shares, excluding 488 unvested participating securities, in thousands.

(2) Shares issuable under stock option plans where the exercise price is greater than the average market price of the Company's Common Stock during the relevant period and directors' stock performance units have been excluded to the extent they are anti-dilutive. Aggregate shares excluded for the three months ended March 31, 2018 and April 1, 2017 were 448 and 220, respectively, in thousands.

NOTE 16 - STOCK COMPENSATION EXPENSE

The Company recognizes compensation expense relating to share-based payments based on the fair value of the equity instrument issued and records such expense in selling and administrative expenses in the Company's Consolidated Condensed Financial Statements. The number of shares to be issued is determined by dividing the specified dollar value of the award by the market value per share on the grant date. The Company's stock compensation expense was $227 for the three months ended March 31, 2018 and $288 for the three months ended April 1, 2017.

On March 12, 2018, the Company granted 297,292 shares of restricted stock to certain key employees of the Company. The grant-date fair value of the awards was $832, or $2.800 per share, and will be recognized as stock compensation expense over a weighted-average period of 6.1 years from the date the awards were granted. Each award is subject to a continued service condition. The fair value of each share of restricted stock awarded was equal to the market value of a share of the Company's Common Stock on the grant date.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

NOTE 17 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Components of accumulated other comprehensive income (loss), net of tax, are as follows:

	Interest Rate Swaps			Post-Retirement Liabilities			Total
Balance at December 30, 2017	(1,587		)	288			(1,299		)
Unrealized gain on interest rate swaps	804			—			804
Reclassification of loss into earnings from interest rate swaps	228			—			228
Reclassification of net actuarial gain into earnings from postretirement benefit plans	—			(7		)	(7		)
Reclassification of prior service credits into earnings from postretirement benefit plans	—			(1		)	(1		)
Balance at March 31, 2018	$	(555	)	$	280		$	(275	)

NOTE 18 - CONTINGENCIES

Contingencies

The Company assesses its exposure related to legal matters, including those pertaining to product liability, safety and health matters and other items that arise in the regular course of its business. If the Company determines 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.

Environmental Remediation

The Company accrues for losses associated with environmental remediation obligations when such losses are probable and estimable. Remediation obligations are accrued based on the latest available information and are recorded at undiscounted amounts. The Company regularly monitors the progress of environmental remediation. If studies indicate that the cost of remediation has changed from the previous estimate, an adjustment to the liability would be recorded in the period in which such determination is made. (See Note 21).

Legal Proceedings

The Company has been sued, together with the 3M Company and approximately 30 other carpet manufacturers, by the Gadsden (Alabama) Water Works in the circuit court of Etowah County Alabama [The Water Works and Sewer Board of the City of Gadsden v. 3M Company, et al, civil action No. 31-CV-2016-900676.00] and by the Town of Centre (Alabama) Water Works in the circuit court of Cherokee County Alabama [The Water Works and Sewer Board of the Town of Centre v. 3M Company, et al, civil action No. 13-CV-2017-900049.00]. Both cases seek monetary damages and injunctive relief related to the use of certain chemical compounds in the manufacture and finishing of carpet products “in and around Dalton Georgia.” On motion of the defendants, the cases were removed to the U.S. District Court for the Northern District of Alabama (Middle Division) Case No. 4:16-CV-01755-SGC and Case No. 4:17-CV-01026-KOB. Subsequently, the Gadsden Water Works filed a motion to have the case remanded back to the state court and such motion has been granted. The lawsuits allege that perflourinated compounds (“PFC”), perflourinated acid (“PFOA”) and perfluorooctane sulfonate (“PFOS”) manufactured by 3M were used in certain finishing and treatment processes by the defendants and, as a consequence of such use, were subsequently either discharged into or leached into the water systems around Dalton, Georgia. The Complaints seeks damages that exceed $10, but are otherwise unspecified in amount in addition to injunctive relief and punitive damages. The Company intends to defend the matters vigorously and is unable to estimate the potential exposure to loss, if any, at this time.

The Company has received a class action complaint filed by Carlos Garcia, a current employee, individually and on behalf of others similarly situated against Fabrica [Carlos Garcia et al. vs. Fabrica International, Inc., et al., in the Superior Court of Orange County, California, Case No. 30-2017-00949461 CU-OE-CXC]. The complaint alleges causes of actions on behalf of classes of Fabrica’s current and former employees during the four-year period immediately preceding the filing of the complaint for failure to pay proper overtime wages, failure to compensate for all meal periods and rest periods, failure to pay all proper overtime and double time, and for the provision and maintaining of inaccurate wage statements. Finally, the complaint asserts a cause of action for unfair competition by means of the above actions and seeks restitution of monies supposedly unlawfully withheld and demands attorneys’ fees and costs. The Company has denied liability, is defending the matters vigorously and is unable to estimate the potential exposure to loss, if any, at this time.

The Company is one of multiple parties to two current lawsuits filed in Madison County Illinois, styled Brenda Bridgeman, Individually and as Special Administrator of the Estate of Robert Bridgeman, Deceased, vs. American Honda Motor Co., Inc., f/k/a Metropolitan

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

Life Insurance Co. et al No. 15-L-374 and styled Danny Atkins and Pamela Atkins, Pltfs., vs. Aurora Pump Company, et al. No. 18-L-2. Both lawsuits entail a claim for damages to be determined in excess of $50 filed on behalf of either a former employee or the estate of an individual which alleges that the deceased contracted mesothelioma as a result of exposure to asbestos while employed by the Company. Discovery in each matter is ongoing, and a tentative trial date has been set for one of the cases. The Company has denied liability, is defending the matters vigorously and is unable to estimate its potential exposure to loss, if any, at this time. In March of 2018, a similar lawsuit styled Charles Anderson, Pltf., vs. 3M Company, et al, No. 17-L-525 was dismissed.

On April 24th, 2018, following the end of the quarter, a law firm claiming to represent one of the Company's shareholders owning 50 shares, sent a request for information concerning the Company's equity incentive plans, and equity awards granted under those plans to the Company's chairman and chief operating officer, alleging that the law firm is investigating “possible breaches of fiduciary duty” in approving such plans and such awards. All such equity plans were approved by shareholders, and all such awards were made in accordance with the applicable terms of the plans. The Company is responding to the request in accordance with applicable law. No claim or suit has been filed.

NOTE 19 - OTHER (INCOME) EXPENSE, NET

Other operating (income) expense, net is summarized as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Other operating (income) expense, net:
(Gain) loss on currency exchanges	$	(8	)	$	17
Amortization of intangibles	76			76
Retirement expenses	54			18
Vendor settlement	(355		)	—
Insurance proceeds	(48		)	—
Miscellaneous (income) expense	40			(59		)
Other operating (income) expense, net	$	(241	)	$	52

	Three Months Ended
	March 31, 2018			April 1, 2017
Other expense (income), net:
Post-retirement income	$	(5	)	$	(5	)
Miscellaneous (income) expense	7			4
Other expense (income), net	$	2		$	(1	)

NOTE 20 - FACILITY CONSOLIDATION AND SEVERANCE EXPENSES, NET

2014 Warehousing, Distribution & Manufacturing Consolidation Plan

The Company developed a plan to align its warehousing, distribution and manufacturing to support its growth and manufacturing strategy resulting in improved distribution capabilities and customer service. The key element and first major step of this plan was the acquisition of a facility to serve as a finished goods warehouse and a cut-order and distribution center in Adairsville, Georgia. Costs related to the consolidation included moving and relocation expenses, information technology expenses and expenses relating to conversion and realignment of equipment. In addition, this plan included the elimination of both carpet dyeing and yarn dyeing in the Company's Atmore, Alabama facility designed to more fully accommodate the distribution and manufacturing realignment. As a result, the dyeing operations in Atmore were moved to the Company's continuous dyeing facility, skein dyeing operation and other outside dyeing processors.

To complete the Warehousing, Distribution & Manufacturing Consolidation Plan, the Company moved its Saraland rug operation from an expiring leased building to an owned facility in March 2016. The Company completed this consolidation plan during 2016. As a result of eliminating its dyeing operations in Atmore, Alabama, the Company disposed of its waste water treatment plant in 2014. Subsequently, after extensive testing, it was determined that the Company still had some contaminants above background levels and installed a soil cap to finalize the cleanup of the site of the Company's former waste water treatment plant.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

2015 Corporate Office Consolidation Plan

In April 2015, the Company's Board of Directors approved the Corporate Office Consolidation Plan, to cover the costs of consolidating three of the Company's existing leased divisional and corporate offices to a single leased facility located in Dalton, Georgia. The Company paid a fee to terminate one of the leased facilities, did not renew a second facility and vacated the third facility. Related to the vacated facility, the Company recorded the estimated costs related to the fulfillment of its contractual lease obligation and on-going facility maintenance, net of an estimate of sub-lease expectations. Accordingly, if the estimates differ, the Company would record an additional charge or benefit, as appropriate. Costs related to the consolidation included the lease termination fee, contractual lease obligations and moving costs.

2017 Profit Improvement Plan

During the fourth quarter of 2017, the Company announced a Profit Improvement Plan to improve profitability through lower cost and streamlined decision making and aligning processes to maximize efficiency. The plan includes consolidating the management of the Company's two commercial brands, Atlas Carpet Mills and Masland Contract, under one management team, sharing operations in sales, marketing, product development and manufacturing. Specific to this plan includes focusing nearly all commercial solution dyed make-to-order production in our Atmore, Alabama operations where the Company has developed such make-to-order capabilities over the last 5 years. Further, the Company is aligning its west coast production facilities, better utilizing its west coast real estate by moving production to its Porterville, California and Atmore, Alabama operations and preparing for more efficient distribution of its west coast products. Furthermore, the Company is re-configuring its east coast distribution facilities to provide more efficient distribution of its products. In addition, the Company had reductions in related support functions such as accounting and information services.

Costs related to the facility consolidation plans are summarized as follows:

											As of March 31, 2018
	Accrued Balance at December 30, 2017		2018 Expenses To Date				2018 Cash Payments		Accrued Balance at March 31, 2018		Total Costs Incurred To Date		Total Expected Costs
Warehousing, Distribution & Manufacturing Consolidation Plan	$	—	$	—			$	—	$	—	$	7,440	$	7,440
Corporate Office Consolidation Plan	171		—				18		153		807		807
Profit Improvement Plan	$	334	$	216			$	316	$	234	$	852	$	1,921
Total All Plans	$	505	$	216	(1)		$	334	$	387	$	9,099	$	10,168
	Accrued Balance at December 31, 2016		2017 Expenses To Date				2017 Cash Payments		Accrued Balance at April 1, 2017
Warehousing, Distribution & Manufacturing Consolidation Plan	266		—				63		203
Corporate Office Consolidation Plan	248		—				18		230
Totals	$	514	$	—	(1	)	$	81	$	433

(1) Costs incurred under these plans are classified as "facility consolidation and severance expenses, net" in the Company's Consolidated Condensed Statements of Operations.

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THE DIXIE GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except per share data) (Continued)

NOTE 21 - DISCONTINUED OPERATIONS

The Company has either sold or discontinued certain operations that are accounted for as "Discontinued Operations" under applicable accounting guidance. Discontinued operations are summarized as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Loss from discontinued operations:
Workers' compensation costs (credits) from former textile operations	$	7		$	(27	)
Environmental remediation costs from former textile operations	(30		)	(21		)
Loss from discontinued operations, before taxes	$	(23	)	$	(48	)
Income tax benefit	—			(19		)
Loss from discontinued operations, net of tax	$	(23	)	$	(29	)

Undiscounted reserves are maintained for the self-insured workers' compensation obligations related to the Company's former textile operations. These reserves are administered by a third-party workers' compensation service provider under the supervision of Company personnel. Such reserves are reassessed on a quarterly basis. Pre-tax cost incurred for workers' compensation as a component of discontinued operations primarily represents a change in estimate for each period from unanticipated medical costs associated with the Company's obligations.

Reserves for environmental remediation obligations are established on an undiscounted basis. The Company has an accrual for environmental remediation obligations related to discontinued operations of $1,741 as of March 31, 2018 and $1,746 as of December 30, 2017. The liability established represents the Company's best estimate of possible loss and is the reasonable amount to which there is any meaningful degree of certainty given the periods of estimated remediation and the dollars applicable to such remediation for those periods. The actual timeline to remediate, and thus, the ultimate cost to complete such remediation through these remediation efforts, may differ significantly from our estimates. Pre-tax cost for environmental remediation obligations classified as discontinued operations were primarily a result of specific events requiring action and additional expense in each period.

NOTE 22 - RELATED PARTY TRANSACTIONS

The Company is a party to a five-year lease with the seller of Atlas Carpet Mills, Inc. to lease three manufacturing facilities as part of the acquisition in 2014. The lessor is controlled by an associate of the Company. Rent paid to the lessor during the three months ended March 31, 2018 and April 1, 2017 was $251 and $226, respectively. The lease was based on current market values for similar facilities.

The Company purchases a portion of its product needs in the form of fiber, yarn and carpet from Engineered Floors, an entity substantially controlled by Robert E. Shaw, a shareholder of the Company. An affiliate of Mr. Shaw holds approximately 7.3% of the Company's Common Stock, which represents approximately 3.3% of the total vote of all classes of the Company's Common Stock. Engineered Floors is one of several suppliers of such materials to the Company. Total purchases from Engineered Floors during the three months ended March 31, 2018 were approximately $1,715 ; or approximately 2.2%, respectively, of the Company's cost of goods sold. Total purchases from Engineered Floors during the three months ended April 1, 2017 were approximately $1,995; or approximately 2.8%, respectively, of the Company's cost of goods sold. Purchases from Engineered Floors are based on market value negotiated prices. The Company has no contractual commitments with Mr. Shaw associated with its business relationship with Engineered Floors. Transactions with Engineered Floors are reviewed annually by the Company's board of directors.

The Company is a party to a ten-year lease with the Rothman Family Partnership to lease a facility as part of the Robertex acquisition in 2013. The lessor is controlled by an associate of the Company. Rent paid to the lessor during the three months ended March 31, 2018 and April 1, 2017 was $69 and $67, respectively. The lease was based on current market values for similar facilities. In addition, the Company has a note payable to Robert P. Rothman related to the acquisition of Robertex Inc. (See Note 10).

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated condensed financial statements and related notes appearing elsewhere in this report.

FORWARD-LOOKING INFORMATION

This Report contains statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include the use of terms or phrases such as "expects," "estimates," "projects," "believes," "anticipates," "intends," and similar terms and phrases. Such forward-looking statements relate to, among other matters, our future financial performance, business prospects, growth strategies or liquidity. The following important factors may affect our future results and could cause those results to differ materially from our historical results; these factors include, in addition to those “Risk Factors” detailed in item 1A of this report, and described elsewhere in this document, the cost and availability of capital, raw material and transportation costs related to petroleum price levels, the cost and availability of energy supplies, the loss of a significant customer or group of customers, ability to attract, develop and retain qualified personnel, materially adverse changes in economic conditions generally in carpet, rug and floorcovering markets we serve and other risks detailed from time to time in our filings with the Securities and Exchange Commission.

OVERVIEW

Our business consists principally of marketing, manufacturing and selling floorcovering products to high-end residential and commercial customers through our various sales forces and brands. We focus exclusively on the upper-end of the floorcovering market where we believe we have strong brands and competitive advantages with our style and design capabilities and customer relationships. Our Fabrica, Masland, and Dixie Home brands have a significant presence in the high-end residential floorcovering markets. Our Atlas Carpet Mills and Masland Contract brands, participate in the upper-end specified commercial marketplace. Dixie International sells all of our brands outside of the North American market.

