- Announces New Restructuring Plan -
- Declares Reduced Quarterly Dividend -
ATLANTA, Feb. 25 /PRNewswire-FirstCall/ -- Interface, Inc. (Nasdaq:
IFSIA), a worldwide floorcoverings company and global leader in
sustainability, today announced results for the fourth quarter and full year
ended December 28, 2008.
Sales for the fourth quarter of 2008 were $247.2 million, compared with
sales of $293.3 million in the fourth quarter of 2007, a decline of 15.7%.
Excluding the items detailed below, operating income for the 2008 fourth
quarter was $21.2 million, or 8.6% of sales, compared with operating income of
$39.4 million, or 13.4% of sales, in the fourth quarter of last year. The
Company's 2008 fourth quarter results were impacted by the following items:
- $61.2 million, or $0.99 per share, in non-cash charges resulting from
the impairment of goodwill related to Bentley Prince Street;
- $11.0 million, or $0.13 per share after tax, in previously announced
restructuring charges;
- $13.3 million, or $0.22 per share, in tax charges for the anticipated
repatriation in 2009 of approximately $37 million of earnings from
Canada and Europe; and
- $2.8 million, or $0.05 per share, in non-cash charges related to the
decline in cash surrender value of Company-owned life insurance.
Including these items, 2008 fourth quarter operating loss was $53.8
million. Please see the attached tables for a reconciliation of GAAP to
Non-GAAP measures.
Net income for the 2008 fourth quarter, excluding the items described
above, was $6.0 million, or $0.10 per share, compared with net income in the
year ago period of $20.3 million, or $0.33 per diluted share. Including the
items, the Company reported a fourth quarter 2008 net loss of $79.3 million,
or $1.29 per share.
"The results for the 2008 fourth quarter reflect the global economic
downturn which impacted our business in almost every geographic area," said
Daniel T. Hendrix, President and Chief Executive Officer. "While we started
out with a decent October, our markets rapidly declined in November and
December. The corporate office segment in Western Europe and the United
States, which already had begun slowing in the third quarter, deteriorated
even further due largely to the crisis among banks and other customers in the
financial sector. In addition, multinational companies cut their spending on
projects in emerging geographic markets such as Eastern Europe, India and the
Middle East, bringing business to a crawl in those regions. We responded
swiftly by taking the appropriate restructuring actions we announced in
December, which were comprised of employee reductions and the shutdown of our
manufacturing operation in Canada, but our margins still suffered. Currency
changes also contributed to the margin loss during the quarter, primarily as a
result of the U.S. dollar strengthening against the Australian dollar."
The Company also announced that it has adopted a new restructuring plan
that primarily consists of a further reduction in its worldwide employee base
by a total of approximately 290 employees and continuing actions taken to
better align fixed costs with demand for its products. In connection with the
new plan, the Company expects to report a pre-tax restructuring charge in the
first quarter of 2009 in the range of $5.5 million to $6.5 million, comprised
of $4.5 million to $5.5 million of employee severance expense and $1.0 million
to $1.5 million of other exit costs, including lease and other termination
costs. Approximately $5.5 million to $6.0 million of the restructuring charge
will involve future cash expenditures, primarily severance expense. The
restructuring plan is expected to be completed in the first quarter of 2009,
and is expected to yield annualized cost savings of approximately $17 million.
This is in addition to the expected savings of $30 million associated with the
restructuring plan previously announced during the fourth quarter of 2008.
Mr. Hendrix commented, "In our continuing efforts to reduce costs and
right-size our business to current demand levels, we identified several
additional measures that should be taken, which led to the adoption of the new
restructuring plan and its related charge. While we are saddened that this
action will affect even more of our hard-working associates, we concluded that
the additional restructuring is necessary to protect our margins and liquidity
while still preserving the capital needed to pursue our market opportunities
and strategies."
