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Meldungen 29.10.2009

Interface: Q3 2009 Results

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Interface, Inc., a worldwide floorcoverings company and global leader in sustainability, today announced results for the third quarter ended October 4, 2009.

Sales for the third quarter of 2009 were $218.4 million, compared with sales of $278.4 million in the third quarter of 2008, a decline of 21.6%. Approximately 3% of the sales decline was related to fluctuations in currency exchange rates relative to the year ago period. On a sequential basis, sales increased 3.3% over sales of $211.3 million in the second quarter of 2009. Operating income for the 2009 third quarter was $18.9 million, or 8.7% of sales, compared with operating income of $31.0 million, or 11.1% of sales, in the third quarter of last year. Operating income improved 13.0% over second quarter 2009 adjusted operating income of $16.8 million (see table below), or 8.0% of sales. Unadjusted, operating income in the second quarter of 2009 was $20.9 million, or 9.9% of sales.

Net income attributable to Interface, Inc. for the 2009 third quarter was $5.5 million, or $0.09 per diluted share, compared with $8.4 million, or $0.13 per diluted share, in the year ago period. Included in the Company's results for the third quarter of 2008 was a previously announced after-tax loss from discontinued operations of $5.2 million, or $0.08 per diluted share.

"We saw steady sequential improvement in our business in the third quarter despite the challenging market conditions," said Daniel T. Hendrix, President and Chief Executive Officer. "Demand for modular carpet in the education, retail and government sectors held up well, offsetting in part the continuing softness in the corporate office segment. Geographically, our business in the Americas has been remarkably resilient, due primarily to our focus on non-office segments. Our business in Europe continued to struggle with the poor economy, but in an encouraging sign orders exceeded sales for the quarter. Asia-Pacific remains tepid overall, as multinational corporate customers have not yet returned to the market. However, Australia has been turning around and we're beginning to see a firming pipeline of orders in China. While the global economic environment continues to be difficult, we feel we've made the appropriate restructuring decisions and investments in our business, and continue to gain share as a leader in the carpet tile market."

Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "We've successfully realigned our cost structure to match demand and strengthened our balance sheet to maintain our competitive position through this market cycle. On a sequential basis, our gross margin expanded almost 50 basis points from 2009 second quarter levels, reflecting the leverage built into our operating model. Our commitment to prudent cost management and capital allocation resulted in strong cash flow generation, and we ended the quarter with $106 million in cash and equivalents on hand."

For the first nine months of 2009, sales were $629.0 million, compared with $835.2 million for the same period a year ago, a decrease of 24.7%. Approximately 4% of the sales decline was related to fluctuations in currency exchange rates relative to the first nine months of last year. Operating income for the 2009 nine-month period was $42.9 million, compared with operating income of $95.4 million in the 2008 nine-month period. Income from continuing operations was $6.1 million, or $0.09 per diluted share, in the 2009 nine-month period, compared with income from continuing operations of $44.4 million, or $0.69 per diluted share, in the same period a year ago. Net income attributable to Interface, Inc. was $5.0 million, or $0.08 per diluted share, in the first nine months of 2009, compared with $38.4 million, or $0.61 per diluted share, for the first nine months of 2008. The Company's results for the first nine months of 2009 included the following items:

    * Pre-tax restructuring charges of $7.6 million relating to the Company's cost reduction initiatives;
    * Income of $5.9 million from patent litigation settlements; and
    * Other expenses of $6.1 million associated with the completion of the previously-announced tender offer for our 10.375% Senior Notes.

Excluding the items detailed above, in the first nine months of 2009, operating income was $44.6 million, or 7.1% of sales, and income from continuing operations was $11.6 million, or $0.18 per diluted share.

Included in the Company's results for the first nine months of 2008 was an after-tax loss from discontinued operations of $5.2 million, or $0.08 per diluted share, as discussed previously.