Our business is primarily concentrated in areas of the soft floorcovering markets which include broadloom carpet, carpet tiles and rugs.  However, over the past few years, there has been a significant shift in the flooring marketplace as hard surface products have grown at a rate much faster than soft surface products. We have responded to this accelerated shift to hard surface flooring by launching several initiatives in both our residential and commercial brands. Our commercial brands offer luxury vinyl flooring (“LVF”) products under the Calibré brand in the commercial markets. Our residential brands, Dixie Home and Masland Residential, offer Stainmaster® PetProtect™ luxury vinyl flooring. During 2018, our residential brand, Fabrica, will begin offering a high-end engineered wood line.

During the first quarter of 2018, our net sales increased 1.4% compared with the first quarter of 2017. Sales of residential products increased 7.3% during the quarter versus prior year quarter while, we estimate, the industry was flat. We continue to anticipate the residential housing market will have steady but moderate growth over the next year. Commercial product sales decreased 9.4% during the quarter while, we believe, the industry was down in the mid-single digits. We anticipate the commercial market to continue to be weak over the next year.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2018 Compared with Three Months Ended April 1, 2017

	Three Months Ended
	March 31, 2018		April 1, 2017
Net sales	100.0	%	100.0	%
Cost of sales	78.2	%	74.2	%
Gross profit	21.8	%	25.8	%
Selling and administrative expenses	23.4	%	25.1	%
Other operating (income) expense, net	(0.3	)%	0.1	%
Facility consolidation and severance expenses, net	0.2	%	—	%
Operating income (loss)	(1.5	)%	0.6	%

Net Sales

Net sales for the quarter ended March 31, 2018 was $98.9 million, an increase of 1.4% compared with net sales of $97.5 million for the year-earlier quarter. In the first quarter of 2018, residential floorcovering sales increased 7.3% and net sales of commercial floorcovering decreased 9.4% compared with the first quarter of 2017. Order entry through the first four weeks of the second quarter have improved for commercial products relative to this same time last year.

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Gross Profit

Gross profit as a percentage of net sales was 21.8% in the first quarter of 2018 compared with 25.8% in the first quarter of 2017, or a 4.0 percentage point decrease as a percentage of sales. During the first quarter of 2018, our sales and costs were negatively impacted by severe weather, which affected several of our east coast facilities in January. In addition, the launch of numerous new difficult to manufacture residential products severely impacted the throughput of our manufacturing operations in January and February, resulting in unabsorbed fixed costs. In addition, we had higher waste and off-quality issues as a result of the intensive effort to launch these new products during the quarter. We were further impacted by the quality initiative, begun in the fourth quarter of 2017 and completed in February of 2018, to reformulate all of our dye formulas to improve color matching through our continuous dye facility. Finally, our commercial sales were slow during the quarter, therefore, we had unabsorbed fixed costs through our facilities that produce primarily commercial products due to the lower production levels required to meet the lower demand.

Selling and Administrative Expenses

Selling and administrative expenses were $23.1 million in first quarter 2018 compared with $24.5 million in the year earlier period, a decrease of 1.7 percentage points as a percentage of sales. Selling and administrative expenses decreased as a percentage of sales primarily as a result of lower selling expenses during the quarter. The lower expenses were partially related to cost savings from the actions taken in the Profit Improvement Plan during the fourth quarter of 2017.

Other Operating (Income) Expense, Net

Other operating (income) expense, net was an income of $241 thousand in the first quarter of 2018 compared with net expense of $52 thousand in the first quarter of 2017. The first quarter of 2018 included a gain of $48 from company-owned life insurance and a gain of $355 from a vendor settlement.

Facility Consolidation and Severance Expenses, Net

Facility consolidation and severance expenses increased $216 thousand in the first quarter of 2018 compared with the year-earlier period as a result of the expenses associated with the Profit Improvement Plan which began in October 2017.

Operating Income (Loss)

We reported an operating loss of $1.5 million in the first quarter of 2018 compared with operating income of $623 thousand in the first quarter of 2017. During the first quarter of 2018, our sales and costs were negatively impacted by severe weather, which affected several of our east coast facilities in January. In addition, the launch of numerous new difficult to manufacture residential products severely impacted the throughput of our manufacturing operations in January and February, resulting in unabsorbed fixed costs. In addition, we had higher waste and off-quality issues as a result of the intensive effort to launch these new products during the quarter. We were further impacted by the quality initiative, begun in the fourth quarter of 2017 and completed in February of 2018, to reformulate all of our dye formulas to improve color matching through our continuous dye facility. Finally, our commercial sales were slow during the quarter, therefore, we had unabsorbed fixed costs through our facilities that produce primarily commercial products due to the lower production levels required to meet the lower demand.

Interest Expense

Interest expense increased $171 thousand in the first quarter of 2018 compared with the first quarter of 2017 principally a result of higher interest rates and higher levels of debt in 2018.

Income Tax Provision (Benefit)

On December 22, 2017, the President signed the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. While we have substantially completed our provisional analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects during the fourth quarter of 2017, the charge related to the Tax Act may differ, possibly materially, due to, among other things, further refinement of our calculations, changes in interpretations and assumptions that we have made or additional guidance that may be issued related to the Tax Act. Pursuant to Staff Accounting Bulletin No. 118, we will complete our analysis over a one-year measurement period from the enactment date, and any adjustments during this measurement period will be included in income from continuing operations as an adjustment to income tax expense in the reporting period when such adjustments are determined.

The benefit rate applied to the pretax loss for the first quarter of 2018 was 5.4% compared with a benefit rate of 22.1% in the year-earlier quarter. During the fourth quarter of 2017, we recorded a full valuation allowance against the deferred tax assets resulting in only refundable credits and a small of amount of state taxes being recognized in the tax benefit for the first quarter of 2018. The first quarter of 2017 included $164 of tax expense related to the adoption of ASU No. 2016-09 which required a shortfall of tax benefits related to stock compensation to be recognized in income tax expense instead of additional paid-in capital.

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Net Income (Loss)

Continuing operations reflected a loss of $2.9 million, or $0.18 per diluted share, in the first quarter of 2018 compared with a loss of $575 thousand, or $0.04 per diluted share, in the same period in 2017. Discontinued operations reflected a loss of $23 thousand, or $0.00 per diluted share, in the first quarter of 2018 compared with a loss of $29 thousand, or $0.00 per diluted share, in the same period in 2017. Including discontinued operations, we had net loss of $2.9 million, or $0.18 per diluted share, in the first quarter of 2018 compared with a net loss of $604 thousand, or $0.04 per diluted share, in the first quarter of 2017.

LIQUIDITY AND CAPITAL RESOURCES

During the three months ended March 31, 2018, cash used in operations was $2.9 million. Accounts receivable increased $1.5 million and inventories increased $3.3 million which was offset by an increase in accounts payable and accrued expenses of $2.1 million. The increase in accounts receivable was due to the higher sales volumes during the first quarter of 2018. We increased inventories and accounts payable to build inventories to prepare for the spring and summer selling seasons.

Capital asset acquisitions for the three months ended March 31, 2018 were $762 thousand. Depreciation and amortization for the three months ended March 31, 2018 were $3.1 million. We expect capital expenditures to be approximately $6.0 million in 2018 while depreciation and amortization is expected to be approximately $13.0 million. Planned capital expenditures in 2018 are primarily for new equipment.

During the three months ended March 31, 2018, cash provided by financing activities was $3.6 million. We had net borrowings on our revolving credit facility of $3.8 million. These proceeds were offset by payments on other debt obligations of $2.4 million. The cash provided by financing was used to fund the operations during the quarter.

We believe our operating cash flows, credit availability under our revolving credit facility and other sources of financing are adequate to finance our anticipated liquidity requirements under current operating conditions. As of March 31, 2018, the unused borrowing availability under our revolving credit facility was $28.8 million. Our revolving credit facility requires us to maintain a fixed charge coverage ratio of 1.1 to 1.0 during any period that borrowing availability is less than $16.5 million. As of the date hereof, our fixed charge coverage ratio was less than 1.1 to 1.0, accordingly the unused availability accessible by us was $12.3 million (the amount above $16.5 million) at March 31, 2018. Significant additional cash expenditures above our normal liquidity requirements or significant deterioration in economic conditions could affect our business and require supplemental financing or other funding sources. There can be no assurance that such supplemental financing or other sources of funding can be obtained or will be obtained on terms favorable to us.

Contractual Obligations

The following table summarizes our future minimum payments under contractual obligations as of March 31, 2018.

	Payments Due By Period
	(dollars in millions)
	2018		2019		2020		2021		2022		Thereafter		Total
Debt	$	4.2	$	2.8	$	1.9	$	103.2	$	1.0	$	8.8	121.9
Interest - debt (1)	4.0		5.1		5.0		3.8		0.4		0.7		19.0
Capital leases	3.2		3.4		3.2		2.5		0.9		0.2		13.4
Interest - capital leases	0.5		0.5		0.3		0.2		—		—		1.5
Operating leases	2.9		2.9		2.4		1.9		1.5		3.5		15.1
Purchase commitments	2.6		—		—		—		—		—		2.6
Totals	17.4		14.7		12.8		111.6		3.8		13.2		173.5

(1)     Interest rates used for variable rate debt were those in effect at March 31, 2018.

Changes to Critical Accounting Policies

Our critical accounting policies were outlined in Management's Discussion and Analysis of Results of Operations and Financial Condition in our 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission. During the first quarter ended March 31, 2018, we adopted the provisions of ASC 606, “Revenue from Contracts with Customers”. See Note 2, Recent Accounting Pronouncements and Note 3, Revenue, in the notes to the Consolidated Condensed Financial Statements, related to the impact of the adoption on our financial statements and accounting policies.

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Recent Accounting Pronouncements

Recent accounting pronouncements are disclosed in Note 2 to the Consolidated Condensed Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk (Dollars in thousands)

Our earnings, cash flows and financial position are exposed to market risks relating to interest rates, among other factors. It is our policy to minimize our exposure to adverse changes in interest rates and manage interest rate risks inherent in funding our Company with debt. We address this financial exposure through a risk management program that includes maintaining a mix of fixed and floating rate debt and the use of interest rate swap agreements (See Note 12 to the Consolidated Condensed Financial Statements).

At March 31, 2018, $51,493, or approximately 38% of our total debt, was subject to floating interest rates.  A one-hundred basis point fluctuation in the variable interest rates applicable to this floating rate debt would have an annual after-tax impact of approximately $381.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  Our management, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such terms are defined in Rules 13(a)-15(e) and 15(d)-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of March 31, 2018, the date of the financial statements included in this Form 10-Q (the “Evaluation Date”). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the Evaluation Date.

No changes in our internal control over financial reporting occurred during the quarter covered by this report that materially affected, or are reasonably likely to affect, our internal control over financial reporting.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures, as well as diverse interpretation of U. S. generally accepted accounting principles by accounting professionals. It is also possible that internal control over financial reporting can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. These inherent limitations are known features of the financial reporting process; therefore, while it is possible to design into the process safeguards to reduce such risk, it is not possible to eliminate all risk.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We have been sued, together with the 3M Company and approximately 30 other carpet manufacturers, by the Gadsden (Alabama) Water Works in the circuit court of Etowah County Alabama [The Water Works and Sewer Board of the City of Gadsden v. 3M Company, et al, civil action No. 31-CV-2016-900676.00] and by the Town of Centre (Alabama) Water Works in the circuit court of Cherokee County Alabama [The Water Works and Sewer Board of the Town of Centre v. 3M Company, et al, civil action No. 13-CV-2017-900049.00]. Both cases seek monetary damages and injunctive relief related to the use of certain chemical compounds in the manufacture and finishing of carpet products “in and around Dalton Georgia.” On motion of the defendants, the cases were removed to the U.S. District Court for the Northern District of Alabama (Middle Division) Case No. 4:16-CV-01755-SGC and Case No. 4:17-CV-01026-KOB. Subsequently, the Gadsden Water Works filed a motion to have the case remanded back to the state court and such motion has been granted. The lawsuits allege that perflourinated compounds (“PFC”), perflourinated acid (“PFOA”) and perfluorooctane sulfonate (“PFOS”) manufactured by 3M were used in certain finishing and treatment processes by the defendants and, as a consequence of such use, were subsequently either discharged into or leached into the water systems around Dalton, Georgia. The Complaints seeks damages that exceed $10,000, but are otherwise unspecified in amount in addition to injunctive relief and punitive damages. We intend to defend the matters vigorously and are unable to estimate our potential exposure to loss, if any, at this time.

We have received a class action complaint filed by Carlos Garcia, a current employee, individually and on behalf of others similarly situated against Fabrica [Carlos Garcia et al. vs. Fabrica International, Inc., et al., in the Superior Court of Orange County, California, Case No. 30-2017-00949461 CU-OE-CXC]. The complaint alleges causes of actions on behalf of classes of Fabrica’s current and former employees during the four-year period immediately preceding the filing of the complaint for failure to pay proper overtime wages, failure to compensate for all meal periods and rest periods, failure to pay all proper overtime and double time, and for the

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provision and maintaining of inaccurate wage statements. Finally, the complaint asserts a cause of action for unfair competition by means of the above actions and seeks restitution of monies supposedly unlawfully withheld and demands attorneys’ fees and costs. We have denied liability, are defending the matters vigorously and are unable to estimate our potential exposure to loss, if any, at this time.

We are one of multiple parties to two current lawsuits filed in Madison County Illinois, styled Brenda Bridgeman, Individually and as Special Administrator of the Estate of Robert Bridgeman, Deceased, vs. American Honda Motor Co., Inc., f/k/a Metropolitan Life Insurance Co., et al No. 15-L-374 and styled Danny Atkins and Pamela Atkins, Pltfs., vs. Aurora Pump Company, et al. No. 18-L-2. Both lawsuits entail a claim for damages to be determined in excess of $50,000 filed on behalf of either a former employee or the estate of an individual which alleges that the deceased contracted mesothelioma as a result of exposure to asbestos while employed by us. Discovery in each matter is ongoing, and a tentative trial date has been set for one of the cases. We have denied liability, are defending the matters vigorously and are unable to estimate our potential exposure to loss, if any, at this time. In March of 2018, a similar lawsuit styled Charles Anderson, Pltf., vs. 3M Company, et al, No. 17-L-525 was dismissed.

On April 24th, 2018, following the end of the quarter, a law firm claiming to represent one of our shareholders owning 50 shares, sent a request for information concerning our equity incentive plans, and equity awards granted under those plans to our chairman and to our chief operating officer, alleging that the law firm is investigating “possible breaches of fiduciary duty” in approving such plans and such awards. All such equity plans were approved by shareholders, and all such awards were made in accordance with the applicable terms of the plans. We are responding to the request in accordance with applicable law. No claim or suit has been filed.

Item 1A. Risk Factors

In addition to the other information provided in this Report, the following risk factors should be considered when evaluating the results of our operations, future prospects and an investment in shares of our Common Stock. Any of these factors could cause our actual financial results to differ materially from our historical results, and could give rise to events that might have a material adverse effect on our business, financial condition and results of operations.

The floorcovering industry is sensitive to changes in general economic conditions and a decline in residential or commercial construction activity or corporate remodeling and refurbishment could have a material adverse effect on our business.

The floorcovering industry, in which we participate, is highly dependent on general economic conditions, such as consumer confidence and income, corporate and government spending, interest rate levels, availability of credit and demand for housing. We derive a majority of our sales from the replacement segment of the market. Therefore, economic changes that result in a significant or prolonged decline in spending for remodeling and replacement activities could have a material adverse effect on our business and results of operations.

The floorcovering industry is highly dependent on construction activity, including new construction, which is cyclical in nature. The U.S. and global economies, along with the residential and commercial markets in such economies, can negatively impact the floorcovering industry and our business. Although the impact of a decline in new construction activity is typically accompanied by an increase in remodeling and replacement activity, these activities typically lag during a cyclical downturn. Although the difficult economic conditions have improved since the last cyclical downturn in 2008, there may be additional downturns that could cause the industry to deteriorate in the foreseeable future. A significant or prolonged decline in residential or commercial construction activity could have a material adverse effect on our business and results of operations.

