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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Contents
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Page
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Report
of Independent Registered Public Accounting Firm
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1
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Financial
Statements
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Statements
of net assets available for benefits
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2
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Statements
of changes in net assets available for benefits
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3
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Notes
to financial statements
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4-8
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Signatures
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9
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Exhibit
Index
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10
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Supplemental
Schedule
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Schedule
of assets (held at end of year)
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12
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December
31,
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2007
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2006
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Assets
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Investments, at fair
value
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Common and collective trust
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$ | 16,564,594 | $ | 28,082,027 | ||||
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Mutual funds
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58,287,529 | 69,538,137 | ||||||
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Interface, Inc. Stock
Fund
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10,656,920 | 10,881,145 | ||||||
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TradeLink Investments –
Self-Directed Brokerage
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302,316 | 327,260 | ||||||
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Participant loans
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2,435,179 | 3,884,982 | ||||||
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Cash and cash
equivalents
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499 | 1,544 | ||||||
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Total
investments
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88,247,037 | 112,715,095 | ||||||
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Receivables
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Participant
contributions
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149,601 | 201,432 | ||||||
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Employer
contributions
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58,226 | 49,079 | ||||||
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Total
receivables
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207,827 | 250,511 | ||||||
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Liabilities
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Excess contributions
payable
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(77,060 | ) | -- | |||||
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Net
assets available for benefits at fair value
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88,377,804 | 112,965,606 | ||||||
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Adjustment
from fair value to contract value for
fully benefit-responsive
investment contracts
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(98,485 | ) | 240,744 | |||||
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Net
assets available for benefits
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$ | 88,279,319 | $ | 113,206,350 | ||||
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Year
ended December 31,
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2007
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2006
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Additions
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Investment
income:
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Interest
and dividend income from mutual funds
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$ | 3,265,945 | $ | 2,075,662 | ||||
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Interest income from common and
collective trust
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1,108,899 | 1,119,016 | ||||||
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Dividend income from Interface,
Inc. stock fund
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57,795 | -- | ||||||
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Interest income from
participant loans
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248,552 | 243,750 | ||||||
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Net appreciation in fair value
of Interface, Inc. stock fund
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1,995,655 | 5,562,046 | ||||||
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Net depreciation in contract
value of common collective trust
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(339,229 | ) | -- | |||||
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Net appreciation in fair value
of mutual funds
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2,019,489 | 5,717,876 | ||||||
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Total
investment income
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8,357,106 | 14,718,350 | ||||||
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Contributions:
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Participant
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7,136,469 | 5,993,513 | ||||||
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Employer
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2,891,276 | 2,031,656 | ||||||
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Rollovers
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280,733 | 523,803 | ||||||
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Total
contributions
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10,308,478 | 8,548,972 | ||||||
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Total
additions
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18,665,584 | 23,267,322 | ||||||
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Deductions
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Benefits paid to
participants
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10,344,091 | 11,298,551 | ||||||
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Administrative
expenses
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52,280 | 39,386 | ||||||
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Total
deductions
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10,396,371 | 11,337,937 | ||||||
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Net
increase (decrease)
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8,269,213 | 11,929,385 | ||||||
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Transfers to other qualified
plans (Note 1)
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(33,196,244 | ) | -- | |||||
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Net assets available for
benefits, beginning of year
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113,206,350 | 101,276,965 | ||||||
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Net assets available for
benefits, end of year
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$ | 88,279,319 | $ | 113,206,350 | ||||
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1. Description
of Plan
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The
following description of the Interface, Inc. Savings and Investment Plan
("Plan") provides only general information. Participants should
refer to Plan’s Summary Plan Description and Plan document for a more
complete description of the Plan's provisions.
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a.
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General - The
Plan is a defined contribution plan established on October 1, 1988
covering substantially all full-time employees of Interface, Inc. and
adopting domestic subsidiaries (the “Company”) who have six months of
service and are age eighteen or older. The Plan also covers
part-time employees of the Company who have twelve months of service and
are age eighteen or older. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
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As
of September 1, 2005, employees hired on or after this date are
automatically enrolled in the Plan at a three percent contribution
rate. Effective January 1, 2007, employees hired prior to
September 1, 2005 and who were not enrolled in the Plan were automatically
enrolled at a three percent contribution rate. Employees that
do not want to participate in the Plan are required to elect out of the
Plan.
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On
July 16, 2007, Interface, Inc. sold its Fabrics Group business segment
(comprised of InterfaceFABRIC, Inc. and its related subsidiaries) to a
third party. As a result of this transaction, employees of the
Fabrics Group ceased to be employees of subsidiaries of Interface, Inc.,
and the Interface, Inc. Administrative Committee agreed to transfer the
Plan accounts, including outstanding loan balances, of those Fabrics Group
employees who had account balances under the Plan to a newly established
401(k) plan of the purchaser, effective October 1,
2007. Fabrics Group employees were not entitled to a
distribution from the Plan as a result of the
transfer.
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b.
