DIXIE GROUP INC

As previously disclosed, we are currently defending five lawsuits based generally on alleged damages related to historical use of certain products alleged to have contained PFAS chemicals in our manufacturing processes. Following the end of the quarter, we engaged in settlement discussions with the plaintiffs in four of these pending claims. These pending matters are those styled: Moss Land Company, LLC, et al. v. City of Calhoun, et al., in the Superior Court of Gordon County, Georgia, Case No. 24CV73929; The City of Calhoun, Georgia v. Daikin America, Inc., et al., in the Superior County of Gordon County, Georgia, Case No. 24CV73929; William Hartwell Brooks v. City of Calhoun, Georgia, et al., in the Superior Court of Gordon County, Georgia, Case No. 24CV74289; and James Haley Stephens v. 3M Company, et al., in the Superior Court of Gordon County, Georgia, Case No. 25CV75072. As a result of those discussions, we have reached a memorandum of understanding to settle the Moss claims subject to certain conditions and negotiation of a final settlement agreement with the plaintiffs and have settled all claims with respect to The City of Calhoun in such matters. Accordingly, we have estimated and recorded a liability for such anticipated settlement amounts and payments. That amount is deemed to be immaterial due to the anticipated terms of the settlement agreements. No final settlement agreement has been entered into with respect to the Brooksand Stephens matters and discussions concerning the terms of those final settlement agreements are ongoing.

Additionally, we have obtained an agreement in principle from the Plaintiffs in the pending Chatsworth matter styled, The City of Chatsworth, Georgia v. 3M Company, et al., in the Superior Court of Murray County, Georgia, Case No. 25-C10245 to dismiss without prejudice that lawsuit and the claims against us asserted therein.