We have significant levels of sales in certain channels of distribution and reduction in sales through these channels could adversely affect our business.

A significant amount of our sales are generated through certain retail and mass merchant channels of distribution. A significant reduction of sales through such channels could adversely affect our business.

We have significant levels of indebtedness that could result in negative consequences to us.

We have a significant amount of indebtedness relative to our equity. Insufficient cash flow, profitability or the value of our assets securing our loans could materially adversely affect our ability to generate sufficient funds to satisfy the terms of our senior loan agreements and other debt obligations. Additionally, the inability to access debt or equity markets at competitive rates in sufficient amounts to satisfy our obligations could adversely impact our business.

Uncertainty in the credit market or downturns in the economy and our business could affect our overall availability and cost of credit.

Uncertainty in the credit markets could affect the availability and cost of credit. Despite recent improvement in overall economic conditions, market conditions could impact our ability to obtain financing in the future, including any financing necessary to refinance existing indebtedness. The cost and terms of such financing is uncertain. Continued operating losses could affect our ability to

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continue to access the credit markets under our current terms and conditions. These and other economic factors could have a material adverse effect on demand for our products and on our financial condition and operating results.

We face intense competition in our industry, which could decrease demand for our products and could have a material adverse effect on our profitability.

The floorcovering industry is highly competitive. We face competition from a number of domestic manufacturers and independent distributors of floorcovering products and, in certain product areas, foreign manufacturers. Significant consolidation within the floorcovering industry has caused a number of our existing and potential competitors to grow significantly larger and have greater access to resources and capital than we do. Maintaining our competitive position may require us to make substantial additional investments in our product development efforts, manufacturing facilities, distribution network and sales and marketing activities. These additional investments may be limited by our access to capital, as well as restrictions set forth in our credit facilities. Competitive pressures and the accelerated growth of hard surface alternatives, have resulted in decreased demand for our soft floorcovering products and in the loss of market share to hard surface products. As a result, competition from providers of other soft surfaces has intensified and may result in decreased demand for our products. In addition, we face, and will continue to face, competitive pressures on our sales price and cost of our products. As a result of any of these factors, there could be a material adverse effect on our sales and profitability.

If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our net revenues and profitability.

Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner. All of our products are subject to changing consumer preferences that cannot be predicted with certainty. In addition, long lead times for certain of our products may make it hard for us to quickly respond to changes in consumer demands. Our new products may not receive consumer acceptance as consumer preferences could shift rapidly to different types of flooring products or away from these types of products altogether, and our future success depends in part on our ability to anticipate and respond to these changes. Failure to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales and excess inventory levels, which could have a material adverse effect on our financial condition.

Raw material prices may vary and the inability to either offset or pass on such cost increases or avoid passing on decreases larger than the cost decrease to our customers could materially adversely affect our business, results of operations and financial condition.

We require substantial amounts of raw materials to produce our products, including nylon and polyester yarn, as well as wool yarns, synthetic backing, latex, and dyes. Substantially all of the raw materials we require are purchased from outside sources. The prices of raw materials and fuel-related costs vary significantly with market conditions. The fact that we source a significant amount of raw materials means that several months of raw materials and work in process are moving through our supply chain at any point in time. We are sourcing the majority of our new luxury vinyl flooring and wood product lines from overseas. We are not able to predict whether commodity costs will significantly increase or decrease in the future. If commodity costs increase in the future and we are not able to reduce or eliminate the effect of the cost increases by reducing production costs or implementing price increases, our profit margins could decrease. If commodity costs decline, we may experience pressures from customers to reduce our selling prices. The timing of any price reductions and decreases in commodity costs may not align. As a result, our margins could be affected.

Unanticipated termination or interruption of our arrangements with third-party suppliers of nylon yarn could have a material adverse effect on us.

Nylon yarn is the principal raw material used in our floorcovering products. A significant portion of such yarn is purchased from one supplier. Our yarn supplier is one of the leading fiber suppliers within the industry and is the exclusive supplier of certain innovative branded fiber technology upon which we rely. We believe our offerings of this innovative fiber technology contribute materially to the competitiveness of our products. While we believe there are other sources of nylon yarns, an unanticipated termination or interruption of our current supply of branded nylon yarn could have a material adverse effect on our ability to supply our product to our customers and have a material adverse impact on our competitiveness if we are unable to replace our nylon supplier with another supplier that can offer similar innovative and branded fiber products. An interruption in the supply of these or other raw materials or sourced products used in our business or in the supply of suitable substitute materials or products would disrupt our operations, which could have a material adverse effect on our business.

We rely on information systems in managing our operations and any system failure or deficiencies of such systems may have an adverse effect on our business.

Our businesses rely on sophisticated systems to obtain, rapidly process, analyze and manage data. We rely on these systems to, among other things facilitate the purchase, manufacture and distribution of our products; receive, process and ship orders on a timely basis; and to maintain accurate and up-to-date operating and financial data for the compilation of management information. We rely on our computer hardware, software and network for the storage, delivery and transmission of data to our sales and

Table of Contents28

distribution systems, and certain of our production processes are managed and conducted by computer. Any damage by unforeseen events or system failure which causes interruptions to the input, retrieval and transmission of data or increase in the service time, whether caused by human error, natural disasters, power loss, computer viruses, intentional acts of vandalism, various forms of cybercrimes including and not limited to hacking, intrusions and malware or otherwise, could disrupt our normal operations. There can be no assurance that we can effectively carry out our disaster recovery plan to handle the failure of our information systems, or that we will be able to restore our operational capacity within sufficient time to avoid material disruption to our business. The occurrence of any of these events could cause unanticipated disruptions in service, decreased customer service and customer satisfaction and harm to our reputation, which could result in loss of customers, increased operating expenses and financial losses. Any such events could in turn have a material adverse effect on our business, financial condition, results of operations, and prospects.

The long-term performance of our business relies on our ability to attract, develop and retain qualified personnel.

To be successful, we must attract, develop and retain qualified and talented personnel in management, sales, marketing, product design and operations. We compete with other floorcovering companies for these employees and invest resources in recruiting, developing, motivating and retaining them. The failure to attract, develop, motivate and retain key employees could negatively affect our business, financial condition and results of operations.

We may experience certain risks associated with internal expansion, acquisitions, joint ventures and strategic investments.

We have recently embarked on several strategic and tactical initiatives, including aggressive internal expansion, acquisitions and investment in new products, to strengthen our future and to enable us to return to sustained growth and profitability. Growth through expansion and acquisition involves risks, many of which may continue to affect us after the acquisition or expansion. An acquired company, operation or internal expansion may not achieve the levels of revenue, profitability and production that we expect. The combination of an acquired company’s business with ours involves risks. Further, internally generated growth that involves expansion involves risks as well. Such risks include the integration of computer systems, alignment of human resource policies and the retention of valued talent. Reported earnings may not meet expectations because of goodwill and intangible asset impairment, other asset impairments, increased interest costs and issuance of additional securities or debt as a result of these acquisitions. We may also face challenges in consolidating functions and integrating our organizations, procedures, operations and product lines in a timely and efficient manner.

The diversion of management attention and any difficulties encountered in the transition and integration process could have a material adverse effect on our revenues, level of expenses and operating results. Failure to successfully manage and integrate an acquisition with our existing operations or expansion of our existing operations could lead to the potential loss of customers of the acquired or existing business, the potential loss of employees who may be vital to the new or existing operations, the potential loss of business opportunities or other adverse consequences that could have a material adverse effect on our business, financial condition and results of operations. Even if integration occurs successfully, failure of the expansion or acquisition to achieve levels of anticipated sales growth, profitability or productivity, or otherwise perform as expected, may have a material adverse effect on our business, financial condition and results of operations.

We are subject to various environmental, safety and health regulations that may subject us to costs, liabilities and other obligations, which could have a material adverse effect on our business, results of operations and financial condition.

We are subject to various environmental, safety and health and other regulations that may subject us to costs, liabilities and other obligations which could have a material adverse effect on our business. The applicable requirements under these laws are subject to amendment, to the imposition of new or additional requirements and to changing interpretations of agencies or courts. We could incur material expenditures to comply with new or existing regulations, including fines and penalties and increased costs of our operations. Additionally, future laws, ordinances, regulations or regulatory guidelines could give rise to additional compliance or remediation costs that could have a material adverse effect on our business, results of operations and financial condition. For example, producer responsibility regulations regarding end-of-life disposal could impose additional cost and complexity to our business.

Various federal, state and local environmental laws govern the use of our current and former facilities. These laws govern such matters as:

• Discharge 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.

Our operations also are governed by laws relating to workplace safety and worker health, which, among other things, establish noise standards and regulate the use of hazardous materials and chemicals in the workplace. We have taken, and will continue to take, steps to comply with these laws. If we fail to comply with present or future environmental or safety regulations, we could be subject to future liabilities. However, we cannot ensure that complying with these environmental or health and safety laws and requirements will not adversely affect our business, results of operations and financial condition.

Table of Contents29

We may be exposed to litigation, claims and other legal proceedings in the ordinary course of business relating to our products or business, which could have a material adverse effect on our business, results of operations and financial condition.

In the ordinary course of business, we are subject to a variety of work-related and product-related claims, lawsuits and legal proceedings, including those relating to product liability, product warranty, product recall, personal injury, environmental and other matters that are inherently subject to many uncertainties regarding the possibility of a loss to our business. Such matters could have a material adverse effect on our business, results of operations and financial condition if we are unable to successfully defend against or resolve these matters or if our insurance coverage is insufficient to satisfy any judgments against us or settlements relating to these matters. Although we have product liability insurance, the policies may not provide coverage for certain claims against us or may not be sufficient to cover all possible liabilities. Further, we may not be able to maintain insurance at commercially acceptable premium levels. Additionally, adverse publicity arising from claims made against us, even if the claims are not successful, could adversely affect our reputation or the reputation and sales of our products.

Our business operations could suffer significant losses from natural disasters, catastrophes, fire or other unexpected events.

Many of our business activities involve substantial investments in manufacturing facilities and many products are produced at a limited number of locations. These facilities could be materially damaged by natural disasters, such as floods, tornadoes, hurricanes and earthquakes, or by fire or other unexpected events such as adverse weather conditions or other disruptions to our facilities, supply chain or our customer's facilities. We could incur uninsured losses and liabilities arising from such events, including damage to our reputation, and/or suffer material losses in operational capacity, which could have a material adverse impact on our business, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Common Stock

The following table provides information regarding our repurchases of shares of our Common Stock during the three months ended March 31, 2018:

Month Ending	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number (or approximate dollar value) of Shares That May Yet Be Purchased Under Plans or Programs
February 3, 2018	—	$	—	—
March 3, 2018	—	—		—
March 31, 2018	19,726	2.85		19,726
Three Months Ended March 31, 2018	19,726	$	—	19,726	$	2,172,047

(1) During the three months ended March 31, 2018, 19,726 shares were withheld from employees in lieu of cash payments for withholding taxes due for a total amount of $56,219.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

(a.) Exhibits

31.1 CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Table of Contents30

32.1 CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 CFO Certification pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

Table of Contents31

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 thereunto duly authorized.

	THE DIXIE GROUP, INC.
	(Registrant)
Date: May 4, 2018	By: /s/ JON A. FAULKNER
	Jon A. Faulkner Vice President and Chief Financial Officer

Table of Contents32

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Daniel K. Frierson, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Dixie Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 4, 2018	/s/ DANIEL K. FRIERSON
	Daniel K. Frierson
	Chief Executive Officer
	The Dixie Group, Inc.

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jon A. Faulkner, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Dixie Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 4, 2018	/s/ JON A. FAULKNER
	Jon A. Faulkner
	Chief Financial Officer
	The Dixie Group, Inc.

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Dixie Group, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Daniel K. Frierson, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DANIEL K. FRIERSON

Daniel K. Frierson, Chief Executive Officer

Date: May 4, 2018

A signed original of this written statement required by Section 906 has been provided to The Dixie Group, Inc. and will be retained by The Dixie Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Dixie Group, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jon A. Faulkner, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JON A. FAULKNER

Jon A. Faulkner, Chief Financial Officer

Date: May 4, 2018

A signed original of this written statement required by Section 906 has been provided to The Dixie Group, Inc. and will be retained by The Dixie Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 26, 2018
Entity Information [Line Items]
Entity Registrant Name	DIXIE GROUP INC
Entity Central Index Key	0000029332
Current Fiscal Year End Date	--12-29
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false
Common Class A [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		15,482,073
Common Class B [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		936,804
Common Class C [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		0

XML

Consolidated Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
CURRENT ASSETS
Cash and cash equivalents	$ 21	$ 19
Receivables, net	47,883	46,480
Inventories, net	116,988	113,657
Prepaids and other current assets	5,780	4,669
TOTAL CURRENT ASSETS	170,672	164,825
PROPERTY, PLANT AND EQUIPMENT, NET	91,522	93,785
GOODWILL AND OTHER INTANGIBLES	5,774	5,850
OTHER ASSETS	19,383	19,447
TOTAL ASSETS	287,351	283,907
CURRENT LIABILITIES
Accounts payable	23,232	18,541
Accrued expenses	31,076	31,360
Current portion of long-term debt	9,113	9,811
TOTAL CURRENT LIABILITIES	63,421	59,712
LONG-TERM DEBT	125,592	123,446
OTHER LONG-TERM LIABILITIES	20,786	21,486
TOTAL LIABILITIES	209,799	204,644
COMMITMENTS AND CONTINGENCIES (See Note 18)
STOCKHOLDERS' EQUITY
Common Stock ($3 par value per share): Authorized 80,000,000 shares, issued and outstanding - 15,482,073 shares for 2018 and 15,279,812 shares for 2017	46,446	45,839
Class B Common Stock ($3 par value per share): Authorized 16,000,000 shares, issued and outstanding - 936,804 shares for 2018 and 861,499 shares for 2017	2,810	2,584
Additional paid-in capital	156,478	157,139
Accumulated deficit	(127,907)	(125,000)
Accumulated other comprehensive income (loss)	(275)	(1,299)
TOTAL STOCKHOLDERS' EQUITY	77,552	79,263
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 287,351	$ 283,907

XML

Consolidated Condensed Balance Sheets (Parentheticals) - $ / shares	Mar. 31, 2018	Dec. 30, 2017
Common stock, par value	$ 3.00	$ 3.00
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	15,482,073	15,279,812
Class B Common stock, par value	$ 3.00	$ 3.00
Class B Common stock, shares authorized	16,000,000	16,000,000
Class B Common stock, shares issued	936,804	861,499

XML

Consolidated Condensed Statements of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2018	Apr. 01, 2017
NET SALES		$ 98,858	$ 97,541
Cost of sales		77,278	72,380
GROSS PROFIT		21,580	25,161
Selling and administrative expenses		23,120	24,486
Other operating (income) expense, net		(241)	52
Facility consolidation and severance expenses, net		216	0
OPERATING (LOSS) INCOME		(1,515)	623
Interest expense		1,533	1,362
Other expense (income), net		2	(1)
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES		(3,050)	(738)
Income tax benefit		(166)	(163)
LOSS FROM CONTINUING OPERATIONS		(2,884)	(575)
Loss from discontinued operations, net of tax		(23)	(29)
NET LOSS		$ (2,907)	$ (604)
BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations		$ (0.18)	$ (0.04)
Discontinued operations		0.00	0.00
Net loss		$ (0.18)	$ (0.04)
BASIC SHARES OUTSTANDING	[1]	15,715	15,673
DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations		$ (0.18)	$ (0.04)
Discontinued operations		0.00	0.00
Net loss		$ (0.18)	$ (0.04)
DILUTED SHARES OUTSTANDING	[1],[2]	15,715	15,673
DIVIDENDS PER SHARE:
Common Stock		$ 0.00	$ 0.00
Class B Common Stock		$ 0.00	$ 0.00

[1] Includes Common and Class B Common shares, excluding 488 unvested participating securities, in thousands.