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Contributions - Each
year, participants may contribute up to 40 percent of pretax annual
compensation, as defined in the Plan, up to a maximum of $15,500 and
$15,000 for 2007 and 2006, respectively. Participants who have
attained age 50 before the end of the plan year were eligible to make
catch-up contributions of $5,000 for both 2007 and
2006. Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined contribution
plans. Participants direct the investment of their
contributions into various investment options offered by the Plan. The
Plan currently offers a common and collective trust, a Company common
stock fund, and twenty-one mutual funds as well as a self-directed
brokerage account option as investment options for participants. Effective
January 1, 2007, the Company contributes 50 percent of the first 6 percent
(previously up to the first 4 percent) of base compensation that a
participant contributes to the Plan. Employees of certain subsidiaries in
the Fabrics Group also received an additional matching contribution of 25
percent of base compensation that a participant contributed to the Plan
between 4 percent and 5 percent of compensation, which matching
contributions ceased on July 15, 2007. Additional profit-sharing amounts
may be contributed at the option of the Company’s Board of Directors in
the form of cash or Company common stock. No additional
profit-sharing amounts were made by the Company to the Plan during the
years ended December 31, 2007 and 2006. Contributions are subject to
certain limitations.
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c.
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Participant Accounts -
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company’s contributions, (b) Plan earnings, and
charged with an allocation of certain administrative expenses. Allocations
are based on participant account balances, as defined. The
benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
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d.
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Vesting - Participants
are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company’s contribution portion of their accounts
is based on years of continuous service. A participant is 100
percent vested after five years of credited service beginning with 20
percent after year one.
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e.
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Participant
Loans - Participants may borrow from their accounts a
minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50
percent of their account balance. The loans are secured by the balance in
the participant’s account and bear interest at a rate commensurate with
local prevailing rates as determined by the plan administrator on the date
of the loan. Interest rates are currently equal to the prime
rate plus one percent. Principal and interest are paid ratably through
payroll deductions.
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f.
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Payment of
Benefits - On termination of service due to death,
disability, retirement, or separation of service, a participant is
eligible to receive a lump-sum amount equal to the value of the
participant’s vested interest in his or her
account. Withdrawals from the Plan may also be made upon
circumstances of financial hardship, in accordance with provisions
specified in the Plan
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g.
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Forfeited
Accounts - Forfeited nonvested accounts are used to
reduce employer contributions. During the Plan years ended December 31,
2007 and 2006, forfeited amounts were not material to the financial
statements.
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h.
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Administrative
Expenses - The Company pays the majority of the Plan’s
administrative expenses. Fees recorded in the Plan for the 2007
and 2006 Plan years relate to recordkeeping fees and participant loans,
and are charged directly to those participant
accounts.
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2. Summary
of
Significant
Accounting
Policies
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Basis
of Accounting
The
financial statements of the Plan are prepared under the accrual method of
accounting.
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Management
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
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As
described in Financial Accounting Standards Board Staff Position, FSP AAG
INV-1 and SOP 94-4-1, “Reporting of Fully Benefit-Responsive Investment
Contracts Held by Certain Investment Companies Subject to the AICPA
Investment Company Guide and Defined-Contribution Health and Welfare and
Pension Plans” (the FSP), investment contracts held by a defined
contribution plan are required to be reported at fair
value. However, contract value is the relevant measurement
attribute for that portion of the net assets available for benefits of a
defined contribution plan attributable to fully benefit-responsive
investment contracts because contract value is the amount participants
would receive if they were to initiate permitted transactions under the
terms of the plan. As required by the FSP, the statement of Net
Assets Available for Benefits presents the fair value of the investment
contracts as well as the adjustment of the fully benefit-responsive
investment contracts from fair value to contract value. The
Statement of Changes in Net Assets Available for Benefits is prepared on a
contract value basis.
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Investment
Valuation and Income Recognition
The
Plan’s investments are stated at fair value. Quoted market
prices are used to value investments. Shares of the mutual
funds are valued at the net asset value of shares held by the Plan at year
end. Common collective trusts are valued at contract
value. Participant loans are valued at their outstanding
balances, which approximate fair value. The Company
common stock fund is valued based upon the quoted market price for
Interface, Inc. Class A Common Stock.
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Purchases
and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
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Payment
of Benefits
Benefits
are recorded when paid.
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3. Investments
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The
fair market value of individual investments that represent 5 percent or
more of the Plan’s net assets are as
follows:
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December
31,
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2007
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2006
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T.
Rowe Price Stable Value Fund
(Common and
collective trust)
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$ | 16,564,594 | $ | 28,082,027 | |||||
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T.
Rowe Price Balanced Fund
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10,586,925 | 10,296,168 | |||||||
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T.
Rowe Price Blue Chip Growth Fund
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11,859,517 | 13,505,791 | |||||||
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T.
Rowe Price Equity Income Fund
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14,619,111 | 18,780,071 | |||||||
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Interface,
Inc. Stock Fund
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10,656,920 | 10,881,145 | |||||||
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Delaware
Select Growth Fund
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* | 6,626,337 | |||||||
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*Represents
less than 5% of net assets available for benefits in the respective
year.