For the full year of 2008, sales were $1.1 billion, essentially even with
year ago levels. Excluding the 2008 fourth quarter items described above,
operating income and income from continuing operations for the 2008 full year
period were $116.7 million (or 10.8% of sales) and $49.6 million (or $0.81 per
share), respectively. These figures compare with operating income and income
from continuing operations of $129.4 million (or 12.0% of sales) and $57.8
million (or $0.94 per diluted share), respectively, in 2007. Including the
items in the 2008 fourth quarter, operating income and loss from continuing
operations for the 2008 full year period were $41.7 million (or 3.9% of sales)
and $35.7 million (or $0.58 per share), respectively. The Company reported a
net loss of $40.9 million, or $0.67 per share, for the full year 2008,
compared with a full year 2007 net loss of $10.8 million, or $0.18 per share.
The net loss in 2008 includes the fourth quarter items described above and a
loss from discontinued operations of $5.2 million, while the net loss in 2007
includes a loss from discontinued operations of $68.7 million.
To conserve cash resources in a prudent manner, the Company's Board of
Directors has decided to reduce its dividend to an annualized rate of $0.01
per share. In that regard, the Board declared a regular quarterly cash
dividend of $0.0025 per share payable March 20, 2009 to shareholders of record
as of March 6, 2009. Patrick C. Lynch, Senior Vice President and Chief
Financial Officer, commented, "From a liquidity perspective, our priority
during 2009 is to generate and accumulate cash to address the maturity of our
$153 million of 10.375% Senior Notes due February 2010. We also are exploring
a number of refinancing opportunities."
Mr. Hendrix concluded, "We are focused on protecting our profit margins by
continuing to take market share and building upon our market-leading position
in modular carpet. While orders are down 27% in the first six weeks of the
year, about a third of that decline is due to currency impacts and we do
expect to report meaningful profitability in 2009. Carpet tile continues to
take share in the flooring market, and growth in non-office segments, helped
by stimulus packages in the U.S. and abroad, should partially offset the
weakness we continue to see in the office market globally. Our market
diversification strategy is gaining additional traction in Europe, and our
cutting-edge sustainability initiatives and what we consider to be the best
sales force in the industry are key differentiators that give us a significant
advantage in challenging market conditions. We will be closely managing
costs, and implementing the new restructuring measures, as we continue to
navigate this difficult operating environment and seek to capitalize on
opportunities that emerge."
The Company will host a conference call today, February 25, 2009, at 5:00
p.m. Eastern Time, to discuss its fourth quarter and full year 2008 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
=2078325 or through the Company's website at
http://www.interfaceglobal.com/Investor-Relations.aspx. The archived version
of the webcast will be available at these sites for one year beginning
approximately one hour after the call ends.
Interface, Inc. is the world's largest manufacturer of modular carpet,
which it markets under the InterfaceFLOR, FLOR, Heuga and Bentley Prince
Street brands, and, through its Bentley Prince Street brand, enjoys a leading
position in the designer quality segment of the broadloom carpet market. 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.
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 forwardlooking statements. Those
forward-looking statements include statements regarding the anticipated future
charges, expenditures and savings relating to the restructuring plan described
above. In particular, all of the anticipated charges, expenditures, savings
and time frame relating to the restructuring plan described above are
estimates and are therefore subject to change. 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 "Risk Factors" included in Item 1A of the Company's Quarterly Report
on Form 10-Q for the quarter ended September 28, 2008 and Annual Report on
Form 10-K for the fiscal year ended December 30, 2007, which discussion is
incorporated herein by this reference, including, but not limited to, the
discussion of specific risks and uncertainties under the headings "The recent
worldwide financial and credit crisis could have a material adverse effect on
our business, financial condition and results of operations," "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 renovation
and construction 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,"
"Large increases in the cost of petroleum-based raw materials could adversely
affect us if we are unable to pass these cost increases through to our
customers," "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," "The
market price of our common stock has been volatile and the value of your
investment may decline," "Our earnings in a future period could be adversely
affected by non-cash adjustments to goodwill, if a future test of goodwill
assets indicates a material impairment of those assets," "Our Chairman,
together with other insiders, currently has sufficient voting power to elect a
majority of our Board of Directors," 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.