[2] Shares issuable under stock option plans where the exercise price is greater than the average market price of the Company's Common Stock during the relevant period and directors' stock performance units have been excluded to the extent they are anti-dilutive. Aggregate shares excluded for the three months ended March 31, 2018 and April 1, 2017 were 448 and 220, respectively, in thousands.

XML

Consolidated Condensed Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Apr. 01, 2017
NET LOSS		$ (2,907)	$ (604)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain on interest rate swaps		804	57
Income taxes		0	22
Unrealized gain on interest rate swaps, net		804	35
Reclassification of loss into earnings from interest rate swaps (1)	[1]	228	359
Income taxes		0	136
Reclassification of loss into earnings from interest rate swaps, net		228	223
Reclassification of net actuarial gain into earnings from postretirement benefit plans (2)	[2]	(7)	(8)
Income taxes		0	(3)
Reclassification of net actuarial gain into earnings from postretirement benefit plans, net		(7)	(5)
Reclassification of prior service credits into earnings from postretirement benefit plans (2)	[2]	(1)	(1)
Income taxes		0	0
Reclassification of prior service credits into earnings from postretirement benefit plans, net		(1)	(1)
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX		1,024	252
COMPREHENSIVE LOSS		$ (1,883)	$ (352)

[1] Amounts for cash flow hedges reclassified from accumulated other comprehensive income (loss) to net loss were included in interest expense in the Company's Consolidated Condensed Statements of Operations.

[2] Amounts for postretirement plans reclassified from accumulated other comprehensive income (loss) to net loss were included in selling and administrative expenses in the Company's Consolidated Condensed Statements of Operations.

XML

Consolidated Condensed Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from continuing operations	$ (2,884)	$ (575)
Loss from discontinued operations	(23)	(29)
Net loss	(2,907)	(604)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,143	3,211
Provision (benefit) for deferred income taxes	7	(141)
Stock-based compensation expense	227	288
Bad debt expense	60	30
Changes in operating assets and liabilities:
Receivables	(1,463)	(7,589)
Inventories	(3,331)	(6,305)
Other current assets	(1,111)	(179)
Accounts payable and accrued expenses	2,145	3,696
Other operating assets and liabilities	375	(463)
NET CASH USED IN OPERATING ACTIVITIES	(2,855)	(8,056)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(762)	(3,720)
NET CASH USED IN INVESTING ACTIVITIES	(762)	(3,720)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on revolving credit facility	3,784	14,251
Payments on notes payable - buildings	(183)	(183)
Payments on notes payable related to acquisitions	0	(294)
Borrowings on notes payable - equipment and other	0	405
Payments on notes payable - equipment and other	(1,114)	(1,130)
Payments on capital leases	(1,074)	(848)
Change in outstanding checks in excess of cash	2,262	(306)
Repurchases of Common Stock	(56)	(116)
NET CASH PROVIDED BY FINANCING ACTIVITIES	3,619	11,779
INCREASE IN CASH AND CASH EQUIVALENTS	2	3
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	19	140
CASH AND CASH EQUIVALENTS AT END OF PERIOD	21	143
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	1,441	1,285
Income taxes paid, net	73	99
Equipment purchased under notes payable	$ 0	$ 59

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial statements which do not include all the information and notes required by such accounting principles for annual financial statements. In the opinion of management, all adjustments (generally consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the accompanying financial statements. The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 30, 2017. Operating results for the three-month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the entire 2018 year.

Based on applicable accounting standards, the Company has determined that it has one reportable segment, Floorcovering comprising of two operating segments, Residential and Commercial. Pursuant to accounting standards, the Company has aggregated the two operating segments into one reporting segment because they have similar economic characteristics, and the operating segments are similar in all of the following areas: (a) the nature of the products and services; (b) the nature of the production processes; (c) the type or class of customer for their products and services; (d) the methods used to distribute their products or provide their services; and (e) the nature of the regulatory environment.

XML

Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Adopted in Fiscal 2018

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". The ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU and all subsequently issued clarifying ASUs replaced most existing revenue recognition guidance in U.S. GAAP. The ASU was effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The standard permits the use of either the retrospective or cumulative effect transition method. The ASU also required expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required for customer contracts, significant judgments and changes in judgments. The Company adopted the new standard effective December 31, 2017, the first day of the Company's fiscal year, using the full retrospective method approach and expanded its financial statement disclosures in order to comply with the ASU. (See Note 3.) The adoption of this ASU did not have a significant impact on the Company's consolidated financial statements. The majority of the Company's revenue arrangements generally consist of a single performance obligation to transfer promised goods or services. Based on the Company's evaluation process and review of its contracts with customers, the timing (point in time) and amount of revenue recognized previously is consistent with how revenue is recognized under the new standard.

Therefore, no changes were required to its reported revenues as a result of the adoption. However, the adoption resulted in the recognition of an asset related to certain product returns by increasing the returns liability for December 30, 2017 and recognizing a corresponding asset for the estimated value of the returns from customers; this gross up had no corresponding impact on the Consolidated Condensed Statement of Operations. The Consolidated Balance Sheet as of December 30, 2017 has been adjusted to reflect retrospective application of the new accounting standard as follows:

	December 30, 2017
	As Previously Reported		Adjustments		As Adjusted
ASSETS
Prepaids and other current assets	$	3,600	$	1,069	$	4,669
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses	$	30,291	$	1,069	$	31,360

As part of the adoption of the ASU, the Company elected to use the following practical expedients (i) to exclude disclosures of transaction prices allocated to remaining performance obligations when the Company expects to recognize such revenue for all periods prior to the date of initial application of the ASU; (ii) not to adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between the Company's transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less; (iii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less; (iv) not to recast revenues for contracts that begin and end in the same fiscal year; and (v) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. The Company's revenue is recognized at a point in time based on the transfer of control whereby the Company does not invest in contract costs that are recoverable. In addition, performance obligations and customer payments are within one year or less. For these reasons, there is not a significant impact as a result of electing these practical expedients.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses the recognition, measurement, presentation and disclosure of financial assets and liabilities. This ASU primarily affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, this ASU clarifies the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. This ASU is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this ASU did not have a significant impact on the financial statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which provides clarification guidance on certain cash flow presentation issues that have developed due to diversity in practice. These issues include certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interests obtained in a financial asset securitization. ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. For public entities, ASU 2016-15 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU did not have a significant impact on the financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which clarifies guidance on the classification and presentation of restricted cash in the statement of cash flows. Under the ASU, changes in restricted cash and restricted cash equivalents would be included along with those of cash and cash equivalents in the statement of cash flows. In addition, a reconciliation between the balance sheet and the statement of cash flows would be disclosed when the balance sheet includes more than one line item for cash and cash equivalents and restricted cash and cash equivalents. For public entities, ASU 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted. Entities are required to apply the standard’s provisions on a retrospective basis. Since the Company has no restricted cash, the adoption of this ASU did not have an impact on the financial statements.

In February 2017, the FASB issued ASU No. 2017-05, "Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets." This ASU clarifies the scope and application of ASC 610-20 on the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. The amendments are effective at the same time as the new revenue standard. For public entities, the amendments are effective for fiscal years beginning after December 15, 2017, including interim reporting periods within those fiscal years. The adoption of this ASU did not have a significant impact on the financial statements.

In March 2017, the FASB issued ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which changed the presentation of net periodic benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Service cost are included within the same income statement line item as other compensation costs arising from services rendered during the period, while other components of net periodic benefit pension cost are presented separately outside of operating income. Additionally, only service costs may be capitalized in assets. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Effective December 31, 2017, the first day of the Company's fiscal year, the Company adopted this ASU. The Company adopted this ASU retrospectively, utilizing the practical expedient by using the amounts disclosed in the postretirement plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. which resulted in an immaterial amount being reclassified between selling and administrative expenses and other (income) expense, net in the Company's Consolidated Condensed Statements of Operations.

In May 2017, the FASB issued ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting." This ASU provides amendments to the current guidance on determining which changes to the terms and conditions of share-based payment awards require the application of modification accounting. The effects of a modification should be accounted for unless there are no changes between the fair value, vesting conditions, and classification of the modified award and the original award immediately before the original award is modified. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU did not have an impact on the financial statements.

Accounting Standards Yet to Be Adopted

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires lessees to recognize on the balance sheet a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is continuing to evaluate the impact of the adoption of this ASU on its financial statements. The Company has developed a project team relative to the process of adopting this ASU and is currently completing a detailed review of the Company’s leasing arrangements, which consist primarily of building and equipment leases, to determine the impact.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which amends the impairment model to utilize an expected loss methodology in place of the current incurred loss methodology, which will result in the more timely recognition of losses. For public entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company does not believe the adoption of this ASU will have a significant impact on the financial statements due to the nature of the Company's customers and the limited amount of write-offs in past years.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The amendments in this ASU update current guidance by more closely aligning the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company does not believe the adoption of this ASU will have a significant impact on the financial statements.

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Revenue

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue

REVENUE

Revenue Recognition Policy

The Company derives its revenues primarily from the sale of floorcovering products and processing services. Revenues are recognized when control of these products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products and services. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. The Company determined revenue recognition through the following steps:

• Identification of the contract with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, the performance obligation is satisfied

Disaggregation of Revenue from Contracts with Customers

The following table disaggregates the Company’s revenue by end-user markets for the three months ended March 31, 2018 and April 1, 2017:

	Three Months Ended
	March 31, 2018		April 1, 2017
Residential floorcovering products	$	67,095	$	62,539
Commercial floorcovering products	31,287		34,516
Other services	476		486
Total net sales	$	98,858	$	97,541

Residential floorcovering products. Residential floorcovering products include broadloom carpet, rugs, luxury vinyl flooring and engineered hardwood. These products are sold into the designer, retailer, mass merchant and builder markets.

Commercial floorcovering products. Commercial floorcovering products include broadloom carpet, carpet tile, rugs, and luxury vinyl flooring. These products are sold into the corporate, hospitality, healthcare, government, education markets through the use of designers and architects.

Other services. Other services include carpet yarn processing and carpet dyeing services.

Contract Balances

Other than receivables that represent an unconditional right to consideration, which are presented separately (See Note 4), the Company does not recognize any contract assets which give conditional rights to receive consideration, as the Company does not incur costs to obtain customer contracts that are recoverable. The Company often receives cash payments from customers in advance of the Company’s performance for limited production run orders resulting in contract liabilities. These contract liabilities are classified in accrued expenses in the Consolidated Condensed Balance Sheet based on the timing of when the Company expects to recognize revenue, which is typically less than a year. The decrease in the contract liabilities is primarily driven by the timing of cash payments received in advance of satisfying the Company's performance obligations and a decline in sales, partially offset by revenues recognized that were included in the contract liability balance at the beginning of the period. The activity in the advanced deposits for the three months ended March 31, 2018 and April 1,2017 is as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Beginning contract liability	$	5,717		$	8,212
Revenue recognized from contract liabilities included in the beginning balance	(4,484		)	(6,311		)
Increases due to cash received, net of amounts recognized in revenue during the period	4,063			5,671
Ending contract liability	$	5,296		$	7,572

Performance Obligations

For performance obligations related to residential floorcovering and commercial floorcovering products, control transfers at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer and the customer must have the significant risks and rewards of ownership. The Company’s principal terms of sale are FOB Shipping Point and FOB Destination and the Company transfers control and records revenue for product sales either upon shipment or delivery to the customer, respectively. Revenue is allocated to each performance obligation based on its relative stand-alone selling prices. Stand-alone selling prices are based on observable prices at which the Company separately sells the products or services.

Variable Consideration

The nature of the Company’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.

Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.

Warranties

The Company generally provides product warranties related to manufacturing defects and specific performance standards for its products for a period up to two years. The Company accrues for estimated future assurance warranty costs in the period in which the sale is recorded. The costs are included in Cost of Sales in the Consolidated Condensed Statements of Operations and the product warranty reserve is included in accrued expenses in the Consolidated Condensed Balance Sheets. The Company calculates its accrual using the portfolio approach based upon historical experience and known trends. (See Note 9.) The Company does not provide an additional service-type warranty.

Bill-and-Hold Arrangement

At the customer's request, the Company had a bill-and-hold arrangement with one customer during the three months ended March 31, 2018. The Company recognized revenue of $630 but retained physical possession of the inventory. The Company segregated the inventory and no longer had the ability to use or direct it to another customer. The inventory was available to be physically transferred to the customer. None of the inventory had been shipped as of March 31, 2018.

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Receivables, Net

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Receivables, Net

RECEIVABLES, NET

Receivables are summarized as follows:

	March 31, 2018			December 30, 2017
Customers, trade	$	45,286		$	43,683
Other receivables	2,768			2,930
Gross receivables	48,054			46,613
Less: allowance for doubtful accounts	(171		)	(133		)
Receivables, net	$	47,883		$	46,480

Bad debt expense was $60 and $30 for the three months ended March 31, 2018 and April 1, 2017, respectively.

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Inventories, Net

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

Inventories, Net

INVENTORIES, NET

Inventories are summarized as follows:

	March 31, 2018			December 30, 2017
Raw materials	$	40,884		$	39,264
Work-in-process	22,510			24,454
Finished goods	67,060			65,172
Supplies and other	155			143
LIFO reserve	(13,621		)	(15,376		)
Inventories, net	$	116,988		$	113,657

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Property, Plant and Equipment, Net

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consists of the following:

	March 31, 2018			December 30, 2017
Land and improvements	$	7,886		$	7,886
Buildings and improvements	63,226			62,852
Machinery and equipment	189,980			188,971
Assets under construction	1,811			2,443
	262,903			262,152
Accumulated depreciation	(171,381		)	(168,367		)
Property, plant and equipment, net	$	91,522		$	93,785

Depreciation of property, plant and equipment, including amounts for capital leases, totaled $3,015 in the three months ended March 31, 2018 and $3,083 in the three months ended April 1, 2017.

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Goodwill and Other Intangibles

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

GOODWILL AND OTHER INTANGIBLES

The carrying amount of goodwill is $3,389 as of March 31, 2018 and December 30, 2017. The Company has a net carrying amount of $2,385 and $2,461 as of March 31, 2018 and December 30, 2017, respectively, for certain intangible assets subject to amortization. Amortization expense was $76 for the three months ended March 31, 2018 and April 1, 2017, respectively.

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Accrued Expenses

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

Accrued Expenses

ACCRUED EXPENSES

Accrued expenses are summarized as follows:

	March 31, 2018		December 30, 2017
			(As Adjusted)
Compensation and benefits	$	8,817	$	9,276
Provision for customer rebates, claims and allowances	8,063		9,820
Advanced customer deposits	5,296		5,717
Outstanding checks in excess of cash	2,641		379
Other	6,259		6,168
Accrued expenses	$	31,076	$	31,360

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Product Warranty Reserves

3 Months Ended

Mar. 31, 2018

Product Warranties Disclosures [Abstract]

Product Warranty Reserves

PRODUCT WARRANTY RESERVES

The Company generally provides product warranties related to manufacturing defects and specific performance standards for its products. Product warranty reserves are included in accrued expenses in the Company's Consolidated Condensed Financial Statements. The following is a summary of the Company's product warranty activity:

	Three Months Ended
	March 31, 2018			April 1, 2017
				(As adjusted)
Product warranty reserve at beginning of period	$	1,356		$	1,439
Warranty liabilities accrued	614			404
Warranty liabilities settled	(691		)	(416		)
Changes for pre-existing warranty liabilities	(31		)	(70		)
Product warranty reserve at end of period	$	1,248		$	1,357

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Long-Term Debt and Credit Arrangements

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Long-Term Debt and Credit Arrangements

LONG-TERM DEBT AND CREDIT ARRANGEMENTS

Long-term debt consists of the following:

	March 31, 2018			December 30, 2017
Revolving credit facility	$	101,493		$	97,708
Notes payable - buildings	12,236			12,419
Acquisition note payable - Robertex	795			791
Notes payable - equipment and other	7,355			8,474
Capital lease obligations	13,446			14,530
Deferred financing costs, net	(620		)	(665		)
Total long-term debt	134,705			133,257
Less: current portion of long-term debt	9,113			9,811
Long-term debt	$	125,592		$	123,446

Revolving Credit Facility

The revolving credit facility provides for a maximum of $150,000 of revolving credit, subject to borrowing base availability. The borrowing base is currently equal to specified percentages of the Company's eligible accounts receivable, inventories, fixed assets and real property less reserves established, from time to time, by the administrative agent under the facility. The revolving credit facility matures on September 23, 2021. The revolving credit facility is secured by a first priority lien on substantially all of the Company's assets.

