SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________
Form
10-K/A
Amendment
No. 1
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the Fiscal Year Ended December 28, 2008
Commission File No.:
0-12016
Interface, Inc.
(Exact
name of registrant as specified in its charter)
|
Georgia
|
|
58-1451243
|
|
(State
of incorporation)
|
|
(I.R.S.
Employer Identification No.)
|
|
|
|
|
|
2859
Paces Ferry Road, Suite 2000
|
|
|
|
Atlanta,
Georgia
|
|
30339
|
|
(Address
of principal executive offices)
|
|
(zip
code)
|
Registrant’s
telephone number, including area code: (770)
437-6800
Securities
Registered Pursuant to Section 12(b) of the Act:
|
Title of Each Class
|
|
Name of Each Exchange on Which
Registered:
|
|
Class
A Common Stock, $0.10 Par Value Per Share
|
|
Nasdaq
Global Select Market
|
|
Series
B Participating Cumulative Preferred Stock Purchase Rights
|
|
Nasdaq
Global Select Market
|
Securities
Registered Pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. YES o NO þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. YES o NO þ
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 þ NO o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. 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 a “smaller reporting company” in Rule 12b-2 of the
Securities Exchange Act of 1934. (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 þ
Aggregate
market value of the voting and non-voting stock held by non-affiliates of the
registrant as of June 27, 2008 (assuming conversion of Class B Common Stock into
Class A Common Stock): $740,422,014 (57,352,596 shares valued at the
last sales price of $12.91 on June 27, 2008). See Item 12.
Number of
shares outstanding of each of the registrant’s classes of Common Stock, as of
February 15, 2009:
|
Class
|
|
Number of Shares
|
|
|
Class
A Common Stock, $0.10 par value per share
|
|
|
56,434,559 |
|
|
Class
B Common Stock, $0.10 par value per share
|
|
|
6,766,885 |
|
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the Proxy Statement for the 2009 Annual Meeting of Shareholders are
incorporated by reference into Part III.
Explanatory
Note
We are
filing this Amendment No. 1 to our Annual Report on Form 10-K for the
fiscal year ended December 28, 2008, for the sole purpose of correcting a
typographical error contained in the “Backlog” section of Item 1 of Part I
– i.e., to correct to “$151.7 million” the amount previously incorrectly shown
as “$115.7 million”. Except for that correcting change and except for
restating the exhibits in Item 15 of Part IV for the sole purpose of
including new certifications in Exhibits 31 and 32 related hereto, this
Amendment does not modify or update the information in the original filing of
the Form 10-K or reflect events occurring after the filing of the original Form
10-K.
PART
I
ITEM
1. BUSINESS
Introduction
and General
We are a
worldwide leader in design, production and sales of modular carpet, and a
manufacturer, marketer and servicer of select other floorcovering products for
the commercial, institutional and residential markets. Our global market share
of the specified carpet tile segment is approximately 35%, which we believe is
more than double that of our nearest competitor. In recent years, modular carpet
sales growth in the floorcovering industry has significantly outpaced the growth
of the overall industry, as architects, designers and end users increasingly
recognized the unique and superior attributes of modular carpet, including its
dynamic design capabilities, greater economic value (which includes lower costs
as a result of reduced waste in both installation and replacement), and
installation ease and speed. Our Modular Carpet segment sales, which do not
include modular carpet sales in our Bentley Prince Street segment, grew from
$563.4 million to $946.8 million during the 2004 to 2008 period,
representing a 14% compound annual growth rate.
Our Bentley Prince Street® brand
is a leader in the high-end, designer-oriented sector of the broadloom market
segment, where custom design and high quality are the principal specifying and
purchasing factors.
As a
global company with a reputation for high quality, reliability and premium
positioning, we market products in over 110 countries under established brand
names such as InterfaceFLOR®,
Heuga®, Bentley Prince
Street and FLOR™
in modular carpet; Bentley
Prince Street and
Prince Street House and Home™ in broadloom carpet; and Intersept® in antimicrobial
chemicals. Our principal geographic markets are the Americas, Europe and
Asia-Pacific, where the percentages of our total net sales were approximately
55%, 34% and 11%, respectively, for fiscal year 2008.
Capitalizing on our
leadership in modular carpet for the corporate office segment, we embarked on a
market diversification strategy in 2001 to increase our presence and market
share for modular carpet in non-corporate office market segments, such as
government, healthcare, hospitality, education and retail space, which combined
are almost twice the size of the approximately $1 billion
U.S. corporate office segment. In 2003, we expanded our diversification
strategy to target the approximately $11 billion U.S. residential
market segment for carpet. As a result, our mix of corporate office versus
non-corporate office modular carpet sales in the Americas shifted to 45% and
55%, respectively, for 2008 compared with 64% and 36%, respectively, in 2001.
