form10-q.htm
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
x
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For
Quarterly Period Ended March 30, 2008
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 o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer þ
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company o
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes o No
x
Shares
outstanding of each of the registrant's classes of common stock at May 2,
2008:
|
Class
|
|
Number of Shares
|
|
|
Class
A Common Stock, $.10 par value per share
|
|
|
55,857,723 |
|
|
|
Class
B Common Stock, $.10 par value per share
|
|
|
7,137,683 |
|
|
INTERFACE,
INC.
INDEX
|
|
|
PAGE
|
|
PART
I.
|
FINANCIAL
INFORMATION
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
3 |
|
|
|
Consolidated
Condensed Balance Sheets – March 30, 2008 and December
30, 2007
|
|
|
3 |
|
|
|
Consolidated
Condensed Statements of Operations - Three Months Ended March 30, 2008 and
April 1, 2007
|
|
|
4 |
|
|
|
Consolidated
Statements of Comprehensive Income (Loss) – Three Months Ended March 30,
2008 and April 1, 2007
|
|
|
5 |
|
|
|
Consolidated
Condensed Statements of Cash Flows – Three Months Ended March 30, 2008 and
April 1, 2007
|
|
|
6 |
|
|
|
Notes
to Consolidated Condensed Financial Statements
|
|
|
7 |
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and
Results of Operations
|
|
|
18 |
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
|
|
21 |
|
|
Item
4.
|
Controls
and Procedures
|
|
|
22 |
|
|
|
|
|
|
|
PART
II.
|
OTHER
INFORMATION
|
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
|
|
22 |
|
|
Item
1A.
|
Risk
Factors
|
|
|
22 |
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
|
22 |
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
|
|
22 |
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
|
22 |
|
|
Item
5.
|
Other
Information
|
|
|
23 |
|
|
Item
6.
|
Exhibits
|
|
|
23 |
|
PART I -
FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
INTERFACE,
INC. AND SUBSIDIARIES
CONSOLIDATED
CONDENSED BALANCE SHEETS
(IN
THOUSANDS)
|
|
MARCH 30, 2008
|
|
|
DECEMBER 30, 2007
|
|
|
|
(UNAUDITED)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
$ |
59,294 |
|
|
$ |
82,375 |
|
Accounts
Receivable, net
|
|
|
161,942 |
|
|
|
178,625 |
|
Inventories
|
|
|
150,836 |
|
|
|
125,789 |
|
Prepaid
and Other Expenses
|
|
|
21,821 |
|
|
|
18,985 |
|
Deferred
Income Taxes
|
|
|
6,143 |
|
|
|
5,863 |
|
Assets
of Business Held for Sale
|
|
|
4,747 |
|
|
|
4,792 |
|
TOTAL
CURRENT ASSETS
|
|
|
404,783 |
|
|
|
416,429 |
|
|
|
|
|
|
|
|
|
|
PROPERTY
AND EQUIPMENT, less
accumulated depreciation
|
|
|
168,519 |
|
|
|
161,874 |
|
DEFERRED
TAX ASSET
|
|
|
59,916 |
|
|
|
60,942 |
|
GOODWILL
|
|
|
149,380 |
|
|
|
142,471 |
|
OTHER
ASSETS
|
|
|
57,025 |
|
|
|
53,516 |
|
TOTAL
ASSETS
|
|
$ |
839,623 |
|
|
$ |
835,232 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
$ |
49,653 |
|
|
$ |
57,243 |
|
Accrued
Expenses
|
|
|
104,169 |
|
|
|
120,388 |
|
Liabilities
of Business Held for Sale
|
|
|
136 |
|
|
|
220 |
|
TOTAL
CURRENT LIABILITIES
|
|
|
153,958 |
|
|
|
177,851 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM
DEBT, less current maturities
|
|
|
-- |
|
|
|
-- |
|
SENIOR
NOTES
|
|
|
175,000 |
|
|
|
175,000 |
|
SENIOR
SUBORDINATED NOTES
|
|
|
135,000 |
|
|
|
135,000 |
|
DEFERRED
INCOME TAXES
|
|
|
8,368 |
|
|
|
7,413 |
|
OTHER
|
|
|
37,814 |
|
|
|
38,852 |
|
TOTAL
LIABILITIES
|
|
|
510,140 |
|
|
|
534,116 |
|
|
|
|
|
|
|
|
|
|
Minority
Interest
|
|
|
7,721 |
|
|
|
6,974 |
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’
EQUITY:
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
|
-- |
|
|
|
-- |
|
Common
Stock
|
|
|
6,298 |
|
|
|
6,184 |
|
Additional
Paid-In Capital
|
|
|
337,182 |
|
|
|
332,650 |
|
Accumulated
Deficit
|
|
|
(4,946 |
) |
|
|
(15,159 |
) |
Accumulated
Other Comprehensive Income – Foreign Currency Translation
Adjustment
|
|
|
13,884 |
|
|
|
1,270 |
|
Accumulated
Other Comprehensive Income – Pension Liability
|
|
|
(30,656 |
) |
|
|
(30,803 |
) |
TOTAL
SHAREHOLDERS’ EQUITY
|
|
|
321,762 |
|
|
|
294,142 |
|
|
|
$ |
839,623 |
|
|
$ |
835,232 |
|
See
accompanying notes to consolidated condensed financial
statements.
INTERFACE,
INC. AND SUBSIDIARIES
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
THREE MONTHS ENDED
|
|
|
|
|
|
|
|
|
|
|
MARCH 30, 2008
|
|
|
APRIL 1, 2007
|
|
|
|
|
|
|
|
|
NET
SALES
|
|
$ |
261,736 |
|
|
$ |
243,492 |
|
Cost
of Sales
|
|
|
167,470 |
|
|
|
160,264 |
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT ON SALES
|
|
|
94,266 |
|
|
|
83,228 |
|
Selling,
General and Administrative Expenses
|
|
|
63,295 |
|
|
|
57,047 |
|
Loss
on Disposition – Specialty Products
|
|
|
-- |
|
|
|
1,873 |
|
OPERATING
INCOME
|
|
|
30,971 |
|
|
|
24,308 |
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
7,828 |
|
|
|
9,120 |
|
Other
Expense
|
|
|
363 |
|
|
|
423 |
|
|
|
|
|
|
|
|
|
|
INCOME
FROM CONTINUING OPERATIONS
BEFORE INCOME TAX EXPENSE
|
|
|
22,780 |
|
|
|
14,765 |
|
Income
Tax Expense
|
|
|
8,658 |
|
|
|
5,696 |
|
|
|
|
|
|
|
|
|
|
Income
from Continuing Operations
|
|
|
14,122 |
|
|
|
9,069 |
|
Loss
from Discontinued Operations, Net of Tax
|
|
|
-- |
|
|
|
(49,685 |
) |
Loss
on Disposal of Discontinued Operations, Net of Tax
|
|
|
-- |
|
|
|
-- |
|
NET
INCOME (LOSS)
|
|
$ |
14,122 |
|
|
$ |
(40,616 |
) |
|
|
|
|
|
|
|
|
|
Earnings
(Loss) Per Share – Basic
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$ |
0.23 |
|
|
$ |
0.15 |
|
Discontinued
Operations
|
|
|
-- |
|
|
|
(0.83 |
) |
Loss
on Disposal of Discontinued Operations
|
|
|
-- |
|
|
|
-- |
|
Earnings
(Loss) Per Share – Basic
|
|
$ |
0.23 |
|
|
$ |
(0.68 |
) |
|
|
|
|
|
|
|
|
|
Earnings
(Loss) Per Share – Diluted
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$ |
0.23 |
|
|
$ |
0.15 |
|
Discontinued
Operations
|
|
|
-- |
|
|
|
(0.81 |
) |
Loss
on Disposal of Discontinued Operations
|
|
|
-- |
|
|
|
-- |
|
Earnings
(Loss) Per Share – Diluted
|
|
$ |
0.23 |
|
|
$ |
(0.66 |
) |
|
|
|
|
|
|
|
|
|
Common
Shares Outstanding – Basic
|
|
|
61,326 |
|
|
|
59,951 |
|
Common
Shares Outstanding – Diluted
|
|
|
62,082 |
|
|
|
61,322 |
|
See
accompanying notes to consolidated condensed financial
statements.
