ATLANTA, April 24 /PRNewswire-FirstCall/ -- Interface, Inc. (Nasdaq: IFSIA), a recognized leader in the worldwide interiors market, today announced that it has sold its European fabrics division (Camborne Holdings Limited) for approximately $28 million in cash. Proceeds from the sale will be used to pay down debt or reinvest in the Company's other businesses.
The acquisition was led by the current management of Camborne, with financing provided by Bank of Scotland. For the full year 2005, the European fabrics division generated revenue of $62.8 million and operating income of $3.1 million, and had depreciation and amortization of $1.5 million. As a result of the sale, Interface will record an after-tax, non-cash write-down for the impairment of goodwill of approximately $20 million in the first quarter of 2006.
In addition, the Company announced that it is taking actions to reduce operating costs within its North American fabrics business. Interface is closing its East Douglas, Massachusetts manufacturing facility and integrating those operations into its Elkin, North Carolina manufacturing facility. As a result, the Company will record an after-tax restructuring charge in the first quarter of 2006 of approximately $3.3 million, or $0.04 per diluted share, related to severance costs (approximately $0.3 million) and non-cash impairment of assets (approximately $3.0 million). The Company expects the restructuring to result in operating savings in 2006 of approximately $2.0 million, and $3.6 million annually thereafter.
Daniel T. Hendrix, President and Chief Executive Officer, commented, "We are pleased that we have been able to reach an agreement with the management team of our European fabrics division for the sale of that business. In 2005, we saw solid operating improvements and growth within our North American fabrics business, and continuing to increase sales and enhance the profitability of this business remains an important part of our strategy. Overall, we feel the sale transaction and our restructuring activity in North America allow for greater financial flexibility."
As previously announced, the Company will host a conference call on Thursday, April 27, 2006, at 9:00 a.m. Eastern Time, to discuss its first quarter 2006 results, which will be simultaneously broadcast live over the Internet. Further details regarding the sale transaction and the restructuring action will also be discussed on this call.
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 Interface, InterfaceFLOR, 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 is a leading producer of interior fabrics and upholstery products, which it markets under the Guilford of Maine and Chatham brands, and provides specialized fabric services through its TekSolutions business.
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 January 1, 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 construction and renovation 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," "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," "We have a significant amount of indebtedness which could have important negative consequences to us," 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, or
Patrick C. Lynch, Chief Financial Officer, both of Interface, +1-770-437-6800;
or Christine Mohrmann, or Jim Olecki, both of Financial Dynamics,
Web site: http://www.interfaceinc.com