Mr. Hendrix concluded, "While we will continue to face challenges in the upcoming months, the sequential trends in our business and our third quarter results provide a foundation for the opportunities that lie ahead. We continue to see a shift in the marketplace to carpet tile, and feel that by taking prudent actions during these challenging times, we remain well positioned to capitalize on it. While the market appears to be stabilizing, we remain as focused as ever on continuing to improve our business. By investing in our market diversification strategy, improving our cost structure and strengthening our balance sheet, we have put Interface in an excellent position to lead a market recovery when demand levels rise."

The Company will host a conference call tomorrow, October 29, 2009, at 9:00 a.m. Eastern Time, to discuss its third quarter 2009 results. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the conference call live over the Internet at:phx.corporate-ir.net/phoenix.zhtmlor through the Company's website atwww.interfaceglobal.com/Investor-Relations.aspx. The archived version of the webcast will be available at these sites for one year beginning approximately one hour after the call ends.

Interface, Inc. is the world's largest manufacturer of modular carpet, which it markets under the InterfaceFLOR, FLOR, Heuga and Bentley Prince Street brands, and, through its Bentley Prince Street brand, enjoys a leading position in the designer quality segment of the broadloom carpet market. 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.

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 forwardlooking 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 "Risk Factors" included in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2008, which discussion is incorporated herein by this reference, including, but not limited to, the discussion of specific risks and uncertainties under the headings "Sales of our principal products have been and may continue to be affected by adverse economic cycles in the renovation and construction of commercial and institutional buildings," "The recent worldwide financial and credit crisis could have a material adverse effect on our business, financial condition and results of operations," "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," "Our success depends significantly upon the efforts, abilities and continued service of our senior management executives and our principal design consultant, and our loss of any of them could affect us adversely," "Our substantial international operations are subject to various political, economic and other uncertainties that could adversely affect our business results, including by restrictive taxation or other government regulation and by foreign currency fluctuations," "Large increases in the cost of petroleum-based raw materials could adversely affect us if we are unable to pass these cost increases through to our customers," "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," "We have a significant amount of indebtedness, which could have important negative consequences to us," "The market price of our common stock has been volatile and the value of your investment may decline," "Our earnings in a future period could be adversely affected by non-cash adjustments to goodwill, if a future test of goodwill assets indicates a material impairment of those assets," "Our Chairman currently has sufficient voting power to elect a majority of our Board of Directors," and "Our Rights Agreement could discourage tender offers or other transactions for our stock 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 Condensed Statements of Operations*
    (In thousands, except per share data)

                                      Three Months Ended  Nine Months Ended
                                      ------------------  ------------------
                                      10/04/09  09/28/08  10/04/09  09/28/08
                                      --------  --------  --------  --------

    Net Sales                         $218,364  $278,423  $628,969  $835,164
    Cost of Sales                      145,952   183,506   424,282   540,688
                                      --------  --------  --------  --------
    Gross Profit                        72,412    94,917   204,687   294,476
    Selling, General & Administrative
     Expenses                           53,487    63,895   160,122   199,047
    Income from Litigation Settlements      --        --    (5,926)       --
    Restructuring Charge                    --        --     7,627        --
                                      --------  --------  --------  --------
    Operating Income                    18,925    31,022    42,864    95,429
    Interest Expense                     9,537     8,173    24,936    24,109
    Bond Retirement Expenses                --        --     6,096        --
    Other Expense (Income), Net            156       544        56       564
                                      --------  --------  --------  --------
    Income Before Taxes                  9,232    22,305    11,776    70,756
    Income Tax Expense                   3,542     8,461     5,661    26,323
                                      --------  --------  --------  --------
    Income from Continuing Operations    5,690    13,844     6,115    44,433
    Discontinued Operations, Net of Tax     --    (5,154)     (650)   (5,154)
    Net Income                           5,690     8,690     5,465    39,279
    Net Income Attributable to
     Noncontrolling Interest in
     Subsidiary                           (233)     (260)     (495)     (851)
                                      --------  --------  --------  --------
    Net Income Attributable to
     Interface, Inc.                    $5,457    $8,430    $4,970   $38,428
                                      ========  ========  ========  ========

