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Interface Reports Third Quarter 2003 Results
- Operating Income Improved 7.1% Versus Third Quarter 2002 - - Debt Reduced by $16.2 Million During the Quarter -

ATLANTA, Oct 22, 2003 /PRNewswire-FirstCall via COMTEX/ -- Interface, Inc. (Nasdaq: IFSIA), a worldwide interiors products and services company, today announced results for the third quarter ended September 28, 2003.

Sales in the third quarter 2003 were $237.1 million, compared with $231.3 million in the third quarter 2002. Operating income was $8.0 million in the third quarter 2003, versus $7.5 million in the third quarter 2002. Loss from continuing operations was $2.1 million, or $0.04 per share, in the third quarter 2003, compared with a loss from continuing operations of $1.8 million, or $0.03 per share, in the third quarter 2002. Loss from discontinued operations, including an $8.8 million after-tax loss on the disposal of those operations, was $11.2 million in the third quarter 2003, versus a loss from discontinued operations of $1.0 million in the same period a year ago. Net loss for the third quarter 2003 was $13.4 million, or $0.27 per share, compared with a third quarter 2002 net loss of $2.7 million, or $0.05 per share.

"In the third quarter of 2003, we continued to make significant improvements which strengthened our business," said Daniel T. Hendrix, President and Chief Executive Officer. "We have focused on generating top line momentum by remaining committed to our market segmentation strategy, the results of which were evident this quarter in revenue growth throughout most areas of our business. In addition, we made efforts to streamline our operations and improve our cost structure, resulting in a 7.1% year-over-year increase in operating income during the third quarter. Although many of our end markets have yet to recover from the continued weakness in the economy, we have been taking proactive measures to position our business for recovery."

Mr. Hendrix continued, "Our worldwide modular business performed strongly this quarter, with an 8.7% year-over-year increase in revenues primarily resulting from our ability to take share and capitalize on opportunities in the corporate office, education and healthcare markets. After returning to operating profitability in the second quarter of this year, our broadloom business posted a significant year-over-year increase in operating income in the third quarter, largely as a result of our cost-cutting initiatives and improvements in manufacturing efficiencies. Although our fabrics business remained flat this quarter, we have completed the restructuring initiatives that will fortify this business and position it for sustained long-term growth."

For the first nine months of 2003, sales were $681.3 million, compared with $691.8 million for the same period a year ago. Operating income for the 2003 nine-month period was $8.3 million (which includes $4.6 million of restructuring charges), versus operating income of $31.2 million for the comparable 2002 nine-month period. During the 2003 nine-month period, loss from continuing operations was $15.1 million, or $0.30 per share, compared with a loss from continuing operations of $0.4 million, or $0.01 per share, in the same period a year ago. Net loss for the 2003 nine-month period was $29.2 million, or $0.58 per share, compared with a net loss of $57.5 million, or $1.15 per share, for the first nine months of 2002. During the first nine months of 2002, the Company's implementation of SFAS No. 142 resulted in an after-tax write-down of $55.4 million, or $1.11 per diluted share, primarily related to the impairment of goodwill.

Patrick C. Lynch, Vice President and Chief Financial Officer of Interface, commented, "As a result of the strategic initiatives we implemented in the third quarter, our business is stronger and more efficient. During the third quarter, we completed the sale of Interface Architectural Resources, our raised/access flooring business, which should improve our overall profitability and enhance our free cash flow generation going forward. In addition, we continued to strengthen our balance sheet by reducing debt by $16.2 million during the third quarter."

Mr. Hendrix continued, "We are pleased to announce the addition of a new member to our Board of Directors. Edward C. Callaway is currently the Chairman of Crested Butte Mountain Resort, Inc. in Colorado, and previously served as its President and Chief Executive Officer from 1987 to 2002. In addition, Edward is actively involved with The Considine Companies, a commercial real estate development business based in Denver. Edward graduated from Dartmouth College before earning a Masters Degree in Accounting from New York University and a Masters of Business Administration Degree from Stanford University. His wide array of business and management expertise will provide an invaluable contribution to our Board of Directors. Edward will join the Board effective today, and is replacing Len Saulter, who is retiring after more than 16 years of service as a director."

Mr. Hendrix concluded, "We are encouraged by our third quarter results and we look forward to maintaining this positive momentum into the final months of fiscal 2003. We remain committed to the strategic priorities that will allow our business to prosper, such as our market segmentation strategy, our ongoing cost management initiatives, and our focus on generating free cash flow to reduce debt."

