SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarterly Period Ended June 30, 2002
Commission File Number 0-12016
------------------------------
INTERFACE, INC.
---------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-1451243
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2859 PACES FERRY ROAD, SUITE 2000, ATLANTA, GEORGIA 30339
---------------------------------------------------------
(Address of principal executive offices and zip code)
(770) 437-6800
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]
Shares outstanding of each of the registrant's classes of common stock at August
8, 2002:
Class Number of Shares
----- ----------------
Class A Common Stock, $.10 par value per share 44,168,229
Class B Common Stock, $.10 par value per share 7,024,698
INTERFACE, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Condensed Balance Sheets - June 30, 2002 3
and December 30, 2001
Consolidated Condensed Statements of Operations - Three Months 4
and Six Months Ended June 30, 2002 and July 1, 2001
Consolidated Statements of Comprehensive Income (Loss) - Three 4
Months and Six Months Ended June 30, 2002 and July 1, 2001
Consolidated Condensed Statements of Cash Flows - Six Months 5
Ended June 30, 2002 and July 1, 2001
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 14
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
-2-
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 30,
2002 2001
---- ----
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,257 $ 793
Accounts Receivable 156,635 161,070
Inventories 170,091 168,249
Prepaid Expenses 28,772 31,018
Deferred Tax Asset 19,018 17,640
-------- --------
TOTAL CURRENT ASSETS 376,773 378,770
PROPERTY AND EQUIPMENT, less
accumulated depreciation 252,283 260,327
GOODWILL 205,080 251,874
OTHER ASSETS 72,254 63,783
-------- --------
$906,390 $954,754
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $65,718 $65,805
Accrued Expenses 91,917 100,566
Current Maturities of Long-Term Debt 5 1,667
-------- --------
TOTAL CURRENT LIABILITIES 157,640 168,038
LONG-TERM DEBT, less current maturities 6,502 178,327
SENIOR NOTES 325,000 150,000
SENIOR SUBORDINATED NOTES 125,000 125,000
DEFERRED INCOME TAXES and OTHER 26,270 26,474
-------- --------
TOTAL LIABILITIES 640,412 647,839
-------- --------
Minority Interest 4,710 4,440
-------- --------
SHAREHOLDERS' EQUITY:
Common Stock 5,119 5,082
Additional Paid-In Capital 221,245 219,490
Retained Earnings 119,706 175,940
Accumulated Other Comprehensive Income -
Foreign Currency Translation (73,741) (86,976)
Minimum pension liability (11,061) (11,061)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 261,268 302,475
-------- --------
$906,390 $954,754
======== ========
See accompanying notes to consolidated condensed financial statements.
-3-
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THREE SIX
MONTHS MONTHS
ENDED ENDED
----------------------- -------------------------
JUNE 30, JULY 1, JUNE 30, JULY 1,
2002 2001 2002 2001
-------- -------- --------- --------
NET SALES $240,593 $287,285 $ 475,018 $593,796
Cost of Sales 171,075 204,387 339,159 421,980
-------- -------- --------- --------
GROSS PROFIT ON SALES 69,518 82,898 135,859 171,816
Selling, General and Administrative Expenses 57,283 71,476 113,148 143,289
-------- -------- --------- --------
OPERATING INCOME 12,235 11,422 22,711 28,527
Interest Expense 10,848 9,298 21,223 18,862
Other Expense 190 2 499 275
-------- -------- --------- --------
INCOME BEFORE TAXES ON INCOME 1,197 2,122 989 9,390
Income Tax Expense 420 850 318 3,688
-------- -------- --------- --------
INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE 777 1,272 671 5,702
Cumulative Effect of Change in Accounting Principle (net of tax) -- -- (55,380) --
-------- -------- --------- --------
NET INCOME (LOSS) $ 777 $ 1,272 $ (54,709) $ 5,702
======== ======== ========= ========
Basic Earnings (Loss) Per Share $ .02 $ .03 $ (1.09) $ .11
======== ======== ========= ========
DILUTED EARNINGS (LOSS) PER SHARE $ .02 $ .03 $ (1.09) $ .11
======== ======== ========= ========
Average Shares Outstanding -- Basic 50,158 49,822 50,098 49,920
======== ======== ========= ========
Average Shares Outstanding -- Diluted 51,404 50,471 50,098 50,739
======== ======== ========= ========
See accompanying notes to consolidated condensed financial statements.
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(IN THOUSANDS)
THREE SIX
MONTHS MONTHS
ENDED ENDED
------------------------ ---------------------------
JUNE 30, JULY 1, JUNE 30, JULY 1,
2002 2001 2002 2001
-------- ------- -------- --------
Net Income (Loss) $ 777 $ 1,272 $(54,709) $ 5,702
Other Comprehensive Income, Foreign
Currency Translation Adjustment 14,355 (5,727) 13,235 (16,350)
------- ------- -------- --------
Comprehensive Income (Loss) $15,132 $(4,455) $(41,474) $(10,648)
======= ======= ======== ========
See accompanying notes to consolidated condensed financial statements.
-4-
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
SIX
MONTHS
ENDED
JUNE 30, JULY 1,
2002 2001
------ ----
CASH FLOWS FROM OPERATING ACTIVITIES: $13,598 $ (15,486)
------- ----------
INVESTING ACTIVITIES:
Capital expenditures (4,690) (17,293)
Other (1,834) (5,877)
------- -------
(6,524) (23,170)
------- -------
FINANCING ACTIVITIES:
Net borrowing (reduction) of long-term debt (175,406) 38,479
Proceeds from issuance of bonds 175,000 --
Refinancing costs (5,470) --
Proceeds from issuance of common stock 1,306 --
Issuance/Repurchase of common stock -- (2,904)
Dividends paid (1,532) (4,579)
------- -------
(6,102) 30,996
------- -------
Net cash provided by (used for) operating,
investing and financing activities 972 (7,660)
Effect of exchange rate changes on cash 492 (201)
------- -------
CASH AND CASH EQUIVALENTS:
Net change during the period 1,464 (7,861)
Balance at beginning of period 793 7,861
------- -------
Balance at end of period $ 2,257 $ --
======= =======
See accompanying notes to consolidated condensed financial statements.