At the Company's election, advances of the revolving credit facility bear interest at annual rates equal to either (a) LIBOR for one, two or three-month periods, as selected by the Company, plus an applicable margin ranging between 1.50% and 2.00%, or (b) the higher of the prime rate, the Federal Funds rate plus 0.5%, or a daily LIBOR rate plus 1.00%, plus an applicable margin ranging between 0.50% and 1.00%. The applicable margin is determined based on availability under the revolving credit facility with margins increasing as availability decreases. As of March 31, 2018, the applicable margin on our revolving credit facility was 1.75%. The Company pays an unused line fee on the average amount by which the aggregate commitments exceed utilization of the revolving credit facility equal to 0.375% per annum. The weighted-average interest rate on borrowings outstanding under the revolving credit facility was 4.26% at March 31, 2018 and 4.12% at December 30, 2017.

The revolving credit facility includes certain affirmative and negative covenants that impose restrictions on the Company's financial and business operations. The revolving credit facility restricts the Company's borrowing availability if its fixed charge coverage ratio is less than 1.1 to 1.0. During any period that the fixed charge coverage ratio is less than 1.1 to 1.0, the Company's borrowing availability is reduced by $16,500. As of March 31, 2018, the unused borrowing availability under the revolving credit facility was $28,794; however, since the Company's fixed charge coverage ratio was less than 1.1 to 1.0, the unused availability accessible by the Company was $12,294 (the amount above $16,500) at March 31, 2018.

Notes Payable - Buildings

On November 7, 2014, the Company entered into a ten-year $8,330 note payable to purchase a previously leased distribution center in Adairsville, Georgia. The note payable is scheduled to mature on November 7, 2024 and is secured by the distribution center. The note payable bears interest at a variable rate equal to one-month LIBOR plus 2.0% and is payable in equal monthly installments of principal of $35, plus interest calculated on the declining balance of the note, with a final payment of $4,165 due on maturity. In addition, the Company entered into an interest rate swap with an amortizing notional amount effective November 7, 2014 which effectively fixes the interest rate at 4.50%.

On January 23, 2015, the Company entered into a ten-year $6,290 note payable to finance an owned facility in Saraland, Alabama. The note payable is scheduled to mature on January 7, 2025 and is secured by the facility. The note payable bears interest at a variable rate equal to one-month LIBOR plus 2.0% and is payable in equal monthly installments of principal of $26, plus interest calculated on the declining balance of the note, with a final payment of $3,145 due on maturity. In addition, the Company entered into an interest rate swap with an amortizing notional amount effective January 7, 2017 which effectively fixes the interest rate at 4.30%.

Acquisition Note Payable - Robertex

On July 1, 2013, the Company signed a 4.50% seller-financed note of $4,000, which was recorded at a fair value of $3,749, with Robert P. Rothman related to the acquisition of Robertex Associates, LLC ("Robertex") in Calhoun, Georgia. The note is payable in five annual installments of principal of $800 plus interest. The note matures June 30, 2018.

Notes Payable - Equipment and Other

The Company's equipment financing notes have terms ranging from 1 to 7 years, bear interest ranging from 1.00% to 7.68% and are due in monthly installments through their maturity dates. The Company's equipment financing notes are secured by the specific equipment financed and do not contain any financial covenants.

Capital Lease Obligations

The Company's capitalized lease obligations have terms ranging from 3 to 7 years, bear interest ranging from 3.55% to 7.37% and are due in monthly or quarterly installments through their maturity dates. The Company's capital lease obligations are secured by the specific equipment leased.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange value of an asset or a liability in an orderly transaction between market participants. The fair value guidance outlines a valuation framework and establishes a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and disclosures. The hierarchy consists of three levels as follows:

Level 1 - Quoted market prices in active markets for identical assets or liabilities as of the reported date;

Level 2 - Other than quoted market prices in active markets for identical assets or liabilities, quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other than quoted prices for assets or liabilities and prices that are derived principally from or corroborated by market data by correlation or other means; and

Level 3 - Measurements using management's best estimate of fair value, where the determination of fair value requires significant management judgment or estimation.

The following table reflects the fair values of assets and liabilities measured and recognized at fair value on a recurring basis on the Company's Consolidated Condensed Balance Sheets as of March 31, 2018 and December 30, 2017:

	March 31, 2018		December 30, 2017		Fair Value Hierarchy Level
Assets:
Interest rate swaps (1)	$	120	$	—	Level 2
Liabilities:
Interest rate swaps (1)	$	1,304	$	2,229	Level 2
Contingent consideration (2)	25		25		Level 3

(1) The Company uses certain external sources in deriving the fair value of the interest rate swaps. The interest rate swaps were valued using observable inputs (e.g., LIBOR yield curves, credit spreads). Valuations of interest rate swaps may fluctuate considerably from period-to-period due to volatility in underlying interest rates, which are driven by market conditions and the duration of the instrument. Credit adjustments could have a significant impact on the valuations due to changes in credit ratings of the Company or its counterparties.

(2) As a result of the Robertex acquisition in 2013, the Company recorded a contingent consideration liability at fair value. This fair value measurement was based on calculations that utilize significant inputs not observable in the market including forecasted revenues, gross margins and discount rates and thus represent Level 3 measurements. This fair value measurement is directly impacted by the Company's estimates. Accordingly, if the estimates within the fair value measurement are higher or lower, the Company would record additional charges or benefits, respectively, as appropriate.

Changes in the fair value measurements using significant unobservable inputs (Level 3) during the three months ending March 31, 2018 and April 1, 2017 were as follows:

	March 31, 2018		April 1, 2017
Beginning balance	$	25	$	200
Fair value adjustments	—		3
Ending balance	$	25	$	203

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 during the three months ending March 31, 2018 or April 1, 2017. If any, the Company recognizes the transfers in or transfers out at the end of the reporting period.

The carrying amounts and estimated fair values of the Company's financial instruments are summarized as follows:

	March 31, 2018				December 30, 2017
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	21	$	21	$	19	$	19
Notes receivable	282		282		282		282
Interest rate swaps	120		120		—		—
Financial liabilities:
Long-term debt and capital leases, including current portion	134,705		131,083		133,257		131,203
Interest rate swaps	1,304		1,304		2,229		2,229

The fair values of the Company's long-term debt and capital leases were estimated using market rates the Company believes would be available for similar types of financial instruments and represent level 2 measurements. The fair values of cash and cash equivalents and notes receivable approximate their carrying amounts due to the short-term nature of the financial instruments.

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Derivatives

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

DERIVATIVES

The Company's earnings, cash flows and financial position are exposed to market risks relating to interest rates. It is the Company's policy to minimize its exposure to adverse changes in interest rates and manage interest rate risks inherent in funding the Company with debt. The Company addresses this risk by maintaining a mix of fixed and floating rate debt and entering into interest rate swaps for a portion of its variable rate debt to minimize interest rate volatility.

The following is a summary of the Company's interest rate swaps as of March 31, 2018:

Type	Notional Amount			Effective Date	Fixed Rate	Variable Rate
Interest rate swap	$	25,000		September 1, 2016 through September 1, 2021	3.105%	1 Month LIBOR
Interest rate swap	$	25,000		September 1, 2015 through September 1, 2021	3.304%	1 Month LIBOR
Interest rate swap	$	6,942	(1)	November 7, 2014 through November 7, 2024	4.500%	1 Month LIBOR
Interest rate swap	$	5,294	(2)	January 7, 2017 through January 7, 2025	4.300%	1 Month LIBOR

(1) Interest rate swap notional amount amortizes by $35 monthly to maturity.

(2) Interest rate swap notional amount amortizes by $26 monthly to maturity.

The following table summarizes the fair values of derivative instruments included in the Company's financial statements:

	Location on Consolidated Balance Sheets	Fair Value
		March 31, 2018		December 30, 2017
Asset Derivatives:
Derivatives designated as hedging instruments:
Interest rate swaps	Other Assets	$	120	$	—
Total Asset Derivatives		$	120	$	—
Liability Derivatives:
Derivatives designated as hedging instruments:
Interest rate swaps, current portion	Accrued Expenses	$	606	$	842
Interest rate swaps, long-term portion	Other Long-Term Liabilities	698		1,387
Total Liability Derivatives		$	1,304	$	2,229

The following tables summarize the pre-tax impact of derivative instruments on the Company's financial statements:

	Amount of Gain or (Loss) Recognized in AOCIL on the effective portion of the Derivative
	Three Months Ended
	March 31, 2018			April 1, 2017
Derivatives designated as hedging instruments:
Cash flow hedges - interest rate swaps	$	804		$	57
	Amount of Gain or (Loss) Reclassified from AOCIL on the effective portion into Income (1)(2)
	Three Months Ended
	March 31, 2018			April 1, 2017
Derivatives designated as hedging instruments:
Cash flow hedges - interest rate swaps	$	(228	)	$	(359	)

(1) The amount of gain (loss) reclassified from AOCIL is included in interest expense on the Company's financial statements.

(2) The amount of loss expected to be reclassified from AOCIL into earnings during the next 12 months subsequent to March 31, 2018 is $606.

The amount of gain (loss) recognized in income on the ineffective portion of interest rate swaps, if any, is included in other expense, net on the Company's Consolidated Condensed Statements of Operations. There was no ineffective portion for the periods presented.

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Employee Benefit Plans

3 Months Ended

Mar. 31, 2018

Defined Benefit Plan [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Company sponsors a 401(k) defined contribution plan that covers approximately 85% of the Company's current associates. This plan includes a mandatory Company match on the first 1% of participants' contributions. The Company matches the next 2% of participants' contributions if the Company meets prescribed earnings levels. The plan also provides for additional Company contributions above the 3% level if the Company attains certain additional performance targets. Matching contribution expense for this 401(k) plan was $264 and $233 for the three months ended March 31, 2018 and April 1, 2017, respectively.

Additionally, the Company sponsors a 401(k) defined contribution plan that covers approximately 15% of the Company's current associates at one facility who are under a collective-bargaining agreement. Under this plan, the Company generally matches participants' contributions, on a sliding scale, up to a maximum of 2.75% of the participant's earnings. Matching contribution expense for the collective-bargaining 401(k) plan was $29 and $18 for the three months ended March 31, 2018 and April 1, 2017, respectively.

Non-Qualified Retirement Savings Plan

The Company sponsors a non-qualified retirement savings plan that allows eligible associates to defer a specified percentage of their compensation. The obligations owed to participants under this plan were $17,002 at March 31, 2018 and $17,010 at December 30, 2017 and are included in other long-term liabilities in the Company's Consolidated Condensed Balance Sheets. The obligations are unsecured general obligations of the Company and the participants have no right, interest or claim in the assets of the Company, except as unsecured general creditors. The Company utilizes a Rabbi Trust to hold, invest and reinvest deferrals and contributions under the plan. Amounts are invested in Company-owned life insurance in the Rabbi Trust and the cash surrender value of the policies was $18,067 at March 31, 2018 and $18,232 at December 30, 2017 and is included in other assets in the Company's Consolidated Condensed Balance Sheets.

Multi-Employer Pension Plan

The Company contributes to a multi-employer pension plan under the terms of a collective-bargaining agreement that covers its union-represented employees. Expenses related to the multi-employer pension plan were $92 and $66 for the three months ended March 31, 2018 and April 1, 2017, respectively.

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Income Taxes

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

On December 22, 2017, the President signed the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. While the Company has substantially completed its provisional analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects during the fourth quarter of 2017, the charge related to the Tax Act may differ, possibly materially, due to, among other things, further refinement of its calculations, changes in interpretations and assumptions that the Company has made or additional guidance that may be issued related to the Tax Act. Pursuant to Staff Accounting Bulletin No. 118, the Company will complete its analysis over a one-year measurement period from the enactment date, and any adjustments during this measurement period will be included in income from continuing operations as an adjustment to income tax expense in the reporting period when such adjustments are determined.

The benefit rate for the three months ending March 31, 2018 was 5.4% compared with a benefit rate of 22.1% for the three months ending April 1, 2017. During the fourth quarter of 2017, the Company recorded a full valuation allowance against the deferred tax assets resulting in only refundable credits and a small of amount of state taxes being recognized in the tax benefit for the first quarter of 2018. The three months ended April 1, 2017 included $164 of tax expense related to the adoption of ASU No. 2016-09 which requires a shortfall of tax benefits related to stock compensation to be recognized in income tax expense instead of additional paid-in capital. The Company is in a net deferred tax liability position of $1,112 and $1,105 at March 31, 2018 and December 30, 2017, respectively which is included in other liabilities in Company's Consolidated Balance Sheets.

The Company accounts for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $419 and $414 at March 31, 2018 and December 30, 2017, respectively. Such benefits, if recognized, would affect the Company's effective tax rate. There were no significant interest or penalties accrued as of March 31, 2018 and December 30, 2017.

The Company and its subsidiaries are subject to United States federal income taxes, as well as income taxes in a number of state jurisdictions. The tax years subsequent to 2013 remain open to examination for U.S. federal income taxes. The majority of state jurisdictions remain open for tax years subsequent to 2013. A few state jurisdictions remain open to examination for tax years subsequent to 2012.

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Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share, Basic and Diluted [Abstract]

Earnings (Loss) Per Share

EARNINGS (LOSS) PER SHARE

The Company's unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are considered participating securities and are included in the computation of earnings per share. Accounting guidance requires additional disclosure of earnings (loss) per share ("EPS") for common stock and unvested share-based payment awards, separately disclosing distributed and undistributed earnings. Undistributed earnings represent earnings that were available for distribution but were not distributed. Common stock and unvested share-based payment awards earn dividends equally. All earnings were undistributed in all periods presented.

The following table sets forth the computation of basic and diluted earnings (loss) per share from continuing operations:

	Three Months Ended
	March 31, 2018			April 1, 2017
Basic earnings (loss) per share:
Loss from continuing operations	$	(2,884	)	$	(575	)
Less: Allocation of earnings to participating securities	—			—
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Basic weighted-average shares outstanding (1)	15,715			15,673
Basic earnings (loss) per share - continuing operations	$	(0.18	)	$	(0.04	)
Diluted earnings (loss) per share:
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Add: Undistributed earnings reallocated to unvested shareholders	—			—
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Basic weighted-average shares outstanding (1)	15,715			15,673
Effect of dilutive securities:
Stock options (2)	—			—
Directors' stock performance units (2)	—			—
Diluted weighted-average shares outstanding (1)(2)	15,715			15,673
Diluted earnings (loss) per share - continuing operations	$	(0.18	)	$	(0.04	)

(1) Includes Common and Class B Common shares, excluding 488 unvested participating securities, in thousands.

(2) Shares issuable under stock option plans where the exercise price is greater than the average market price of the Company's Common Stock during the relevant period and directors' stock performance units have been excluded to the extent they are anti-dilutive. Aggregate shares excluded for the three months ended March 31, 2018 and April 1, 2017 were 448 and 220, respectively, in thousands.

