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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 October 3, 1993
Commission File Number 0-12016
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INTERFACE, INC.
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(Exact name of registrant as specified in its charter)
GEORGIA 58-1451243
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ORCHARD HILL ROAD, P.O. BOX 1503, LAGRANGE, GEORGIA 30241
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(Address of principal executive offices and zip code)
(706) 882-1891
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(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
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Shares outstanding of each of the registrant's classes of common stock at
November 1, 1993:
Class Number of Shares
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Class A Common Stock, $.10 par value per share 14,123,847
Class B Common Stock, $.10 par value per share 3,214,387
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Part I, Item 2, Management's Discussion and Analysis of Financial Condition
and Results of Operations, is deleted in its entirety and the following is
inserted in lieu thereof:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS. For the three month and nine month periods
ended October 3, 1993, the Company's net sales increased $23.9 million (16.6%)
and $5.2 million (1.2%), respectively, compared to the same periods in 1992.
The increase was primarily attributable to (i) sales generated by Bentley
Mills, Inc., which was acquired during June 1993, (ii) increased sales volume
in the Company's carpet tile operations in Asia-Pacific, particularly Southeast
Asia and Australia, (iii) improved volume in the Company's Latin America
operation, and (iv) continued improvement in unit volume in the Company's
interior fabric and chemical operations. These increases in sales were
somewhat offset by the strengthening of the U.S. dollar against certain key
European currencies, particularly the pound sterling; slow sales in the Japan
and Continental Europe carpet tile markets, which have continued to experience
a recessionary economic climate; and competitive price pressures, particularly
in the U.S. carpet tile market.
Cost of sales decreased as a percentage of sales for the three month
period ended October 3, 1993, compared to the same period in the prior year,
while increasing for the nine month period compared to the same period in 1992.
The decrease in cost of sales for the three months ended October 3, 1993 was
due primarily to increased efficiencies in the Company's carpet manufacturing
operations as a result of increased production efficiencies, improved quality
and reduced waste, particularly in the United States and Europe where
significant capital improvements were made. The increase for the nine month
period was due primarily to (i) increased cost associated with the Company's
Netherlands manufacturing facility, which experienced unfavorable foreign
currency exchange rates in certain of its export markets, particularly the
United Kingdom, Spain, Italy and Sweden, and (ii) competitive price pressures
in the United States.
Selling, general and administrative expense as a percentage of sales
decreased for the three and nine months ended October 3, 1993, compared to the
same periods in 1992, primarily as a result of continued cost control measures
which were implemented in 1991 and 1992 throughout the Company, particularly in
Europe.
For the three month and nine month periods ended October 3, 1993, the
Company's other expense increased $1.7 million and $1.2 million, respectively,
compared to the same periods in 1992. The increase is primarily due to
increased
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interest expense on bank debt incurred in conjunction with the acquisition of
Bentley in June 1993.
Due, by and large, to the aforementioned factors, coupled with the
dividends paid on the Series A Preferred Shares, the Company's net income
increased 81.0% and decreased 7.7%, respectively, for the three months and nine
months ended October 3, 1993, compared to the same periods in 1992.
LIQUIDITY AND CAPITAL RESOURCES. The primary uses of cash for the
nine month period ended October 3, 1993 have been: (i) $10.3 million associated
with the acquisition of Bentley, (ii) $11.2 million for additions to property
and equipment in the Company's manufacturing facilities, (iii) $4.9 million for
a business acquisition in the Company's interior fabrics division, (iv) $1.3
million for investment in patents, and (v) $3.5 million for dividends paid on
common stock. These uses of cash were funded, in part, by $18.1 million in
operating activities and $13.0 million from long-term financing.
The Company, as of October 3, 1993, recognized a $6.1 million decrease
in foreign currency translation adjustments compared to that of January 3,
1993, primarily due to the movement of the U.S. dollar against two key
functional currencies, the British pound sterling and the Dutch guilder. This
adjustment to shareholders' equity was converted by the guidelines of the
Financial Accounting Standards Board (FASB) 52.
In June 1993, the Company amended and restated its existing revolving
credit and term loan facilities, and issued $25.0 million in preferred stock in
conjunction with the purchase of Bentley. The amendment, among other things,
increased the outstanding term loan by $55.0 million and reduced the revolving
credit facility by approximately $20.0 million.
Management believes that the cash provided by operations and available
under long-term loan commitments will provide adequate funds for current
commitments and other requirements in the foreseeable future.
Bentley Mills' City of Industry, California plant is located in the
San Gabriel Valley, which has been generally designated as a Superfund site.
Neither the Environmental Protection Agency nor the potentially responsible
party ("PRP") group has asserted that Bentley is a PRP in connection with such
Superfund site.
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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: February 28, 1994 By: /s/Daniel T. Hendrix
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Daniel T. Hendrix
Vice President
(Principal Financial Officer)
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