RESULTS OF OPERATIONS Fiscal Year Ended December 26, 2020 Compared with Fiscal Year Ended December 28, 2019 Net Sales.  Net sales for the year ended December 26, 2020 were $315.9 million compared with $374.6 in the year-earlier period, a decrease of 15.7% for the year-over-year comparison. Sales of residential floorcovering products were down 7.0% and sales of commercial floorcovering products decreased 37.0%. Net sales in our residential markets have begun to recover from the COVID-19 pandemic but our commercial markets continue to experience reduced sales activity. Gross Profit.  Gross profit, as a percentage of net sales, increased 1.2 percentage points in 2020 compared with 2019. Cost reductions resulting from our Profit Improvement Plan, which was implemented in the prior year, and net expense reductions from the implementation of our COVID-19 Continuity Plan contributed to the improved gross profit margin. These cost savings were partially offset by under absorbed fixed costs due to reduced sales volume after the first quarter and costs related to the COVID-19 Recovery Plan. Selling and Administrative Expenses.  Selling and administrative expenses were $75.7 million in 2020 compared with $83.8 million in 2019, but higher as a percentage of the lower sales volume. Selling and administrative expenses as a percent of the net sales for 2020 and 2019 were 24.0% and 22.4% respectively. The reduction in expenses for selling and administrative expenses in 2020 was the result of cost cuts in response to the COVID-19 pandemic and cost reductions in place from the Profit Improvement Plan implemented in previous years. Other Operating (Income) Expense, Net.  Net other operating (income) expense was income of $108 thousand in 2020 compared with income of $24.0 million in 2019. In 2020, the income was primarily the result of net gains on currency exchange rate adjustments. In 2019, we recognized a $25.1 million gain on the sale of our facility in Santa Ana, California. Facility Consolidation and Severance Expenses, Net. Facility consolidation expenses were $3.8 million in 2020 compared with $5.0 million in the year- earlier period. The facility consolidation expenses incurred during 2020 were primarily related to our COVID-19 Continuity Plan including severance and financing related charges, as well as residual costs from our Profit Improvement Plan including adjustments for workers' compensation related charges. The expenses in 2019 were primarily related to the Profit Improvement Plan. Operating Income (Loss).  The operating loss in 2020 was $2.9 million compared to income of $21.3 million in 2019. The 2019 income was heavily driven by the gain of $25.1 million on the sale of our Santa Ana facility. Adjusted for this transaction, the 2019 operating loss would have been $3.8 million. The 2020 operating loss was the result of lower sales volume and the related under absorbed fixed costs as well as $3.8 million in restructuring expenses primarily related to COVID recovery. These negative impacts were mitigated by higher gross profit margins as a result of cost reductions related to our Profit Improvement Plan from prior years and our current year COVID recovery initiatives. Interest Expense.  Interest expense of $5.8 million in 2020 was a reduction of $641 thousand from $6.4 million incurred in 2019. The reduction is the result of generally lower interest rates and lower levels of debt in 2020 offset by financing costs and Table of Contents 19 Fiscal Year Ended (amounts in thousands) December 26, 2020 % of Net Sales December 28, 2019 % of Net Sales Increase (Decrease) % Change Net sales $ 315,939  100.0  % $ 374,582  100.0  % $ (58,643) (15.7) % Cost of sales 239,483  75.8  % 288,377  77.0  % (48,894) (17.0) % Gross profit 76,456  24.2  % 86,205  23.0  % (9,749) (11.3) % Selling and administrative expenses 75,731  24.0  % 83,825  22.4  % (8,094) (9.7) % Other operating (income) expense, net (108) —  % (23,988) (6.4) % 23,880  (99.5) % Facility consolidation and severance expenses, net 3,752  1.2  % 5,019  1.3  % (1,267) (25.2) % Operating income (loss) (2,919) (1.0) % 21,349  5.7  % (24,268) (113.7) % Interest expense 5,803  1.8  % 6,444  1.7  % (641) (9.9) % Other (income) expense, net 678  0.2  % (57) —  % 735  (1,289.5) % Income (loss) before taxes (9,400) (3.0) % 14,962  4.0  % (24,362) (162.8) % Income tax benefit (312) (0.1) % (657) (0.2) % 345  (52.5) % Income (loss) from continuing operations (9,088) (2.9) % 15,619  4.2  % (24,707) (158.2) % Loss from discontinued operations (120) —  % (348) (0.1) % 228  (65.5) % Net income (loss) $ (9,208) (2.9) % $ 15,271  4.1  % $ (24,479) (160.3) %