INTERFACE,
INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(IN
THOUSANDS)
|
|
THREE MONTHS ENDED
|
|
|
|
|
|
|
|
MARCH 30, 2008
|
|
|
APRIL 1, 2007
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
$ |
14,122 |
|
|
$ |
(40,616 |
) |
Other
Comprehensive Income, Foreign Currency Translation
|
|
|
|
|
|
|
|
|
Adjustment
and Pension Liability Adjustment
|
|
|
12,761 |
|
|
|
3,673 |
|
Comprehensive
Income (Loss)
|
|
$ |
26,883 |
|
|
$ |
(36,943 |
) |
See
accompanying notes to consolidated condensed financial
statements.
INTERFACE,
INC. AND SUBSIDIARIES
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN
THOUSANDS)
|
|
THREE MONTHS ENDED
|
|
|
|
MARCH 30, 2008
|
|
|
APRIL 1, 2007
|
|
OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
14,122 |
|
|
$ |
(40,616 |
) |
Loss
from discontinued operations
|
|
|
-- |
|
|
|
49,685 |
|
Income
from continuing operations
|
|
|
14,122 |
|
|
|
9,069 |
|
Adjustments
to reconcile income to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Loss
on disposition of assets – Specialty Products
|
|
|
-- |
|
|
|
1,873 |
|
Depreciation
and amortization
|
|
|
6,495 |
|
|
|
6,454 |
|
Deferred
income taxes and other
|
|
|
1,327 |
|
|
|
31 |
|
Working
capital changes:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
21,226 |
|
|
|
799 |
|
Inventories
|
|
|
(21,000 |
) |
|
|
(14,805 |
) |
Prepaid
expenses
|
|
|
(1,665 |
) |
|
|
114 |
|
Accounts
payable and accrued expenses
|
|
|
(33,333 |
) |
|
|
(17,231 |
) |
|
|
|
|
|
|
|
|
|
Cash
used in continuing operations
|
|
|
(12,828 |
) |
|
|
(13,696 |
) |
Cash
provided by discontinued operations
|
|
|
-- |
|
|
|
3,073 |
|
|
|
|
|
|
|
|
|
|
CASH
USED IN OPERATING ACTIVITIES:
|
|
|
(12,828 |
) |
|
|
(10,623 |
) |
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(6,014 |
) |
|
|
(10,831 |
) |
Other
|
|
|
(4,194 |
) |
|
|
(6,420 |
) |
Cash
used in investing activities of continuing operations
|
|
|
(10,208 |
) |
|
|
(17,251 |
) |
Cash
used in discontinued operations
|
|
|
-- |
|
|
|
(1,019 |
) |
|
|
|
|
|
|
|
|
|
CASH
USED IN INVESTING ACTIVITIES:
|
|
|
(10,208 |
) |
|
|
(18,270 |
) |
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
Repurchase
of senior notes
|
|
|
-- |
|
|
|
(15,700 |
) |
Proceeds
from issuance of common stock
|
|
|
818 |
|
|
|
1,425 |
|
Dividends
paid
|
|
|
(1,888 |
) |
|
|
(1,224 |
) |
|
|
|
|
|
|
|
|
|
CASH
USED IN FINANCING ACTIVITIES:
|
|
|
(1,070 |
) |
|
|
(15,499 |
) |
|
|
|
|
|
|
|
|
|
Net
cash used in operating, investing and
|
|
|
|
|
|
|
|
|
financing
activities
|
|
|
(24,106 |
) |
|
|
(44,392 |
) |
Effect
of exchange rate changes on cash
|
|
|
1,025 |
|
|
|
252 |
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS:
|
|
|
|
|
|
|
|
|
Net
change during the period
|
|
|
(23,081 |
) |
|
|
(44,140 |
) |
Balance
at beginning of period
|
|
|
82,375 |
|
|
|
109,157 |
|
|
|
|
|
|
|
|
|
|
Balance
at end of period
|
|
$ |
59,294 |
|
|
$ |
65,017 |
|
See
accompanying notes to consolidated condensed financial statements.
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 Company’s year-end
financial statements and notes thereto contained in its Annual Report on Form
10-K for the fiscal year ended December 30, 2007, as filed with the
Commission.
The
financial information included in this report has been prepared by the Company,
without audit. 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. The December
30, 2007, consolidated condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
accounting principles generally accepted in the United States.
In 2004,
the Company committed to a plan to exit its owned Re:Source dealer businesses
(as well as a small Australian dealer business and a small residential fabrics
business) and began to dispose of several of the dealer subsidiaries. In
addition, as described below in Note 2, the Company has sold its Fabrics Group
business segment. The results of operations and related disposal
costs, gains and losses for these businesses are classified as discontinued
operations for all periods presented.
Additionally,
certain prior period amounts have been reclassified to conform to the current
period presentation.
NOTE 2 –
SALE OF FABRICS GROUP BUSINESS SEGMENT
In the
second quarter of 2007, the Company entered into an agreement to sell its
Fabrics Group business segment to a third party. The sale was completed in the
third quarter of 2007. The purchase price for the business segment
was $67.2 million, after working capital and certain other adjustments. Of this
$67.2 million, $6.5 million represents deferred compensation which would be
remitted to the Company upon the achievement of certain performance criteria by
the disposed segment over the 18 months following the sale. At this
time, the Company has determined that the receipt of this deferred amount is
probable. As described below in Notes 9 and 10, the Company incurred impairment
charges of approximately $61.9 million during the first six months of 2007 (of
which $48.3 million was incurred in the first quarter of 2007) to reduce the
carrying value of the business segment to fair value as represented by the
purchase price. In the second and third quarters of 2007, the Company
incurred approximately $12.4 million of direct costs to sell the business
segment. The major classes of assets and liabilities related to the
business segment at disposition were accounts receivable of $15.2 million,
inventory of $32.7 million, property, plant and equipment of $36.5 million, and
accounts payable and accruals of $11.4 million.
Current
and prior periods have been restated to include the results of operations and
related disposal costs, gains and losses for this business segment as
discontinued operations. In addition, assets and liabilities of this
business segment have been reported in assets and liabilities held for sale for
all reported periods.
NOTE 3 –
INVENTORIES
Inventories
are summarized as follows:
|
|
March 30, 2008
|
|
|
December 30, 2007
|
|
|
|
(In
thousands)
|
|
Finished
Goods
|
|
$ |
95,669 |
|
|
$ |
77,036 |
|
Work
in Process
|
|
|
18,815 |
|
|
|
17,347 |
|
Raw
Materials
|
|
|
36,352 |
|
|
|
31,406 |
|
|
|
$ |
150,836 |
|
|
$ |
125,789 |
|
NOTE 4 –
EARNINGS (LOSS) PER SHARE
Basic
earnings (loss) per share is computed by dividing net income (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. Diluted earnings (loss) per share is calculated in a
manner consistent with that of basic earnings (loss) per share while giving
effect to all potentially dilutive common shares that were outstanding during
the period. The computation of diluted earnings (loss) per share does not assume
conversion or exercise of securities that would have an anti-dilutive effect on
earnings (loss) per share. For the quarters ended March 30, 2008, and
April 1, 2007, outstanding options to purchase 195,000 and 85,000 shares of
common stock, respectively, were not included in the computation of diluted
earnings per share as their impact would be anti-dilutive.
For
the Three-Month
Period
Ended
|
|
Net
Income (Loss)
|
|
|
Average
Shares
Outstanding
|
|
|
Earnings
Per
Share
|
|
|
|
(In
Thousands Except Per Share Amounts)
|
|
March
30, 2008
|
|
$ |
14,122 |
|
|
|
61,326 |
|
|
$ |
0.23 |
|
Effect
of Dilution:
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
& Restricted Stock
|
|
|
-- |
|
|
|
756 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$ |
14,122 |
|
|
|
62,082 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
1, 2007
|
|
$ |
(40,616 |
) |
|
|
59,951 |
|
|
$ |
(0.68 |
) |
Effect
of Dilution:
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
& Restricted Stock
|
|
|
-- |
|
|
|
1,371 |
|
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$ |
(40,616 |
) |
|
|
61,322 |
|
|
$ |
(0.66 |
) |
NOTE 5 –
SEGMENT INFORMATION
Based on
the quantitative thresholds specified in Statement of Financial Accounting
Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and
Related Information,” the Company has determined that it has three reportable
segments: (1) the Modular Carpet segment, which includes its InterfaceFLOR,
Heuga and FLOR modular carpet businesses, as well as its Intersept antimicrobial
sales and licensing program, (2) the Bentley Prince Street segment, which
includes its Bentley Prince Street broadloom, modular carpet and area rug
businesses, and (3) the Specialty Products segment, which includes Pandel, Inc.,
a producer of vinyl carpet tile backing and specialty mat and foam
products. The majority of the operations of the Specialty Products
segment were sold on March 7, 2007 (see Note 11 for further
information). In June of 2007, the Company entered into an agreement
to sell its former Fabrics Group business segment, and the sale was completed in
the third quarter of 2007 (see Note 2 for further
information). Accordingly, the Company has included the operations of
the former Fabrics Group segment in discontinued operations. The former segment
known as the Re:Source Network, which primarily encompassed the Company’s owned
Re:Source dealers that provided carpet installation and maintenance services in
the United States, is also reported as discontinued operations in the
accompanying consolidated condensed statements of operations.