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Stock Compensation Expense

3 Months Ended

Mar. 31, 2018

Share-based Compensation [Abstract]

Stock Compensation Expense

STOCK COMPENSATION EXPENSE

The Company recognizes compensation expense relating to share-based payments based on the fair value of the equity instrument issued and records such expense in selling and administrative expenses in the Company's Consolidated Condensed Financial Statements. The number of shares to be issued is determined by dividing the specified dollar value of the award by the market value per share on the grant date. The Company's stock compensation expense was $227 for the three months ended March 31, 2018 and $288 for the three months ended April 1, 2017.

On March 12, 2018, the Company granted 297,292 shares of restricted stock to certain key employees of the Company. The grant-date fair value of the awards was $832, or $2.800 per share, and will be recognized as stock compensation expense over a weighted-average period of 6.1 years from the date the awards were granted. Each award is subject to a continued service condition. The fair value of each share of restricted stock awarded was equal to the market value of a share of the Company's Common Stock on the grant date.

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Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2018

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Components of accumulated other comprehensive income (loss), net of tax, are as follows:

	Interest Rate Swaps			Post-Retirement Liabilities			Total
Balance at December 30, 2017	(1,587		)	288			(1,299		)
Unrealized gain on interest rate swaps	804			—			804
Reclassification of loss into earnings from interest rate swaps	228			—			228
Reclassification of net actuarial gain into earnings from postretirement benefit plans	—			(7		)	(7		)
Reclassification of prior service credits into earnings from postretirement benefit plans	—			(1		)	(1		)
Balance at March 31, 2018	$	(555	)	$	280		$	(275	)

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Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Contingencies

CONTINGENCIES

Contingencies

The Company assesses its exposure related to legal matters, including those pertaining to product liability, safety and health matters and other items that arise in the regular course of its business. If the Company determines 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.

Environmental Remediation

The Company accrues for losses associated with environmental remediation obligations when such losses are probable and estimable. Remediation obligations are accrued based on the latest available information and are recorded at undiscounted amounts. The Company regularly monitors the progress of environmental remediation. If studies indicate that the cost of remediation has changed from the previous estimate, an adjustment to the liability would be recorded in the period in which such determination is made. (See Note 21).

Legal Proceedings

The Company has been sued, together with the 3M Company and approximately 30 other carpet manufacturers, by the Gadsden (Alabama) Water Works in the circuit court of Etowah County Alabama [The Water Works and Sewer Board of the City of Gadsden v. 3M Company, et al, civil action No. 31-CV-2016-900676.00] and by the Town of Centre (Alabama) Water Works in the circuit court of Cherokee County Alabama [The Water Works and Sewer Board of the Town of Centre v. 3M Company, et al, civil action No. 13-CV-2017-900049.00]. Both cases seek monetary damages and injunctive relief related to the use of certain chemical compounds in the manufacture and finishing of carpet products “in and around Dalton Georgia.” On motion of the defendants, the cases were removed to the U.S. District Court for the Northern District of Alabama (Middle Division) Case No. 4:16-CV-01755-SGC and Case No. 4:17-CV-01026-KOB. Subsequently, the Gadsden Water Works filed a motion to have the case remanded back to the state court and such motion has been granted. The lawsuits allege that perflourinated compounds (“PFC”), perflourinated acid (“PFOA”) and perfluorooctane sulfonate (“PFOS”) manufactured by 3M were used in certain finishing and treatment processes by the defendants and, as a consequence of such use, were subsequently either discharged into or leached into the water systems around Dalton, Georgia. The Complaints seeks damages that exceed $10, but are otherwise unspecified in amount in addition to injunctive relief and punitive damages. The Company intends to defend the matters vigorously and is unable to estimate the potential exposure to loss, if any, at this time.

The Company has received a class action complaint filed by Carlos Garcia, a current employee, individually and on behalf of others similarly situated against Fabrica [Carlos Garcia et al. vs. Fabrica International, Inc., et al., in the Superior Court of Orange County, California, Case No. 30-2017-00949461 CU-OE-CXC]. The complaint alleges causes of actions on behalf of classes of Fabrica’s current and former employees during the four-year period immediately preceding the filing of the complaint for failure to pay proper overtime wages, failure to compensate for all meal periods and rest periods, failure to pay all proper overtime and double time, and for the provision and maintaining of inaccurate wage statements. Finally, the complaint asserts a cause of action for unfair competition by means of the above actions and seeks restitution of monies supposedly unlawfully withheld and demands attorneys’ fees and costs. The Company has denied liability, is defending the matters vigorously and is unable to estimate the potential exposure to loss, if any, at this time.

The Company is one of multiple parties to two current lawsuits filed in Madison County Illinois, styled Brenda Bridgeman, Individually and as Special Administrator of the Estate of Robert Bridgeman, Deceased, vs. American Honda Motor Co., Inc., f/k/a Metropolitan Life Insurance Co. et al No. 15-L-374 and styled Danny Atkins and Pamela Atkins, Pltfs., vs. Aurora Pump Company, et al. No. 18-L-2. Both lawsuits entail a claim for damages to be determined in excess of $50 filed on behalf of either a former employee or the estate of an individual which alleges that the deceased contracted mesothelioma as a result of exposure to asbestos while employed by the Company. Discovery in each matter is ongoing, and a tentative trial date has been set for one of the cases. The Company has denied liability, is defending the matters vigorously and is unable to estimate its potential exposure to loss, if any, at this time. In March of 2018, a similar lawsuit styled Charles Anderson, Pltf., vs. 3M Company, et al, No. 17-L-525 was dismissed.

On April 24th, 2018, following the end of the quarter, a law firm claiming to represent one of the Company's shareholders owning 50 shares, sent a request for information concerning the Company's equity incentive plans, and equity awards granted under those plans to the Company's chairman and chief operating officer, alleging that the law firm is investigating “possible breaches of fiduciary duty” in approving such plans and such awards. All such equity plans were approved by shareholders, and all such awards were made in accordance with the applicable terms of the plans. The Company is responding to the request in accordance with applicable law. No claim or suit has been filed.

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Other (Income) Expense, Net

3 Months Ended

Mar. 31, 2018

Other Income and Expenses [Abstract]

Other (Income) Expense, Net

OTHER (INCOME) EXPENSE, NET

Other operating (income) expense, net is summarized as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Other operating (income) expense, net:
(Gain) loss on currency exchanges	$	(8	)	$	17
Amortization of intangibles	76			76
Retirement expenses	54			18
Vendor settlement	(355		)	—
Insurance proceeds	(48		)	—
Miscellaneous (income) expense	40			(59		)
Other operating (income) expense, net	$	(241	)	$	52

	Three Months Ended
	March 31, 2018			April 1, 2017
Other expense (income), net:
Post-retirement income	$	(5	)	$	(5	)
Miscellaneous (income) expense	7			4
Other expense (income), net	$	2		$	(1	)

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Facility Consolidation and Severance Expenses, Net

3 Months Ended

Mar. 31, 2018

Restructuring and Related Activities [Abstract]

Facility Consolidation and Severance Expenses, Net

FACILITY CONSOLIDATION AND SEVERANCE EXPENSES, NET

2014 Warehousing, Distribution & Manufacturing Consolidation Plan

The Company developed a plan to align its warehousing, distribution and manufacturing to support its growth and manufacturing strategy resulting in improved distribution capabilities and customer service. The key element and first major step of this plan was the acquisition of a facility to serve as a finished goods warehouse and a cut-order and distribution center in Adairsville, Georgia. Costs related to the consolidation included moving and relocation expenses, information technology expenses and expenses relating to conversion and realignment of equipment. In addition, this plan included the elimination of both carpet dyeing and yarn dyeing in the Company's Atmore, Alabama facility designed to more fully accommodate the distribution and manufacturing realignment. As a result, the dyeing operations in Atmore were moved to the Company's continuous dyeing facility, skein dyeing operation and other outside dyeing processors.

To complete the Warehousing, Distribution & Manufacturing Consolidation Plan, the Company moved its Saraland rug operation from an expiring leased building to an owned facility in March 2016. The Company completed this consolidation plan during 2016. As a result of eliminating its dyeing operations in Atmore, Alabama, the Company disposed of its waste water treatment plant in 2014. Subsequently, after extensive testing, it was determined that the Company still had some contaminants above background levels and installed a soil cap to finalize the cleanup of the site of the Company's former waste water treatment plant.

2015 Corporate Office Consolidation Plan

In April 2015, the Company's Board of Directors approved the Corporate Office Consolidation Plan, to cover the costs of consolidating three of the Company's existing leased divisional and corporate offices to a single leased facility located in Dalton, Georgia. The Company paid a fee to terminate one of the leased facilities, did not renew a second facility and vacated the third facility. Related to the vacated facility, the Company recorded the estimated costs related to the fulfillment of its contractual lease obligation and on-going facility maintenance, net of an estimate of sub-lease expectations. Accordingly, if the estimates differ, the Company would record an additional charge or benefit, as appropriate. Costs related to the consolidation included the lease termination fee, contractual lease obligations and moving costs.

2017 Profit Improvement Plan

During the fourth quarter of 2017, the Company announced a Profit Improvement Plan to improve profitability through lower cost and streamlined decision making and aligning processes to maximize efficiency. The plan includes consolidating the management of the Company's two commercial brands, Atlas Carpet Mills and Masland Contract, under one management team, sharing operations in sales, marketing, product development and manufacturing. Specific to this plan includes focusing nearly all commercial solution dyed make-to-order production in our Atmore, Alabama operations where the Company has developed such make-to-order capabilities over the last 5 years. Further, the Company is aligning its west coast production facilities, better utilizing its west coast real estate by moving production to its Porterville, California and Atmore, Alabama operations and preparing for more efficient distribution of its west coast products. Furthermore, the Company is re-configuring its east coast distribution facilities to provide more efficient distribution of its products. In addition, the Company had reductions in related support functions such as accounting and information services.

Costs related to the facility consolidation plans are summarized as follows:

											As of March 31, 2018
	Accrued Balance at December 30, 2017		2018 Expenses To Date				2018 Cash Payments		Accrued Balance at March 31, 2018		Total Costs Incurred To Date		Total Expected Costs
Warehousing, Distribution & Manufacturing Consolidation Plan	$	—	$	—			$	—	$	—	$	7,440	$	7,440
Corporate Office Consolidation Plan	171		—				18		153		807		807
Profit Improvement Plan	$	334	$	216			$	316	$	234	$	852	$	1,921
Total All Plans	$	505	$	216	(1)		$	334	$	387	$	9,099	$	10,168
	Accrued Balance at December 31, 2016		2017 Expenses To Date				2017 Cash Payments		Accrued Balance at April 1, 2017
Warehousing, Distribution & Manufacturing Consolidation Plan	266		—				63		203
Corporate Office Consolidation Plan	248		—				18		230
Totals	$	514	$	—	(1	)	$	81	$	433

(1) Costs incurred under these plans are classified as "facility consolidation and severance expenses, net" in the Company's Consolidated Condensed Statements of Operations.

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Discontinued Operations

3 Months Ended

Mar. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

The Company has either sold or discontinued certain operations that are accounted for as "Discontinued Operations" under applicable accounting guidance. Discontinued operations are summarized as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Loss from discontinued operations:
Workers' compensation costs (credits) from former textile operations	$	7		$	(27	)
Environmental remediation costs from former textile operations	(30		)	(21		)
Loss from discontinued operations, before taxes	$	(23	)	$	(48	)
Income tax benefit	—			(19		)
Loss from discontinued operations, net of tax	$	(23	)	$	(29	)

Undiscounted reserves are maintained for the self-insured workers' compensation obligations related to the Company's former textile operations. These reserves are administered by a third-party workers' compensation service provider under the supervision of Company personnel. Such reserves are reassessed on a quarterly basis. Pre-tax cost incurred for workers' compensation as a component of discontinued operations primarily represents a change in estimate for each period from unanticipated medical costs associated with the Company's obligations.

Reserves for environmental remediation obligations are established on an undiscounted basis. The Company has an accrual for environmental remediation obligations related to discontinued operations of $1,741 as of March 31, 2018 and $1,746 as of December 30, 2017. The liability established represents the Company's best estimate of possible loss and is the reasonable amount to which there is any meaningful degree of certainty given the periods of estimated remediation and the dollars applicable to such remediation for those periods. The actual timeline to remediate, and thus, the ultimate cost to complete such remediation through these remediation efforts, may differ significantly from our estimates. Pre-tax cost for environmental remediation obligations classified as discontinued operations were primarily a result of specific events requiring action and additional expense in each period.

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Related Party Transactions

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

The Company is a party to a five-year lease with the seller of Atlas Carpet Mills, Inc. to lease three manufacturing facilities as part of the acquisition in 2014. The lessor is controlled by an associate of the Company. Rent paid to the lessor during the three months ended March 31, 2018 and April 1, 2017 was $251 and $226, respectively. The lease was based on current market values for similar facilities.

The Company purchases a portion of its product needs in the form of fiber, yarn and carpet from Engineered Floors, an entity substantially controlled by Robert E. Shaw, a shareholder of the Company. An affiliate of Mr. Shaw holds approximately 7.3% of the Company's Common Stock, which represents approximately 3.3% of the total vote of all classes of the Company's Common Stock. Engineered Floors is one of several suppliers of such materials to the Company. Total purchases from Engineered Floors during the three months ended March 31, 2018 were approximately $1,715 ; or approximately 2.2%, respectively, of the Company's cost of goods sold. Total purchases from Engineered Floors during the three months ended April 1, 2017 were approximately $1,995; or approximately 2.8%, respectively, of the Company's cost of goods sold. Purchases from Engineered Floors are based on market value negotiated prices. The Company has no contractual commitments with Mr. Shaw associated with its business relationship with Engineered Floors. Transactions with Engineered Floors are reviewed annually by the Company's board of directors.

The Company is a party to a ten-year lease with the Rothman Family Partnership to lease a facility as part of the Robertex acquisition in 2013. The lessor is controlled by an associate of the Company. Rent paid to the lessor during the three months ended March 31, 2018 and April 1, 2017 was $69 and $67, respectively. The lease was based on current market values for similar facilities. In addition, the Company has a note payable to Robert P. Rothman related to the acquisition of Robertex Inc. (See Note 10).