-5-
INTERFACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - CONDENSED FOOTNOTES
As contemplated by the Securities and Exchange Commission (the
"Commission") instructions to Form 10-Q, the following footnotes have been
condensed and, therefore, do not contain all disclosures required in connection
with annual financial statements. Reference should be made to the notes to the
Company's year-end financial statements contained in its Annual Report on Form
10-K for the fiscal year ended December 30, 2001, as filed with the Commission.
The financial information included in this report has been prepared by
the Company, without audit, and should not be relied upon to the same extent as
audited financial statements. In the opinion of management, the financial
information included in this report contains all adjustments (all of which are
normal and recurring) necessary for a fair presentation of the results for the
interim periods. Nevertheless, the results shown for interim periods are not
necessarily indicative of results to be expected for the full year.
NOTE 2 - INVENTORIES
Inventories are summarized as follows:
(In thousands)
June 30, December 30,
2002 2001
------- ------------
Finished Goods $ 96,470 $ 84,191
Work in Process 36,825 35,204
Raw Materials 36,796 48,854
--------- ---------
$170,091 $ 168,249
======== =========
NOTE 3 - RESTRUCTURING CHARGES
During 2001, the Company recorded a pre-tax restructuring charge of
$65.1 million. The charge reflected: (i) the withdrawal from the European
broadloom market; (ii) the consolidation in the Company's raised/access flooring
operations; (iii) the further rationalization of the U.S. broadloom operations;
(iv) a worldwide workforce reduction of approximately 838 employees; and (v) the
consolidation of certain non-strategic Re:Source Americas operations. The
Company initially recorded a charge of $62.2 million during the third quarter of
2001, and in the fourth quarter of 2001 recorded an additional $2.9 million
charge related to pension benefits for terminated European employees.
Specific elements of the restructuring activities, the related costs
and current status of the plan are discussed below.
U.S.
Economic developments had caused a decline in demand for raised/access
flooring, panel fabric and certain of the Company's other products. In order to
better match the cost structure to the expected revenue base, the Company closed
two raised/access flooring plants and one panel fabric plant, eliminated certain
product lines, consolidated certain under-performing distribution locations and
made other head-count reductions. A charge of approximately $28.8 million was
recorded representing the reduction of carrying value of the related property
and equipment, impairment of intangible assets and other costs to close these
operations. Additionally, the Company recorded approximately $5.3 million of
termination benefits associated with the facility closures and other head-count
reductions.
Europe
For several years up through 2001, the Company's European broadloom
operations had negative returns. The softening global economy during 2001, and
the events of September 11, 2001 (which severely impacted consumers of broadloom
carpet in the hospitality, leisure and airline businesses) led management to
conclude that positive returns from this operation were unlikely for the near
future. As a result, the Company elected to divest of this operation. The
Company also elected to consolidate certain production and administrative
facilities throughout Europe. A charge of approximately $19.0 million was
recorded representing the reduction of carrying value of the related property
and equipment, impairment of intangible assets and other costs to close or
dispose of these operations. Additionally, the Company recorded approximately
$12.0 million of termination benefits associated with the facility closures.
-6-
A summary of the restructuring activities is presented below:
U.S. EUROPE TOTAL
--------- --------- ---------
(IN THOUSANDS)
Facilities consolidation............................................. $ 5,889 $ 8,685 $ 14,574
Workforce reduction.................................................. 5,266 12,049 17,315
Product rationalization.............................................. 15,735 1,070 16,805
Other impaired assets................................................ 6,997 9,394 16,391
--------- --------- ---------
$ 33,887 $ 31,198 $ 65,085
========= ========= =========
The restructuring charge was comprised of $24.0 million of cash
expenditures for severance benefits and other costs and $41.1 million of
non-cash charges, primarily for the write-down of carrying value and disposal of
certain assets.
The termination benefits of $17.3 million, primarily related to
severance costs, are a result of aggregate reductions of approximately 838
employees. The staff reductions as originally planned were expected to be as
follows:
U.S. EUROPE TOTAL
Manufacturing............................................... 243 436 679
Selling and administrative.................................. 62 97 159
------ ---- ----
305 533 838
===== ==== ====
As a result of the restructuring, approximately 800 employees were
terminated through June 30, 2002. The charge for termination benefits and other
costs to exit activities incurred during 2001 was reflected as a separately
stated charge against operating income. The Company believes the remaining
provisions are adequate to complete the plan.
