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Interface Reports First Quarter 2001 Results
ATLANTA, Georgia, April 24, 2001 -- Interface, Inc. (Nasdaq: IFSIA), a worldwide commercial interiors products and services company, today reported results for the quarter ended April 1, 2001.
For the first quarter of 2001, the Company reported net income of $4.4 million, or $0.09 per diluted share, and sales of $306.5 million, compared with first quarter 2000 net income of $5.2 million, or $0.10 per diluted share, before a restructuring charge, and sales of $293.2 million. Operating income for the first quarter of 2001 was $17.1 million versus $18.2 million, before the restructuring charge, in the same period a year ago. (In first quarter 2000 the Company recorded a non-recurring, pre-tax restructuring charge of approximately $20 million, or $0.27 per diluted share after tax, related to consolidations and headcount reductions in North America and Europe. Including this charge, the net loss for the first quarter last year was $8.8 million, or $(0.17) per diluted share.)
First quarter 2001 operating results reflected increased sales in the Company's modular and architectural products businesses, improved margins in its domestic broadloom operations, and profitability gains in its Re:Source Americas service business. The domestic broadloom segment benefited from synergies resulting from the recent consolidation of the Company's Prince Street operation with its Bentley Mills operation. Re:Source Americas' profitability continued to improve, despite lower sales, as a result of the Company's initiative to be more selective in identifying sales opportunities and the divestiture of under-performing businesses in 2000.
These positive factors were offset by reduced profits in the Company's interior fabrics operation, which experienced decelerating order rates as a result of the slow-down in the office furniture industry. Most of the Company's major OEM customers experienced lower production requirements, which resulted in lower fabric sales by the Company. Additionally, unfavorable exchange rates between the U.S. dollar and the Euro lessened the impact of positive contributions from the Company's European operations.
Ray C. Anderson, Chairman, President and Chief Executive Officer, commented, "The softening in the commercial interiors market and the U.S. economy that we saw at the end of 2000 became more pervasive in the first quarter of 2001. We saw a slowing of orders across most of our product groups, particularly in the interior fabrics segment. Lower sales and production volumes in some of our businesses caused an under-absorption of overhead costs, which, along with higher energy costs, particularly in California, impacted gross margins and mitigated the positive effect of the operational and manufacturing efficiencies implemented throughout the past year."
Mr. Anderson continued, "In spite of the difficult economic environment, our results demonstrated improved operational processes and the success of our cost-reduction actions. Our domestic broadloom operations realized significantly improved margins due to initial synergies from the consolidation of Prince Street into Bentley, which were partially offset by disruptions early in the quarter from the energy shortages in California. With the consolidation virtually complete, we look for substantial benefits in the second half of 2001. At Re:Source Americas we continued to focus on more profitable sales opportunities and maintained the recent trend of higher earnings."
Daniel T. Hendrix, Executive Vice President and Chief Financial Officer, added, "We are redoubling our efforts to maximize cash flow during this period of economic uncertainty. We are limiting our capital spending to only those projects that offer prompt paybacks. We plan to manage our working capital aggressively and generate free cash which we intend to use to reduce debt, and we will continue to control expenses by eliminating non-critical spending."
Mr. Anderson concluded, "While we are challenged to grow revenue during the current economic climate, Interface has never been better positioned in terms of products, processes, and competitiveness. The actions taken over the past two years will enable the Company to temper the impact of the slack economy and achieve a leveraged rebound in earnings when revenue growth resumes in a healthier 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."



- TABLES FOLLOW -






INTERFACE, INC.
Consolidated Statements of Income
Three Months Ended
(In thousands, except per share data)
4/1/01
4/2/00
Net Sales
$306,511
$293,218
Cost of Sales
217,593
204,552
Gross Profit
88,918
88,666
Selling, General & Administrative Expenses
71,813
70,443
Restructuring Charge
-
20,095
Operating Income (Loss)
17,105
(1,872)
Other Expense (Income)
9,837
10,029
Pretax Income (Loss)
7,268
(11,901)
Income Tax (Benefit) Expense
2,838
(3,097)
Net Income (Loss)
$ 4,430
$ (8,804)
Earnings Per Share - Basic
$ .09
$ (0.17)
Earnings Per Share - Diluted
$ .09
$ (0.17)
Common Shares Outstanding
Basic
49,972
51,826
Diluted
50,945
51,826
Consolidated Balance Sheets
(In thousands)
4/1/01
12/31/00
Assets
Current Assets
$ 457,431
$ 447,108
Property, Plant & Equipment
256,532
258,245
Other Assets
326,492
329,496
Total Assets
$1,040,455
$1,034,849
Liabilities
Current Liabilities
$ 195,989
$ 206,149
Long-Term Debt
177,456
146,550
Senior Subordinated Notes
275,000
275,000
Other Liabilities
23,920
29,551
Total Liabilities
672,365
657,250
Shareholders' Equity
368,090
377,599
Total Liabilities and Shareholders' Equity
$1,040,455
$1,034,849




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