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Revenue Recognition Policy

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition Policy

The Company derives its revenues primarily from the sale of floorcovering products and processing services. Revenues are recognized when control of these products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products and services. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. The Company determined revenue recognition through the following steps:

• Identification of the contract with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, the performance obligation is satisfied

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Recent Accounting Pronouncements New Accounting Pronouncements and Changes in Accounting (Tables)

3 Months Ended

Mar. 31, 2018

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

The Consolidated Balance Sheet as of December 30, 2017 has been adjusted to reflect retrospective application of the new accounting standard as follows:

	December 30, 2017
	As Previously Reported		Adjustments		As Adjusted
ASSETS
Prepaids and other current assets	$	3,600	$	1,069	$	4,669
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses	$	30,291	$	1,069	$	31,360

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Revenue (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue from Contracts with Customers [Table Text Block]

The following table disaggregates the Company’s revenue by end-user markets for the three months ended March 31, 2018 and April 1, 2017:

	Three Months Ended
	March 31, 2018		April 1, 2017
Residential floorcovering products	$	67,095	$	62,539
Commercial floorcovering products	31,287		34,516
Other services	476		486
Total net sales	$	98,858	$	97,541

Contract Balances [Table Text Block]

The activity in the advanced deposits for the three months ended March 31, 2018 and April 1,2017 is as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Beginning contract liability	$	5,717		$	8,212
Revenue recognized from contract liabilities included in the beginning balance	(4,484		)	(6,311		)
Increases due to cash received, net of amounts recognized in revenue during the period	4,063			5,671
Ending contract liability	$	5,296		$	7,572

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Receivables, Net (Tables)

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Receivables are summarized as follows:

	March 31, 2018			December 30, 2017
Customers, trade	$	45,286		$	43,683
Other receivables	2,768			2,930
Gross receivables	48,054			46,613
Less: allowance for doubtful accounts	(171		)	(133		)
Receivables, net	$	47,883		$	46,480

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Inventories, Net (Tables)

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories are summarized as follows:

	March 31, 2018			December 30, 2017
Raw materials	$	40,884		$	39,264
Work-in-process	22,510			24,454
Finished goods	67,060			65,172
Supplies and other	155			143
LIFO reserve	(13,621		)	(15,376		)
Inventories, net	$	116,988		$	113,657

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Property, Plant and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Property, plant and equipment consists of the following:

	March 31, 2018			December 30, 2017
Land and improvements	$	7,886		$	7,886
Buildings and improvements	63,226			62,852
Machinery and equipment	189,980			188,971
Assets under construction	1,811			2,443
	262,903			262,152
Accumulated depreciation	(171,381		)	(168,367		)
Property, plant and equipment, net	$	91,522		$	93,785

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Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

Accrued expenses are summarized as follows:

	March 31, 2018		December 30, 2017
			(As Adjusted)
Compensation and benefits	$	8,817	$	9,276
Provision for customer rebates, claims and allowances	8,063		9,820
Advanced customer deposits	5,296		5,717
Outstanding checks in excess of cash	2,641		379
Other	6,259		6,168
Accrued expenses	$	31,076	$	31,360

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Product Warranty Reserves (Tables)

3 Months Ended

Mar. 31, 2018

Product Warranties Disclosures [Abstract]

Schedule of Product Warranty Liability [Table Text Block]

The following is a summary of the Company's product warranty activity:

	Three Months Ended
	March 31, 2018			April 1, 2017
				(As adjusted)
Product warranty reserve at beginning of period	$	1,356		$	1,439
Warranty liabilities accrued	614			404
Warranty liabilities settled	(691		)	(416		)
Changes for pre-existing warranty liabilities	(31		)	(70		)
Product warranty reserve at end of period	$	1,248		$	1,357

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Long-Term Debt and Credit Arrangements (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

Long-term debt consists of the following:

	March 31, 2018			December 30, 2017
Revolving credit facility	$	101,493		$	97,708
Notes payable - buildings	12,236			12,419
Acquisition note payable - Robertex	795			791
Notes payable - equipment and other	7,355			8,474
Capital lease obligations	13,446			14,530
Deferred financing costs, net	(620		)	(665		)
Total long-term debt	134,705			133,257
Less: current portion of long-term debt	9,113			9,811
Long-term debt	$	125,592		$	123,446

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following table reflects the fair values of assets and liabilities measured and recognized at fair value on a recurring basis on the Company's Consolidated Condensed Balance Sheets as of March 31, 2018 and December 30, 2017:

	March 31, 2018		December 30, 2017		Fair Value Hierarchy Level
Assets:
Interest rate swaps (1)	$	120	$	—	Level 2
Liabilities:
Interest rate swaps (1)	$	1,304	$	2,229	Level 2
Contingent consideration (2)	25		25		Level 3

(1) The Company uses certain external sources in deriving the fair value of the interest rate swaps. The interest rate swaps were valued using observable inputs (e.g., LIBOR yield curves, credit spreads). Valuations of interest rate swaps may fluctuate considerably from period-to-period due to volatility in underlying interest rates, which are driven by market conditions and the duration of the instrument. Credit adjustments could have a significant impact on the valuations due to changes in credit ratings of the Company or its counterparties.

(2) As a result of the Robertex acquisition in 2013, the Company recorded a contingent consideration liability at fair value. This fair value measurement was based on calculations that utilize significant inputs not observable in the market including forecasted revenues, gross margins and discount rates and thus represent Level 3 measurements. This fair value measurement is directly impacted by the Company's estimates. Accordingly, if the estimates within the fair value measurement are higher or lower, the Company would record additional charges or benefits, respectively, as appropriate.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Changes in the fair value measurements using significant unobservable inputs (Level 3) during the three months ending March 31, 2018 and April 1, 2017 were as follows:

	March 31, 2018		April 1, 2017
Beginning balance	$	25	$	200
Fair value adjustments	—		3
Ending balance	$	25	$	203

Fair Value, by Balance Sheet Grouping [Table Text Block]

The carrying amounts and estimated fair values of the Company's financial instruments are summarized as follows:

	March 31, 2018				December 30, 2017
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	21	$	21	$	19	$	19
Notes receivable	282		282		282		282
Interest rate swaps	120		120		—		—
Financial liabilities:
Long-term debt and capital leases, including current portion	134,705		131,083		133,257		131,203
Interest rate swaps	1,304		1,304		2,229		2,229

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Derivatives (Tables)

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments [Table Text Block]

The following is a summary of the Company's interest rate swaps as of March 31, 2018:

Type	Notional Amount			Effective Date	Fixed Rate	Variable Rate
Interest rate swap	$	25,000		September 1, 2016 through September 1, 2021	3.105%	1 Month LIBOR
Interest rate swap	$	25,000		September 1, 2015 through September 1, 2021	3.304%	1 Month LIBOR
Interest rate swap	$	6,942	(1)	November 7, 2014 through November 7, 2024	4.500%	1 Month LIBOR
Interest rate swap	$	5,294	(2)	January 7, 2017 through January 7, 2025	4.300%	1 Month LIBOR

(1) Interest rate swap notional amount amortizes by $35 monthly to maturity.

(2) Interest rate swap notional amount amortizes by $26 monthly to maturity.

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The following table summarizes the fair values of derivative instruments included in the Company's financial statements:

	Location on Consolidated Balance Sheets	Fair Value
		March 31, 2018		December 30, 2017
Asset Derivatives:
Derivatives designated as hedging instruments:
Interest rate swaps	Other Assets	$	120	$	—
Total Asset Derivatives		$	120	$	—
Liability Derivatives:
Derivatives designated as hedging instruments:
Interest rate swaps, current portion	Accrued Expenses	$	606	$	842
Interest rate swaps, long-term portion	Other Long-Term Liabilities	698		1,387
Total Liability Derivatives		$	1,304	$	2,229

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance [Table Text Block]

The following tables summarize the pre-tax impact of derivative instruments on the Company's financial statements:

	Amount of Gain or (Loss) Recognized in AOCIL on the effective portion of the Derivative
	Three Months Ended
	March 31, 2018			April 1, 2017
Derivatives designated as hedging instruments:
Cash flow hedges - interest rate swaps	$	804		$	57
	Amount of Gain or (Loss) Reclassified from AOCIL on the effective portion into Income (1)(2)
	Three Months Ended
	March 31, 2018			April 1, 2017
Derivatives designated as hedging instruments:
Cash flow hedges - interest rate swaps	$	(228	)	$	(359	)

(1) The amount of gain (loss) reclassified from AOCIL is included in interest expense on the Company's financial statements.

(2) The amount of loss expected to be reclassified from AOCIL into earnings during the next 12 months subsequent to March 31, 2018 is $606.

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share, Basic and Diluted [Abstract]

Schedule of Earnings Per Share Reconciliation [Table Text Block]

The following table sets forth the computation of basic and diluted earnings (loss) per share from continuing operations:

	Three Months Ended
	March 31, 2018			April 1, 2017
Basic earnings (loss) per share:
Loss from continuing operations	$	(2,884	)	$	(575	)
Less: Allocation of earnings to participating securities	—			—
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Basic weighted-average shares outstanding (1)	15,715			15,673
Basic earnings (loss) per share - continuing operations	$	(0.18	)	$	(0.04	)
Diluted earnings (loss) per share:
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Add: Undistributed earnings reallocated to unvested shareholders	—			—
Loss from continuing operations available to common shareholders - basic	$	(2,884	)	$	(575	)
Basic weighted-average shares outstanding (1)	15,715			15,673
Effect of dilutive securities:
Stock options (2)	—			—
Directors' stock performance units (2)	—			—
Diluted weighted-average shares outstanding (1)(2)	15,715			15,673
Diluted earnings (loss) per share - continuing operations	$	(0.18	)	$	(0.04	)

(1) Includes Common and Class B Common shares, excluding 488 unvested participating securities, in thousands.

(2) Shares issuable under stock option plans where the exercise price is greater than the average market price of the Company's Common Stock during the relevant period and directors' stock performance units have been excluded to the extent they are anti-dilutive. Aggregate shares excluded for the three months ended March 31, 2018 and April 1, 2017 were 448 and 220, respectively, in thousands.

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Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2018

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

Components of accumulated other comprehensive income (loss), net of tax, are as follows:

	Interest Rate Swaps			Post-Retirement Liabilities			Total
Balance at December 30, 2017	(1,587		)	288			(1,299		)
Unrealized gain on interest rate swaps	804			—			804
Reclassification of loss into earnings from interest rate swaps	228			—			228
Reclassification of net actuarial gain into earnings from postretirement benefit plans	—			(7		)	(7		)
Reclassification of prior service credits into earnings from postretirement benefit plans	—			(1		)	(1		)
Balance at March 31, 2018	$	(555	)	$	280		$	(275	)

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Other (Income) Expense, Net (Tables)

3 Months Ended

Mar. 31, 2018

Other Income and Expenses [Abstract]

Schedule of Other Operating Cost and Expense, by Component [Table Text Block]

Other operating (income) expense, net is summarized as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Other operating (income) expense, net:
(Gain) loss on currency exchanges	$	(8	)	$	17
Amortization of intangibles	76			76
Retirement expenses	54			18
Vendor settlement	(355		)	—
Insurance proceeds	(48		)	—
Miscellaneous (income) expense	40			(59		)
Other operating (income) expense, net	$	(241	)	$	52

Schedule of Other Nonoperating Income (Expense) [Table Text Block]

	Three Months Ended
	March 31, 2018			April 1, 2017
Other expense (income), net:
Post-retirement income	$	(5	)	$	(5	)
Miscellaneous (income) expense	7			4
Other expense (income), net	$	2		$	(1	)

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Facility Consolidation and Severance Expenses, Net (Tables)

3 Months Ended

Mar. 31, 2018

Restructuring Cost and Reserve [Line Items]

Restructuring and Related Costs [Table Text Block]

Costs related to the facility consolidation plans are summarized as follows:

											As of March 31, 2018
	Accrued Balance at December 30, 2017		2018 Expenses To Date				2018 Cash Payments		Accrued Balance at March 31, 2018		Total Costs Incurred To Date		Total Expected Costs
Warehousing, Distribution & Manufacturing Consolidation Plan	$	—	$	—			$	—	$	—	$	7,440	$	7,440
Corporate Office Consolidation Plan	171		—				18		153		807		807
Profit Improvement Plan	$	334	$	216			$	316	$	234	$	852	$	1,921
Total All Plans	$	505	$	216	(1)		$	334	$	387	$	9,099	$	10,168
	Accrued Balance at December 31, 2016		2017 Expenses To Date				2017 Cash Payments		Accrued Balance at April 1, 2017
Warehousing, Distribution & Manufacturing Consolidation Plan	266		—				63		203
Corporate Office Consolidation Plan	248		—				18		230
Totals	$	514	$	—	(1	)	$	81	$	433

(1) Costs incurred under these plans are classified as "facility consolidation and severance expenses, net" in the Company's Consolidated Condensed Statements of Operations.

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Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

Discontinued operations are summarized as follows:

	Three Months Ended
	March 31, 2018			April 1, 2017
Loss from discontinued operations:
Workers' compensation costs (credits) from former textile operations	$	7		$	(27	)
Environmental remediation costs from former textile operations	(30		)	(21		)
Loss from discontinued operations, before taxes	$	(23	)	$	(48	)
Income tax benefit	—			(19		)
Loss from discontinued operations, net of tax	$	(23	)	$	(29	)

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Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Prepaids and other current assets	$ 5,780	$ 4,669
Accrued expenses	$ 31,076	31,360
Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Prepaids and other current assets		3,600
Accrued expenses		30,291
Restatement Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Prepaids and other current assets		1,069
Accrued expenses		$ 1,069

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Disaggregation of Revenue [Line Items]
NET SALES	$ 98,858	$ 97,541
Residential Floorcovering Products [Member]
Disaggregation of Revenue [Line Items]
NET SALES	67,095	62,539
Commercial Floorcovering Products [Member]
Disaggregation of Revenue [Line Items]
NET SALES	31,287	34,516
Other Services [Member]
Disaggregation of Revenue [Line Items]
NET SALES	$ 476	$ 486

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Revenue (Contract Balances) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Revenue from Contract with Customer [Abstract]
Beginning contract liability	$ 5,717	$ 8,212
Revenue recognized from contract liabilities included in the beginning balance	(4,484)	(6,311)
Increases due to cash received, net of amounts recognized in revenue during the period	4,063	5,671
Ending contract liability	$ 5,296	$ 7,572

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Revenue (Bill-and-Hold Arrangement) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Revenue from Contract with Customer [Abstract]
Bill-and-Hold Arrangement	$ 630

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Receivables, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017	Dec. 30, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Customers, trade	$ 45,286		$ 43,683
Other receivables	2,768		2,930
Gross receivables	48,054		46,613
Less: allowance for doubtful accounts	(171)		(133)
Receivables, net	47,883		$ 46,480
Allowance for doubtful accounts [Abstract]
Bad debt expense	$ 60	$ 30

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Inventories, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 40,884	$ 39,264
Work-in-process	22,510	24,454
Finished goods	67,060	65,172
Supplies and other	155	143
LIFO reserve	(13,621)	(15,376)
Inventories, net	$ 116,988	$ 113,657

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Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017	Dec. 30, 2017
Property, Plant and Equipment [Line Items]
Land and improvements	$ 7,886		$ 7,886
Buildings and improvements	63,226		62,852
Machinery and equipment	189,980		188,971
Assets under construction	1,811		2,443
Property, plant and equipment, gross	262,903		262,152
Accumulated depreciation	(171,381)		(168,367)
Property, plant and equipment, net	91,522		$ 93,785
Depreciation	$ 3,015	$ 3,083

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Goodwill and Other Intangibles (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017	Dec. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 3,389		$ 3,389
Finite-Lived Intangible Assets, Net	2,385		$ 2,461
Amortization of intangibles	$ 76	$ 76

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Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
Payables and Accruals [Abstract]
Compensation and benefits	$ 8,817	$ 9,276
Provision for customer rebates, claims and allowances	8,063	9,820
Advanced customer deposits	5,296	5,717
Outstanding checks in excess of cash	2,641	379
Other	6,259	6,168
Accrued expenses	$ 31,076	$ 31,360

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Product Warranty Reserves (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Product Warranties Disclosures [Abstract]
Product warranty reserve at beginning of period	$ 1,356	$ 1,439
Warranty liabilities accrued	614	404
Warranty liabilities settled	(691)	(416)
Changes for pre-existing warranty liabilities	(31)	(70)
Product warranty reserve at end of period	$ 1,248	$ 1,357

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Long-Term Debt and Credit Arrangements (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
Debt Instrument [Line Items]
Revolving credit facility	$ 101,493	$ 97,708
Notes payable - buildings	12,236	12,419
Acquisition note payable - Robertex	795	791
Notes payable - equipment and other	7,355	8,474
Capital lease obligations	13,446	14,530
Deferred financing costs, net	(620)	(665)
Total long-term debt	134,705	133,257
Less: current portion of long-term debt	9,113	9,811
Long-term debt	$ 125,592	$ 123,446

