Interface Reports Fourth Quarter And Year-End 2001 Results

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February 20, 2002
ATLANTA, Georgia, February 20, 2002 - Interface, Inc. (Nasdaq: IFSIA), a worldwide commercial interiors products and services company, today announced results for the fourth quarter and fiscal year ended December 30, 2001, which were consistent with guidance provided in its third quarter earnings release.

Sales in the fourth quarter 2001 were $247.0 million, compared with $330.3 million in the fourth quarter 2000. During the fourth quarter 2001, the Company recognized an additional $2.9 million of pre-tax restructuring expense, equivalent to $0.02 per diluted share after-tax, associated with the restructuring initiatives announced in October, primarily in connection with exiting the European broadloom business. Operating income, excluding the pre-tax non-recurring restructuring charges in each respective period, was $9.8 million in the fourth quarter 2001, versus $25.2 million in the fourth quarter 2000. Net income for the fourth quarter 2001 was $0.5 million, or $0.01 per diluted share, before non-recurring restructuring charges, compared with fourth quarter 2000 net income of $9.9 million, or $0.19 per diluted share, before non-recurring restructuring charges. Including the additional $2.9 million non-recurring pre-tax restructuring charge in the fourth quarter 2001, net loss during the quarter was $0.7 million, or $(0.01) per diluted share. This compared with net income during the fourth quarter 2000 of $9.3 million, or $0.18 per diluted share, including a $1.0 million pre-tax non-recurring restructuring charge, equivalent to $0.01 per diluted share after tax.

Sales for the 2001 fiscal year were $1,103.9 million, compared with $1,283.9 million in 2000. Operating income, excluding pre-tax non-recurring restructuring charges in each respective year, was $49.0 million in 2001, versus $90.1 million in 2000. Net income for fiscal year 2001 was $6.9 million, or $0.14 per diluted share, before non-recurring restructuring charges, compared with 2000 net income of $31.8 million, or $0.62 per diluted share, before non-recurring restructuring charges. Including non-recurring pre-tax restructuring charges of approximately $65.1 million, or $0.86 per diluted share after-tax, 2001 net loss was $36.3 million, or $(0.72) per diluted share. This compared with 2000 net income of $17.3 million, or $0.34 per diluted share, including non-recurring pre-tax restructuring charges of approximately $21.0 million, equivalent to $0.28 per diluted share after-tax.

Daniel T. Hendrix, President and Chief Executive Officer of Interface, commented, "The commercial interiors industry continued to experience an unprecedented decline in the fourth quarter, which resulted in lower revenues across all our business segments. While we still believe order levels have stabilized, we continue to bounce along the bottom of the trough."

Mr. Hendrix also stated, "In the fourth quarter, we achieved our goal of more closely matching the Company's production with anticipated demand levels, while still maintaining the flexibility to ramp up when the economy turns. As a result of this and other cost management initiatives, the fourth quarter gross profit percentage was relatively even with that of the third quarter, despite lower revenues. We also reduced our fourth quarter SG&A expenses by approximately $4 million compared with the third quarter, and by approximately $15 million compared with the fourth quarter 2000. In addition, we decreased inventories, receivables and capital expenditures, which enabled us to generate free cash flow and helped in reducing debt by approximately $17 million in the fourth quarter. Moreover, the Company made significant progress in implementing the restructuring activities announced in October, and remained on track to complete the restructuring by the second quarter of 2002."

Mr. Hendrix commented further, "From a sales and marketing perspective, in the fourth quarter, the Company introduced new products and realigned its sales organization around targeted markets to enhance revenue opportunities. The new alignment and product offerings better position our sales force to pursue additional market share in our existing markets and to penetrate less cyclical markets, such as the education, government, health care and retail sectors. The Company also established a strategic presence in the residential decorative fabrics sector during the fourth quarter. In essence, we are leaving no stone unturned in our continuing efforts to target new market niches."

Patrick C. Lynch, Vice President and Chief Financial Officer of Interface, commented on the Company's recent financing activities, "We successfully completed a private offering of bonds in January of this year, which allowed us to refinance our revolving credit facility. These actions have created significant liquidity and financial flexibility for Interface."

Mr. Hendrix concluded, "We are confident that Interface is well positioned for 2002. Assuming no change in the present business conditions, we anticipate revenue for the first quarter 2002 to be between $230 million and $240 million, and earnings to be between break-even and a loss of three cents per diluted share. Going forward, we intend to maintain our focus on expanding our market share in both existing and relatively unpenetrated markets, increasing our product offerings, managing our expenses, inventories and supply chain, and paying down long-term debt with free cash flow generated through operations and reductions in capital expenditures and working capital. By concentrating on these areas, we believe Interface will be poised to capitalize on an upturn in the economy."

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. 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."


Consolidated Statements of Income
Three Months Ended
Twelve Months Ended
(In thousands, except per share data)
Net Sales
$ 247,001
$ 330,342
Cost of Sales
Gross Profit
Selling, General & Administrative Expenses
Restructuring Charge
Operating Income (Loss)
Other Expense (Income)
Pretax Income (Loss)
Income Tax (Benefit) Expense
Net Income (Loss)
$ (685)
$ 9,324
$ 17,321
Earnings Per Share - Basic
$ (.01)
$ (.72)
Earnings Per Share - Diluted
$ (.01)
$ (.72)
Common Shares Outstanding
Consolidated Balance Sheets
(In thousands)
$ 793
$ 7,861
Accounts Receivable
Other Current Assets
Total Current Assets
Property, Plant & Equipment
Other Assets
Total Assets
$ 945,274
Current Liabilities
$ 147,242
$ 206,149
Long-Term Debt
Senior and Senior Subordinated Notes
Other Liabilities
Total Liabilities
Shareholders' Equity
Total Liabilities and Shareholders' Equity
$ 945,274

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