ATLANTA, Georgia, October 1, 2001 -- Interface, Inc. (Nasdaq: IFSIA), a worldwide commercial interiors products and services company, today announced that it will record a pre-tax restructuring charge in the third quarter of 2001 of approximately $60 million ($0.80 per diluted share after tax) primarily attributable to the rationalization of worldwide broadloom and U.S. access flooring businesses. The restructuring charge is comprised of approximately $21 million of cash expenditures for severance benefits and relocation costs and approximately $39 million of non-cash charges, primarily for the write-down of the carrying value and disposal of certain impaired assets, including goodwill. Excluding the restructuring charge, the Company expects to generate third quarter earnings of $0.01 to $0.03 per share on revenues of approximately $255 - $265 million.
Specifically, the non-recurring charge reflects the Company's withdrawal from the European broadloom market; facilities consolidation in its raised/access flooring operations; further rationalization of the U.S. broadloom operations; worldwide workforce reduction of 850 employees, and the consolidation of certain non-strategic Re:Source dealer locations. The Company expects to fund the cash portion of the restructuring charge primarily from the proceeds of the sale or liquidation of the European broadloom business, so the actions it is taking will not materially impact overall cash flows. The Company anticipates that the restructuring will be completed by the second quarter of 2002.
Daniel T. Hendrix, President and Chief Executive Officer, commented, "The economy continued to lag through the third quarter, which affected demand for all of our products, although the market for our modular carpet segment was impacted less than our other segments. Orders generated during September have historically comprised a substantial part of our third quarter business, but the events in the past three weeks had a further negative impact on orders and shipments here and abroad."
Mr. Hendrix concluded, "While we cannot control our business climate, we can address the operations under our management. We are right-sizing our business to match current and anticipated demand, and are examining every prudent way to reduce expense levels without undermining our future. Moreover, the restructuring actions commenced in the third quarter should result in ongoing cost savings of $25 million per year for the Company, beginning Fourth Quarter 2001. Our continued focus on decreasing our debt and minimizing expenses, and our efforts to streamline our operations, will position Interface to achieve a leveraged rebound in earnings when revenue growth resumes in a healthier economy."
In conjunction with this release, Interface will hold a conference call today, Monday, October 1, 2001, at 5:00 p.m. Eastern Time which will be simultaneously broadcast live over the Internet. Listeners may access the call live over the Internet at http://www.videonewswire.com/event.asp?id=1246, or archived at this site beginning approximately 1 hour after the call ends through Monday, October 8, 2001 at 6:00 p.m. Eastern Time. Please allow at least 15 minutes prior to the call to visit the site and download and install any necessary audio software.
Interface, Inc. is a recognized leader in the worldwide commercial interiors market, offering floorcoverings, fabrics, interior architectural products and specialty chemicals. 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, Prince Street and Firth brands, enjoys a leading position in the high quality, designer-oriented segment of the broadloom and woven carpet market. The Company also provides specialized carpet replacement, installation and maintenance services through its Re:Source Americas service network. The Company is also 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. The Company also provides specialized fabrics services through its Teksolutions business. In addition, the Company produces raised/access flooring systems under the C-Tec, Intercell and Atlantic brands; produces adhesives and chemicals used in various rubber and plastic products; offers Intersept, a proprietary antimicrobial used in a variety of interior finishes; and sponsors the Envirosense Consortium in its mission to address workplace environmental issues.
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 in the Company's Safe Harbor Compliance Statement for Forward-Looking Statements, included as Exhibit 99.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, which discussion is incorporated herein by this reference, including, but not limited to, the discussion of specific risks and uncertainties under the headings "Strong Competition: The Company competes with a large number of other manufacturers in the highly competitive commercial floorcovering products market, and certain of these competitors have financial resources in excess of the Company's," "Cyclical Nature of Industry: Sales of the Company's principal products may be affected by cycles in the construction and renovation of commercial and institutional buildings," "Reliance on Key Personnel: The Company's continued success depends to a significant extent upon the efforts, abilities and continued service of its senior management executives and its design consultants," "Risks of Foreign Operations: The Company's substantial international operations are subject to various political, economic and other uncertainties, such as foreign currency exchange restrictions," "Reliance on Petroleum-Based Raw Materials: Large increases in the cost of petroleum-based raw materials, which the Company is unable to pass through to its customers, could adversely affect the Company," "Reliance on Third Party for Supply of Fiber: Unanticipated termination or interruption of the Company's arrangement with its primary third-party supplier of synthetic fiber could have a material adverse effect on the Company," and "Restrictions Due to Substantial Indebtedness: The Company's indebtedness, which is substantial in relation to its shareholders' equity, requires the Company to dedicate a substantial portion of its cash flow from operations to service debt and governs certain other activities of the Company."