Losses mount at global floorcoverings company Interface
Interface Inc, a worldwide floorcoverings company and global leader in sustainability, announced results for the fourth quarter and full year ended December 28, 2008.
Sales for the fourth quarter of 2008 were $247.2 million, compared with sales of $293.3 million in the fourth quarter of 2007, a decline of 15.7%. Excluding the items detailed below, operating income for the 2008 fourth quarter was $21.2 million, or 8.6% of sales, compared with operating income of $39.4 million, or 13.4% of sales, in the fourth quarter of last year. The Company's 2008 fourth quarter results were impacted by the following items:
• $61.2 million, or $0.99 per share, in non-cash charges resulting from the impairment of goodwill related to Bentley Prince Street;
• $11.0 million, or $0.13 per share after tax, in previously announced restructuring charges;
• $13.3 million, or $0.22 per share, in tax charges for the anticipated repatriation in 2009 of approximately $37 million of earnings from Canada and Europe; and
• $2.8 million, or $0.05 per share, in non-cash charges related to the decline in cash surrender value of Company-owned life insurance.
Including these items, 2008 fourth quarter operating loss was $53.8 million. Please see the attached tables for a reconciliation of GAAP to Non-GAAP measures.
Net income for the 2008 fourth quarter, excluding the items described above, was $6.0 million, or $0.10 per share, compared with net income in the year ago period of $20.3 million, or $0.33 per diluted share. Including the items, the Company reported a fourth quarter 2008 net loss of $79.3 million, or $1.29 per share.
"The results for the 2008 fourth quarter reflect the global economic downturn which impacted our business in almost every geographic area," said Daniel T. Hendrix, President and Chief Executive Officer. "While we started out with a decent October, our markets rapidly declined in November and December. The corporate office segment in Western Europe and the United States, which already had begun slowing in the third quarter, deteriorated even further due largely to the crisis among banks and other customers in the financial sector.
In addition, multinational companies cut their spending on projects in emerging geographic markets such as Eastern Europe, India and the Middle East, bringing business to a crawl in those regions. We responded swiftly by taking the appropriate restructuring actions we announced in December, which were comprised of employee reductions and the shutdown of our manufacturing operation in Canada, but our margins still suffered. Currency changes also contributed to the margin loss during the quarter, primarily as a result of the U.S. dollar strengthening against the Australian dollar."
The Company also announced that it has adopted a new restructuring plan that primarily consists of a further reduction in its worldwide employee base by a total of approximately290 employees and continuing actions taken to better align fixed costs with demand for its products. In connection with the new plan, the Company expects to report a pre-tax restructuring charge in the first quarter of 2009 in the range of $5.5 million to $6.5 million, comprised of $4.5 million to $5.5 million of employee severance expense and $1.0 million to $1.5 million of other exit costs, including lease and other termination costs.