- Fourth Quarter Sales Up 12% Year-Over-Year - - Fourth Quarter Operating Income Increases 51% Year-Over-Year -Feb 22, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Interface, Inc.
(Nasdaq: IFSIA), a worldwide floorcoverings and fabrics company, today
announced results for the fourth quarter and full year ended January 1, 2006.
Sales in the 2005 fourth quarter rose 12.0% to $260.6 million from $232.6
million in the year ago period. Operating income in the 2005 fourth quarter
was $23.1 million, compared with operating income of $15.3 million in the
fourth quarter 2004, an increase of 51.0%. As a percentage of sales,
operating income improved to 8.9% in the fourth quarter of 2005 versus 6.6% in
the fourth quarter of last year.
Pursuant to the provisions of the American Jobs Creation Act of 2004, the
Company repatriated $25.4 million of earnings from foreign subsidiaries during
the fourth quarter of 2005. This action took advantage of an opportunity to
repatriate the funds at a substantially reduced tax rate, provided the
transaction occurred before the end of 2005. Consequently, the Company
recorded a tax charge of approximately $1.8 million, or $0.03 per share, in
the fourth quarter related to the repatriation. After this charge, net income
for the fourth quarter 2005 was $5.7 million, or $0.11 per diluted share,
compared with a net loss in the fourth quarter of 2004 of $4.4 million, or
$0.08 per diluted share.
"The year 2005 was very gratifying, as we built upon the momentum
generated during our turnaround in 2004," said Daniel T. Hendrix, President
and Chief Executive Officer. "We continued to expand our leadership position
in the worldwide modular market, outpacing the growth in the overall industry.
While we garnered the benefit of some resurgence in our core corporate office
market, we also took further steps to significantly diversify our revenue base
through our segmentation strategy. This was true not only in modular but also
in our fabrics and broadloom businesses, each of which delivered solid
improvements in both sales and profitability during the year. Importantly, we
also were able to largely offset rising raw material costs through enhanced
manufacturing efficiencies, diligent cost management and successfully passing
through price increases, which led to higher operating margins."
Mr. Hendrix added, "Modular carpet is increasingly becoming the
floorcovering of choice across most commercial market segments, and that is
reflected by the 13% increase year-over-year in worldwide sales we achieved in
the fourth quarter. This growth was particularly strong in the U.S. and
Asia-Pacific regions, where strong order flows produced record fourth quarter
results -- for the second year in a row. Furthermore, our Europe modular
business had its best quarter in the last five years. The growing strength of
the corporate office market also led to an 11% increase year-over-year in
fabrics sales in the fourth quarter. We are pleased with the progress made in
this business during the year, as we were successful in our efforts to reduce
costs, penetrate the automotive market, and significantly improve
profitability over prior year levels. In addition, our Bentley Prince Street
broadloom business posted its best quarter in five years, with sales in the
fourth quarter increasing 15% year-over-year, while our cost control efforts
within this division led to substantial profitability growth."
Patrick C. Lynch, Vice President and Chief Financial Officer, commented,
"Financially, this was an important year for Interface, as our results affirm
the strategic actions we have taken within the business. Based on the
leverage in our operating model, we were able to capitalize on the growth
opportunities presented in our markets, while containing costs and decreasing
selling, general and administrative expenses as a percentage of overall sales.
At the same time, we maintained our focus on cash flow, generating a $29.1
million net increase in cash for the year."
For the full year 2005, sales increased 11.8% to $985.8 million, compared
with $881.7 million in 2004. Operating income rose 35.0% to $82.0 million, or
8.3% of sales, from $60.7 million, or 6.9% of sales, last year. Income from
continuing operations was $18.0 million, or $0.34 per diluted share, for 2005,
versus income from continuing operations of $6.4 million, or $0.12 per diluted
share, a year ago. In connection with the Company's repatriation in 2005 of
an aggregate of $35.9 million of earnings of foreign subsidiaries, it recorded
aggregate tax charges of $3.4 million, or $0.06 per diluted share. After
these charges, together with losses from discontinued operations of $14.8
million and a loss on disposal of $1.9 million, net income for 2005 was $1.2
million, or $0.02 per diluted share. This compares with a net loss in 2004 of
$55.4 million, or $1.06 per diluted share (which included a loss from
discontinued operations of $58.8 million and a loss on disposal of $3.0
million).
Mr. Hendrix concluded, "We are very pleased with our results for the
fourth quarter and full year 2005. We believe we are well positioned to
continue the strong momentum in all of our businesses in 2006 by driving our
segmentation strategy and maintaining careful control over our cost
structure."
The Company will host a conference call today, February 22, 2006, at 4:30
p.m. Eastern Time, to discuss its fourth quarter and full year 2005 results.
The conference call will be simultaneously broadcast live over the Internet.
Listeners may access the conference call live over the Internet at
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-
eventDetails&c=112931&eventID=1211711 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 February 22, 2007 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, InterfaceFLOR,
Heuga, Bentley and Prince Street brands, and, through its Bentley and Prince
Street brands, enjoys a leading position in the high quality, designer-
oriented segment of the broadloom carpet market. The Company is a leading
producer of interior fabrics and upholstery products, which it markets under
the Guilford of Maine, Chatham and Camborne brands, and provides specialized
fabric services through its TekSolutions business.