- TABLES FOLLOW -
Consolidated Condensed Statements of Operations
(In thousands, except Three Months Ended Twelve Months Ended
per share data) 12/28/08 12/30/07 12/28/08 12/30/07
Net Sales $247,180 $293,348 $1,082,344 $1,081,273
Cost of Sales 169,611 189,208 710,299 703,751
Gross Profit 77,569 104,140 372,045 377,522
Selling, General &
Administrative Expenses 59,151 64,700 258,198 246,258
Impairment of Goodwill 61,213 -- 61,213 --
Restructuring Charges 10,975 -- 10,975 --
Loss on Disposal -
Specialty Products -- -- -- 1,873
Operating
Income (Loss) (53,770) 39,440 41,659 129,391
Interest Expense 7,371 7,186 31,480 34,110
Other Expense
(Income), Net 1,443 (465) 2,858 1,851
Income Before Taxes (62,584) 32,719 7,321 93,430
Income Tax Expense 16,717 12,469 43,040 35,582
Income (Loss) from
Continuing
Operations (79,301) 20,250 (35,719) 57,848
Discontinued
Operations,
Net of Tax -- -- (5,154) (68,660)
Loss on Disposal -
Discontinued
Operations,
Net of Tax -- -- -- --
Net Income (Loss) $(79,301) $20,250 $(40,873) $(10,812)
Earnings (Loss)
Per Share - Basic
Continuing Operations $(1.29) $0.33 $(0.58) $0.96
Discontinued
Operations -- -- (0.08) (1.14)
Loss on Disposal -- -- -- --
Earnings (Loss) Per
Share - Basic $(1.29) $0.33 $(0.67) $(0.18)
Earnings (Loss)
Per Share - Diluted
Continuing Operations $(1.29) $0.33 $(0.58) $0.94
Discontinued Operations -- -- (0.08) (1.12)
Loss on Disposal -- -- -- --
Earnings (Loss) Per
Share - Diluted $(1.29) $0.33 $(0.67) $(0.18)
Common Shares
Outstanding - Basic 61,603 60,926 61,439 60,573
Common Shares
Outstanding - Diluted 61,603 61,895 61,439 61,520
Orders from Continuing
Operations* 222,860 284,057 1,083,933 1,112,693
Backlog (as of
12/28/08
and 12/30/07,
respectively) 97,242 123,771
* Orders from Continuing Operations exclude all activity related to the
Fabrics Group business segment, which was sold in the third quarter of
2007.
Consolidated Condensed Balance Sheets
(In thousands) 12/28/08 12/30/07
Assets
Cash $71,757 $82,375
Accounts Receivable 144,783 178,625
Inventory 128,923 125,789
Other Current Assets 27,342 24,848
Assets of Businesses Held for Sale 3,150 4,792
Total Current Assets 375,955 416,429
Property, Plant & Equipment 160,717 161,874
Other Assets 169,363 256,929
Total Assets $706,035 $835,232
Liabilities
Accounts Payable $52,040 $57,243
Accrued Liabilities 102,592 120,388
Liabilities of Businesses Held for Sale -- 220
Total Current Liabilities 154,632 177,851
Senior and Senior Subordinated Notes 287,588 310,000
Other Long-Term Liabilities 54,319 53,239
Total Liabilities 496,539 541,090
Shareholders' Equity 209,496 294,142
Total Liabilities and Shareholders' Equity $706,035 $835,232
Consolidated Condensed Statements of
Cash Flows Twelve Months Ended
(In millions) 12/28/08 12/30/07
Net Income (Loss) $(40.9) $(10.8)
Adjustments for Discontinued
Operations 5.2 68.6
Net Income from Continuing
Operations $(35.7) $57.8
Depreciation and Amortization 23.7 22.5
Impairment of Goodwill 61.2 --
Deferred Income Taxes and Other
Non-Cash Items 18.8 6.9
Change in Working Capital
Accounts Receivable 11.9 (32.1)
Inventories (11.4) (11.9)
Prepaids 5.1 6.0
Accounts Payable and Accrued
Expenses (18.5) 19.3
Cash Provided from Continuing
Operations 55.1 68.5
Cash Provided from (used in)
Operating Activities of
Discontinued Operations -- (2.8)
Cash Provided from Operating
Activities 55.1 65.7
Cash Provided from (Used in)
Investing Activities (33.5) 6.2
Cash Provided from (Used in)
Financing Activities (28.5) (101.7)
Effect of Exchange Rate Changes on
Cash (3.7) 3.0
Net Increase (Decrease) in Cash $(10.6) $(26.8)
