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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A NO. 2
/ 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
- ---------------------------------------------- ----------------
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 1 of the Registrant's Form 10-Q, as amended for the quarter
ended October 3, 1993 is deleted in its entirety and the following
is inserted in lieu thereof:
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERFACE, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
(In thousands)
----------------------------------------------------------------------------- October 3, October 3,
ASSETS 1993 1993
----------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 8,275 $ 10,243
Accounts Receivable 126,689 109,343
Inventories 118,934 101,390
Deferred Tax Asset 1,517 743
Prepaid Expenses 15,546 10,712
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TOTAL CURRENT ASSETS 270,961 232,431
PROPERTY AND EQUIPMENT, less
accumulated depreciation 143,059 137,605
EXCESS OF COST OVER NET ASSETS ACQUIRED 194,178 133,321
OTHER ASSETS 35,282 30,763
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$643,480 $534,120
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts Payable 58,805 43,530
Accrued Expenses 37,113 38,642
Current Maturities of Long-Term Debt 16,500 11,425
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TOTAL CURRENT LIABILITIES 112,418 93,597
LONG-TERM DEBT, less current maturities 194,063 131,563
CONVERTIBLE SUBORDINATED DEBENTURES 103,925 103,925
DEFERRED INCOME TAXES 22,042 18,686
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TOTAL LIABILITIES 432,448 347,771
PREFERRED STOCK - REDEEMABLE 25,000 -
COMMON STOCK:
Class A 1,775 1,757
Class B 321 329
ADDITIONAL PAID-IN CAPITAL 82,638 82,110
RETAINED EARNINGS 122,463 117,174
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (3,419) 2,725
TREASURY STOCK, 3,600 CLASS A SHARES, AT COST (17,746) (17,746)
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$643,480 $534,120
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
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INTERFACE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share amounts)
- ----------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
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October 3, October 4, October 3, October 4,
1993 1992 1993 1992
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<S> <C> <C> <C> <C>
Net Sales $167,586 $143,716 $452,672 $447,505
Cost of Sales 113,030 97,711 309,437 302,422
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Gross Profit on Sales 54,556 46,005 143,235 145,083
Selling, General and Administrative Expense 41,669 38,072 110,927 113,204
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Operating Income 12,887 7,933 32,308 31,879
Other (Expense) Income - Net (6,934) (5,213) (18,656) (17,523)
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Income before Taxes on Income 5,953 2,720 13,652 14,356
Taxes on Income 2,083 816 4,781 5,265
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Net Income 3,870 1,904 8,871 9,091
Less: Preferred Dividends 423 0 476 0
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Net Income Available to Common Shareholders $3,447 $1,904 $8,395 $9,091
======= ======= ======= =======
Earnings Per Common Share
Primary $0.20 $0.11 $0.49 $0.53
Fully Diluted<F1>* $0.20 $0.11 $0.49 $0.53
======= ======= ======= =======
Dividends Per Share of Common Stock $0.06 $0.06 $0.18 $0.18
======= ======= ======= =======
Weighted Average Common Shares Outstanding
Primary 17,309 17,226 17,280 17,249
======= ======= ======= =======
Fully Diluted 25,144 23,371 24,068 23,393
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<FN>
<F1>* For the three month and nine month periods ended October 3, 1993 and
October 4, 1992, respectively, earnings per share on a fully diluted basis were
antidilutive.
</TABLE>
See accompanying notes to consolidated condensed financial
statements.
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INTERFACE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
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October 3, October 4,
(In thousands) 1993 1992
-------- --------
<S> <C> <C>
Operating Activities:
Net Income $ 8,871 $ 9,091
Adjustment to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 20,520 16,977
Deferred income taxes (87) (1,935)
Cash provided by (used for):
Accounts receivable (1,705) 6,757
Inventories 870 4,491
Prepaid and other (3,743) (2,223)
Accounts payable and accrued expenses (6,165) (9,399)
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18,561 23,759
Investing Activities:
Capital expenditures (11,225) (11,513)
Acquisitions of businesses (16,503) 0
Other (2,726) (2,681)
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(30,454) (14,194)
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Financing Activities:
Net borrowing of long-term debt 12,953 (2,358)
Issuance of common stock 550 344
Dividends paid (3,586) (3,106)
Other 0 (1,276)
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9,917 (6,396)
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Net cash provided by operating,
investing and financing activities (1,976) 3,169
Effect of exchange rate changes on cash 8 28
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Cash and cash equivalents:
Net increase (decrease) during the period (1,968) 3,197
Balance at beginning of period 10,243 10,376
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Balance at end of period $ 8,275 $13,573
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
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INTERFACE, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
NOTE 1 - CONDENSED FOOTNOTES
As contemplated by the Securities and Exchange 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 to Shareholders for the
fiscal year ended January 3, 1993, as filed with the Securities and Exchange
Commission.