The following table displays the activity within the accrued
restructuring liability for the six-month period ended June 30, 2002:
Termination Benefits
U.S. EUROPE TOTAL
--------- --------- ---------
(IN THOUSANDS)
Balance, at December 30, 2001.......................... $ 1,971 $ 9,352 $ 11,323
Cash payments.......................................... (1,854) (9,352) (11,206)
--------- --------- ---------
Balance, at June 30, 2002.............................. $ 117 $ --- $ 117
========= ========= =========
Other Costs to Exit Activities
U.S. EUROPE TOTAL
---------- ---------- ----------
(IN THOUSANDS)
Balance, at December 30, 2001.......................... $ 1,199 $ 6,114 $ 7,313
Costs incurred......................................... (1,015) (1,912) (2,927)
---------- ---------- ----------
Balance, at June 30, 2002.............................. $ 184 $ 4,202 $ 4,386
=========== =========== ==========
NOTE 4 - EARNINGS PER SHARE AND DIVIDENDS
Basic earnings per share is computed by dividing net income (or loss)
to common shareholders by the weighted average number of shares of Class A and
Class B Common Stock outstanding during the period. Shares issued or reacquired
during the period have been weighted for the portion of the period that they
were outstanding. Basic earnings per share has been computed based upon
50,098,000 shares and 49,920,000 shares outstanding for the six-month periods
ended June 30, 2002 and July 1, 2001, respectively. Diluted earnings per share
is calculated in a manner consistent with that of basic earnings per share while
giving effect to all dilutive potential common shares that were outstanding
during the period. Diluted earnings per share has been computed based upon
50,098,000 shares and 50,739,000 shares outstanding for the six-month periods
ended June 30, 2002 and July 1, 2001, respectively. During the first six months
of 2002, there were vested, unexercised, in the money stock options for
2,642,000 shares. These shares were not included in the computation of the
diluted per share amount because the Company was in a net loss position and,
thus, any potential common shares were anti-dilutive.
-7-
The following is a reconciliation from basic earnings per share to diluted
earnings per share for each of the periods presented:
(In Thousands Except Per Share Amounts)
For the Six-Month Average Shares Earnings
Period Ended Net Income Outstanding Per Share
----------------- ------------- ---------- ------------
June 30, 2002 $ (54,709) 50,098 $ (1.09)
Effect of Dilution:
Options -- -- --
----------- ---------- ---------
Diluted $ (54,709) 50,098 $ (1.09)
=========== ========== =========
July 1, 2001 $ 5,702 49,920 $ 0.11
Effect of Dilution:
Options -- 819 --
----------- ---------- ---------
Diluted $ 5,702 50,739 $ 0.11
=========== ========== =========
NOTE 5 - SEGMENT INFORMATION
Based on the quantitative thresholds specified in SFAS 131, the Company
has determined that it has two reportable segments: Floorcovering
Products/Services and Interior Fabrics. The Floorcovering Products/Services
segment manufactures, installs and services commercial modular and broadloom
carpet, and the Interior Fabrics segment manufactures panel and upholstery
fabrics.
The accounting policies of the operating segments are the same as those
described in the Summary of Significant Accounting Policies contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 30,
2001, as filed with the Commission. Segment amounts disclosed are prior to any
elimination entries made in consolidation. The chief operating decision maker
evaluates performance of the segments based on operating income. Costs excluded
from this profit measure primarily consist of interest/other expense and income
taxes. Corporate expenses are primarily comprised of corporate overhead
expenses. Assets not identifiable to any individual segment are corporate
assets, which are primarily comprised of cash and cash equivalents, short-term
investments, intangible assets and intercompany amounts, which are eliminated in
consolidation.
-8-
Segment Disclosures Summary information by segment follows:
Floorcovering Interior Other (Includes
(in thousands) Products/Services Fabrics Architectural Products) Total
-------------- ----------------- ------- ----------------------- -----
Six Months Ended
June 30, 2002
Net Sales $ 355,792 $ 104,654 $ 14,572 $ 475,018
Depreciation and amortization 10,223 5,357 409 15,989
Operating Income 20,066 3,555 (954) 22,667
Total Assets $ 649,737 $ 250,027 $ 34,591 $ 934,355
Six Months Ended
July 1, 2001
Net Sales $ 445,676 $ 109,573 $ 38,547 $ 593,796
Depreciation and amortization 15,319 5,985 938 22,242
Operating Income 23,088 5,107 (1,117) 27,078
Total Assets $ 769,304 $ 224,170 $ 67,449 $1,060,923
A reconciliation of the Company's total segment operating income, depreciation
and amortization and assets to the corresponding consolidated amounts follows:
Six Months Ended
(in thousands)
June 30, 2002 July 1, 2001
----------- -------------
DEPRECIATION AND AMORTIZATION
Total segment depreciation and amortization $ 15,989 $ 22,242
Corporate depreciation and amortization 2,820 2,815
----------- -------------
Reported depreciation and amortization $ 18,809 $ 25,057
=========== =============
OPERATING INCOME
Total segment operating income $ 22,667 $ 27,078
Corporate expenses and other reconciling amounts 44 1,449
----------- -------------
Reported operating income $ 22,711 $ 28,527
=========== =============
ASSETS
Total segment assets $ 934,355 $1,060,923
Corporate assets and eliminations (27,965) (33,650)
----------- ----------
Reported total assets $ 906,390 $1,027,273
=========== =============
-9-
NOTE 6 - LONG-TERM DEBT
On January 17, 2002, the Company amended and restated its revolving
credit facility. The amendment and restatement, among other things, substituted
certain lenders, changed certain covenants, and reduced the maximum borrowing
amount to $100 million. In connection with the amendment and restatement of the
facility, the Company issued the 10.375% Senior Notes discussed below. The
amended facility matures May 15, 2005, subject to a possible extension of that
maturity date to January 17, 2007 if the Company meets certain conditions
relating to the repayment of long-term debt. Interest is charged at varying
rates based on the Company's ability to meet certain performance criteria.
On January 17, 2002, the Company also completed a private offering of
$175 million in 10.375% Senior Notes due 2010. Interest is payable semi-annually
on February 1st and August 1st beginning August 1st, 2002. Proceeds from the
issuance of these Notes were used to pay down the revolving credit facility. The
Notes are guaranteed, jointly and severally, on an unsecured senior basis by
certain of the Company's domestic subsidiaries. At any time prior to February 1,
2005, the Company may redeem up to 35% of the aggregate principal amount of the
Notes with the proceeds of one or more equity offerings at a redemption price in
cash equal to 110 3/8% of the principal amount thereof, plus accrued interest at
the redemption date. On June 17, 2002, the Company completed an exchange offer
pursuant to which the Notes were exchanged for substantially similar notes
registered under the Securities Act.
