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Contact:
Daniel T. Hendrix
President and Chief Executive Officer
Patrick C. Lynch
Chief Financial Officer
(770) 437-6800
FD Morgen-Walke:
Christine Mohrmann, Lindsay Hatton
(212) 850-5600
INTERFACE REPORTS SECOND QUARTER 2003 RESULTS
ATLANTA, Georgia, July 23, 2003 - Interface,
Inc. (Nasdaq: IFSIA), a worldwide commercial interiors products
and services company, today announced results for the second quarter
ended June 29, 2003.
Sales in the second quarter 2003 were $234.0
million, compared with $233.8 million in the second quarter 2002.
The Company recorded a pre-tax restructuring charge of $2.5 million
during the second quarter 2003 in connection with the completion
of its previously announced initiative designed to rationalize
manufacturing operations in its fabrics division and further reduce
workforce worldwide. Operating income was $3.7 million in the
second quarter 2003, versus $13.1 million in the second quarter
2002. Loss from continuing operations, excluding the restructuring
charge, was $2.3 million, or $0.05 per diluted share, in the second
quarter 2003, compared with income from continuing operations
of $1.4 million, or $0.03 per diluted share, in the second quarter
2002. Net loss for the second quarter 2003 was $5.4 million, or
$0.11 per diluted share, compared with second quarter 2002 net
income of $0.8 million, or $0.02 per diluted share.
"On a sequential basis, we improved our
operating income by $7.2 million, which shows evidence of our
sustained efforts to strengthen and improve each of our business
segments," said Daniel T. Hendrix, President and Chief Executive
Officer. "Through the continued implementation of our market segmentation
strategy, we drove overall top-line growth and, as a result of
our continued focus on cost controls, we saw sequential improvements
in operating income in each of our businesses. Even though the
corporate environment remains soft, order levels slightly exceeded
the first quarter of 2003 as a result of our ability to reach
new customers in the hospitality, education, healthcare, and residential
markets."
Mr. Hendrix continued, "Our broadloom business
returned to operating profitability during the second quarter,
with a 34% sequential increase in revenues and a $4.2 million
sequential turnaround in operating income. In addition, our modular
business showed continued strength, most notably in the hospitality
and education markets where sales growth resulted from our targeted
marketing initiatives. In the fabrics business, we are beginning
to capture the positive results of the integration and restructuring
programs that have been implemented over the past few quarters,
resulting in cost savings and improved efficiencies. Our service
business also showed improvement, benefiting from our market segmentation
strategy."
For the first six months of 2003, sales
were $444.2 million, compared with $460.4 million for the same
period a year ago. Operating income for the 2003 six-month period
was $0.3 million (which includes $4.6 million of restructuring
charges), versus operating income of $23.7 million for the comparable
2002 six-month period. During the 2003 six-month period, loss
from continuing operations was $13.0 million, or $0.26 per diluted
share, compared with income from continuing operations of $1.4
million in the same period a year ago. Net loss for the six month
period was $15.8 million, or $0.31 per diluted share, compared
with net loss of $54.7 million, or $1.09 per diluted share, for
the first six months of 2002. During the first six 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, "We took a number of
steps during the second quarter to improve our balance sheet and
fortify our capital structure. Foremost among these was the amendment
and restatement of our credit facility, which provides Interface
with ample liquidity and financial flexibility, allowing us the
opportunity to pursue growth opportunities and fund our working
capital needs going forward."
Mr. Hendrix concluded, "While the depressed
condition of the interiors industry and the continued weakness
in the corporate office segment in particular give us reason for
caution, we remain optimistic about our ability to improve upon
the first half of the year. We will remain focused on the elements
that will keep our business moving in the right direction - streamlining
our cost structure, managing our working capital requirements,
and continuing to execute our market segmentation strategy."
The Company will host a conference call
tomorrow, July 24, 2003, at 9:00 a.m. Eastern Time, to discuss
its second 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/ajwz384823773gf12.html
or through the Company's website at
http://www.interfaceinc.com/results/investor/news.php. The
archived version of the conference call will be available at these
sites beginning approximately one hour after the call ends through
July 24, 2004 at 11:59 p.m. Eastern Time. Interface, Inc. is a recognized leader in
the worldwide commercial interiors market, offering floorcoverings,
fabrics and interior architectural products. 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; produces carpets and textiles for residential uses;
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.
This release includes a non-GAAP financial
measure as defined under SEC rules, specifically, loss from continuing
operations excluding a restructuring charge. As required by SEC
rules, we have provided below a reconciliation of this measure
to the most directly comparable GAAP measure.
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