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" included in Item 1 of the Company's Annual Report on Form 10-K for
the fiscal year ended January 2, 2005, 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 have been and may continue to be
affected by adverse economic cycles in the construction and renovation of
commercial and institutional buildings," "Our success depends significantly
upon the efforts, abilities and continued service of our senior management
executives and our principal design consultant, and our loss of any of them
could affect us adversely," "Our substantial international operations are
subject to various political, economic and other uncertainties that could
adversely affect our business results, including by restrictive taxation or
other government regulation and by foreign currency fluctuations," "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," "We have a
significant amount of indebtedness which could have important negative
consequences to us," and "Our Rights Agreement could discourage tender offers
or other transactions for our stock 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 Twelve Months Ended
1-Jan-06 2-Jan-05 1-Jan-06 2-Jan-05
Net Sales $260,608 $232,590 $985,766 $881,658
Cost of Sales 180,819 164,432 681,069 616,297
Gross Profit 79,789 68,158 304,697 265,361
Selling, General
and Administrative
Expenses 56,693 52,854 222,696 204,619
Operating Income 23,096 15,304 82,001 60,742
Interest Expense 11,055 11,271 45,541 46,023
Bond Offering Cost - - - 1,869
Other Expense
(Income), Net (106) 756 933 2,366
Income Before Taxes 12,147 3,277 35,527 10,484
Income Tax Expense 6,381 1,425 17,561 4,044
Income from
Continuing
Operations 5,766 1,852 17,966 6,440
Discontinued
Operations, Net
of Tax (50) (2,748) (14,791) (58,815)
Loss on Disposal,
Net of Tax - (3,492) (1,935) (3,027)
Net Income (Loss) $5,716 $(4,388) $1,240 $(55,402)
Earnings (Loss) Per
Share - Basic
Continuing
Operations $0.11 $ 0.04 $0.35 $0.13
Discontinued
Operations - (0.05) (0.29) (1.16)
Loss on Disposal - (0.07) (0.04) (0.06)
Earnings (Loss) Per
Share - Basic $0.11 $(0.08) $0.02 $(1.09)
Earnings (Loss) Per
Share - Diluted
Continuing
Operations $0.11 $ 0.04 $0.34 $0.12
Discontinued
Operations - (0.05) (0.28) (1.12)
Loss on Disposal - (0.07) (0.04) (0.06)
Earnings (Loss) Per
Share - Diluted $0.11 $(0.08) $0.02 $(1.06)
Common Shares
Outstanding - Basic 51,834 51,026 51,551 50,682
Common Shares
Outstanding -
Diluted 53,171 52,870 52,895 52,171
Orders from
Continuing
Operations $268,000 $247,700 $1,026,400 $951,900
Continuing
Operations Backlog
(as of 01/01/06 and
01/02/05,
respectively) $104,000 $91,700
Consolidated Condensed Balance Sheets
(In thousands) 1-Jan-06 2-Jan-05
Assets
Cash $51,312 $22,164
Accounts Receivable 141,408 142,228
Inventory 130,209 137,618
Other Current Assets 21,164 22,756
Assets of Businesses Held for Sale 5,526 42,788
Total Current Assets 349,619 367,554
Property, Plant & Equipment 185,643 194,702
Other Assets 303,728 307,542
Total Assets $838,990 $869,798
Liabilities
Current Liabilities $140,107 $138,712
Long-Term Debt - -
Senior and Senior Subordinated Notes 458,000 460,000
Other Liabilities 68,807 76,908
Total Liabilities 666,914 675,620
Shareholders' Equity 172,076 194,178
Total Liabilities and Shareholders'
Equity $838,990 $869,798
Consolidated Condensed Statements of Cash Flows Twelve Months Ended
(In millions) 1-Jan-06 2-Jan-05
Net Income (Loss) $1.2 $(55.4)
Depreciation, Amortization and other
non-cash 32.5 33.3
Deferreds and other non-cash items 10.4 52.8
Change in Working Capital
Accounts Receivable (6.7) 0.3
Inventories 2.8 (1.9)
Prepaids (2.7) 1.0
Accounts Payable and Accrued Expenses 11.8 (1.9)
Cash Provided from Operating Activities
of Continuing Operations 49.3 28.2
Cash Provided from (used in) Operating Activities
of Discontinued Operations 12.0 (18.7)
Cash Provided from Operating Activities 61.3 9.5
Cash Used in Investing Activities (30.6) (7.8)
Cash Provided from Financing Activities 0.9 15.2
Effect of Exchange Rate Changes on Cash (2.5) 2.3
Net Increase in Cash $29.1 $19.2
Consolidated Condensed Segment Reporting
(In millions)
Three Months Ended Twelve Months Ended
1-Jan-06 2-Jan-05 % Change 1-Jan-06 2-Jan-05 % Change
Net Sales
Modular Carpet $ 171.0 $151.8 12.7% $646.2 $563.4 14.7%
Bentley Prince
Street 35.5 31.0 14.5% 125.2 119.1 5.1%
Fabrics Group 51.0 46.1 10.6% 198.8 186.4 6.7%
Specialty
Products 3.1 3.7 (16.2)% 15.6 12.8 21.9%
Total $ 260.6 $232.6 12.0% $985.8 $881.7 11.8%
Operating Income
(Loss)
Modular Carpet $21.4 $19.2 $77.4 $63.9
Bentley Prince
Street 1.7 0.3 3.5 0.1
Fabrics Group 1.3 (1.0) 4.3 0.8
Specialty Products 0.0 (0.3) 0.6 (0.5)
Corporate Expenses
and Eliminations (1.3) (2.9) (3.8) (3.6)
Total $23.1 $15.3 $82.0 $60.7
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 Jim Olecki
Financial Dynamics
+1-212-850-5600
for Interface, Inc.