- Operating Income Improved 7.1% Versus Third Quarter 2002 - - Debt Reduced by $16.2 Million During the Quarter -ATLANTA, Oct 22, 2003 /PRNewswire-FirstCall via COMTEX/ -- Interface, Inc.
(Nasdaq: IFSIA), a worldwide interiors products and services company, today
announced results for the third quarter ended September 28, 2003.
Sales in the third quarter 2003 were $237.1 million, compared with $231.3
million in the third quarter 2002. Operating income was $8.0 million in the
third quarter 2003, versus $7.5 million in the third quarter 2002. Loss from
continuing operations was $2.1 million, or $0.04 per share, in the third
quarter 2003, compared with a loss from continuing operations of $1.8 million,
or $0.03 per share, in the third quarter 2002. Loss from discontinued
operations, including an $8.8 million after-tax loss on the disposal of those
operations, was $11.2 million in the third quarter 2003, versus a loss from
discontinued operations of $1.0 million in the same period a year ago. Net
loss for the third quarter 2003 was $13.4 million, or $0.27 per share,
compared with a third quarter 2002 net loss of $2.7 million, or $0.05 per
share.
"In the third quarter of 2003, we continued to make significant
improvements which strengthened our business," said Daniel T. Hendrix,
President and Chief Executive Officer. "We have focused on generating top
line momentum by remaining committed to our market segmentation strategy, the
results of which were evident this quarter in revenue growth throughout most
areas of our business. In addition, we made efforts to streamline our
operations and improve our cost structure, resulting in a 7.1% year-over-year
increase in operating income during the third quarter. Although many of our
end markets have yet to recover from the continued weakness in the economy, we
have been taking proactive measures to position our business for recovery."
Mr. Hendrix continued, "Our worldwide modular business performed strongly
this quarter, with an 8.7% year-over-year increase in revenues primarily
resulting from our ability to take share and capitalize on opportunities in
the corporate office, education and healthcare markets. After returning to
operating profitability in the second quarter of this year, our broadloom
business posted a significant year-over-year increase in operating income in
the third quarter, largely as a result of our cost-cutting initiatives and
improvements in manufacturing efficiencies. Although our fabrics business
remained flat this quarter, we have completed the restructuring initiatives
that will fortify this business and position it for sustained long-term
growth."
For the first nine months of 2003, sales were $681.3 million, compared
with $691.8 million for the same period a year ago. Operating income for the
2003 nine-month period was $8.3 million (which includes $4.6 million of
restructuring charges), versus operating income of $31.2 million for the
comparable 2002 nine-month period. During the 2003 nine-month period, loss
from continuing operations was $15.1 million, or $0.30 per share, compared
with a loss from continuing operations of $0.4 million, or $0.01 per share, in
the same period a year ago. Net loss for the 2003 nine-month period was $29.2
million, or $0.58 per share, compared with a net loss of $57.5 million, or
$1.15 per share, for the first nine months of 2002. During the first nine
months of 2002, the Company's implementation of SFAS No. 142 resulted in an
after-tax write-down of $55.4 million, or $1.11 per diluted share, primarily
related to the impairment of goodwill.
Patrick C. Lynch, Vice President and Chief Financial Officer of Interface,
commented, "As a result of the strategic initiatives we implemented in the
third quarter, our business is stronger and more efficient. During the third
quarter, we completed the sale of Interface Architectural Resources, our
raised/access flooring business, which should improve our overall
profitability and enhance our free cash flow generation going forward. In
addition, we continued to strengthen our balance sheet by reducing debt by
$16.2 million during the third quarter."
Mr. Hendrix continued, "We are pleased to announce the addition of a new
member to our Board of Directors. Edward C. Callaway is currently the
Chairman of Crested Butte Mountain Resort, Inc. in Colorado, and previously
served as its President and Chief Executive Officer from 1987 to 2002. In
addition, Edward is actively involved with The Considine Companies, a
commercial real estate development business based in Denver. Edward graduated
from Dartmouth College before earning a Masters Degree in Accounting from New
York University and a Masters of Business Administration Degree from Stanford
University. His wide array of business and management expertise will provide
an invaluable contribution to our Board of Directors. Edward will join the
Board effective today, and is replacing Len Saulter, who is retiring after
more than 16 years of service as a director."
Mr. Hendrix concluded, "We are encouraged by our third quarter results and
we look forward to maintaining this positive momentum into the final months of
fiscal 2003. We remain committed to the strategic priorities that will allow
our business to prosper, such as our market segmentation strategy, our ongoing
cost management initiatives, and our focus on generating free cash flow to
reduce debt."
The Company will host a conference call tomorrow, October 23, 2003, at
9:00 a.m. Eastern Time, to discuss its third quarter 2003 results. The
conference call will be simultaneously broadcast live over the Internet.
Listeners may access the conference call live over the Internet at
http://www.firstcallevents.com/service/ajwz390484001gf12.html or through the
Company's website at http://www.interfaceinc.com/results/investor/. The
archived version of the conference call will be available at these sites
beginning approximately one hour after the call ends through October 23, 2004
at 11:59 p.m. Eastern Time.