NOTE 7 - CHATHAM ENVIRONMENTAL ACCRUAL
Two years ago, the Company acquired certain assets and assumed certain
liabilities of the Chatham Manufacturing division ("Chatham") of CMI Industries,
Inc. As part of the acquisition, the Company engaged environmental consultants
to review potential environmental liabilities at all Chatham properties. Based
on their review, the environmental consultants recommended certain environmental
remedial actions, including groundwater monitoring, and estimated the costs
thereof. Based upon the cost estimates provided by the environmental
consultants, as of December 30, 2001, the Company estimated that the range of
the net present value of reasonably predictable costs of groundwater monitoring
and other remedial actions was between $7.9 million and $10.2 million.
There have been two developments which have substantially reduced the
estimated cost of environmental remediation associated with Chatham. First,
during the quarter ended June 30, 2002, the Company assigned to the Town of
Elkin, North Carolina, the Company's right and obligation to acquire from CMI
Industries the wastewater treatment facility serving the Chatham properties
(although, pursuant to the assignment agreement, the Company still has certain
rights and obligations concerning environmental remediation at this site).
Second, in conjunction with the aforementioned assignment, the Company
determined that the wastewater treatment facility site should be eligible for
remediation under the State of North Carolina's "brownfield" program, which
generally requires a less stringent degree of remedial action. Subsequently, the
State confirmed in writing the site's eligibility under the brownfield program.
As a result, the Company now believes that the estimated range of the
net present value of reasonably predictable costs of groundwater monitoring and
other remedial actions at Chatham and the wastewater treatment facility is
between $4.0 million and $6.3 million. As of December 30, 2001, the Company had
accrued approximately $9.0 million, which at that time represented the best
estimate available of the net present value of the costs of remedial actions
discounted at 6%. In light of the developments described above, the accrual has
been reduced to $5.1 million. The reduction of the accrual was recorded as a
reduction of "other expense" in the Statement of Operations during the quarter
ended June 30, 2002, as there was no goodwill associated with the Chatham
acquisition.
NOTE 8 - WRITE-DOWN OF CERTAIN ASSETS
In the second quarter of 2002, the Company concluded that certain
assets (specifically, accounts receivable and inventory) of Interface Americas
Re:Source Technologies, Inc., a subsidiary of the Company which produces
adhesives and certain specialty chemicals, were overstated by approximately $3.9
million. As a result, the Company recorded an appropriate charge, which is
included in the caption "other expense" in the Statement of Operations, in the
second quarter to write down the carrying amount of those assets. The
overstatement related to periods prior to the year 2000, and the Company
currently is considering whether any such period should be adjusted rather
than retaining the charge as taken in the period ended June 30, 2002.
NOTE 9 - SUPPLEMENTAL GUARANTOR FINANCIAL STATEMENTS
The Guarantor Subsidiaries, which consist of the Company's principal
domestic subsidiaries, are guarantors of the Company's 10.375% senior notes due
2010, its 7.3% senior notes due 2008, and its 9.5% senior subordinated notes due
2005. The Supplemental Guarantor Financial Statements are presented herein
pursuant to requirements of the Commission.
-10-
INTERFACE, INC. AND SUBSIDIARIES
STATEMENT OF INCOME (LOSS)
FOR THE SIX MONTHS ENDED JUNE 30, 2002
CONSOLIDATION
NON- INTERFACE, INC. AND
GUARANTOR GUARANTOR (PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION) ENTRIES TOTALS
------------ ------------ ------------ ------- ------
(IN THOUSANDS)
Net sales $ 393,554 $145,526 $ -- $ (64,062) $ 475,018
Cost of sales 303,026 100,195 -- (64,062) 339,159
--------- --------- --------- --------- ---------
Gross profit on sales 90,528 45,331 -- -- 135,859
Selling, general and administrative
expenses 69,829 32,771 10,548 -- 113,148
--------- --------- --------- --------- ---------
Operating income (loss) 20,699 12,560 (10,548) 22,711
Interest/Other expense 8,279 1,991 11,452 -- 21,722
--------- --------- --------- --------- ---------
Income (loss) before taxes on income
and equity in income of subsidiaries 12,420 10,569 (22,000) -- 989
Income tax (benefit) expense 4,821 3,615 (8,118) -- 318
--------- --------- --------- --------- ---------
Income (loss) before change in
accounting principle 7,599 6,954 (13,882) -- 671
Cumulative effect of change in
accounting principle (net of tax) (33,480) (21,900) -- -- (55,380)
Equity in income (loss) of subsidiaries -- -- (40,827) 40,827 --
--------- --------- --------- --------- ---------
Net income (loss) $ (25,881) $ (14,946) $ (54,709) $ 40,827 $ (54,709)
========= ========= ========= ========= =========
-11-
BALANCE SHEET
JUNE 30, 2002
CONSOLIDATION
NON- INTERFACE, INC. AND
GUARANTOR GUARANTOR (PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION) ENTRIES TOTALS
------------ ------------ ------------ ------- ------
(IN THOUSANDS)
ASSETS
Current Assets:
Cash and cash equivalents $ 3,918 $ 4,610 $ (6,271) $ --- $ 2,257
Accounts receivable 115,038 67,649 (26,052) --- 156,635
Inventories 114,842 55,249 --- --- 170,091
Prepaids and Deferred Tax Assets 10,651 10,875 26,264 --- 47,790
--------- --------- --------- ---------- ---------
Total current assets 244,449 138,383 (6,059) --- 376,773
Property and equipment
less accumulated depreciation 166,177 72,448 13,658 --- 252,283
Investment in subsidiaries 133,136 (45,437) 830,048 (917,747) ---
Goodwill 131,849 72,020 1,211 --- 205,080
Other assets 9,812 11,162 51,280 --- 72,254
--------- --------- --------- ---------- ---------
$ 685,423 $ 248,576 $ 890,138 $ (917,747) $ 906,390
========= ========= ========= ========== =========
