Atlanta, GA, Oct. 23--Consistent with Interface''s prior estimate, sales in the third quarter ended September 29 were $235.4 million, compared with $263.1 million in the third quarter last year. Operating income was $6.0 million in the third quarter, versus operating income of $10.7 million, before a restructuring charge, in the same period a year ago. (In the third quarter 2001, the company recorded a non-recurring pre-tax restructuring charge of approximately $62.1 million, or $0.83 per diluted share after tax.) Net loss for the third quarter was $2.7 million, or $(0.05) per diluted share, compared with last year¹s third quarter net income of $0.7 million, or $0.01 per diluted share, before the restructuring charge. (Including the restructuring charge, net loss for the third quarter 2001 was $41.3 million, or $(0.83) per diluted share.)
The company''s carpet tile business experienced continued growth during the third quarter, with orders in the U.S. increasing 5% sequentially and 11% year-over-year. While its carpet tile business continued its positive momentum during the third quarter, sustained economic pressure and poor industry conditions led to lower than projected results in other business segments. Performance in these other businesses was negatively affected by declining sales volumes. The results in the fabrics business, while consistent with the overall decreased demand levels in the commercial furniture market, also were impacted significantly by production overcapacity. In that regard, the company stated that its board of directors has approved a plan to rationalize manufacturing facilities in its fabrics division and further reduce its work force in both U.S. and international operations, primarily in the fabrics division.
"Our third quarter results are consistent with the preliminary results we released on October 15, and reflect the continued softness in the economy,² said CEO Daniel T. Hendrix. ³While the market environment remains challenging, we¹re taking proactive steps to ensure the health and vitality of our business. We¹re rationalizing manufacturing facilities in our fabrics division, as well as reducing work force, which are expected to result in at least $20 million of annual cost savings. This restructuring initiative will help match our cost structure to current demand levels and improve our profitability."
For the first nine months of the year, sales were $710.4 million, compared with $856.9 million a year ago. Operating income for the nine month period was $28.7 million, versus operating income of $39.2 million, before the restructuring charge, for the comparable period a year ago. The loss for the three quarters of the year, prior to the cumulative effect of the accounting change relating to goodwill impairment required by Statement of Financial Accounting Standards ("SFAS") No. 142, was $2.1 million, or $(0.04) per diluted share. (After the cumulative effect of the SFAS No. 142 accounting change, net loss for the first nine months of 2002 was $57.5 million, or $(1.15) per diluted share.) This compares with net income of $6.4 million, or $0.13 per diluted share, before the restructuring charge, in the third quarter a year ago. (Including the restructuring charge, net loss for the first nine months of 2001 was $35.6 million, or $(0.71) per diluted share.)
In accordance with its prior statement, the company declared no dividend for the third quarter.
"Based on current economic conditions,² said Hendrix, ³We expect fourth quarter earnings before the planned restructuring charge to range between break even and a loss of five cents per diluted share, and revenues to be between $230 million and $240 million. We¹re confident that Interface is moving in the right direction, and we look forward to seeing positive results as our strategic initiatives take hold and market conditions improve."