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, 2007, as filed with
the Commission. Segment amounts disclosed are prior to any elimination entries
made in consolidation, except in the case of net sales, where intercompany sales
have been eliminated. The chief operating decision maker evaluates performance
of the segments based on operating income. Costs excluded from this profit
measure primarily consist of allocated corporate expenses, interest/other
expense and income taxes. Corporate expenses are primarily comprised of
corporate overhead expenses. Thus, operating income includes only the costs that
are directly attributable to the operations of the individual
segment. 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.
Segment
Disclosures
Summary
information by segment follows:
|
|
Modular
Carpet
|
|
|
Bentley
Prince Street
|
|
|
Specialty
Products
|
|
|
Total
|
|
|
|
(In
thousands)
|
|
Three
Months Ended March 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
226,073 |
|
|
$ |
35,663 |
|
|
$ |
-- |
|
|
$ |
261,736 |
|
Depreciation
and amortization
|
|
|
3,593 |
|
|
|
508 |
|
|
|
-- |
|
|
|
4,101 |
|
Operating
income
|
|
|
30,866 |
|
|
|
1,589 |
|
|
|
-- |
|
|
|
32,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended April 1, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
205,254 |
|
|
$ |
36,046 |
|
|
$ |
2,192 |
|
|
$ |
243,492 |
|
Depreciation
and amortization
|
|
|
3,544 |
|
|
|
466 |
|
|
|
12 |
|
|
|
4,022 |
|
Operating
income
|
|
|
26,762 |
|
|
|
932 |
|
|
|
(1,733 |
) |
|
|
25,961 |
|
A
reconciliation of the Company’s total segment operating income, depreciation and
amortization, and assets to the corresponding consolidated amounts
follows:
|
|
Three Months Ended
|
|
|
|
March 30, 2008
|
|
|
April 1, 2007
|
|
|
|
(In
thousands)
|
|
DEPRECIATION
AND AMORTIZATION
|
|
|
|
|
|
|
Total
segment depreciation and amortization
|
|
$ |
4,101 |
|
|
$ |
4,022 |
|
Corporate
depreciation and amortization
|
|
|
2,394 |
|
|
|
2,432 |
|
Reported
depreciation and amortization
|
|
$ |
6,495 |
|
|
$ |
6,454 |
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
|
|
Total
segment operating income
|
|
$ |
32,455 |
|
|
$ |
25,961 |
|
Corporate
expenses and other reconciling amounts
|
|
|
(1,484 |
) |
|
|
(1,653 |
) |
Reported
operating income
|
|
$ |
30,971 |
|
|
$ |
24,308 |
|
|
|
March 30, 2008
|
|
|
December 30, 2007
|
|
ASSETS
|
|
(In thousands)
|
|
Total
segment assets
|
|
$ |
690,783 |
|
|
$
|
670,515 |
|
Discontinued
operations
|
|
|
4,747 |
|
|
|
4,792 |
|
Corporate
assets and eliminations
|
|
|
144,093 |
|
|
|
159,925 |
|
Reported
total assets
|
|
$ |
839,623 |
|
|
$ |
835,232 |
|
NOTE 6 –
LONG-TERM DEBT
On
January 1, 2008, the Company amended its domestic revolving credit agreement
(the “Facility”). The amendment (the “First Amendment”) extended the
stated maturity date of the Facility to December 31, 2012. In addition,
the applicable interest rates for LIBOR-based loans have been
reduced. Interest on those loans is now charged at varying rates
computed by applying a margin ranging from 1.00% to 2.00% (reduced from the
range of 1.25% to 2.25%) over the applicable LIBOR rate, depending on our
average excess borrowing availability during the most recently completed fiscal
quarter. The Company also is no longer required to deliver monthly
financial statements to the lenders. In light of our recent borrowing
levels and in an effort to reduce unused line fees, the Company has reduced the
maximum aggregate amount of loans and letters of credit available to us at any
one time from $125 million to $100 million (subject to a borrowing base, as
existed prior to the First Amendment), with an option for us to increase that
maximum aggregate amount to $150 million (the same option level that existed
prior to the First Amendment) upon the satisfaction of certain conditions.
The lender group has been reduced from 5 lenders to 4 lenders, and the
lending commitments have been reallocated among the remaining lenders. In
connection with the reduction in the number of lenders and the reallocation of
lending commitments, the threshold of “Required Lenders” for purposes of certain
amendments and consents under the Facility has been increased from more than 50%
of the aggregate amount of the lending commitments to more than 66 2/3% of
the aggregate amount of the lending commitments.
The
Company is presently in compliance with all covenants under the Facility and
anticipates that it will remain in compliance with the covenants for the
foreseeable future.
As of
March 30, 2008, there were zero borrowings and $9.9 million in letters of credit
outstanding under the Facility. As of March 30, 2008, the Company
could have incurred $61.1 million of additional borrowings under the
Facility.
Interface
Europe B.V. (the Company’s modular carpet subsidiary based in the Netherlands)
and certain of its subsidiaries maintain a Credit Agreement with ABN AMRO Bank
N.V. Under this Credit Agreement, ABN AMRO provides a credit facility for
borrowings and bank guarantees in varying aggregate amounts over
time. As of March 30, 2008, there were no borrowings outstanding
under this facility, and the Company could have incurred €15.0 million
(approximately $23.7 million) of additional borrowings under the
facility.
Other
non-U.S. subsidiaries of the Company have an aggregate of the equivalent of
$15.1 million of lines of credit available. No amounts were
outstanding under these lines of credit as of March 30, 2008.
As of
March 30, 2008, the estimated fair values (based on then-current market prices)
of the 9.5% Senior Subordinated Notes due 2014 and the 10.375% Senior Notes due
2010 were $139.7 million and $182.9 million, respectively.
NOTE 7 –
STOCK-BASED COMPENSATION
Stock Option
Awards
In the
first quarter of fiscal 2006, the Company adopted SFAS No. 123R,
“Share-Based Payments,” which revises SFAS No. 123, “Accounting for Stock-Based
Compensation.” This standard requires that the Company measure the
cost of employee services received in exchange for an award of equity
instruments based on the grant date fair value of the award. That
cost will be recognized over the period in which the employee is required to
provide the services – the requisite service period (usually the vesting period)
– in exchange for the award. The grant date fair value for options
and similar instruments will be estimated using option pricing
models. Under SFAS No. 123R, the Company is required to select a
valuation technique or option pricing model that meets the criteria as stated in
the standard, which includes a binomial model and the Black-Scholes model. The
Company has elected to use the Black-Scholes model. The adoption of SFAS No.
123R, applying the “modified prospective method,” as elected by the Company,
requires the Company to value stock options prior to its adoption of SFAS No.
123R under the fair value method and expense these amounts over the remaining
vesting period of the stock options. SFAS No. 123R requires that the Company
estimate forfeitures for stock options and reduce compensation expense
accordingly. The Company has reduced its stock compensation expense by the
assumed forfeiture rate and will evaluate experience against this forfeiture
rate going forward.
During
the first three months of 2008 and 2007, the Company recognized stock option
compensation costs of $0.1 million in each period. The remaining
unrecognized compensation cost related to unvested awards at March 30, 2008,
approximated $1.0 million, and the weighted average period of time over
which this cost will be recognized is approximately two years.