Interface, Inc. is a recognized leader in the worldwide interiors market,
offering floorcoverings and fabrics. The Company is committed to the goal of
sustainability and doing business in ways that minimize the impact on the
environment while enhancing shareholder value. The Company is the world's
largest manufacturer of modular carpet under the Interface, Heuga, Bentley and
Prince Street brands, and through its Bentley Mills and Prince Street brands,
enjoys a leading position in the high quality, designer-oriented segment of
the broadloom carpet market. The Company provides specialized carpet
replacement, installation, maintenance and reclamation services through its
Re:Source Americas service network. The Company is a leading producer of
interior fabrics and upholstery products, which it markets under the Guilford
of Maine, Stevens Linen, Toltec, Intek, Chatham, Camborne and Glenside brands.
In addition, the Company provides specialized fabric services through its
TekSolutions business and produces InterCell brand raised/access flooring
systems.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: Except for historical information contained herein, the other matters
set forth in this news release are forward-looking statements. The
forward-looking statements set forth above involve a number of risks and
uncertainties that could cause actual results to differ materially from any
such statement, including risks and uncertainties associated with economic
conditions in the commercial interiors industry as well as the risks and
uncertainties discussed under the heading "Safe Harbor Compliance Statement
for Forward-Looking Statements" in Item 1 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 2002, which discussion is
incorporated herein by this reference, including, but not limited to, the
discussion of specific risks and uncertainties under the headings "We compete
with a large number of manufacturers in the highly competitive commercial
floorcovering products market, and some of these competitors have greater
financial resources than we do," "Sales of our principal products may be
affected by cycles in the construction and renovation of commercial and
institutional buildings," "Our continued success depends significantly upon
the efforts, abilities and continued service of our senior management
executives and our design consultants," "Our substantial international
operations are subject to various political, economic and other
uncertainties," "Our Chairman, together with other insiders, currently has
sufficient voting power to elect a majority of our Board of Directors," "Large
increases in the cost of petroleum-based raw materials, which we are unable to
pass through to our customers, could adversely affect us," "Unanticipated
termination or interruption of any of our arrangements with our primary
third- party suppliers of synthetic fiber could have a material adverse effect
on us," and "Our Rights Agreement could discourage tender offers or other
transactions that could result in shareholders receiving a premium over the
market price for our stock." Any forward-looking statements are made pursuant
to the Private Securities Litigation Reform Act of 1995 and, as such, speak
only as of the date made. The Company assumes no responsibility to update or
revise forward-looking statements made in this press release and cautions
readers not to place undue reliance on any such forward-looking statements.
Consolidated Statements of Income
(in thousands, except per share data)
Three Months Ended Nine Months Ended
28-Sep-03 29-Sep-02 28-Sep-03 29-Sep-02
Net Sales $237,094 $231,315 $681,268 $691,759
Cost of Sales 171,862 166,666 495,466 492,196
Gross Profit 65,232 64,649 185,802 199,563
Selling, General &
Administrative
Expenses 57,201 57,151 172,911 168,400
Restructuring Charge - - 4,555 -
Operating Income 8,031 7,498 8,336 31,163
Interest Expense 11,033 10,573 31,426 31,739
Other Expense, Net 155 - 592 380
Income (Loss)
Before Taxes (3,157) (3,075) (23,682) (956)
Income Tax Expense
(Benefit) (1,011) (1,293) (8,554) (534)
Income (Loss) from
Continuing
Operations (2,146) (1,782) (15,128) (422)
Discontinued Operations,
Net of Tax (2,417) (967) (5,201) (1,656)
Loss on Disposal,
Net of Tax (8,825) - (8,825) -
Income (Loss) before
Change in
Accounting
Principle (13,388) (2,749) (29,154) (2,078)
Cumulative Effect
of Change, Net of Tax - - - (55,380)
Net Income (Loss) $(13,388) $ (2,749) $(29,154) $(57,458)
Earnings Per Share - Basic and Diluted
Continuing Operations $(0.04) $(0.03) $(0.30) $(0.01)
Discontinued Operations (0.05) (0.02) (0.10) (0.03)
Loss on Disposal (0.18) - (0.18) -
Cumulative Effect of
Change in Accounting
Principle - - - (1.11)
Earnings Per Share -
Basic and Diluted $(0.27) $(0.05) $(0.58) $(1.15)
Common Shares Outstanding,
Basic and Diluted 50,273 50,251 50,247 50,148
Consolidated Condensed Balance Sheets
(In thousands) 28-Sep-03 29-Dec-02
Assets
Cash $ 22,567 $ 34,134
Accounts Receivable 176,453 137,486
Inventory 143,977 134,656
Other Current Assets 40,249 42,953
Assets of Business Held for Sale - 17,492
Total Current Assets 383,246 366,721
Property, Plant & Equipment 207,225 213,059
Other Assets 286,178 283,730
Total Assets $ 876,649 $ 863,510
Liabilities
Current Liabilities $ 173,721 $ 168,912
Long-Term Debt 5,502 -
Senior and Senior Subordinated Notes 445,000 445,000
Other Liabilities 43,146 25,427
Total Liabilities 667,369 639,339
Shareholders' Equity 209,280 224,171
Total Liabilities and
Shareholders' Equity $ 876,649 $ 863,510
SOURCE Interface, Inc.
Daniel T. Hendrix, President and Chief Executive Officer or
Patrick C. Lynch, Chief Financial Officer, both of Interface, Inc.,
+1-770-437-6800; or Christine Mohrmann or Lindsay Hatton, both of Financial
Dynamics, +1-212-850-5600, for Interface, Inc.
http://www.interfaceinc.com