    Earnings (Loss) Per Share
     Attributable to Interface, Inc.
     - Basic
    Continuing Operations                $0.09     $0.22     $0.09     $0.69
    Discontinued Operations                 --     (0.08)    (0.01)    (0.08)
                                      --------  --------  --------  --------
    Earnings (Loss) Per Share
     Attributable to Interface, Inc.
     - Basic                             $0.09     $0.13     $0.08     $0.61
                                      ========  ========  ========  ========
    Earnings (Loss) Per Share
     Attributable to Interface, Inc.
     - Diluted
    Continuing Operations                $0.09     $0.21     $0.09     $0.69
    Discontinued Operations                 --     (0.08)    (0.01)    (0.08)
                                      --------  --------  --------  --------
    Earnings (Loss) Per Share
     Attributable to Interface, Inc.
     - Diluted                           $0.09     $0.13     $0.08     $0.61
                                      ========  ========  ========  ========
    Common Shares Outstanding - Basic   63,190    63,052    63,197    62,950
    Common Shares Outstanding
     - Diluted                          63,487    63,341    63,258    63,263

    Orders from Continuing Operations  222,394   267,874   658,866   862,565
    Continuing Operations Backlog
     (as of 10/04/09 and 09/28/08,
      respectively)                                        116,076   135,914

    * Prior year periods have been adjusted for the adoption of accounting
    standards relating to the determination of shares used in earnings
    per share calculations and related to the presentation of noncontrolling
    interests in financial statements.


    Consolidated Condensed Balance Sheets*
    (In thousands)                                   10/04/09        12/28/08
                                                     --------        --------
    Assets
        Cash                                         $105,938         $71,757
        Accounts Receivable                           126,914         144,783
        Inventory                                     119,744         128,923
        Other Current Assets                           26,277          27,342
        Assets of Businesses Held for Sale              2,150           3,150
                                                     --------        --------
            Total Current Assets                      381,023         375,955
        Property, Plant & Equipment                   163,321         160,717
        Other Assets                                  180,037         169,363
                                                     --------        --------
            Total Assets                             $724,381        $706,035
                                                     ========        ========
    Liabilities
        Accounts Payable                              $41,357         $52,040
        Accrued Liabilities                            96,901         102,592
        Current Portion of Long-Term Debt              14,586              --
                                                     --------        --------
            Total Current Liabilities                 152,844         154,632
        Senior Secured and Senior
         Subordinated Notes                           279,870         287,588
        Other Long-Term Liabilities                    48,374          46,378

            Total Liabilities                         481,088         488,598
        Shareholders' Equity                          243,293         217,437
                                                     --------        --------
            Total Liabilities and Shareholders'
             Equity                                  $724,381        $706,035
                                                     ========        ========


    Consolidated Condensed Statements of Cash Flows*
    (In millions)
                               Three Months Ended     Nine Months Ended
                               ------------------    -------------------
                               10/04/09  09/28/08    10/04/09   09/28/08
                               --------  --------    --------   --------
    Net Income                     $5.7      $8.7        $5.5      $39.3
    Adjustments for
     Discontinued
     Operations                      --       5.2         0.7        5.2
                                   ----      ----        ----       ----
    Net Income from
     Continuing
     Operations                    $5.7     $13.9        $6.2      $44.5
    Depreciation and
     Amortization                   6.9       5.7        18.9       17.7
    Deferred Income
     Taxes and Other
     Non-Cash Items                 0.0       0.8         1.4        3.3
    Change in Working Capital
    Accounts Receivable      (0.4)      3.2         27.5      10.3
    Inventories               4.6       1.5         13.5     (21.8)
    Prepaids and Other
     Current Assets          (5.0)      3.2         (1.1)     (0.5)
    Accounts Payable and
     Accrued Expenses         6.3     (13.9)       (20.4)    (17.9)
                             ----      ----         ----      ----
    Cash Provided from
     Continuing Operations         18.1     14.4         46.0       35.6
    Cash Provided from
     (Used in) Operating
     Activities of
     Discontinued Operations        --        --           --         --
                                  ----      ----         ----       ----
    Cash Provided from
     Operating Activities         18.1      14.4         46.0       35.6
    Cash Provided from
     (Used in) Investing
      Activities                  (2.7)     (7.9)        (8.5)     (26.4)
    Cash Provided from
     (Used in) Financing
     Activities                   (0.5)     (1.4)        (5.4)      (4.3)
    Effect of Exchange Rate
     Changes on Cash               1.2      (3.2)         2.2       (1.8)
                                  ----      ----         ----       ----
    Net Increase in Cash         $16.1      $1.9        $34.3       $3.1
                                  ====      ====         ====       ====