The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants issued in the first three months of fiscal years
2008 and 2007:
|
|
Three
Months Ended
March 30, 2008
|
|
|
Three
Months Ended
April 1, 2007
|
|
Risk
free interest rate
|
|
|
3.90 |
% |
|
|
4.73 |
% |
Expected
life
|
|
3.25 years
|
|
|
3.25 years
|
|
Expected
volatility
|
|
|
61 |
% |
|
|
60 |
% |
Expected
dividend yield
|
|
|
0.57 |
% |
|
|
0.51 |
% |
The
weighted average grant date fair value of stock options granted during the first
three months of fiscal year 2008 was $6.21 per share.
The
following table summarizes stock options outstanding as of March 30, 2008, as
well as activity during the three months then ended:
|
|
Shares
|
|
|
Weighted
Average
Exercise Price
|
|
Outstanding
at December 30, 2007
|
|
|
805,000 |
|
|
$ |
6.22 |
|
Granted
|
|
|
145,000 |
|
|
|
14.18 |
|
Exercised
|
|
|
117,000 |
|
|
|
6.17 |
|
Forfeited
or canceled
|
|
|
4,000 |
|
|
|
9.44 |
|
Outstanding
at March 30, 2008 (a)
|
|
|
829,000 |
|
|
$ |
7.59 |
|
|
|
|
|
|
|
|
|
|
Exercisable
at March 30, 2008 (b)
|
|
|
636,000 |
|
|
$ |
5.65 |
|
(a) At
March 30, 2008, the weighted-average remaining contractual life of options
outstanding was 3.0 years.
(b) At
March 30, 2008, the weighted-average remaining contractual life of options
exercisable was 3.3 years.
At March
30, 2008, the aggregate intrinsic value of options outstanding and options
exercisable was $5.6 million and $5.5 million, respectively (the intrinsic
value of a stock option is the amount by which the market value of the
underlying stock exceeds the exercise price of the option).
Cash
proceeds and intrinsic value related to total stock options exercised during the
first three months of fiscal years 2008 and 2007 are provided in the following
table:
|
|
Three Months Ended
|
|
|
|
March 30, 2008
|
|
|
April 1,
2007
|
|
|
|
(In
thousands)
|
|
Proceeds
from stock options exercised
|
|
$ |
818 |
|
|
$ |
1,425 |
|
Intrinsic
value of stock options exercised
|
|
$ |
1,133 |
|
|
$ |
3,485 |
|
Restricted
Stock Awards
During
the three months ended March 30, 2008, and April 1, 2007, the Company granted
restricted stock awards for 1,012,000 and 277,000 shares, respectively, of Class
B common stock. These awards (or a portion thereof) vest with respect
to each recipient over a two to five-year period from the date of grant,
provided the individual remains in the employment or service of the Company as
of the vesting date. Additionally, these shares (or a portion
thereof) could vest earlier upon the attainment of certain performance criteria,
in the event of a change in control of the Company, or upon involuntary
termination without cause.
Compensation
expense related to restricted stock grants was $3.9 million and $2.9 million for
the three months ended March 30, 2008, and April 1, 2007,
respectively. SFAS No. 123R requires that the Company estimate
forfeitures for restricted stock and reduce compensation expense
accordingly. The Company has reduced its expense by the assumed
forfeiture rate and will evaluate experience against this forfeiture rate going
forward.
The
following table summarizes restricted stock activity as of March 30, 2008, and
during the three months then ended:
|
|
Shares
|
|
|
Weighted
Average
Grant
Date
Fair Value
|
|
Outstanding
at December 30, 2007
|
|
|
852,000 |
|
|
$ |
9.90 |
|
Granted
|
|
|
1,012,000 |
|
|
|
14.13 |
|
Vested
|
|
|
389,000 |
|
|
|
10.16 |
|
Forfeited
or canceled
|
|
|
-- |
|
|
|
-- |
|
Outstanding
at March 30, 2008
|
|
|
1,475,000 |
|
|
$ |
11.87 |
|
As of
March 30, 2008, the unrecognized total compensation cost related to unvested
restricted stock was $13.3 million. That cost is expected to be
recognized by the end of 2012.
NOTE 8 –
EMPLOYEE BENEFIT PLANS
The
following tables provide the components of net periodic benefit cost for the
three-month periods ended March 30, 2008, and April 1, 2007,
respectively:
|
|
Three Months Ended
|
|
Defined Benefit Retirement Plan
(Europe)
|
|
March 30, 2008
|
|
|
April 1, 2007
|
|
|
|
(In
thousands)
|
|
Service
cost
|
|
$ |
697 |
|
|
$ |
712 |
|
Interest
cost
|
|
|
3,314 |
|
|
|
3,045 |
|
Expected
return on assets
|
|
|
(3,865 |
) |
|
|
(3,230 |
) |
Amortization
of prior service costs
|
|
|
-- |
|
|
|
-- |
|
Recognized
net actuarial (gains)/losses
|
|
|
364 |
|
|
|
690 |
|
Amortization
of transition obligation
|
|
|
-- |
|
|
|
28 |
|
Net
periodic benefit cost
|
|
$ |
510 |
|
|
$ |
1,245 |
|
|
|
Three Months Ended
|
|
Salary Continuation Plan
(SCP)
|
|
March 30, 2008
|
|
|
April 1, 2007
|
|
|
|
(In
thousands)
|
|
Service
cost
|
|
$ |
67 |
|
|
$ |
66 |
|
Interest
cost
|
|
|
237 |
|
|
|
224 |
|
Amortization
of transition obligation
|
|
|
55 |
|
|
|
55 |
|
Amortization
of prior service cost
|
|
|
12 |
|
|
|
12 |
|
Amortization
of (gain)/loss
|
|
|
74 |
|
|
|
72 |
|
Net
periodic benefit cost
|
|
$ |
445 |
|
|
$ |
429 |
|
NOTE 9 –
DISCONTINUED OPERATIONS
As
discussed above in Note 2, in the second quarter of 2007, the Company committed
to a plan to exit its Fabrics Group business segment, and in the third quarter
of 2007, the Company completed the sale. Therefore, the results for the Fabrics
Group business segment have been reported as discontinued
operations. In connection with this action, the Company also recorded
write-downs for the impairment of assets and goodwill of $3.8 million and $44.5
million, respectively, in the first three months of 2007. In
connection with the sale, the Company recorded the aforementioned impairments to
reduce the carrying value of the business segment to its fair
value.
In 2004,
the Company committed to a plan to exit its owned Re:Source dealer businesses
and began to dispose of several of the dealer
subsidiaries. Therefore, the results for the owned Re:Source dealer
businesses, as well as the Company’s small Australian dealer and small
residential fabrics businesses that management also decided to exit at that
time, are reported as discontinued operations.
Summary
operating results for the above-described discontinued operations are as
follows:
|
|
Three Months Ended
|
|
|
|
March 30, 2008
|
|
|
April 1, 2007
|
|
|
|
(In
thousands)
|
|
Net
sales
|
|
$ |
-- |
|
|
$ |
35,826 |
|
Loss
on operations before taxes on income
|
|
|
-- |
|
|
|
(51,192 |
) |
Tax
benefit
|
|
|
-- |
|
|
|
1,507 |
|
Loss
on operations, net of tax
|
|
|
-- |
|
|
|
(49,685 |
) |
Assets
and liabilities, including reserves, related to the above-described discontinued
operations that were held for sale consist of the following:
|
|
March 30, 2008
|
|
|
December 30, 2007
|
|
|
|
(In
thousands)
|
|
Current
assets
|
|
$ |
35 |
|
|
$ |
79 |
|
Property
and equipment
|
|
|
4,706 |
|
|
|
4,706 |
|
Other
assets
|
|
|
6 |
|
|
|
7 |
|
Current
liabilities
|
|
|
136 |
|
|
|
220 |
|
Other
liabilities
|
|
|
-- |
|
|
|
-- |
|
NOTE 10 –
IMPAIRMENT OF GOODWILL AND OTHER ASSETS
In the
first quarter of 2007, the Company recorded charges for impairment of goodwill
of $44.5 million and impairment of other intangible assets of $3.8 million
related to its Fabrics Group business segment. The Company was
exploring possible strategic options with respect to its fabrics business, and
its analyses indicated that the carrying value of the assets of the fabrics
business exceeded their fair value. When such an indication is
present, the Company measures potential goodwill and other asset impairments
based on an allocation of the estimated fair value of the reporting unit to its
underlying assets and liabilities. An impairment loss is recognized
to the extent that the reporting unit’s recorded goodwill exceeds the implied
fair value of goodwill. In addition to the impairment of goodwill,
the Company determined that the other intangible assets of the business unit
were impaired as well. As discussed above in Note 2, in the second
quarter of 2007, the Company entered into an agreement to sell its fabrics
business unit for approximately $67.2 million (after working capital and certain
other adjustments). These impairment charges have been included in
discontinued operations in the consolidated condensed statement of operations
for the first three months of 2007.
