Interface makes substantial progress during Q2

30 Jul '09

5 min read

Interface Inc, a worldwide floorcoverings company and global leader in sustainability, announced results for the second quarter ended July 5, 2009.

Sales for the second quarter of 2009 were $211.3 million, compared with sales of $295.0 million in the second quarter of 2008, a decline of 28.4%. Approximately 6% of the sales decline was related to fluctuations in currency exchange rates relative to the year ago period. Operating income for the 2009 second quarter was $20.9 million, or 9.9% of sales, compared with operating income of $33.4 million, or 11.3% of sales, in the second quarter of last year. The Company's operating income in the second quarter of 2009 included the following items:

• Income of $5.9 million from patent litigation settlements; and
• A pre-tax restructuring charge of $1.9 million relating to the Company's continued cost reduction initiatives in Europe and the Americas.

Excluding the items detailed above, operating income in the 2009 second quarter was $16.8 million, or 8.0% of sales.

In the second quarter of 2009, the Company recorded other expenses of $6.1 million, or the equivalent of $0.06 per diluted share, associated with the completion of its previously-announced issuance of 11 3/8% Senior Secured Notes due 2013. Excluding the items described above and the bond offering expenses, net income attributable to Interface Inc for the 2009 second quarter was $5.1 million, or $0.08 per diluted share, compared with net income attributable to Interface Inc in the year-ago period of $15.9 million, or $0.25 per diluted share. Including all items, the Company reported second quarter 2009 net income attributable to Interface, Inc. of $3.7 million, or $0.06 per diluted share.

"Interface has made substantial progress during the second quarter of 2009, with sequential quarterly improvements in orders, sales and operating income in the face of a global marketplace that continues to be very challenging," said Daniel T. Hendrix, President and Chief Executive Officer.

"The successful implementation of our restructuring initiatives and the further development of our market diversification strategy have enabled us to improve our cost structure and operational efficiency while maintaining our competitive position in the marketplace. Even though our results compared with a record second quarter last year reflect the continued pressure of current economic conditions, the non-office segments faired reasonably well, driven mostly by the education buying season. The corporate office segment, however, continued to deteriorate, which particularly impacted our performance in Europe and the emerging markets."

Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "Interface has taken a number of steps to significantly reduce its cost structure in light of recent global economic pressures, and most of the benefits of these actions flowed through our results for the 2009 second quarter. We also took significant steps towards our goal of strengthening our balance sheet during the period, successfully refinancing nearly all of our near-term debt maturities and ensuring we have the capital necessary to continue executing on our strategic initiatives. As a result of our focus on enhancing liquidity, managing costs and generating free cash flow, we exited the quarter with $90 million in cash."

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