LIABILITIES AND COMMON
SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 36,093 $ 29,437 $ 188 $ --- $ 65,718
Accrued expenses 27,932 42,155 21,835 --- 91,922
--------- --------- --------- ---------- ---------
Total current liabilities 64,025 71,592 22,023 --- 157,640
Long-term debt, less
current maturities 6,420 82 --- --- 6,502
Senior notes and senior
subordinated --- --- 450,000 --- 450,000
notes
Deferred income taxes/other 15,343 (7,018) 17,945 --- 26,270
--------- --------- --------- ---------- ---------
Total liabilities 64,656 489,968 --- 640,412
85,788
Minority interests 4,710 --- --- 4,710
---
Redeemable preferred stock 57,891 --- --- (57,891) ---
Common stock 94,145 102,199 5,119 (196,344) 5,119
Additional paid-in capital 191,411 12,525 220,141 (202,832) 221,245
Retained earnings 257,304 138,331 183,216 (459,145) 119,706
Foreign currency translation adjustment (1,116) (62,784) (8,306) (1,535) (73,741)
Minimum pension liability -- (11,061) --- --- (11,061)
--------- --------- --------- ---------- ---------
$ 685,423 $ 248,576 $ 890,138 $ (917,747) $ 906,390
========= ========= ========= ========== =========
-12-
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS
ENDED JUNE 30, 2002
CONSOLIDATION
NON- INTERFACE, INC. AND
GUARANTOR GUARANTOR (PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION) ENTRIES TOTALS
------------ ------------ ------------ ------- ------
(IN THOUSANDS)
Net cash provided by (used for)
operating activities $ 16,932 $ 6,585 $ (9,919) $ -- $ 13,598
Cash flows from investing activities:
Purchase of plant and equipment ( 6,529) 497 1,342 -- (4,690)
Other assets (1,603) --- (231) -- (1,834)
-------- ------- --------- ------- ---------
Net cash provided by (used for)
investing activities (8,132) 497 1,111 -- (6,524)
-------- ------- --------- ------- ---------
Cash flows from financing activities:
Net borrowings (repayments) (8,882) (9,406) (157,118) -- (175,406)
Proceeds from issuance of bonds --- --- 175,000 -- 175,000
Refinancing costs --- --- (5,470) -- (5,470)
Proceeds from issuance/
repurchase of common stock --- --- 1,306 -- 1,306
Cash dividends paid --- --- (1,532) -- (1,532)
-------- ------- --------- ------- ---------
Net cash provided by (used for)
financing activities (8,882) (9,406) 12,186 -- (6,102)
-------- ------- --------- ------- ---------
Effect of exchange rate change
on cash 480 12 --- -- 492
-------- ------- --------- ------- ---------
Net increase (decrease) in cash 398 (2,312) 3,378 -- 1,464
Cash at beginning of period 5,846 4,596 (9,649) -- 793
-------- ------- --------- ------- ---------
Cash at end of period $ 6,244 $ 2,284 $ (6,271) $ -- $ 2,257
======== ======= ========= ======= =========
NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board finalized
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS
141 requires the use of the purchase method of accounting and prohibits the use
of the pooling-of-interests method of accounting for business combinations. SFAS
141 also requires the recognition of acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001, and to
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, the reclassification of the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.
SFAS 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS 142 requires companies to identify reporting units for the
purpose of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires a transitional goodwill impairment test
within six months from the date of adoption.
-13-
The Company adopted the new standards on accounting for goodwill and
other intangible assets beginning in the first quarter of fiscal 2002. In the
second quarter of 2002, we completed the transitional goodwill impairment test
required by SFAS 142. We used an outside consultant to help prepare valuations
of our reporting units in accordance with the new standard, and we compared
those valuations with the respective book values of the reporting units to
determine whether any goodwill impairment existed. In preparing the valuations,
we considered past, present and future expected performance, and applied several
methods of using those inputs to arrive at the valuations. The test showed
goodwill impairment in three of our overseas reporting units and five of our
Americas reporting units. In all cases, the impairment primarily was
attributable to actual and currently-forecasted revenue and profitability for
the reporting unit being lower (consistent with the industry-wide decline in
carpet sales and related services) than that anticipated at the time of the
acquisition of the reporting unit. The effect of this accounting change (an
after-tax charge of $55.4 million, or $1.11 per diluted share) has been
recorded as the cumulative effect of a change in accounting principle effective
the first quarter of fiscal 2002, as required by SFAS 142. The charge had no
cash effect, and, as required, is presented net of tax.
In June 2001, the Financial Accounting Standards Board approved the
issuance of SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS
143 establishes accounting standards for the recognition and measurement of
legal obligations associated with the retirement of tangible long-lived assets
and requires recognition of a liability for an asset retirement obligation in
the period in which it is incurred. The provisions of this statement are
effective for financial statements issued for fiscal years beginning after June
15, 2002. We are in the process of evaluating the impact this standard will have
on our financial statements.
In October 2001, the Financial Accounting Standards Board issued SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS
144 addresses financial accounting for the impairment or disposal of long-lived
assets. The provisions of this statement are effective for financial statements
issued for fiscal years beginning after December 15, 2001. We are in the process
of evaluating the impact this standard will have on our financial statements.
In April 2002, the Financial Accounting Standards Board issued SFAS No.