NOTE 11 –
SALE OF PANDEL, INC.
In the
first quarter of 2007, the Company sold its subsidiary Pandel, Inc. for $1.4
million to an entity formed by the general manager of Pandel. The operations of
Pandel represent the Company’s Specialty Products segment. Pandel
primarily produces vinyl carpet tile backing and specialty mat and foam
products. As a result of this sale, the Company recorded a loss on disposition
of $1.9 million in the first quarter of 2007. The total assets
of this business were $3.3 million, comprised primarily of inventory and
accounts receivable. Total liabilities related to this business were $0.4
million. In the first three months of 2007, Pandel had net sales of $2.2
million. Prior to the sale, certain of Pandel’s production assets
were conveyed to another subsidiary of the Company, where they will continue to
be used in its carpet tile backing process.
NOTE 12 –
SUPPLEMENTAL CASH FLOW INFORMATION
Cash
payments for interest amounted to $15.8 million and $18.6 million for the three
months ended March 30, 2008, and April 1, 2007, respectively. Income
tax payments amounted to $4.7 million and $3.0 million for the three months
ended March 30, 2008, and April 1, 2007, respectively.
NOTE 13 –
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling
Interests in Consolidated Financial Statements – an amendment to ARB No.
51.” SFAS No. 160 establishes standards of accounting and
reporting of noncontrolling interests in subsidiaries, currently known as
minority interests, in consolidated financial statements, provides guidance on
accounting for changes in the parent’s ownership interest in a subsidiary and
establishes standards of accounting of the deconsolidation of a subsidiary due
to the loss of control. SFAS No. 160 requires an entity to present
minority interest as a component of equity. Additionally, SFAS No.
160 requires an entity to present net income and consolidated comprehensive
income attributable to the parent and the minority interest separately on the
face of the consolidated financial statements. This standard is
effective for the fiscal year beginning after December 15, 2008. The
Company is currently assessing the effect, if any, that the adoption of this
pronouncement will have on its consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations.” SFAS No. 141R requires the acquiring entity to
recognize and measure at an acquisition date fair value all identifiable assets
acquired, liabilities assumed and any noncontrolling interest in the
acquiree. The statement requires an entity to recognize and measure
the goodwill acquired in a business combination or a gain from a bargain
purchase. SFAS No. 141R requires disclosures about the nature and
financial effect of the business combination and also changes the accounting for
certain income tax assets recorded in purchase accounting. This
standard is effective for the fiscal year beginning after December 15,
2008. The Company is currently assessing the effect, if any, that the
adoption of this pronouncement will have on its consolidated financial
statements.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an Amendment of FASB
Statement No. 115.” This standard permits an entity to choose to
measure certain financial assets and liabilities at fair
value. SFAS No. 159 also revises provisions of SFAS No. 115 that
apply to available-for-sale and trading securities. This statement is
effective for fiscal years beginning after November 15, 2007. The
adoption of this pronouncement did not have any impact on the Company’s
consolidated financial statements.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements.” This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. For financial
assets subject to fair value measurements, SFAS No. 157 is effective for fiscal
years beginning after November 15, 2007. In November 2007, the FASB
granted a deferral for the application of SFAS No. 157 with regard to
non-financial assets until fiscal years beginning after November 15,
2008. The adoption of the pronouncement for financial assets did not
have a material impact on the Company’s consolidated financial
statements. The Company is currently evaluating the effect, if any,
that the adoption of this pronouncement with regard to non-financial assets will
have on its consolidated financial statements.
In
September 2006, the Emerging Issues Task Force (“EITF”) of the FASB reached
consensus on EITF Issue No. 06-04, “Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements” (“EITF 06-04”). The scope of EITF 06-04 is limited to
the recognition of a liability and related compensation costs for endorsement
split-dollar life insurance arrangements that provide a benefit to an employee
that extends to postretirement periods. The Company adopted this
standard on December 31, 2007, the first day of the 2008 fiscal
year. The Company provides an endorsement split-dollar policy to one
individual. In accordance with the standard, the Company recorded the
present value of the expected future policy premiums for this insurance policy,
an amount equal to approximately $2.0 million, as an adjustment to retained
earnings.
NOTE 14 –
INCOME TAXES
In July
2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for
Uncertainty in Income Taxes.” In summary, FIN 48 requires that all tax
positions subject to SFAS No. 109, “Accounting for Income Taxes,” be
analyzed using a two-step approach. The first step requires an entity to
determine if a tax position is more-likely-than-not to be sustained upon
examination. In the second step, the tax benefit is measured as the largest
amount of benefit, determined on a cumulative probability basis, that is
more-likely-than-not to be realized upon ultimate settlement. FIN 48 was
effective as of January 1, 2007, with any adjustment in a company’s tax
provision being accounted for as a cumulative effect of accounting change in
beginning equity. On January 1, 2007, the Company adopted the
provisions of FIN 48. As required by FIN 48, the cumulative
effect of applying the provisions of the Interpretation have been reported as an
adjustment to the Company’s retained earnings balance as of January 1,
2007. The Company recognized a $4.6 million increase in its liability
for unrecognized tax benefits with a corresponding decrease to the fiscal year
2007 opening balance of retained earnings. There have been no
material changes to the Company’s unrecognized tax benefits during the three
months ended March 30, 2008. As of March 30, 2008, the Company
had approximately $7.8 million accrued for unrecognized tax
benefits.
NOTE 15 –
SUPPLEMENTAL CONDENSED CONSOLIDATING 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 and
its 9.5% senior subordinated notes due 2014. These guarantees
are full and unconditional. The Supplemental Guarantor Financial
Statements are presented herein pursuant to requirements of the
Commission.
INTERFACE,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE
THREE MONTHS ENDED MARCH 30, 2008
|
|
GUARANTOR
SUBSIDIARIES
|
|
|
NON-GUARANTOR
SUBSIDIARIES
|
|
|
INTERFACE,
INC.
(PARENT
CORPORATION)
|
|
|
CONSOLIDATION
AND ELIMINATION ENTRIES
|
|
|
CONSOLIDATED
TOTALS
|
|
|
|
(IN
THOUSANDS)
|
|
Net
sales
|
|
$ |
143,862 |
|
|
$ |
142,070 |
|
|
$ |
-- |
|
|
$ |
(24,196 |
) |
|
$ |
261,736 |
|
Cost
of sales
|
|
|
105,144 |
|
|
|
86,522 |
|
|
|
-- |
|
|
|
(24,196 |
) |
|
|
167,470 |
|
Gross
profit on sales
|
|
|
38,718 |
|
|
|
55,548 |
|
|
|
-- |
|
|
|
-- |
|
|
|
94,266 |
|
Selling,
general and administrative expenses
|
|
|
25,321 |
|
|
|
30,321 |
|
|
|
7,653 |
|
|
|
-- |
|
|
|
63,295 |
|
Operating
income (loss)
|
|
|
13,397 |
|
|
|
25,227 |
|
|
|
(7,653 |
) |
|
|
-- |
|
|
|
30,971 |
|
Interest/Other
expense
|
|
|
1,895 |
|
|
|
2,747 |
|
|
|
3,549 |
|
|
|
-- |
|
|
|
8,191 |
|
Income
(loss) before taxes on income and equity in income of
subsidiaries
|
|
|
11,502 |
|
|
|
22,480 |
|
|
|
(11,202 |
) |
|
|
-- |
|
|
|
22,780 |
|
Income
tax (benefit) expense
|
|
|
4,427 |
|
|
|
7,058 |
|
|
|
(2,827 |
) |
|
|
-- |
|
|
|
8,658 |
|
Equity
in income (loss) of subsidiaries
|
|
|
-- |
|
|
|
-- |
|
|
|
8,597 |
|
|
|
(8,597 |
) |
|
|
-- |
|
Income
(loss) from continuing operations
|
|
|
7,075 |
|
|
|
15,422 |
|
|
|
222 |
|
|
|
(8,597 |
) |
|
|
14,122 |
|
Loss
on discontinued operations, net of tax
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Net
income (loss)
|
|
$ |
7,075 |
|
|
$ |
15,422 |
|
|
$ |
222 |
|
|
$ |
(8,597 |
) |
|
$ |
14,122 |
|
CONDENSED
CONSOLIDATING BALANCE SHEET
MARCH 30,
2008
|
|
GUARANTOR
SUBSIDIARIES
|
|
|
NON-GUARANTOR
SUBSIDIARIES
|
|
|
INTERFACE,
INC.
