Interface Announces Pending Sale of Its Fabrics Division

Interface, Inc. (Nasdaq: IFSIA), a worldwide floorcoverings and fabrics company, today announced that it has entered into a definitive agreement to sell its fabrics division in an all-cash transaction valued at up to $70 million. The division, known as InterfaceFABRIC, is a leading producer of interior fabrics and upholstery products, which it markets under the Guilford of Maine(R), Chatham(R) and Terratex(R) brands, and provides specialized automotive textile solutions.

The fabrics division will be sold to an affiliate of Sun Capital Partners, a leading private investment firm. According to the terms of the agreement, Interface will receive approximately $63.5 million in cash proceeds at the closing of the transaction, with potential for an additional $6.5 million in cash proceeds, subject to the division meeting certain performance metrics over the subsequent six to eighteen months period. The transaction is expected to close during the third quarter, subject to regulatory review and other customary closing conditions.

Upon closing, the transaction is expected to be accretive to Interface's results by approximately $0.05 to $0.08 per diluted share on an annualized basis. In the second quarter of 2007, the Company expects to reflect the fabrics division as discontinued operations in its financial statements, and record an after-tax, non-cash loss of approximately $9.0 million, or $0.15 per diluted share, as well as other after-tax exit costs and expenses estimated at $5.0 million, or $0.08 per diluted share, as a result of the transaction (of these exit costs and expenses, the Company estimates that between $3.8 million to $6.0 million represent pre-tax cash costs and expenses). The final loss and expenses related to the disposition will be determined after the closing of the transaction based upon the closing balance sheet of the division.

For the full year 2006, the fabrics division generated revenue of $161.2 million and an operating loss of $27.3 million, and had depreciation and amortization of $9.4 million. These full year 2006 results include the operations of Interface's former European fabrics business, which was sold in April 2006. The divested European fabrics business accounted for sales of $17.3 million and an operating loss (after a $20.7 million goodwill impairment charge) of $19.6 million in 2006.

Source: Interface, Inc.