    * Prior year periods have been adjusted for the adoption of accounting
    standards relating to the determination of shares used in earnings
    per share calculations and related to the presentation of noncontrolling
    interests in financial statements.


    Consolidated Condensed Segment Reporting
    (In millions)

                    Three Months Ended            Nine Months Ended
                    ------------------            ------------------
                    10/04/09  09/28/08  % Change  10/04/09  09/28/08  % Change
                    --------  --------  --------  --------  --------  --------
    Net Sales
     Modular Carpet   $194.1    $243.0   (20.1%)    $557.1    $728.4   (23.5%)
     Bentley Prince
      Street            24.3      35.4   (31.4%)      71.9     106.8   (32.7%)
                    --------  --------  --------  --------  --------  --------
    Total             $218.4    $278.4   (21.6%)    $629.0    $835.2   (24.7%)
                    ========  ========  ========  ========  ========  ========

    Operating Income (Loss)
     Modular Carpet    $20.3     $30.3   (33.0%)     $44.5     $96.5   (53.9%)
     Bentley Prince
      Street            (1.0)      0.7  (242.9%)      (6.0)      2.5  (340.0%)
     Corporate
      Expenses, Income
      and Eliminations  (0.4)       --        *        4.4      (3.6)  222.2%
                    --------  --------  --------  --------  --------  --------
    Total              $18.9     $31.0   (39.0%)     $42.9     $95.4   (55.0%)
                    ========  ========  ========  ========  ========  ========
    * Not meaningful


                        Reconciliation of Non-GAAP Performance Measures to
                                     GAAP Performance Measures
                             (In millions except per share amounts)


                                                      Nine Months Ended
                                                            10/04/09
    Operating Income, Excluding Restructuring
     Charge and Income from Litigation Settlements           $44.6
    Restructuring Charge                                      (7.6)
    Income from Litigation Settlements                         5.9
                                                             -----
    Operating Income, As Reported                            $42.9
                                                             =====


                                                      Nine Months Ended
                                                            10/04/09
    Income from Continuing Operations, Excluding
     Restructuring Charge, Income from
     Litigation Settlements and Bond Retirement Expenses     $11.6
    Restructuring Charge                                      (5.4)
    Income from Litigation Settlements                         3.6
    Bond Retirement Expenses                                  (3.7)
                                                             -----
    Income from Continuing Operations, As
     Reported                                                 $6.1
                                                              ====

                                                      Nine Months Ended
                                                             10/04/09
    Diluted Earnings Per Share from Continuing
     Operations, Excluding Restructuring Charge,
     Income from Litigation Settlements and Bond
     Retirement Expenses                                     $0.18
    Restructuring Charge                                     (0.09)
    Income from Litigation Settlements                        0.06
    Bond Retirement Expenses                                 (0.06)
                                                            ------
      Diluted Earnings Per Share from Continuing
       Operations, As Reported                               $0.09
                                                             =====

                                                     Three Months Ended
                                                            07/05/09
    Operating Income, Excluding Restructuring
     Charge and Income from Litigation Settlements           $16.8
    Restructuring Charge                                      (1.9)
    Income from Litigation Settlements                         5.9
                                                               ---
    Operating Income, As Reported                            $20.9


Source: Interface

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