(PARENT
CORPORATION)
|
|
|
CONSOLIDATION
AND ELIMINATION ENTRIES
|
|
|
CONSOLIDATED
TOTALS
|
|
|
|
(IN
THOUSANDS)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
-- |
|
|
$ |
40,912 |
|
|
$ |
18,382 |
|
|
$ |
-- |
|
|
$ |
59,294 |
|
Accounts
receivable
|
|
|
61,601 |
|
|
|
96,794 |
|
|
|
3,547 |
|
|
|
-- |
|
|
|
161,942 |
|
Inventories
|
|
|
73,479 |
|
|
|
77,357 |
|
|
|
-- |
|
|
|
-- |
|
|
|
150,836 |
|
Prepaids
and deferred income taxes
|
|
|
8,430 |
|
|
|
12,107 |
|
|
|
7,427 |
|
|
|
-- |
|
|
|
27,964 |
|
Assets
of business held for sale
|
|
|
41 |
|
|
|
4,706 |
|
|
|
-- |
|
|
|
-- |
|
|
|
4,747 |
|
Total
current assets
|
|
|
143,551 |
|
|
|
231,876 |
|
|
|
29,356 |
|
|
|
-- |
|
|
|
404,783 |
|
Property
and equipment less accumulated depreciation
|
|
|
78,149 |
|
|
|
84,177 |
|
|
|
6,193 |
|
|
|
-- |
|
|
|
168,519 |
|
Investment
in subsidiaries
|
|
|
234,596 |
|
|
|
152,982 |
|
|
|
85,196 |
|
|
|
(472,774 |
) |
|
|
-- |
|
Goodwill
|
|
|
68,168 |
|
|
|
81,212 |
|
|
|
-- |
|
|
|
-- |
|
|
|
149,380 |
|
Other
assets
|
|
|
7,462 |
|
|
|
14,006 |
|
|
|
95,473 |
|
|
|
-- |
|
|
|
116,941 |
|
|
|
$ |
531,926 |
|
|
$ |
564,253 |
|
|
$ |
216,218 |
|
|
$ |
(472,774 |
) |
|
$ |
839,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$ |
37,053 |
|
|
$ |
95,973 |
|
|
$ |
20,932 |
|
|
$ |
-- |
|
|
$ |
153,958 |
|
Long-term
debt, less current maturities
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Senior
notes and senior subordinated notes
|
|
|
-- |
|
|
|
-- |
|
|
|
310,000 |
|
|
|
-- |
|
|
|
310,000 |
|
Deferred
income taxes
|
|
|
1,614 |
|
|
|
12,302 |
|
|
|
(5,548 |
) |
|
|
-- |
|
|
|
8,368 |
|
Other
|
|
|
3,357 |
|
|
|
7,575 |
|
|
|
26,882 |
|
|
|
-- |
|
|
|
37,814 |
|
Total
liabilities
|
|
|
42,024 |
|
|
|
115,850 |
|
|
|
352,266 |
|
|
|
-- |
|
|
|
510,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interests
|
|
|
-- |
|
|
|
7,721 |
|
|
|
-- |
|
|
|
-- |
|
|
|
7,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
preferred stock
|
|
|
57,891 |
|
|
|
-- |
|
|
|
-- |
|
|
|
(57,891 |
) |
|
|
-- |
|
Common
stock
|
|
|
94,145 |
|
|
|
102,199 |
|
|
|
6,298 |
|
|
|
(196,344 |
) |
|
|
6,298 |
|
Additional
paid-in capital
|
|
|
191,411 |
|
|
|
12,525 |
|
|
|
337,182 |
|
|
|
(203,936 |
) |
|
|
337,182 |
|
Retained
earnings (deficit)
|
|
|
146,455 |
|
|
|
332,801 |
|
|
|
(469,599 |
) |
|
|
(14,603 |
) |
|
|
(4,946 |
) |
AOCI
- Foreign currency translation adjustment
|
|
|
-- |
|
|
|
20,748 |
|
|
|
(6,864 |
) |
|
|
-- |
|
|
|
13,884 |
|
AOCI
- Pension liability
|
|
|
-- |
|
|
|
(27,591 |
) |
|
|
(3,065 |
) |
|
|
-- |
|
|
|
(30,656 |
) |
|
|
$ |
531,926 |
|
|
$ |
564,253 |
|
|
$ |
216,218 |
|
|
$ |
(472,774 |
) |
|
$ |
839,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE
THREE MONTHS
ENDED
MARCH 30, 2008
|
|
GUARANTOR
SUBSIDIARIES
|
|
|
NON-GUARANTOR
SUBSIDIARIES
|
|
|
INTERFACE,
INC.
(PARENT
CORPORATION)
|
|
|
CONSOLIDATION
AND ELIMINATION ENTRIES
|
|
|
CONSOLIDATED
TOTALS
|
|
|
|
(IN
THOUSANDS)
|
|
Net
cash provided by (used for) operating activities
|
|
$ |
(5,496 |
) |
|
$ |
8,056 |
|
|
$ |
(15,388 |
) |
|
$ |
-- |
|
|
$ |
(12,828 |
) |
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of plant and equipment
|
|
|
(3,048 |
) |
|
|
(2,802 |
) |
|
|
(164 |
) |
|
|
-- |
|
|
|
(6,014 |
) |
Other
|
|
|
(933 |
) |
|
|
(70 |
) |
|
|
(3,191 |
) |
|
|
-- |
|
|
|
(4,194 |
) |
Net
cash provided by (used for) investing activities
|
|
|
(3,981 |
) |
|
|
(2,872 |
) |
|
|
(3,355 |
) |
|
|
-- |
|
|
|
(10,208 |
) |
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
borrowings
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Repurchase
of senior notes
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Proceeds
from issuance of common stock
|
|
|
-- |
|
|
|
-- |
|
|
|
818 |
|
|
|
-- |
|
|
|
818 |
|
Other
|
|
|
8,283 |
|
|
|
(292 |
) |
|
|
(7,991 |
) |
|
|
-- |
|
|
|
-- |
|
Dividends
paid
|
|
|
-- |
|
|
|
-- |
|
|
|
(1,888 |
) |
|
|
-- |
|
|
|
(1,888 |
) |
Net
cash provided by (used for) financing activities
|
|
|
8,283 |
|
|
|
(292 |
) |
|
|
(9,061 |
) |
|
|
-- |
|
|
|
(1,070 |
) |
Effect
of exchange rate change on cash
|
|
|
-- |
|
|
|
1,022 |
|
|
|
3 |
|
|
|
-- |
|
|
|
1,025 |
|
Net
increase (decrease) in cash
|
|
|
(1,194 |
) |
|
|
5,914 |
|
|
|
(27,801 |
) |
|
|
-- |
|
|
|
(23,081 |
) |
Cash
at beginning of period
|
|
|
1,194 |
|
|
|
34,998 |
|
|
|
46,183 |
|
|
|
-- |
|
|
|
82,375 |
|
Cash
at end of period
|
|
$ |
-- |
|
|
$ |
40,912 |
|
|
$ |
18,382 |
|
|
$ |
-- |
|
|
$ |
59,294 |
|
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Our
discussions below in this Item 2 are based upon the more detailed discussions
about our business, operations and financial condition included in our Annual
Report on Form 10-K for the fiscal year ended December 30, 2007, under Item 7 of
that Form 10-K. Our discussions here focus on our results during
the quarter ended, or as of, March 30, 2008, and the comparable period of 2007
for comparison purposes, and, to the extent applicable, any material changes
from the information discussed in that Form 10-K or other important
intervening developments or information since that time. These
discussions should be read in conjunction with that Form 10-K for more detailed
and background information.