145, "Rescission of SFAS No. 4, 44, 64, Amendment of SFAS No. 13, and Technical
Corrections." SFAS 4, which was amended by SFAS 64, required all gains and
losses from the extinguishment of debt to be aggregated and, if material,
classified as an extraordinary item, net of related income tax effect. As a
result, the criteria in Opinion 30 will now be used to classify those gains and
losses. SFAS 13 was amended to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. The adoption of SFAS 145 will not have a current
impact on the Company's consolidated financial statements.
In July 2002, the Financial Accounting Standards Board issued SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities."
Generally, SFAS 146 provides that defined exit costs (including restructuring
and employee termination costs) are to be recorded on an incurred basis rather
than on a commitment basis as is presently required. SFAS 146 is effective for
exit or disposal activities initiated after December 31, 2002. The Company
currently anticipates that adoption of this statement will not have a material
impact on its financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward-Looking Statements
This report contains statements which may constitute "forward-looking
statements" within the meaning of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended by the Private Securities
Litigation Reform Act of 1995. Those statements include statements regarding the
intent, belief or current expectations of the Company and members of its
management team, as well as the assumptions on which such statements are based.
Any forward-looking statements are not guarantees of future performance and
involve a number of risks and uncertainties that could cause actual results to
differ materially from those contemplated by such forward-looking statements.
Important factors currently known to management that could cause actual results
to differ materially from those in forward-looking statements include risks and
uncertainties associated with economic conditions in the commercial interiors
industry as well as the risks and uncertainties discussed under the heading
"Safe Harbor Compliance Statement for Forward-Looking Statements" included in
Item 1 of the Company's Annual Report on Form 10-K for the fiscal year ended
December 30, 2001, which discussion is hereby incorporated by reference,
including but not limited to the discussion of specific risks and uncertainties
under the headings "We compete with a large number of manufacturers in the
highly competitive commercial floorcovering products market, and some of these
competitors have greater financial resources than we do," "Sales of our
principal products may be affected by cycles in the construction and renovation
of commercial and institutional buildings," "Our continued success depends
significantly upon the efforts, abilities and continued service of our senior
management executives and our design
-14-
consultants," "Our substantial international operations are subject to various
political, economic and other uncertainties," "Our Chairman, together with other
insiders, currently has sufficient voting power to elect a majority of our Board
of Directors," "Large increases in the cost of petroleum-based raw materials,
which we are unable to pass through to our customers, could adversely affect
us," "Unanticipated termination or interruption of our arrangement with our
primary third-party supplier of synthetic fiber could have a material adverse
effect on us," "Our Rights Agreement, which is triggered if a third party
acquires beneficial ownership of 15% or more of our common stock without our
consent, could discourage tender offers or other transactions that could result
in shareholders receiving a premium over the market price for our stock." The
Company undertakes no obligation to update or revise forward-looking statements
to reflect changed assumptions, the occurrence of unanticipated events or
changes to future operating results over time.
General
The Company's revenues are derived from sales of commercial
floorcovering products (primarily modular and broadloom carpet) and related
services, interior fabrics, architectural products and other specialty products.
During the six-month period ended June 30, 2002, the Company had revenues of
$475.0 million, compared with revenues of $593.8 million in the comparable
period last year. In the first six months of 2002, the Company's implementation
of Statement of Financial Accounting Standards ("SFAS") No. 142, entitled
"Goodwill and Other Intangible Assets," resulted in a $55.4 million after-tax
write-down, the equivalent of $1.11 per diluted share, primarily related to the
impairment of goodwill. After the cumulative effect of SFAS No. 142, net loss
for the six-month period ended June 30, 2002, was $54.7 million, or $(1.09) per
diluted share. Excluding the cumulative effect of SFAS No. 142, income for the
six-month period ended June 30, 2002, was $0.7 million, or $0.02 per diluted
share, compared with net income of $5.7 million, or $0.11 per diluted share, in
the comparable period last year.
Results of Operations
For the three-month and six-month periods ended June 30, 2002, the
Company's net sales decreased $46.7 million (16.3%) and $118.8 million (20.0%)
compared with the same periods in 2001. The decreases were primarily
attributable to (i) reduced corporate profits in general, which has led to
decreased spending in the commercial interiors market; (ii) the decline of panel
fabric sales to certain OEM furniture manufacturers as a result of reduced
demand in the commercial interiors market; and (iii) reduced demand for steel
panel products made by our raised/access flooring division.
Cost of sales, as a percentage of net sales, remained even at 71.1% for
the three-month period ended June 30, 2002, compared with 71.1% in the
comparable period in 2001. The Company was able to maintain a stable percentage
year-over-year for the three-month period, despite a 16.3% year-over-year
decline in net sales. For the six-month period ended June 30, 2002, cost of
sales, as a percentage of net sales, increased slightly to 71.4%, compared with
71.1% in the same period in 2001. The stability of the percentage during the
three-month period, as well as the slight percentage increase for the six-month
period, reflect primarily (i) the under-absorption of fixed manufacturing costs
due to lower volume levels, (ii) a flux in our relative sales mix from products
which have had traditionally higher margins to those with traditionally lower
margins, and (iii) other manufacturing costs associated with scaling production
to meet current demand levels. The current year percentages also were favorably
affected by the benefits of the 2001 restructuring activities.
Selling, general and administrative expenses, as a percentage of net
sales, decreased to 23.8% and 23.8% for the three-month and six-month periods
ended June 30, 2002, respectively, compared with 24.9% and 24.1% in the
comparable periods in 2001. The percentage decrease primarily reflects benefits
from the Company's 2001 restructuring activities, and also reflects an absolute
dollar decrease in expenses compared with the same periods in 2001.
For the three-month and six-month periods ended June 30, 2002, interest
expense increased $1.6 million and $2.4 million, respectively, compared with the
same periods in 2001, due primarily to the Company's issuance of Senior Notes in
January 2002 and higher interest rates on the Company's revolving credit
facility (see below).
