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Interface Reports Third Quarter 2002 Results
ATLANTA, Georgia, October 23, 2002 -- Interface, Inc. (Nasdaq: IFSIA), a worldwide commercial interiors products and services company, today reported results for the third quarter ended September 29, 2002.
Consistent with the Company's prior announcement, sales in the third quarter were $235.4 million, compared with $263.1 million in the third quarter 2001. Operating income was $6.0 million in the third quarter, versus operating income of $10.7 million, before a restructuring charge, in the same period a year ago. (In the third quarter 2001, the Company recorded a non-recurring pre-tax restructuring charge of approximately $62.1 million, or $0.83 per diluted share after tax.) Net loss for the third quarter 2002 was $2.7 million, or $(0.05) per diluted share, compared with third quarter 2001 net income of $0.7 million, or $0.01 per diluted share, before the restructuring charge. (Including the restructuring charge, net loss for the third quarter 2001 was $41.3 million, or $(0.83) per diluted share.)
While the Company's carpet tile business continued its positive momentum during the third quarter, sustained economic pressure and poor industry conditions led to lower than projected results in other business segments. Performance in these other businesses was negatively affected by declining sales volumes. The results in the fabrics business, while consistent with the overall decreased demand levels in the commercial furniture market, also were impacted significantly by production overcapacity. In that regard, the Company stated that its board of directors has approved a previously announced plan to rationalize manufacturing facilities in its fabrics division and further reduce its work force in both U.S. and international operations, primarily in the fabrics division.
The Company's carpet tile business experienced continued growth during the third quarter of 2002, with orders in the U.S. increasing 5% sequentially and 11% year-over-year. Strong sales volumes for carpet tile in the U.S. and Asia contributed positively to top-line performance, helping to stabilize margins both domestically and abroad. Interface's carpet tile business continues to lead the corporate market segment, and the Company made significant progress during the third quarter to capitalize on non-corporate opportunities.
Daniel T. Hendrix, President and Chief Executive Officer, commented, "Our third quarter results are consistent with the preliminary results we released on October 15, 2002, and reflect the continued softness in the economy. While the market environment remains challenging, we are taking proactive steps to ensure the health and vitality of our business. We are rationalizing manufacturing facilities in our fabrics division, as well as reducing work force, which are expected to result in at least $20 million of annual cost savings. This restructuring initiative will help match our cost structure to current demand levels and improve our profitability."
For the first nine months of 2002, sales were $710.4 million, compared with $856.9 million for the same period a year ago. Operating income for the nine-month period in 2002 was $28.7 million, versus operating income of $39.2 million, before the restructuring charge, for the comparable 2001 nine-month period. The loss for the nine-month period in 2002, prior to the cumulative effect of the accounting change relating to goodwill impairment required by Statement of Financial Accounting Standards ("SFAS") No. 142, was $2.1 million, or $(0.04) per diluted share. (After the cumulative effect of the SFAS No. 142 accounting change, net loss for the first nine months of 2002 was $57.5 million, or $(1.15) per diluted share.) This compares with net income of $6.4 million, or $0.13 per diluted share, before the restructuring charge, in the third quarter 2001. (Including the restructuring charge, net loss for the first nine months of 2001 was $35.6 million, or $(0.71) per diluted share.)
In accordance with its prior statement, the Company declared no dividend for the third quarter 2002.
Mr. Hendrix also stated, "At Interface, our products continue to generate very positive feedback from the marketplace. In particular, our carpet tile segment continues to grow in popularity, and is taking market share in the areas of education, healthcare and hospitality. We believe that our market segmentation strategy will further enhance the industry-leading reputation and growing financial strength of our Company."
Mr. Hendrix concluded, "Based on current economic conditions, we expect fourth quarter 2002 earnings before the planned restructuring charge to range between break-even and a loss of five cents per diluted share, and revenues to be between $230 million and $240 million. We are confident that Interface is moving in the right direction, and we look forward to seeing positive results as our strategic initiatives take hold and market conditions improve."
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.



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