News Flash

Losses mount at global floorcoverings company Interface

26 Feb '09

6 min read

Approximately $5.5 million to $6.0 million of the restructuring charge will involve future cash expenditures, primarily severance expense. The restructuring plan is expected to be completed in the first quarter of 2009, and is expected to yield annualized cost savings of approximately $17 million. This is in addition to the expected savings of $30 million associated with the restructuring plan previously announced during the fourth quarter of 2008.

Mr. Hendrix commented, "In our continuing efforts to reduce costs and right-size our business to current demand levels, we identified several additional measures that should be taken, which led to the adoption of the new restructuring plan and its related charge. While we are saddened that this action will affect even more of our hard-working associates, we concluded that the additional restructuring is necessary to protect our margins and liquidity while still preserving the capital needed to pursue our market opportunities and strategies."

For the full year of 2008, sales were $1.1 billion, essentially even with year ago levels. Excluding the 2008 fourth quarter items described above, operating income and income from continuing operations for the 2008 full year period were $116.7 million (or 10.8% of sales) and $49.6 million (or $0.81 per share), respectively. These figures compare with operating income and income from continuing operations of $129.4 million (or 12.0% of sales) and $57.8 million (or $0.94 per diluted share), respectively, in 2007.

Including the items in the 2008 fourth quarter, operating income and loss from continuing operations for the 2008 full year period were $41.7 million (or 3.9% of sales) and $35.7 million (or $0.58 per share), respectively. The Company reported a net loss of $40.9 million, or $0.67 per share, for the full year 2008, compared with a full year 2007 net loss of $10.8 million, or $0.18 per share. The net loss in 2008 includes the fourth quarter items described above and a loss from discontinued operations of $5.2 million, while the net loss in 2007 includes a loss from discontinued operations of $68.7 million.

To conserve cash resources in a prudent manner, the Company's Board of Directors has decided to reduce its dividend to an annualized rate of $0.01 per share. In that regard, the Board declared a regular quarterly cash dividend of $0.0025 per share payable March 20, 2009 to shareholders of record as of March 6, 2009. Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "From a liquidity perspective, our priority during 2009 is to generate and accumulate cash to address the maturity of our $153 million of 10.375% Senior Notes due February 2010. We also are exploring a number of refinancing opportunities."

Mr. Hendrix concluded, "We are focused on protecting our profit margins by continuing to take market share and building upon our market-leading position in modular carpet. While orders are down 27% in the first six weeks of the year, about a third of that decline is due to currency impacts and we do expect to report meaningful profitability in 2009. Carpet tile continues to take share in the flooring market, and growth in non-office segments, helped by stimulus packages in the U.S. and abroad, should partially offset the weakness we continue to see in the office market globally.

Our market diversification strategy is gaining additional traction in Europe, and our cutting-edge sustainability initiatives and what we consider to be the best sales force in the industry are key differentiators that give us a significant advantage in challenging market conditions. We will be closely managing costs, and implementing the new restructuring measures, as we continue to navigate this difficult operating environment and seek to capitalize on opportunities that emerge."

Interface Inc

More Interface Inc News... More Textiles News - United States Of America...