Liquidity and Capital Resources
On January 17, 2002, the Company amended and restated its revolving
credit facility. The amendment and restatement, among other things, substituted
certain lenders, changed certain covenants, and reduced the maximum borrowing
amount to $100 million. In connection with the amendment and restatement of the
facility, the Company issued the 10.375% Senior Notes discussed below. The
amended facility matures May 15, 2005, subject to a possible extension of that
maturity date to January 17, 2007 if the Company
-15-
meets certain conditions relating to the repayment of long-term debt. Interest
is charged at varying rates based on the Company's ability to meet certain
performance criteria.
On January 17, 2002, the Company also completed a private offering of
$175 million in 10.375% Senior Notes due 2010. Interest is payable semi-annually
on February 1st and August 1st beginning August 1st, 2002. Proceeds from the
issuance of these Notes were used to pay down the revolving credit facility. On
June 17, 2002, the Company completed an exchange offer pursuant to which the
Notes were exchanged for substantially similar notes registered under the
Securities Act.
The Company's primary source of cash during the six months ended June
30, 2002 was $13.6 million from operating activities. The primary uses of cash
during the six month period ended June 30, 2002 were (i) costs associated with
the aforementioned issuance of 10.375% Senior Notes in January 2002, (ii) an
increase in prepaid expenses, (iii) $4.7 million for additions to property and
equipment in the Company's manufacturing facilities, and (iv) $1.5 million for
the payment of dividends on outstanding common stock. Management believes that
cash provided by operations and long-term loan commitments (including the issue
of senior notes) will provide adequate funds for current commitments and other
requirements in the foreseeable future; however, certain factors could affect
the Company's free cash flow, including, but not limited to, the following
factors discussed under the heading "Safe Harbor Compliance Statement for
Forward-Looking Statements" in Item 1 of the Company's Annual Report on Form
10-K for the fiscal year ended December 30, 2001: "Sales of our principal
products may be affected by cycles in the construction and renovation of
commercial and institutional buildings," "Our substantial international
operations are subject to various political, economic and other uncertainties,"
"Large increases in the cost of petroleum-based raw materials, which we are
unable to pass through to our customers, could adversely affect us," and
"Unanticipated termination or interruption of our arrangement with our primary
third-party supplier of synthetic fiber could have a material adverse effect on
us."
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a result of the scope and volume of its global operations, the
Company is exposed to an element of market risk from changes in interest rates
and foreign currency exchange rates. The Company's results of operations and
financial condition could be impacted by this risk. The Company manages its
exposure to market risk through its regular operating and financial activities
and, to the extent appropriate, through the use of derivative financial
instruments.
The Company employs derivative financial instruments as risk management
tools and not for speculative or trading purposes. The Company monitors the use
of derivative financial instruments through the use of objective measurable
systems, well-defined market and credit risk limits, and timely reports to
senior management according to prescribed guidelines. The Company has
established strict counterparty credit guidelines and only enters into
transactions with financial institutions with a rating of investment grade or
better. As a result, the Company considers the risk of counterparty default to
be minimal.
Interest Rate Market Risk Exposure. Changes in interest rates affect
the interest paid on certain of the Company's debt. To mitigate the impact of
fluctuations in interest rates, management of the Company has developed and
implemented a policy to maintain the percentage of fixed and variable rate debt
within certain parameters. The Company maintains the fixed/variable rate mix
within these parameters either by borrowing on a fixed-rate basis or entering
into interest rate swap transactions. In the interest rate swaps, the Company
agrees to exchange, at specified intervals, the difference between fixed and
variable interest amounts calculated by reference to an agreed-upon notional
principal linked to LIBOR.
At June 30, 2002, the Company had utilized interest rate swap
agreements to effectively convert approximately $150 million of fixed rate debt
into variable rate debt. The Company anticipates that for the remainder of
fiscal 2002 it will not utilize swap agreements or other derivative financial
instruments to convert variable rate to fixed rate debt, or vice versa.
Foreign Currency Exchange Market Risk Exposure. A significant portion
of the Company's operations consists of manufacturing and sales activities in
foreign jurisdictions. The Company manufactures its products in the U.S.,
Canada, England, Northern Ireland, the Netherlands, Australia and Thailand, and
sells its products in more than 100 countries. As a result, the Company's
financial results could be significantly affected by factors such as changes in
foreign currency exchange rates or weak economic conditions in the foreign
markets in which the Company distributes its products. The Company's operating
results are exposed to changes in exchange rates between the U.S. dollar and
many other currencies, including the euro, British pound sterling, Canadian
dollar, Australian dollar, Thai baht, and Japanese yen. When the U.S. dollar
strengthens against a foreign currency, the value of anticipated sales in those
currencies decreases, and vice-versa. Additionally, to the extent the Company's
foreign operations with functional currencies other than the U.S. dollar
transact business in countries other than the U.S., exchange rate changes
between two foreign currencies could
-16-
ultimately impact the Company. Finally, because the Company reports in U.S.
dollars on a consolidated basis, foreign currency exchange fluctuations can have
a translation impact on the Company's financial position.
To mitigate the short-term effect of changes in currency exchange rates
on the Company's sales denominated in foreign currencies, the Company regularly
hedges by entering into currency swap contracts to hedge certain firm sales
commitments denominated in foreign currencies. In these currency swap
agreements, the Company and a counterparty financial institution exchange equal
initial principal amounts of two currencies at the spot exchange rate. Over the
term of the swap contract, the Company and the counterparty exchange interest
payments in their swapped currencies. At maturity, the principal amount is
re-swapped, at the contractual exchange rate.
The Company, as of June 30, 2002, recognized a $13.2 million increase
in its foreign currency translation adjustment account compared to December 30,
2001, primarily because of the weakening of the U.S. dollar against the euro.
