CHATTANOOGA, Tenn. -- The Dixie Group Inc. has reported net income of $188,000, or 2 cents per diluted share, for the second quarter ended June 30, 2001. For the same period in 2000, the company reported net income of $1.3 million, or 11 cents per diluted share. Sales for the second quarter of 2001 were $145.5 million compared with $146.1 million in the year-earlier period.

For the first six months of 2001, the Dixie Group reported a net loss of $2.5 million, or 22 cents per diluted share, compared with net income of $70,000, or 1 cent per diluted share, for the first half of 2000. Year-to-date sales in 2001 were $278.6 million compared with $282.4 million in the first six months of 2000.

"Although we are not satisfied with our results, we returned to profitability in the second quarter of 2001 and have made tremendous progress in improving our operations and balance sheet," said Daniel K. Frierson, company chairman and CEO. "Earnings before interest and taxes (EBIT) improved $12.4 million in the first half of 2001 vs. the last half of 2000. The improvement was driven by the consolidation of our North Georgia operations, which resulted in a substantial reduction in cost and the total number of associates required for our operations.

"As of June 30, 2001, we have reduced debt by approximately $31.0 million compared with the high point in mid-August 2000, including a reduction of $16.0 million in the second quarter 2001. In the last 12 months, we have also reduced inventory by $25.0 million, including $11.0 million during the second quarter.

"Sales remain soft in most of our markets, with the largest declines in the factory-built housing, floor covering specialty and base materials markets,” Frierson continued. “Sales to the high-end markets increased as a result of the acquisition of Fabrica International on July 1, 2000. Although we expect sales to remain sluggish for the remainder of 2001, we are well positioned to take advantage of improvements in our markets.”