ATLANTA, June 20 /PRNewswire-FirstCall/ -- Interface, Inc.
(Nasdaq: IFSIA), a worldwide floorcoverings and fabrics company, today
announced that it has entered into a definitive agreement to sell its fabrics
division in an all-cash transaction valued at up to $70 million. The
division, known as InterfaceFABRIC, is a leading producer of interior fabrics
and upholstery products, which it markets under the Guilford of Maine(R),
Chatham(R) and Terratex(R) brands, and provides specialized automotive textile
solutions.
The fabrics division will be sold to an affiliate of Sun Capital Partners,
a leading private investment firm. According to the terms of the agreement,
Interface will receive approximately $63.5 million in cash proceeds at the
closing of the transaction, with potential for an additional $6.5 million in
cash proceeds, subject to the division meeting certain performance metrics
over the subsequent six to eighteen months period. The transaction is
expected to close during the third quarter, subject to regulatory review and
other customary closing conditions. Upon closing, the transaction is expected
to be accretive to Interface's results by approximately $0.05 to $0.08 per
diluted share on an annualized basis. In the second quarter of 2007, the
Company expects to reflect the fabrics division as discontinued operations in
its financial statements, and record an after-tax, non-cash loss of
approximately $9.0 million, or $0.15 per diluted share, as well as other
after-tax exit costs and expenses estimated at $5.0 million, or $0.08 per
diluted share, as a result of the transaction (of these exit costs and
expenses, the Company estimates that between $3.8 million to $6.0 million
represent pre-tax cash costs and expenses). The final loss and expenses
related to the disposition will be determined after the closing of the
transaction based upon the closing balance sheet of the division.
For the full year 2006, the fabrics division generated revenue of $161.2
million and an operating loss of $27.3 million, and had depreciation and
amortization of $9.4 million. These full year 2006 results include the
operations of Interface's former European fabrics business, which was sold in
April 2006. The divested European fabrics business accounted for sales of
$17.3 million and an operating loss (after a $20.7 million goodwill impairment
charge) of $19.6 million in 2006.
"We are pleased to enter this transaction with an affiliate of Sun Capital
Partners and believe that the sale of our fabrics division is a good strategic
and financial decision for Interface," said Daniel T. Hendrix, President and
Chief Executive Officer. "Strategically, the sale will allow Interface
management to focus on leveraging the opportunities within our core modular
carpet and Bentley Prince Street divisions, which have delivered consistently
strong performance, while also providing the fabrics division with the
resources to execute on its promising operating strategy. Financially, the
transaction is in keeping with our goal of reducing our outstanding debt and
further strengthening our balance sheet. I'd like to thank the employees of
our fabrics division for their continuing dedication and hard work."
M. Steven Liff, a Managing Director of Sun Capital Partners, added: "We
are excited about the opportunity for our affiliate to acquire Interface's
fabrics division. We believe that the market is robust for commercial
interiors and we see strong potential to increase the efficiencies within the
fabrics division while leveraging its unique brands to enhance the division's
future growth."
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 InterfaceFLOR, FLOR, Heuga
and Bentley Prince Street brands, and, through its Bentley Prince Street
brand, enjoys a leading position in the high quality, designer-oriented
segment of the broadloom carpet market. The Company's InterfaceFABRIC
business is a leading producer of interior fabrics and upholstery products,
which it markets under the Guilford of Maine, Chatham and Terratex brands, and
provides specialized automotive textile solutions.
Sun Capital Partners, Inc. is a leading private investment firm focused on
leveraged buyouts, equity, debt, and other investments in market-leading
companies that can benefit from its in-house operating professionals and
experience. Sun Capital affiliates have invested in and managed more than 155
companies worldwide with combined sales in excess of $35.0 billion since Sun
Capital's inception in 1995. Sun Capital has offices in Boca Raton, Los
Angeles, and New York, as well as affiliates with offices in London, Tokyo,
and Shenzhen. For more information, please visit www.SunCapPart.com.
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 "Risk Factors" included in Item 1A of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, 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 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.
SOURCE Interface, Inc.
CONTACT:
Daniel T. Hendrix, President and Chief Executive Officer,
Patrick C. Lynch, Senior Vice President and Chief Financial Officer,
+1-770-437-6800,
both of Interface, Inc.;
Christine Mohrmann, Bob Joyce
+1-212-850-5600, both of FD for Interface, Inc.
Web site: http://www.suncappart.com