Interface Reports First Quarter 2001 Results

Apr 24, 2001, 01:00 ET from Interface, Inc.

    ATLANTA, April 24 /PRNewswire/ -- 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."
     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."
 
                                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
 
 

SOURCE Interface, Inc.
    ATLANTA, April 24 /PRNewswire/ -- 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."
     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."
 
                                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
 
 SOURCE  Interface, Inc.