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. 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 “Risk Factors” included in Item 1A of the Company’s Annual Report on
Form 10-K for the fiscal year ended December 30, 2007, which discussion is
hereby incorporated by reference. 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.
Sale of
Fabrics Group Business Segment
In July
2007, we completed the sale of our Fabrics Group business segment to a third
party pursuant to an agreement we entered into in the second quarter of
2007. Following working capital and other adjustments provided for in
the agreement, we received $60.7 million in cash at the closing of the
transaction. We may receive up to $6.5 million of additional purchase
price under the agreement pursuant to an earn-out arrangement focused on the
performance of that business segment, as owned and operated by the purchaser,
during the 18-month period following the closing. As discussed in the
Notes to Consolidated Condensed Financial Statements in Item 1 of Part 1, in the
first quarter of 2007, we recorded charges for impairment of goodwill of $44.5
million and impairment of other intangible assets of $3.8 million related to the
Fabrics Group segment.
As
described below, the results of operations of the former Fabrics Group business
segment, including the European component as well as the related impairment
charges discussed above, are included as part of our discontinued
operations.
Discontinued
Operations
As
described above, in the second quarter of 2007, we entered into an agreement to
sell our Fabrics Group business segment to a third party, and we completed the
sale in the third quarter of 2007. In addition, in 2004, we decided
to exit our owned Re:Source dealer businesses, which were part of a broader
network comprised of both owned and aligned dealers that sell and install
floorcovering products, and we began to dispose of several of our dealer
subsidiaries. We now have sold or terminated all ongoing operations
of our dealer businesses, and in some cases we are completing their wind-down
through subcontracting arrangements.
In
accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets,” we have reported the results of operations for the Re:Source
dealer businesses (as well as the results of operations of a small Australian
dealer business and a small residential fabrics business that we also decided to
exit at that time), and the results of operations for the former Fabrics Group
business segment for all periods reflected herein, as “discontinued
operations.” Consequently, our discussion of revenues or sales and
other results of operations (except for net income or loss amounts), including
percentages derived from or based on such amounts, excludes these discontinued
operations unless we indicate otherwise.
Our
discontinued operations had no net sales and no income or loss in the
three-month period ended March 30, 2008. Our discontinued operations
had net sales of $35.8 million in the three-month period ended April 1, 2007
(these results are included in our statements of operations as part of the “Loss
from Discontinued Operations, Net of Taxes”). Loss from operations of these
businesses, inclusive of goodwill and other asset impairments, net of tax, was
$49.7 million in the three-month period ended April 1, 2007.
General
During
the quarter ended March 30, 2008, we had net sales of $261.7 million, compared
with net sales of $243.5 million in the first quarter last
year. Fluctuations in currency exchange rates positively impacted
2008 first quarter sales by 2.5% (approximately $6.0 million), compared
with the prior year period.
During
the first quarter of 2008, we had net income of $14.1 million, or $0.23 per
diluted share, compared with net loss (inclusive of the discontinued operations
described above) of $40.6 million, or $0.66 per diluted share, in the first
quarter last year. Income from continuing operations in the first
quarter of 2007 was $9.1 million, or $0.15 per diluted share.
Results
of Operations
The
following table presents, as a percentage of net sales, certain items included
in our Consolidated Condensed Statements of Operations for the three-month
periods ended March 30, 2008, and April 1, 2007, respectively:
|
|
Three Months Ended
|
|
|
|
March 30, 2008
|
|
|
April 1, 2007
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost
of sales
|
|
|
64.0 |
|
|
|
65.8 |
|
Gross
profit on sales
|
|
|
36.0 |
|
|
|
34.2 |
|
Selling,
general and administrative expenses
|
|
|
24.2 |
|
|
|
23.4 |
|
Loss
on disposal of Specialty Products
|
|
|
-- |
|
|
|
0.8 |
|
Operating
income
|
|
|
11.8 |
|
|
|
10.0 |
|
Interest/Other
expense
|
|
|
3.1 |
|
|
|
3.9 |
|
Income
from continuing operations before tax expense
|
|
|
8.7 |
|
|
|
6.1 |
|
Income
tax expense
|
|
|
3.3 |
|
|
|
2.3 |
|
Income
from continuing operations
|
|
|
5.4 |
|
|
|
3.7 |
|
Discontinued
operations, net of tax
|
|
|
-- |
|
|
|
(20.4 |
) |
Loss
on disposal
|
|
|
-- |
|
|
|
-- |
|
Net
income (loss)
|
|
|
5.4 |
|
|
|
(16.7 |
) |
Below we
provide information regarding net sales for each of our three operating
segments, and analyze those results for the three-month periods ended March 30,
2008, and April 1, 2007, respectively.
Net
Sales by Business Segment
Net sales
by operating segment and for our Company as a whole were as follows for the
three-month periods ended March 30, 2008, and April 1, 2007,
respectively:
|
|
Three Months Ended
|
|
|
Percentage
|
|
Net Sales By Segment
|
|
03/30/08
|
|
|
04/01/07
|
|
|
Change
|
|
|
|
(In
thousands)
|
|
|
|
|
Modular
Carpet
|
|
$ |
226,073 |
|
|
$ |
205,254 |
|
|
|
10.1 |
% |
Bentley
Prince Street
|
|
|
35,663 |
|
|
|
36,046 |
|
|
|
(1.1 |
)% |
Specialty
Products (sold in March 2007)
|
|
|
-- |
|
|
|
2,192 |
|
|
|
* |
|
Total
|
|
$ |
261,736 |
|
|
$ |
243,492 |
|
|
|
7.5 |
% |
* Not
meaningful
Modular Carpet
Segment. For the quarter ended March, 30, 2008, net sales for
the Modular Carpet segment increased $20.8 million (10.1%) versus the
comparable period in 2007. On a geographic basis, we experienced
increases in Asia-Pacific (up 33.7%) and the Americas (up 5%). In
Europe, sales were down slightly in local currency but up 10% as reported in
U.S. dollars due to the strength of the Euro versus the U.S.
dollar. Sales increases were due mostly to the success of our market
segmentation strategy, largely in the retail and hospitality
segments. However, the increases were partially offset by the slowing
corporate office segment, particularly in Europe. Sales growth in
Asia-Pacific also was due to the relatively good economic climate in that
region.
Bentley Prince Street
Segment. In our Bentley Prince Street segment, net sales for
the quarter ended March 30, 2008, decreased $0.4 million (1.1%) versus the
comparable period in 2007. This was in line with the commercial interior
market’s decline in broadloom carpet, and was somewhat offset by strong sales
growth of modular carpet by Bentley Prince Street.
Specialty Products Segment.
Because we sold Pandel, Inc. (which comprised the Specialty Products
segment) on March 7, 2007, we no longer had sales in the Specialty Products
segment in the quarter ended March 30, 2008.
Cost
and Expenses
Company
Consolidated. The following table presents, on a consolidated
basis for our operations, our overall cost of sales and selling, general and
administrative expenses for the three-month periods ended March 30, 2008, and
April 1, 2007, respectively:
|
|
Three Months Ended
|
|
|
Percentage
|
|
Cost and Expenses
|
|
03/30/08
|
|
|
04/01/07
|
|
|
Change
|
|
|
|
(In
thousands)
|
|
|
|
|
Cost
of sales
|
|
$ |
167,470 |
|
|
$ |
160,264 |
|
|
|
4.5 |
% |
Selling,
general and administrative expenses
|
|
|
63,295 |
|
|
|
57,047 |
|
|
|
11.0 |
% |
Total
|
|
$ |
230,765 |
|
|
$ |
217,311 |
|
|
|
6.2 |
% |
For the
quarter ended March 30, 2008, our cost of sales increased $7.2 million (4.5%)
versus the comparable period in 2007, primarily due to increased product ($4.8
million) and labor ($0.7 million) costs associated with increased production
levels during the first quarter of 2008. Our raw material prices in
the first quarter 2008 were approximately equivalent to those in the first
quarter of 2007. The translation of Euros into U.S. dollars resulted
in an approximately $2.5 million increase in the cost of goods sold during the
first quarter 2008 compared with the same period in 2007. As a
percentage of net sales, cost of sales decreased to 64.0% for the quarter ended
March 30, 2008, versus 65.8% for the comparable period in 2007. The
percentage decrease was primarily due to increased price levels and improved
manufacturing efficiencies in our modular carpet operations.
