ATLANTA -- Interface Inc. warned that it expects to report lower revenue and net income for the second quarter ended July 1.

Based on preliminary data, the company expects second quarter revenue of between $285 million and $295 million and net income of between $1.5 million and $2.5 million, or 3 to 5 cents per diluted share.

“We are disappointed that sales have softened further compared with the first quarter,” said Daniel T. Hendrix, president and CEO. “The continued decline in the domestic economy and its effect on U.S. corporate confidence have prompted our commercial customers to delay projects, resulting in a more significant slowing of orders than previously experienced.”

Hendrix said sales from Interface’s interior fabrics and broadloom carpet segments continued to decrease “because of the well-documented difficult conditions in the commercial interiors and office furniture industries.”

“Overall lower sales volumes compared with the first quarter of 2001 and the year-ago period resulted in a greater under-absorption of fixed manufacturing costs, reducing second quarter profits,” he explained. “However, second quarter performance of our modular carpet business in North America and Europe is expected to be even with the same period a year ago, despite the current economic landscape, as carpet tile continues to gain market share against other floor covering alternatives.”

Hendrix added that Interface expects to generate $30 million of free cash flow for fiscal year 2001, which the company has earmarked for reduction of its long-term debt. Through aggressive management of costs and inventory, assuming the economy suffers no further deterioration, Hendrix said Interface should turn in full-year earnings in the range of 25 to 35 cents per diluted share.

The company expects to report earnings for the second quarter of 2001 on July 24 after the close of the market.