NOTE 2 - FISCAL YEAR END
The Company's fiscal year ends on the Sunday nearest December 31. The
fiscal year ended January 3, 1993 was comprised of 53 weeks. The fiscal year
ending January 2, 1994 will be comprised of 52 weeks; therefore, the first
quarter of fiscal 1993 was comprised of 13 weeks as compared to 14 weeks in
the first quarter of fiscal 1992.
NOTE 3 - INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
October 3, January 3,
1993 1993
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<S> <C> <C>
Finished Goods $ 62,696 $ 55,527
Work-in-Process 23,971 21,882
Raw Materials 32,267 23,981
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$118,934 $101,390
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</TABLE>
NOTE 4 - BUSINESS ACQUISITIONS
The Company, through a series of stock purchases in
June 1993, acquired 100% of the outstanding capital stock of
Bentley Mills, Inc. ("Bentley"), a U.S. company engaged in the
manufacturing and distribution of broadloom carpet, for the
aggregate consideration of $34.0 million, which is comprised of
$9.0 million in cash and $25.0 million of redeemable
Preferred Stock. As part of the overall transaction,
the Company also repaid Bentley's existing bank debt. The
Company accounted for this transaction as a purchase. At the acquisition
date, the fair value of the net liabilities of Bentley exceeded the fair
market value of the net assets by approximately $23.1 million. Accordingly,
the excess of the purchase price ($34.0 million) over the fair value of
net assets acquired was approximately $57.1 million and is being amortized
over 40 years. The results of operations of Bentley have been included
within the consolidated financial statements since June 1, 1993.
Preferred shareholders have the right to require the Company to
redeem, after May 31, 2003, the then outstanding shares of Preferred Stock
at face value plus all accrued but unpaid dividends. The Company is not
required to establish any sinking or retirement fund with respect to the
Preferred Stock.
The Preferred Stock is entitled to a 7% annual cumulative cash
dividend that is payable quarterly. Shares of Preferred Stock are non-voting,
except as required by law or in limited circumstances to protect their
preferential rights. The Preferred Stock is convertible into shares of
the Company's Class A Common Stock at the rate of one share of Class A
Common Stock for each $14.7875 of face value thereof plus the amount of
any accrued but unpaid dividends.
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NOTE 4 - BUSINESS ACQUISITIONS (Continued)
The Company, at its sole option, may redeem any of the then
outstanding Preferred Stock by paying in cash for each share redeemed the
face value thereof plus all accrued but unpaid dividends. No such
redemption is permitted before June 1, 1995. Between June 1, 1995 and
May 31, 1996 such redemption is allowable if the market price of Class A
Common Stock exceeds approximately $17.75. No limitations exist as to
redemption subsequent to May 31, 1996.
On February 18, 1993, the Company acquired (through its
fabrics subsidiary) the fabric division assets of Stevens Linen
Associates, Inc., based in Dudley, Massachusetts, for $4.9
million. In addition, on January 14, 1993, the Company acquired
(through certain of its U.S. and French subsidiaries), for $1.3
million, the patents, know-how and production equipment of
Servoplan, S.A., a French company, relating to the low-profile
access flooring system developed by Servoplan.
NOTE 5 - PREFERRED STOCK
The Company issued a new Series A Cumulative Convertible
Preferred Stock in conjunction with the Bentley transaction. The
Series A Preferred Stock is entitled to a 7% annual cumulative
cash dividend that is payable quarterly. Shares of Series A
Preferred Stock are non-voting, except as required by law or in
limited circumstances to protect their preferential rights, but
are convertible into shares of the Company's Class A Common Stock
at a rate of one share for each $14.7875 of face value and
accrued but unpaid dividends.
NOTE 6 - EARNINGS PER SHARE AND DIVIDENDS
Earnings per share are computed on the basis of the
weighted average number of shares of common stock outstanding
during each period. Primary earnings per share are computed by
dividing net income by the weighted average number of common
shares outstanding during each period. Fully diluted earnings
per share are computed on the same basis as primary earnings per
share, except that the outstanding Series A Preferred Shares (see
Note 5) and 8% Convertible Subordinated Debentures (issued in
September 1988) are assumed to be converted to common stock, and
the interest on the Debentures, net of income tax effect, is
added back to net income.
For the purpose of computing earnings per share and
dividends paid, the Company is treating as treasury stock (and,
therefore, not outstanding) 3,600,000 shares of Class A Common
Stock owned by Interface Europe, Ltd., a wholly-owned subsidiary
in the United Kingdom.
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INTERFACE, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
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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 are for
interim periods and are not necessarily indicative of results to
be expected for the year.
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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: March 28, 1994 By: /s/Daniel T. Hendrix
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Daniel T. Hendrix
Vice President
(Principal Financial Officer)
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