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4. Related
Party
Transactions
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Certain
Plan investments are shares of mutual funds and units of a stable value
fund managed by T. Rowe Price Trust Company. T. Rowe Price
Trust Company is a trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest.
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At
December 31, 2007 and 2006, the Plan held 652,998 and 765,200 shares,
respectively, of common stock of Interface, Inc., the sponsoring
employer. The Plan also issues loans to participants, which are
secured by the balances in the participants’ accounts.
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5. Plan
Termination
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Although
it has not expressed any intent to do so, the Company has the right under
the Plan to discontinue its contributions at any time, and to amend or
terminate the Plan subject to the provisions of ERISA. In the
event of Plan termination, participants would become 100 percent vested in
their employer contributions.
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6. Tax
Status
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The
Internal Revenue Service has determined and informed the Company by a
letter dated December 12, 2002, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC). The Plan has been amended since reviewing the
determination letter. However, the Plan administrator and the
Plan’s tax counsel believe that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the
IRC.
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7. Risks
and
Uncertainties
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The
Plan invests in various investment securities. Investment
securities are exposed to various risks such as interest rate, market and
credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in
the values of investment securities will occur in the near term and that
such changes could materially affect participants’ account balances and
the amounts reported in the Statement of Net Assets Available for
Benefits.
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ADMINISTRATIVE
COMMITTEE OF THE
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INTERFACE,
INC. SAVINGS AND
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INVESTMENT
PLAN
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Date: June
26, 2008
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By:
__/s/William G.
Reynolds____________________________________
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William
G. Reynolds, Member
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Exhibit No.
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Document
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23.1
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Consent
of Independent Registered Public Accounting
Firm
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Employer
Identification Number: 58-1451243
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Plan
Number: 002
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Form:
5500
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(b)
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(c)
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(e)
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Identity
of
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Description
of
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(d)
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Current
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(a)
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Issuer
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Investment
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Cost
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Value
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T.
Rowe Price Settlement Fund
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Uninvested
cash
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a | $ | 499 | |||||||
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Common
Collective Trusts:
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T.
Rowe Price Stable Value Fund
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16,564,594
units
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a | 16,564,594 | ||||||||
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Mutual
Funds:
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Ariel
Appreciation Fund
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73,416
shares
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a | 3,161,312 | |||||||||
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N&B
Socially Responsible Fund
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40,457
shares
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a | 1,077,377 | |||||||||
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Delaware
Select Growth Fund
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105,908
shares
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a | 3,201,610 | |||||||||
| * |
T.
Rowe Price Equity Index 500 Fund
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62,453
shares
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a | 2,458,168 | ||||||||
| * |
T.
Rowe Price Balanced Fund
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513,928
shares
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a | 10,586,925 | ||||||||
| * |
T.
Rowe Price Equity Income Fund
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520,253
shares
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a | 14,619,111 | ||||||||
| * |
T.
Rowe Price Spectrum Income Fund
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258,024
shares
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a | 3,150,476 | ||||||||
| * |
T.
Rowe Price Blue Chip Growth Fund
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294,793
shares
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a | 11,859,517 | ||||||||
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William
Blair Small Cap Growth Fund
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50,988
shares
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a | 1,188,021 | |||||||||
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Allianz
RCM Technology Admin
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18,161
shares
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a | 933,279 | |||||||||
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Invesco
Ret Trust Intl Equity
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53,397
shares
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a | 2,135,873 | |||||||||
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Retirement
Income Fund
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3,339
shares
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a | 44,413 | |||||||||
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Retirement
2005 Fund
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1,961
shares
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a | 23,117 | |||||||||
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Retirement
2010 Fund
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27,564
shares
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a
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446,813 | |||||||||
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Retirement
2015 Fund
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54,368
shares
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a | 687,756 | |||||||||
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Retirement
2020 Fund
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39,652
shares
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a | 703,434 | |||||||||
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Retirement
2025 Fund
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39,125
shares
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a | 515,667 | |||||||||
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Retirement
2030 Fund
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29,448
shares
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a | 560,977 | |||||||||
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Retirement
2035 Fund
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16,560
shares
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a | 223,721 | |||||||||
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Retirement
2040 Fund
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17,961
shares
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a | 344,843 | |||||||||
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Retirement
2045 Fund
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28,682
shares
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a | 365,119 | |||||||||
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Total
Mutual Funds
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58,287,529 | |||||||||||
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TradeLink
Investments – Self Directed Brokerage
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302,316
shares
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a | 302,316 | |||||||||
| * |
Interface,
Inc. Stock Fund – Employer Securities
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652,998
shares
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a | 10,656,920 | ||||||||
| * |
Participant
loans
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731
loans with interest rates ranging
between
5.00 to 9.50 percent
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- | 2,435,179 | ||||||||
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Total
Investments
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$ | 88,247,037 | ||||||||||