Atlanta, GA, Oct. 16--Interface also plans, subject to final board approval, to further rationalize manufacturing operations in its fabrics division, and further reduce its work force in both U.S. and international operations, beginning in the fourth quarter. This initiative is expected to generate more than $20 million per year in cost savings and reduce headcount by approximately 300 employees. In connection with these activities, the company expects to incur a pre-tax restructuring charge of approximately $18 million. The restructuring charge will be comprised of approximately $8 million of cash expenditures primarily for severance benefits, and approximately $10 million of non-cash charges, primarily for the write down of the carrying value and disposal of certain manufacturing assets, including buildings and equipment. The company anticipates that the restructuring will be completed by the end of the second quarter 2003.
Interface also stated that it will suspend repurchasing bonds and its dividend payments in order to ensure compliance with restrictions resulting from the fixed charges coverage ratio contained in the indentures for two of its outstanding series of public bonds.
According to Hendrix, "We continue to make progress in strengthening our profitable carpet tile business and streamlining our business model, despite a challenging operating environment. During the third quarter, we were pleased to see the successful results of our market segmentation strategy, with increased activity in the education, retail and government sectors. The market segmentation strategy is only one way in which Interface is adjusting its operations toward the goals of increased sales, efficiency and profitability, as well as reducing the company''''s dependence on cyclical corporate spending. The restructuring in our fabrics division and work force reductions that are planned to begin in the fourth quarter are further examples of the company''''s commitment to building a lean and resilient business that will be well positioned to capitalize on the improvement in the economy when it occurs."
