[INTERFACE LOGO]
CONTACT: Daniel T. Hendrix
President and Chief Executive Officer
Patrick C. Lynch
Chief Financial Officer
(770) 437-6800
FD Morgen-Walke:
Christine Mohrmann, Lindsay Hatton
FOR IMMEDIATE RELEASE (212) 850-5600
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INTERFACE REPORTS FIRST QUARTER 2003 RESULTS
ATLANTA, Georgia, April 23, 2003 - Interface, Inc. (Nasdaq: IFSIA), a
worldwide commercial interiors products and services company, today announced
results for the first quarter ended March 30, 2003.
Sales in the first quarter 2003 were $210.2 million, compared with
$226.7 million in the first quarter 2002. The Company recorded a pre-tax
restructuring charge of $2.1 million during the first quarter 2003 in connection
with its previously-announced restructuring initiative designed to rationalize
manufacturing operations in its fabrics division and further reduce worldwide
workforce. Operating loss was $3.4 million in the first quarter 2003, versus
operating income of $10.6 million in the first quarter 2002. Loss from
continuing operations was $9.0 million, or $0.18 per share, in the first quarter
2003, compared with break-even results from continuing operations in the first
quarter 2002. Net loss for the first quarter 2003 was $10.4 million, or $0.21
per share, compared with a first quarter 2002 net loss of $0.1 million, or $0.00
per share.
"Our decline in sales in the first quarter was in line with industry
performance, reflecting the effects of a prolonged economic downturn,
exacerbated by market uncertainty in the face of the war in Iraq," said Daniel
T. Hendrix, President and Chief Executive Officer. "We also experienced delays
in implementing cost reductions in the fabrics business, which are now back on
track. Our management team is focused on the fundamentals, and that has kept us
in a market leadership position. We are implementing strategies that strengthen
our position in our core office market as well as improve our ability to meet
the needs of a growing universe of customers. First, we've launched an
exceptional marketing campaign branded i2(TM), our initiative to drive the
modular concept within the total commercial market - including hospitality,
retail, education, healthcare and government. This segmentation initiative is
paying immediate dividends,
INTERFACE REPORTS FIRST QUARTER 2003 RESULTS -2-
particularly in the education sector, which should generate significant sales in
the second quarter as we enter the schools' buying season."
"Secondly, our launch of InterfaceFLOR in the residential market
during the first quarter has generated exciting early success. This penetration
of the residential market represents a new and significant upside in our
long-term prospects for growth," Hendrix said.
Hendrix also noted the successful market segmentation efforts underway
in the Company's broadloom business, which is operating at a lower break-even
point as a result of cost-cutting initiatives that will be realized in the
second quarter. Other highlights included continued improved business, year over
year, in both Europe and Asia-Pacific.
He concluded, "We are beginning to sense an improvement in the tone of
the business, evidenced by orders of $230 million received during the first
quarter. We believe the uncertainty associated with the war caused many
customers to delay their projects, which contributed to a $14 million increase
in our backlog going into the second quarter as compared with year-end 2002.
Considering our increased backlog, our market segmentation headway and our
continued aggressive efforts to reduce costs and improve liquidity, we believe
we are better positioned for the remainder of the year. Consequently, we are
targeting improvements in revenues, operating income and bottom line results in
the second quarter 2003. We also anticipate generating free cash flow of $25
million in the second quarter. This free cash flow is derived by an expected $30
million of cash provided by operating activities, which includes a tax refund,
less an expected $5 million of cash used in investing activities - both as
determined in accordance with GAAP."
The Company will host a conference call tomorrow, April 24, 2003, at
9:00 a.m. Eastern Time, to discuss its first 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/ajwz380050401gf12.html or through the
Company's website at http://www.interfaceinc.com/results/investor/news.php. The
archived version of the conference call will be available at these sites
beginning approximately one hour after the call ends through Friday, May 23,
2003 at 11:59 p.m. Eastern Time.
Interface, Inc. is a recognized leader in the worldwide commercial
interiors market, offering floorcoverings, fabrics and interior architectural
products. 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,
INTERFACE REPORTS FIRST QUARTER 2003 RESULTS -3-
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; produces raised/access flooring systems under
the TecCrete, TecFlor, TecSteel and InterCell brands; and markets modular wiring
systems under the Interface PeoplePower brand.
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.
- TABLES FOLLOW -
INTERFACE REPORTS FIRST QUARTER 2003 RESULTS -4-
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS THREE MONTHS ENDED
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(In thousands, except per share data) 3/30/03 3/31/02
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Net Sales $ 210,210 $ 226,671
Cost of Sales 154,511 161,078
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Gross Profit 55,699 65,593
Selling, General & Administrative Expense 57,040 55,011
Restructuring Charge 2,086 --
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Operating Income (Loss) (3,427) 10,582
Interest Expense 10,180 10,352
Other Expense, Net 93 269
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Loss Before Taxes (13,700) (39)
Income Tax Benefit (4,658) (36)
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Loss from Continuing Operations (9,042) (3)
Discontinued Operations (net of tax) (1,312) (103)
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Net Loss $ (10,354) $ (106)
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Basic and diluted loss per share:
Continuing Operations $ (0.18) $ 0.00
Discontinued Operations (0.03) 0.00
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Basic and diluted loss per share $ (0.21) $ 0.00
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Basic and diluted common shares outstanding 50,211 50,017
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CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) 3/30/03 12/29/02
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ASSETS
Cash $ 22,959 $ 34,134
Accounts Receivable 129,638 137,486
Inventories 144,228 134,656
Other 50,229 42,953
Assets of business held for sale 18,613 17,492
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Total Current Assets 365,667 366,721
Property, Plant & Equipment 209,626 213,059
Other Assets 289,799 283,730
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Total Assets $ 865,092 $ 863,510
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LIABILITIES
Current Liabilities $ 174,607 $ 168,912
Long-Term Debt 2,504 --
Senior and Senior Subordinated Notes 445,000 445,000
Other Liabilities 25,124 25,427
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Total Liabilities 647,235 639,339
Shareholders' Equity 217,857 224,171
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Total Liabilities and Shareholders'
Equity $ 865,092 $ 863,510
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