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Long-Term Debt and Credit Arrangements (Revolving Credit Facility) (Details) - Amended Revolving Credit Facility [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) Rate	Dec. 30, 2017 Rate
Line of Credit Facility [Line Items]
Maximum Borrowing Capacity | $	$ 150,000
Basis Spread on Variable Rate at End of Period	1.75%
Commitment Fee Percentage	0.375%
Debt, Weighted Average Interest Rate	4.26%	4.12%
Current Borrowing Capacity Accessible to the Company | $	$ 12,294
Line of Credit Facility, Amended Minimum Borrowing Capacity for No Financial Covenants | $	16,500
Remaining Borrowing Capacity | $	$ 28,794
Minimum [Member]
Line of Credit Facility [Line Items]
Fixed Charge Coverage Ratio	1.1
Alternative [Member] | Minimum [Member] | Libor [Member]
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	1.50%
Alternative [Member] | Maximum [Member] | Libor [Member]
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	2.00%
Alternative B [Member] | Federal Funds [Member]
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	0.50%
Alternative B [Member] | Daily Libor [Member]
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	1.00%
Alternative B [Member] | Minimum [Member] | Daily Libor [Member]
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	0.50%
Alternative B [Member] | Maximum [Member] | Daily Libor [Member]
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	1.00%

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Long-Term Debt and Credit Arrangements (Notes Payable - Buildings) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 30, 2017	Jan. 23, 2015	Nov. 07, 2014
Debt Instrument [Line Items]
Notes payable - buildings	$ 12,236	$ 12,419
Building - Adairsville [Member]
Debt Instrument [Line Items]
Notes payable - buildings				$ 8,330
Debt Instrument, Interest Rate, Stated Percentage				2.00%
Debt Instrument, Periodic Payment, Principal	35
Final Payment on Debt Instument				$ 4,165
Fixed Interest Rate				4.50%
Building - Saraland [Member]
Debt Instrument [Line Items]
Notes payable - buildings			$ 6,290
Debt Instrument, Interest Rate, Stated Percentage			2.00%
Debt Instrument, Periodic Payment, Principal	$ 26
Final Payment on Debt Instument			$ 3,145
Fixed Interest Rate			4.30%

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Long-Term Debt and Credit Arrangements (Acquisition Note Payable - Robertex) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) yr	Dec. 30, 2017 USD ($)	Jul. 01, 2013 USD ($) Rate
Debt Instrument [Line Items]
Acquisition note payable - Robertex	$ 795	$ 791
Note Payable - Robertex Acquisition [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage | Rate			4.50%
Acquisition note payable - Robertex	$ 3,749		$ 4,000
Term of Note Payable | yr	5
Debt Instrument, Annual Principal Payment	$ 800

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Long-Term Debt and Credit Arrangements (Notes Payable - Equipment and Other) (Details) - Equipment Note Payable [Member]	3 Months Ended
	Mar. 31, 2018 yr Rate
Minimum [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage | Rate	1.00%
Term of Note Payable | yr	1
Maximum [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage | Rate	7.68%
Term of Note Payable | yr	7

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Long-Term Debt and Credit Arrangements (Capital Lease Obligations) (Details) - Capital Lease Obligations [Member]	3 Months Ended
	Mar. 31, 2018 yr Rate
Minimum [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage | Rate	3.55%
Term of Capital Lease Obligation (in months) | yr	3
Maximum [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage | Rate	7.37%
Term of Capital Lease Obligation (in months) | yr	7

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Fair Value Measurements (Fair Value Measurements - Assets and Liabilities Measured on Recurring and Nonrecurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 30, 2017
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Interest rate swaps	[1]	$ 120	$ 0
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swaps	[1]	1,304	2,229
Fair Value, Inputs, Level 3 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Contingent consideration	[2]	$ 25	$ 25

[1] The Company uses certain external sources in deriving the fair value of the interest rate swaps. The interest rate swaps were valued using observable inputs (e.g., LIBOR yield curves, credit spreads). Valuations of interest rate swaps may fluctuate considerably from period-to-period due to volatility in underlying interest rates, which are driven by market conditions and the duration of the instrument. Credit adjustments could have a significant impact on the valuations due to changes in credit ratings of the Company or its counterparties.

[2] As a result of the Robertex acquisition in 2013, the Company recorded a contingent consideration liability at fair value. This fair value measurement was based on calculations that utilize significant inputs not observable in the market including forecasted revenues, gross margins and discount rates and thus represent Level 3 measurements. This fair value measurement is directly impacted by the Company's estimates. Accordingly, if the estimates within the fair value measurement are higher or lower, the Company would record additional charges or benefits, respectively, as appropriate.

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Fair Value Measurements (Fair Value Measurements - Liabilities Measured on Recurring Basis Unobservable Input Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 25	$ 200
Fair value adjustments	0	3
Ending balance	$ 25	$ 203

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Fair Value Measurements (Fair Value Measurements - Carrying Amount and Fair Value) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and cash equivalents	$ 21	$ 19
Notes receivable	282	282
Interest rate swaps	120	0
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Long-term debt and capital leases, including current portion	134,705	133,257
Interest rate swaps	1,304	2,229
Estimate of Fair Value, Fair Value Disclosure [Member]
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and cash equivalents	21	19
Notes receivable	282	282
Interest rate swaps	120	0
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Long-term debt and capital leases, including current portion	131,083	131,203
Interest rate swaps	$ 1,304	$ 2,229

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Derivatives (Summary of Derivative Instruments) (Details) - Interest Rate Swap [Member] $ in Thousands	Mar. 31, 2018 USD ($) Rate
Effective September 1, 2016 through September 1, 2021 [Member]
Derivative [Line Items]
Notional Amount	$ 25,000
Fixed Interest Rate | Rate	3.105%
Effective September 1, 2015 through September 1, 2021 [Member]
Derivative [Line Items]
Notional Amount	$ 25,000
Fixed Interest Rate | Rate	3.304%
Effective November 7, 2014 through November 7, 2024 [Member]
Derivative [Line Items]
Notional Amount	$ 6,942	[1]
Fixed Interest Rate | Rate	4.50%
Derivative, Amortizing Notional Amount	$ 35
Effective January 7, 2017 through January 7, 2025 [Member]
Derivative [Line Items]
Notional Amount	$ 5,294	[2]
Fixed Interest Rate | Rate	4.30%
Derivative, Amortizing Notional Amount	$ 26

[1] Interest rate swap notional amount amortizes by $35 monthly to maturity.

[2] Interest rate swap notional amount amortizes by $26 monthly to maturity.

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Derivatives (Derivatives - Fair Value and Designation) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
Derivative Asset, Fair Value, Net [Abstract]
Interest rate swaps	$ 120	$ 0
Derivative Liability, Fair Value, Net [Abstract]
Interest rate swaps	1,304	2,229
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Other Assets [Member]
Derivative Asset, Fair Value, Net [Abstract]
Interest rate swaps	120	0
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Accrued Liabilities [Member]
Derivative Liability, Fair Value, Net [Abstract]
Interest rate swaps	606	842
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Other Liabilities [Member]
Derivative Liability, Fair Value, Net [Abstract]
Interest rate swaps	$ 698	$ 1,387

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Derivatives (Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance) (Details) - Designated as Hedging Instrument [Member] - Interest Rate Swap [Member] - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Apr. 01, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in AOCIL on the effective portion of the Derivative		$ 804	$ 57
Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Reclassified from AOCIL on the effective portion into Income	[1],[2]	(228)	(359)
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net		606
Other Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized on the ineffective portion in Income on interest rate swaps		$ 0	$ 0

[1] The amount of gain (loss) reclassified from AOCIL is included in interest expense on the Company's financial statements.

[2] The amount of loss expected to be reclassified from AOCIL into earnings during the next 12 months subsequent to March 31, 2018 is $606.

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Employee Benefit Plans (Defined Contribution Plans) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Non-Collective-Bargaining Plan [Member]
Defined Contribution Plans [Line Items]
Percentage of Employees Covered	85.00%
Employer Matching Contribution, Percentage	1.00%
Employer Matching Contribution, Discretionary Percentage	2.00%
Maximum Annual Contribution Per Employee, Percentage	3.00%
Cost Recognized	$ 264	$ 233
Collective-Bargaining Plan [Member]
Defined Contribution Plans [Line Items]
Percentage of Employees Covered	15.00%
Maximum Annual Contribution Per Employee, Percentage	2.75%
Cost Recognized	$ 29	$ 18

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Employee Benefit Plans (Non-qualified Retirement Savings Plan) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
Retirement Benefits [Abstract]
Liability to Participants	$ 17,002	$ 17,010
Cash Surrender Value of Life Insurance	$ 18,067	$ 18,232

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Employee Benefit Plans (Multi-Employer Pension Plan) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Multiemployer Plans [Line Items]
Contributions	$ 92	$ 66

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Income Taxes (Income Tax Reconciliation, Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Apr. 01, 2017	Dec. 30, 2017
Income Tax Disclosure [Abstract]
Federal Statutory Income Tax Rate			35.00%
Federal Statutory Income Tax Rate Effective January 1, 2018	21.00%
Effective income tax rate	5.40%	22.10%
Stock-based compensation		$ 164
Deferred Tax Liabilities, Net	$ 1,112		$ 1,105

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Income Taxes (Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
Income Tax Contingency [Line Items]
Unrecognized tax benefits	$ 419	$ 414
Income tax penalties and interest accrued	$ 0	$ 0

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Earnings (Loss) Per Share (Earnings (Loss) Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2018	Apr. 01, 2017
Basic earnings (loss) per share:
Loss from continuing operations		$ (2,884)	$ (575)
Less: Allocation of earnings to participating securities		0	0
Loss from continuing operations available to common shareholders - basic		$ (2,884)	$ (575)
Basic weighted-average shares outstanding (1)	[1]	15,715	15,673
Basic earnings (loss) per share - continuing operations		$ (0.18)	$ (0.04)
Diluted earnings (loss) per share:
Loss from continuing operations available to common shareholders - basic		$ (2,884)	$ (575)
Add: Undistributed earnings reallocated to unvested shareholders		0	0
Loss from continuing operations available to common shareholders - basic		$ (2,884)	$ (575)
Effect of dilutive securities:
Stock options (2)	[2]	0	0
Directors' stock performance units (2)	[2]	0	0
Diluted weighted-average shares outstanding (1)(2)	[1],[2]	15,715	15,673
Diluted earnings (loss) per share - continuing operations		$ (0.18)	$ (0.04)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number		488
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		448	220

[1] Includes Common and Class B Common shares, excluding 488 unvested participating securities, in thousands.

[2] Shares issuable under stock option plans where the exercise price is greater than the average market price of the Company's Common Stock during the relevant period and directors' stock performance units have been excluded to the extent they are anti-dilutive. Aggregate shares excluded for the three months ended March 31, 2018 and April 1, 2017 were 448 and 220, respectively, in thousands.

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Stock Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017	Mar. 12, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 227	$ 288
Restricted Stock Granted in Period			297,292
Grant Date Fair Value of Restricted Stock			$ 832
Weighted Average Grant Date Fair Value of Resticted Stock			$ 2.800
Award Vesting Period	6 years 1 month

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Accumulated Other Comprehensive Income (Loss) (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss) - total	$ (1,299)
Unrealized gain on interest rate swaps, net	804	$ 35
Reclassification of loss into earnings from interest rate swaps, net	228	223
Reclassification of net actuarial gain into earnings from postretirement benefit plans, net	(7)	(5)
Reclassification of prior service credits into earnings from postretirement benefit plans, net	(1)	$ (1)
Accumulated other comprehensive income (loss) - total	(275)
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss) - total	(1,587)
Unrealized gain on interest rate swaps, net	804
Reclassification of loss into earnings from interest rate swaps, net	228
Accumulated other comprehensive income (loss) - total	(555)
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss) - total	288
Reclassification of net actuarial gain into earnings from postretirement benefit plans, net	(7)
Reclassification of prior service credits into earnings from postretirement benefit plans, net	(1)
Accumulated other comprehensive income (loss) - total	$ 280

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Accumulated Other Comprehensive Income (Loss) (Accumulated Other Comprehensive Income (Loss)) (Parentheticals) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized gain on interest rate swaps	$ 0	$ 22
Reclassification of loss into earnings from interest rate swaps	0	136
Reclassification of net actuarial gain into earnings from postretirement benefit plans	0	(3)
Reclassification of prior service credits into earnings from postretirement benefit plans	0	$ 0
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized gain on interest rate swaps	0
Reclassification of loss into earnings from interest rate swaps	0
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Reclassification of net actuarial gain into earnings from postretirement benefit plans	0
Reclassification of prior service credits into earnings from postretirement benefit plans	$ 0

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Contingencies (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
The Water Works and Sewer Board of the City of Gadsden [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages Sought, Value	$ 10
The Water Works and Sewer Board of the Town of Centre [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages Sought, Value	10
Brenda Bridgeman [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages Sought, Value	50
Danny and Pamela Atkins [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages Sought, Value	$ 50

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Other Operating Income and Expenses, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Other Operating Income and Expenses, Net [Abstract]
(Gain) loss on currency exchanges	$ (8)	$ 17
Amortization of intangibles	76	76
Retirement expenses	54	18
Vendor settlement	(355)	0
Insurance proceeds	(48)	0
Miscellaneous (income) expense	40	(59)
Other operating (income) expense, net	$ (241)	$ 52

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Other Non-Operating Income and Expenses, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Other Non-Operating Income and Expenses, Net [Abstract]
Post-retirement income	$ (5)	$ (5)
Miscellaneous (income) expense	7	4
Other expense (income), net	$ 2	$ (1)

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Facility Consolidation and Severance Expenses, Net (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Apr. 01, 2017
Restructuring Cost and Reserve [Line Items]
Accrued Balance		$ 505	$ 514
Expenses To Date	[1]	216	0
Cash Payments		334	81
Accrued Balance		387	433
Total Costs Incurred To Date		9,099
Expected Cost Remaining		10,168
2014 Warehousing Distribution and Manufacturing Consolidation Plan [Member]
Restructuring Cost and Reserve [Line Items]
Accrued Balance		0	266
Expenses To Date	[1]	0	0
Cash Payments		0	63
Accrued Balance		0	203
Total Costs Incurred To Date		7,440
Expected Cost Remaining		7,440
2015 Corporate Office Consolidation Plan [Member]
Restructuring Cost and Reserve [Line Items]
Accrued Balance		171	248
Expenses To Date	[1]	0	0
Cash Payments		18	18
Accrued Balance		153	$ 230
Total Costs Incurred To Date		807
Expected Cost Remaining		807
2017 Profit Improvement Plan [Member]
Restructuring Cost and Reserve [Line Items]
Accrued Balance		334
Expenses To Date	[1]	216
Cash Payments		316
Accrued Balance		234
Total Costs Incurred To Date		852
Expected Cost Remaining		$ 1,921

[1] Costs incurred under these plans are classified as "facility consolidation and severance expenses, net" in the Company's Consolidated Condensed Statements of Operations.

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Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Loss from discontinued operations:
Loss from discontinued operations, before taxes	$ (23)	$ (48)
Income tax benefit	0	(19)
Income (loss) from discontinued operations	(23)	(29)
Previously Discontinued Operations [Member]
Loss from discontinued operations:
Workers' compensation costs (credits) from former textile operations	7	(27)
Environmental remediation costs from former textile operations	$ (30)	$ (21)

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Discontinued Operations (Environmental Remediation) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 30, 2017
Environmental Remediation Obligations [Abstract]
Accrual for Environmental Loss Contingencies	$ 1,741	$ 1,746

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Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
James Horwich [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Amounts of Transaction	$ 251	$ 226
Robert E Shaw [Member]
Related Party Transaction [Line Items]
Ownership of Common Stock, Percentage	7.30%
Voting Interest of Common Stock, Percentage	3.30%
Related Party Transaction, Purchases from Related Party	$ 1,715	$ 1,995
Related Party Transaction, Purchases from Related Party, Percentage	2.20%	2.80%
Robert P Rothman [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Amounts of Transaction	$ 69	$ 67