For the
quarter ended March 30, 2008, our selling, general and administrative expenses
increased $6.2 million (11.0%) versus the comparable period in
2007. The primary components of this increase
were: (1) a $2.3 million increase in marketing expenses as we
continue to invest in our marketing platforms, (2) a $1.6 million increase in
expenses due to the translation of foreign currency into U.S. dollars, and (3)
$1.0 million related to incremental performance vesting of restricted stock in
the first quarter of 2008 compared with performance vesting in the first quarter
of 2007. Due to these increases, as a percentage of net sales, selling, general
and administrative expenses increased for the quarter ended March 30, 2008 to
24.2% versus 23.4% for the comparable period in 2007.
Cost and Expenses by
Segment. The following table presents the combined cost of
sales and selling, general and administrative expenses for each of our operating
segments:
Cost
of Sales and Selling, General and
|
|
Three Months Ended
|
|
|
Percentage
|
|
Administrative Expenses
(Combined)
|
|
03/30/08
|
|
|
04/01/07
|
|
|
Change
|
|
|
|
(In
thousands)
|
|
|
|
|
Modular
Carpet
|
|
$ |
195,207 |
|
|
$ |
178,492 |
|
|
|
9.4 |
% |
Bentley
Prince Street
|
|
|
34,074 |
|
|
|
35,114 |
|
|
|
(3.0 |
)% |
Specialty
Products (sold in March 2007)
|
|
|
-- |
|
|
|
2,052 |
|
|
|
* |
|
Corporate
Expenses and Eliminations
|
|
|
1,484 |
|
|
|
1,653 |
|
|
|
(10.2 |
)% |
Total
|
|
$ |
230,765 |
|
|
$ |
217,311 |
|
|
|
6.2 |
% |
*Not
meaningful
Interest
Expenses
For the
three-month period ended March 30, 2008, interest expense decreased $1.3 million
to $7.8 million, versus $9.1 million in the comparable period in
2007. This decrease was due primarily to the lower levels of debt
outstanding on a daily basis during the first quarter of 2008 (mostly through
the redemption of our 7.3% Senior Notes in the third quarter of 2007) versus the
comparable period in 2007.
Liquidity
and Capital Resources
General
At March
30, 2008, we had $59.3 million in cash. At that date, we had no
borrowings and $9.9 million in letters of credit outstanding under our domestic
revolving credit facility, and no borrowings outstanding under our European
credit facility. As of March 30, 2008, we could have incurred $61.1
million of additional borrowings under our domestic revolving credit facility
and €15.0 million (approximately $23.7 million) of additional borrowings under
our European credit facility. In addition, we could have incurred an
additional $15.1 million of borrowings under our other credit facilities in
place at other non-U.S. subsidiaries.
Our
primary sources of cash during the three-month period ended March 30, 2008, were
(1) $21.2 million from cash received as a reduction of accounts receivable, (2)
a reduction of $1.3 million in deferred income taxes and other current assets,
and (3) $0.8 million from the exercise of employee stock
options. The primary uses of cash for the three-month period ended
March 30, 2008, were: (1) $55.6 million to fund working capital needs for
inventory purchases, accounts payable and accruals, (2) $6.0 million for capital
expenditures, primarily for our manufacturing facilities, and (3) $1.9 million
for the payment of dividends.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our
discussion below in this Item 3 is based upon the more detailed discussions of
our market risk and related matters included in our Annual Report on Form 10-K
for the fiscal year ended December 30, 2007, under Item 7A of that Form
10-K. Our discussion here focuses on the quarter ended March 30,
2008, and any material changes from (or other important intervening developments
since the time of) the information discussed in that Form 10-K. This
discussion should be read in conjunction with that Form 10-K for more detailed
and background information.
At March
30, 2008, we recognized a $12.6 million increase in our foreign currency
translation adjustment account compared to December 30, 2007, primarily because
of the strengthening of the Euro against the U.S dollar.
Sensitivity Analysis. For
purposes of specific risk analysis, we use sensitivity analysis to measure the
impact that market risk may have on the fair values of our market sensitive
instruments.
To
perform sensitivity analysis, we assess 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 March 30, 2008.
The values that result from these computations are compared with the market
values of these financial instruments at March 30, 2008. The differences in this
comparison are the hypothetical gains or losses associated with each type of
risk.
As of
March 30, 2008, based on a hypothetical immediate 150 basis point increase in
interest rates, with all other variables held constant, the market value of our
fixed rate long-term debt would be impacted by a net decrease of approximately
$11.6 million. Conversely, a 150 basis point decrease in interest rates would
result in a net increase in the market value of our fixed rate long-term debt of
approximately $16.5 million.
As of
March 30, 2008, a 10% decrease or increase 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 our financial instruments of
$18.7 million or an increase in the fair value of our financial instruments of
$15.3 million, respectively. As the impact of offsetting changes in the fair
market value of our net foreign investments is not included in the sensitivity
model, these results are not indicative of our actual exposure to foreign
currency exchange risk.
ITEM
4. CONTROLS AND PROCEDURES
As of the
end of the period covered by this Quarterly Report on Form 10-Q, an evaluation
was performed under the supervision and with the participation of our
management, including our President and Chief Executive Officer and our Senior
Vice President and Chief Financial Officer, of the effectiveness of the design
and operation of our disclosure controls and procedures, as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934 (the “Act”), pursuant to
Rule 13a-14(c) under the Act. Based on that evaluation, our President
and Chief Executive Officer and our Senior Vice President and Chief Financial
Officer concluded that our disclosure controls and procedures were effective as
of the end of the period covered by this Quarterly Report.
There
were no changes in our internal control over financial reporting that occurred
during our last fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
PART II -
OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
We are
subject to various legal proceedings in the ordinary course of business, none of
which is required to be disclosed under this Item 1.
ITEM 1A.
RISK FACTORS
There are
no material changes in risk factors in the first quarter of 2008. For
a discussion of risk factors, see Part I, Item 1A, “Risk Factors,” in our
Annual Report on Form 10-K for fiscal year 2007.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM
5. OTHER INFORMATION
None
ITEM
6. EXHIBITS
The
following exhibits are filed with this report:
EXHIBIT
NUMBER
|
|
DESCRIPTION OF EXHIBIT
|
|
|
|
3.1
|
|
Restated
Articles of Incorporation, dated as of March 17, 2008 (included as Exhibit
3.1 to the Company’s Current Report on Form 8-K dated March 17, 2008,
previously filed with the Commission and incorporated herein by
reference).
|
4.1
|
|
Rights
Agreement dated March 7, 2008 and effective as of March 17, 2008 between
Interface, Inc. and Computershare Trust Company, N.A., as Rights Agent
(included as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated
March 7, 2008, previously filed with the Commission and incorporated
herein by reference).
|
31.1
|
|
Section
302 Certification of Chief Executive Officer.
|
31.2
|
|
Section
302 Certification of Chief Financial Officer.
|
32.1
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. §
1350.
|
32.2
|
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. §
1350.
|
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: May
5, 2008
|
By:
|
/s/ Patrick
C.
Lynch
|
|
|
Patrick
C. Lynch
|
|
|
Senior
Vice President
|
|
|
(Principal
Financial Officer)
|
EXHIBIT
INDEX
EXHIBIT
NUMBER
|
|
DESCRIPTION OF EXHIBIT
|
|
|
|
3.1
|
|
Restated
Articles of Incorporation, dated as of March 17, 2008 (included as Exhibit
3.1 to the Company’s Current Report on Form 8-K dated March 17, 2008,
previously filed with the Commission and incorporated herein by
reference).
|
4.1
|
|
Rights
Agreement dated March 7, 2008 and effective as of March 17, 2008 between
Interface, Inc. and Computershare Trust Company, N.A., as Rights Agent
(included as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated
March 7, 2008, previously filed with the Commission and incorporated
herein by reference).
|
31.1
|
|
Section
302 Certification of Chief Executive Officer.
|
31.2
|
|
Section
302 Certification of Chief Financial Officer.
|
32.1
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. §
1350.
|
32.2
|
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. §
1350.
|