Press Release

<< Back


Interface Reports Second Quarter 2001 Results
ATLANTA, Georgia, July 24, 2001 -- Interface, Inc. (Nasdaq: IFSIA), a worldwide commercial interiors products and services company, today reported results for the second quarter ended July 1, 2001.
For the second quarter of 2001, the Company reported net income of $1.3 million, or $0.03 per diluted share, and sales of $287.3 million, compared with second quarter 2000 net income of $7.0 million, or $0.14 per diluted share, and sales of $323.7 million. Operating income for the second quarter of 2001 was $11.4 million versus $21.4 million in the same period a year ago.
Second quarter results, reflecting the sluggish domestic economy, were affected by lower sales volumes which prevented the complete absorption of fixed manufacturing and operating costs. Decreased demand across the majority of the Company's businesses, particularly in the interior fabrics and broadloom segments, yielded lower revenue levels. Within the broadloom segment, production disruptions at the Company's California facility delayed the positive impact of the full synergies to be gained from the integration of the Company's Prince Street and Bentley Mills operations at that facility.
These factors were somewhat offset by the Company's modular segment. The modular business remained stable, in part because carpet tile continued to gain market share in the commercial floorcoverings market. In addition, the Company saw improved profitability in this segment in the second quarter due to increased manufacturing efficiencies and reduced raw materials prices.
For the first six months of 2001, net income was $5.7 million, or $0.11 per diluted share, on sales of $593.8 million. This compared with net income of $12.2 million, or $0.24 per diluted share, before a non-recurring, pre-tax restructuring charge of approximately $20 million ($0.27 per diluted share after tax), on sales of $616.9 million for the same period a year ago. Operating income for the six-month period was $28.5 million versus operating income of $39.6 million, excluding the restructuring charge, for the comparable 2000 six-month period.
Daniel T. Hendrix, President and Chief Executive Officer, commented, "Our results are consistent with the preliminary results we released on July 2 and show the effects of the slow U.S. economy on our industry. However, we are pleased with the proven strength of our modular business and with the increasing popularity of carpet tile. In the present challenging economic environment we have maintained our focus on working capital management and cost containment. We remain intent on generating a total of $30 million in free cash for the year and improving our financial position by continuing disciplined cost-cutting and paying down debt. We continue to strive for increased market share in our core market segments and have been very successful in certain of those segments, modular carpet, in particular, and we are aggressively pursuing and evaluating opportunities to expand into other markets."
Mr. Hendrix continued, "Our recent and ongoing strategic initiatives continue to benefit the Company. Re:Source Americas, as a result of its keen focus on more profitable opportunities, has sustained positive operating margins on lower sales. We have also improved operations in this business to provide flexibility to scale expenses to revenue levels. Additionally, we are pleased with the performance of our Chatham upholstery business, acquired last year, and we expect to realize fully the synergies from the integration of that business with our other interior fabrics operations in the second half of 2001. And at our West Coast manufacturing facility, we continue to realize lower overhead costs from the integration of our two U.S. broadloom mills at that facility."
Mr. Hendrix concluded, "Based on current economic conditions, we expect full year earnings to be around $0.25 per diluted share. Our continued focus this year on decreasing our debt and minimizing expenses, and our strategies to deepen and broaden our markets, will position Interface for growth when the economy improves."

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, 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
Six Months Ended
(In thousands, except per share data)
7/1/01
7/2/00
7/1/01
7/2/00
Net Sales
$ 287,285
$ 323,725
$ 593,796
$ 616,943
Cost of Sales
204,387
226,180
421,980
430,732
Gross Profit
82,898
97,545
171,816
186,211
Selling, General & Administrative Expenses
71,476
76,144
143,298
146,587
Restructuring Charge
-
-
-
20,095
Operating Income (Loss)
11,422
21,401
28,527
19,529
Other Expense (Income)
9,300
9,856
19,137
19,885
Pretax Income (Loss)
2,122
11,545
9,390
(356)
Income Tax (Benefit) Expense
850
4,503
3,688
1,405
Net Income (Loss)
$ 1,272
$ 7,042
$ 5,702
$ (1,761)
Earnings Per Share - Basic
$0.03
$0.14
$0.11
$(0.03)
Earnings Per Share - Diluted
$0.03
$0.14
$0.11
$(0.03)
Common Shares Outstanding
Basic
49,822
51,352
49,920
51,572
Diluted
50,471
51,355
50,739
51,572
Consolidated Balance Sheets
(In thousands)
7/01/01
12/31/00
Assets
Current Assets
$ 439,178
$ 447,108
Property, Plant & Equipment
261,608
258,245
Other Assets
326,488
329,496
Total Assets
$1,027,274
$1,034,849
Liabilities
Current Liabilities
$ 181,822
$ 206,149
Long-Term Debt
181,650
146,550
Senior and Senior Subordinated Notes
275,000
275,000
Other Liabilities
26,205
29,551
Total Liabilities
664,677
657,250
Shareholders' Equity
362,597
377,599
Total Liabilities and Shareholders' Equity
$1,027,274
$1,034,849




# # #