The Company will host a conference call tomorrow, October 23, 2003, at 9:00 a.m. Eastern Time, to discuss its third quarter 2003 results. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the conference call live over the Internet at http://www.firstcallevents.com/service/ajwz390484001gf12.html or through the Company's website at http://www.interfaceinc.com/results/investor/. The archived version of the conference call will be available at these sites beginning approximately one hour after the call ends through October 23, 2004 at 11:59 p.m. Eastern Time.

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, 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 fabric services through its TekSolutions business and produces InterCell brand raised/access flooring systems.

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 "Safe Harbor Compliance Statement for Forward-Looking Statements" in Item 1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2002, 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 may be affected by cycles in the construction and renovation of commercial and institutional buildings," "Our continued success depends significantly upon the efforts, abilities and continued service of our senior management executives and our design consultants," "Our substantial international operations are subject to various political, economic and other uncertainties," "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," and "Our Rights Agreement could discourage tender offers or other transactions 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.


    Consolidated Statements of Income
    (in thousands, except per share data)

                            Three Months Ended       Nine Months Ended
                          28-Sep-03   29-Sep-02    28-Sep-03     29-Sep-02

    Net Sales             $237,094     $231,315     $681,268     $691,759
    Cost of Sales          171,862      166,666      495,466      492,196
      Gross Profit          65,232       64,649      185,802      199,563
    Selling, General &
     Administrative
     Expenses               57,201       57,151      172,911      168,400
    Restructuring Charge         -            -        4,555            -
      Operating Income       8,031        7,498        8,336       31,163
    Interest Expense        11,033       10,573       31,426       31,739
    Other Expense, Net         155            -          592          380
      Income (Loss)
       Before Taxes         (3,157)      (3,075)     (23,682)        (956)
    Income Tax Expense
     (Benefit)              (1,011)      (1,293)      (8,554)        (534)
      Income (Loss) from
       Continuing
       Operations           (2,146)      (1,782)     (15,128)        (422)
    Discontinued Operations,
     Net of Tax             (2,417)        (967)      (5,201)      (1,656)
    Loss on Disposal,
     Net of Tax             (8,825)           -       (8,825)           -
       Income (Loss) before
        Change in
        Accounting
        Principle          (13,388)      (2,749)     (29,154)      (2,078)
    Cumulative Effect
     of Change, Net of Tax       -            -            -      (55,380)
    Net Income (Loss)     $(13,388)    $ (2,749)    $(29,154)    $(57,458)

    Earnings Per Share - Basic and Diluted
     Continuing Operations  $(0.04)      $(0.03)      $(0.30)      $(0.01)
     Discontinued Operations (0.05)       (0.02)       (0.10)       (0.03)
     Loss on Disposal        (0.18)           -        (0.18)           -
     Cumulative Effect of
      Change in Accounting
      Principle                  -            -            -        (1.11)
    Earnings Per Share -
     Basic and Diluted      $(0.27)      $(0.05)      $(0.58)      $(1.15)

    Common Shares Outstanding,
     Basic and Diluted       50,273       50,251      50,247       50,148

    Consolidated Condensed Balance Sheets
    (In thousands)                                  28-Sep-03    29-Dec-02
    Assets
      Cash                                          $  22,567    $  34,134
      Accounts Receivable                             176,453      137,486
      Inventory                                       143,977      134,656
      Other Current Assets                             40,249       42,953
      Assets of Business Held for Sale                      -       17,492
         Total Current Assets                         383,246      366,721
      Property, Plant & Equipment                     207,225      213,059
      Other Assets                                    286,178      283,730
         Total Assets                               $ 876,649    $ 863,510

    Liabilities
      Current Liabilities                           $ 173,721    $ 168,912
      Long-Term Debt                                    5,502            -
      Senior and Senior Subordinated Notes            445,000      445,000
      Other Liabilities                                43,146       25,427
         Total Liabilities                            667,369      639,339
      Shareholders' Equity                            209,280      224,171
         Total Liabilities and
          Shareholders' Equity                      $ 876,649    $ 863,510

SOURCE Interface, Inc.

Daniel T. Hendrix, President and Chief Executive Officer or
Patrick C. Lynch, Chief Financial Officer, both of Interface, Inc.,
+1-770-437-6800; or Christine Mohrmann or Lindsay Hatton, both of Financial
Dynamics, +1-212-850-5600, for Interface, Inc.
http://www.interfaceinc.com