Sensitivity Analysis. For purposes of specific risk analysis, the
Company uses sensitivity analysis to measure the impact that market risk may
have on the fair values of the Company's market sensitive instruments.
To perform sensitivity analysis, the Company assesses the risk of loss
in fair values associated with the impact of hypothetical changes in interest
rates and foreign currency exchange rates on market sensitive instruments. The
market value of instruments affected by interest rate and foreign currency
exchange rate risk is computed based on the present value of future cash flows
as impacted by the changes in the rates attributable to the market risk being
measured. The discount rates used for the present value computations were
selected based on market interest and foreign currency exchange rates in effect
at June 30, 2002. The market values that result from these computations are
compared with the market values of these financial instruments at June 30, 2002.
The differences in this comparison are the hypothetical gains or losses
associated with each type of risk.
As of June 30, 2002, based on a hypothetical immediate 150 basis point
increase in interest rates, with all other variables held constant, the market
value of the Company's fixed rate long-term debt would be impacted by a net
decrease of $8.3 million. Conversely, a 150 basis point decrease in interest
rates would result in a net increase in the market value of the Company's fixed
rate long-term debt of $9.2 million. At December 30, 2001, a 150 basis point
movement would have resulted in the same approximate changes.
As of June 30, 2002, a 10% movement in the levels of foreign currency
exchange rates against the U.S. dollar, with all other variables held constant,
would result in a decrease in the fair value of the Company's financial
instruments of $6.7 million or an increase in the fair value of the Company's
financial instruments of $6.7 million. At December 30, 2001, a 10% movement
would have resulted in the same changes. As the impact of offsetting changes in
the fair market value of the Company's net foreign investments is not included
in the sensitivity model, these results are not indicative of the Company's
actual exposure to foreign currency exchange risk.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its annual meeting of shareholders on May 21,
2002.
-17-
(b) Not applicable.
(c) The matters considered at the annual meeting, and the votes
cast for, against or withheld, as well as the number of
abstentions and broker non-votes, relating to each matter, are
as follows:
Election of the following directors:
Class A For Withheld
----------------------- ---------- ----------
Dianne Dillon-Ridgley 36,957,165 1,944,801
June M. Henton 36,970,389 1,931,577
Christopher G. Kennedy 36,934,211 1,967,755
James B. Miller, Jr. 36,630,137 2,271,829
Thomas R. Oliver 36,941,587 1,960,379
Class B For Withheld
-------------------------- ---------- --------
Ray C. Anderson 5,307,334 0
Carl I. Gable 5,307,334 0
Daniel T. Hendrix 5,307,334 0
J. Smith Lanier, II 5,307,334 0
Leonard G. Saulter 5,307,334 0
Clarinus C. Th. van Andel 5,307,334 0
(d) Not applicable.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
3.1 Restated Articles of Incorporation (included as Exhibit 3.1 to
the Company's quarterly report on Form 10-Q for the quarter
ended July 5, 1998, previously filed with the Commission and
incorporated herein by reference).
3.2 Bylaws, as amended and restated (included as Exhibit 3.2 to
the Company's quarterly report on Form 10-Q for the quarter
ended April 1, 2001, previously filed with the Commission and
incorporated hereby by reference).
4.1 See Exhibits 3.1 and 3.2 for provisions in the Company's
Articles of Incorporation and Bylaws defining the rights of
holders of Common Stock of the Company.
4.2 Rights Agreement between the Company and Wachovia Bank, N.A.,
dated as of March 4, 1998, with an effective date of March 16,
1998 (included as Exhibit 10.1A to the Company's registration
statement on Form 8-A/A dated March 12, 1998, previously filed
with the Commission and incorporated herein by reference).
4.3 Indenture governing the Company's 9.5% Senior Subordinated
Notes due 2005, dated as of November 15, 1995, among the
Company, certain U.S. subsidiaries of the Company, as
Guarantors, and First Union National Bank of Georgia, as
Trustee (included as Exhibit 4.1 to the Company's registration
statement on Form S-4, File No. 33-65201, previously filed
with the Commission and incorporated herein by reference); and
Supplement No. 1 to Indenture, dated as of December 27, 1996
(included as Exhibit 4.2(b) to the Company's Annual Report on
Form 10-K for the year ended December 29, 1996, previously
filed with the Commission and incorporated herein by
reference).
-18-
4.4 Form of Indenture governing the Company's 7.3% senior notes
due 2008, among the Company, certain U.S. 4.4 subsidiaries of
the Company, as Guarantors, and First Union National Bank, as
trustee (included as Exhibit 4.1 to the Company's registration
statement on Form S-3/A, File No. 333-46611, previously filed
with the Commission and incorporated herein by reference).
4.5 Indenture governing the Company's 10.375% Senior Notes due
2010, among the Company, certain U.S. subsidiaries of the
Company, as Guarantors, and First Union National Bank, as
Trustee (included as Exhibit 4.5 to the Company's Annual
Report on Form 10-K for the year ended December 30, 2001 (the
"2001 10-K"), previously filed with the Commission and
incorporated herein by reference).
4.6 Registration Rights Agreement, dated as of January 17, 2002,
among the Company, certain U.S. subsidiaries of the Company,
as Guarantors, Salomon Smith Barney, Inc. and First Union
Securities, Inc. (included as Exhibit 4.6 to the 2001 10-K,
previously filed with the Commission and incorporated herein
by reference).
(b) No reports on Form 8-K were filed during the quarter ended June 30,
2002.
-19-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERFACE, INC.
Date: August 16, 2002 By: /s/ Patrick C. Lynch
--------------------------------------
Patrick C. Lynch
Vice President
(Principal Financial Officer)
-20-