Consolidated Condensed Segment Reporting
(In millions)
Three Months Ended Twelve Months Ended
12/28/08 12/30/07 % Change 12/28/08 12/30/07 % Change
Net Sales
Modular
Carpet $218.5 $257.0 (15.0%) $946.8 $930.7 1.7%
Bentley
Prince Street 28.7 36.3 (20.9%) 135.5 148.4 (8.7%)
Specialty
Products -- -- -- -- 2.2 *
Total $247.2 $293.3 (15.7%) $1,082.3 $1,081.3 0.0%
Operating
Income (Loss)
Modular
Carpet $12.8 $40.1 (68.1%) $109.3 $133.7 (18.2%)
Bentley
Prince
Street (63.9) 1.4 * (61.4) 5.6 *
Specialty
Products -- -- -- -- (1.8) *
Corporate
Expenses and
Eliminations (2.7) (2.1) (28.6%) (6.2) (8.1) 23.5%
Total $(53.8) $39.4 * $41.7 $129.4 (67.8%)
* Not meaningful
Reconciliation of Non-GAAP Performance Measures to
GAAP Performance Measures
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
12/28/08 12/28/08
Operating Income, Excluding
Impairment, Restructuring
Charges and Decline in Value
of Insurance $21.2 $116.7
Impairment of Goodwill (61.2) (61.2)
Restructuring Charges (11.0) (11.0)
Decline in cash surrender
value of Company-owned life
insurance (2.8) (2.8)
Operating Income (Loss), As
Reported $(53.8) $41.7
Income from Continuing
Operations, Excluding
Impairment, Restructuring
and Repatriation Charges,
and Decline in Value of
Insurance $6.0 $49.6
Impairment of Goodwill (61.2) (61.2)
Restructuring Charges, After
Tax (8.0) (8.0)
Repatriation Charges (13.3) (13.3)
Decline in cash surrender
value of Company-owned life
insurance (2.8) (2.8)
Loss from Continuing
Operations, As Reported $(79.3) $(35.7)
Net Income, Excluding Impairment,
Restructuring and Repatriation
Charges, and Decline in Value of
Insurance $6.0 $44.4
Impairment of Goodwill (61.2) (61.2)
Restructuring Charges, After Tax (8.0) (8.0)
Repatriation Charges (13.3) (13.3)
Decline in cash surrender value of
Company-owned life insurance (2.8) (2.8)
Net Loss, As Reported $(79.3) $(40.9)
Three Months Ended
12/28/08
Earnings Per Share, Excluding
Impairment, Restructuring and
Repatriation Charges, and Decline
in Value of Insurance $0.10
Impairment of Goodwill (0.99)
Restructuring Charges, After Tax (0.13)
Repatriation Charges (0.22)
Decline in cash surrender value of
Company-owned life insurance (0.05)
Loss Per Share, As Reported $(1.29)
Twelve Months Ended
12/28/08
Income Per Share from Continuing
Operations, Excluding Impairment,
Restructuring and Repatriation
Charges, and Decline in Value of
Insurance $0.81
Impairment of Goodwill (1.00)
Restructuring Charges, After Tax (0.13)
Repatriation Charges (0.22)
Decline in cash surrender value of
Company-owned life insurance (0.05)
Loss Per Share from Continuing
Operations, As Reported $(0.58)
The Company believes that the above non-GAAP performance measures, which
management uses in managing and evaluating the Company's business, may provide
users of the Company's financial information with additional meaningful bases
for comparing the Company's current results and results in a prior period, as
these measures reflect factors that are unique to the current period relative
to the comparable prior period. However, these non-GAAP performance measures
should be viewed in addition to, and not as an alternative for, the Company's
reported results under accounting principles generally accepted in the United
States.
SOURCE Interface, Inc.
- 02/25/2009
CONTACT: Daniel T. Hendrix, President and Chief Executive Officer, or
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, both of
Interface, Inc., +1-770-437-6800, or Eric Boyriven or
Jessica Greenberger,
both of FD, for Interface, Inc., +1-212-850-5600
Web Site: http://www.interfaceinc.com
(IFSIA IFSIA)