Atlanta, GA, July 27--Interface, Inc. reported a net loss of $7.4 million or $0.14 in the second quarter verses a net loss of $200,000 or break-even earnings per share in the year-ago period.
Sales during the quarter were up 14% $246.5 million compared with second quarter 2004 sales of $216.2 million.
For the first six months of 2005, sales were $481.3 million, compared with $426.2 million for the same period a year ago, an increase of 12.9%. Income from continuing operations for the first six months of 2005 increased to $6.9 million, from $2.2 million in the prior year period.
Pursuant to the provisions of the American Jobs Creation Act of 2004, the company repatriated $10.5 million of earnings from foreign subsidiaries during the second quarter of 2005. This plan takes advantage of the company's ability to initiate such a transaction at a substantially reduced tax rate, provided the repatriation occurs before the end of 2005. Consequently, the company recorded a tax charge of approximately $1.6 million, or $0.03 per share, in the second quarter related to the repatriation. After this charge, income from continuing operations for the 2005 second quarter was $3.9 million, or $0.08 per share.
As announced in the third quarter of last year, the company made the decision to exit the owned dealer business. Consequently, it is reporting the results of operations for its owned Re:Source dealers (as well as a small Australian dealer business and a small residential fabrics business) as "discontinued operations," in accordance with accounting standards. In the 2005 second quarter, these operations yielded an after-tax operating loss of $9.8 million, and the company recorded a $1.6 million after-tax loss on the disposal of certain of these operations.
"We are very pleased with our results for the quarter, which reflected healthy top-line growth and profitability improvements across nearly all of our businesses and regions," said Daniel T. Hendrix, president and chief executive officer. "Our results speak to the success we are achieving in our markets, the strength of our brands and our segmentation strategy, and the earnings leverage built into our company. Our modular business continued to lead the way, as the Americas, Asia-Pacific, and European regions all produced double-digit growth in sales and operating income during the quarter. Additionally, we were encouraged to see continued recovery in the corporate office market and considerable success in the retail space market, which helped drive consolidated orders up 17% to $262 million, compared with the second quarter of last year."
Mr. Hendrix continued, "Interface continues to lead and shape the modular carpet market, which is expanding in virtually all parts of the world. Our segmentation strategy is working well, enabling us to gain market share and deliver worldwide modular sales growth of 20% year-over-year. Revenues in our fabrics business were up 6%, largely due to the improving corporate office market reflected in sales to OEM customers, and we expect improved profitability in this business during the second half of the year.
"In our Bentley Prince Street broadloom business, orders were up 9%, and we are confident that our initiatives to cut costs and increase manufacturing efficiencies in this business will lead to continued profit improvements as we move through the rest of the year."
Mr. Hendrix concluded, "We continue to be bullish about the momentum we have in our business and our prospects."
