Interface Reports Second Quarter 2002 Results
ATLANTA, Georgia, July 23, 2002 - Interface, Inc. (Nasdaq: IFSIA), a worldwide commercial interiors products and services company, today announced results for the second quarter ended June 30, 2002.
Sales in the second quarter 2002 were $240.6 million, compared with $287.3 million in the second quarter 2001. Operating income was $12.2 million in the second quarter 2002, versus $11.4 million in the second quarter 2001. Net income for the second quarter 2002 was $0.8 million, or $0.02 per diluted share, compared with second quarter 2001 net income of $1.3 million, or $0.03 per diluted share.
For the first six months of 2002, sales were $475.0 million, compared with $593.8 million for the same period a year ago. Operating income for the six-month period was $22.7 million, versus operating income of $28.5 million for the comparable 2001 six-month period.
During the first six months of 2002, the Company's implementation of Statement of Financial Accounting Standards ("SFAS") No. 142, entitled "Goodwill and Other Intangible Assets," resulted in a $55.4 million after-tax write-down (or $1.11 per diluted share), primarily related to the impairment of goodwill. After the cumulative effect of SFAS No. 142, net loss for the first six months of 2002 was $54.7 million, or $(1.09) per diluted share.
Daniel T. Hendrix, President and Chief Executive Officer of Interface, commented, "In the second quarter 2002, we were pleased to see evidence of Interface's continued operating strength and we were encouraged by signs of industry stabilization. Order levels increased by 7% second quarter over first quarter, accompanied by similar sequential improvements in revenue and gross margin. In addition, our market segmentation strategy is beginning to help us offset soft corporate spending as we garner business in other market segments. In particular, we have seen excellent progress in the government and education segments, and we are excited by the potential for additional new business in the retail area."
Mr. Hendrix continued, "Our cost base is down and we are intently focused on top-line growth. As demand improves, we have significant leverage to improve profits. Revenues increased 6% sequentially in our North American modular business, and order activity increased in our broadloom and fabrics businesses. Our international business is showing progress, with revenues in Asia up 23% over the first quarter 2002 and order levels in the European modular business up 8% sequentially. In addition, our commitment to sustainability continues to provide us with a competitive edge, as more and more customers recognize the value of, and demand, an environmentally responsible product."
Patrick C. Lynch, Vice President and Chief Financial Officer of Interface, commented, "We continue to work on improving our balance sheet and controlling our cost structure. During the second quarter 2002, we paid down $8 million in debt, while managing working capital and generating free cash flow. In addition, better pricing discipline and improved manufacturing efficiencies led to a sequential gross margin improvement in the second quarter."
Mr. Hendrix concluded, "Assuming no change in the present business conditions, we anticipate revenue for the third quarter 2002 to be between $240 million and $250 million, and earnings progress to continue."
Interface, Inc. is a recognized leader in the worldwide commercial interiors market, offering floorcoverings, fabrics, interior architectural products and specialty chemicals. 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 fabrics services through its TekSolutions business; produces raised/access flooring systems under the TecCrete, TecFlor, TecSteel and InterCell brands; markets modular wiring systems under the Interface PeoplePower brand; and produces adhesives and chemicals used with commercial interiors products and in various rubber and plastic products.