(Company-wide, our mix of corporate office versus non-corporate office sales was
60% and 40%, respectively, in 2008.) We believe the appeal and
utilization of modular carpet is growing in each of these non-corporate office
segments, and we are using our considerable skills and experience with
designing, producing and marketing modular products that make us the market
leader in the corporate office segment to support and facilitate our penetration
into these new segments around the world.
Our
modular carpet leadership, strong business model and market diversification
strategy, restructuring initiatives and sustained strategic investments in
innovative product concepts and designs enabled us to weather successfully the
unprecedented downturn, both in severity and duration, that affected the
commercial interiors industry from 2001 to 2003. As a result, we were
well-positioned to capitalize on improved market conditions when the commercial
interiors industry began to recover in 2004. From 2004 to 2008, we increased our
net sales from $695.3 million to $1,082.3 million, a 12% compound annual
growth rate.
In the
fourth quarter of 2008, and particularly in November and December, the worldwide
financial and credit crisis caused many corporations, governments and other
organizations to delay or curtail spending on renovation and construction
projects where our carpet is used. This downturn negatively impacted
our performance. In the fourth quarter of 2008, we announced a restructuring
plan pursuant to which we are ceasing manufacturing operations at our facility
in Canada and reducing our worldwide employee base by a total of approximately
530 employees in the areas of manufacturing, sales and
administration. The employee reductions amount to about 14% of our
worldwide workforce. The plan is intended to reduce costs across our
worldwide operations, and more closely align our operations with the decreased
demand levels that we began experiencing in the fourth quarter of
2008.
Our
Strengths
Our
principal competitive strengths include:
Market Leader in Attractive Modular
Carpet Segment. We
are the world’s leading manufacturer of carpet tile with a market share in the
specified carpet tile segment (the segment in which architects and designers are
heavily involved in “specifying”, or selecting, the carpet) of approximately
35%, which we believe is more than double that of our nearest competitor.
Modular carpet has become more prevalent across all commercial interiors markets
as designers, architects and end users have become more familiar with its unique
attributes. We continue to drive this trend with our product innovations and
designs discussed below. According to the 2008 Floor Focus interiors
industry survey of the top 250 designers in the United States, carpet tile was
ranked as the number one “hot product” for the seventh consecutive year. We
believe that we are well positioned to lead and capitalize upon the continued
shift to modular carpet, both domestically and around the world.
Established Brands and Reputation
for Quality, Reliability and Leadership. Our
products are known in the industry for their high quality, reliability and
premium positioning in the marketplace. Our established brand names in carpets
are leaders in the industry. The 2008 Floor Focus survey ranked
our InterfaceFLOR brand
first or second in each of the survey categories of quality, performance, value
and service. Interface companies also ranked first and third in the category of
“best overall business experience” for carpet companies in this survey. On the
international front, InterfaceFLOR and Heuga are well-recognized
brand names in carpet tiles for commercial, institutional and residential
use. More generally, as the appeal and utilization of modular
carpet continues to expand into new market segments such as education,
hospitality and retail space, our reputation as the pioneer of modular
carpet — as well as our established brands and leading market position for
modular carpet in the corporate office segment — will enhance our
competitive advantage in marketing to the customers in these new
markets.
Innovative Product Design and
Development Capabilities. Our
product design and development capabilities have long given us a significant
competitive advantage, and they continue to do so as modular carpet’s appeal and
utilization expand across virtually every market segment and around the globe.
One of our best design innovations is our i2™ modular product line,
which includes our popular
Entropy® product for which we received a patent in 2005 on the key
elements of its design. The
i2 line introduced and features mergeable dye lots, and includes carpet
tile products designed to be installed randomly without reference to the
orientation of neighboring tiles. The i2 line offers
cost-efficient installation and maintenance, interactive flexibility, and
recycled and recyclable materials. Our i2 line of products, which
now comprises more than 40% of our total U.S. modular carpet business,
represents a differentiated category of smart, environmentally sensitive and
stylish modular carpet, and
Entropy has become the fastest growing product in our history. The
award-winning design firm David Oakey Designs had a pivotal role in developing
our i2 product line,
and our long-standing exclusive relationship with David Oakey Designs remains
vibrant and augments our internal research, development and design staff.
Another recent innovation is our patent-pending TacTiles® carpet tile
installation system, which uses small squares of adhesive plastic film to
connect intersecting carpet tiles, thus eliminating the need for traditional
carpet adhesive and resulting in a reduction in installation time and waste
materials.
Made-to-Order and Global
Manufacturing Capabilities. The
success of our modernization and restructuring of operations over the past
several years gives us a distinct competitive advantage in meeting two principal
requirements of the specified products markets we primarily target — that
is, providing custom samples quickly and on-time delivery of customized final
products. We also can generate realistic digital samples that allow us to create
a virtually unlimited number of new design concepts and distribute them
instantly for customer review, while at the same time reducing sampling waste.
Approximately 75% to 80% of our modular carpet products in the United States and
Asia-Pacific markets are now made-to-order, and we are increasing our
made-to-order production in Europe as well. Our made-to-order capabilities not
only enhance our marketing and sales, they significantly improve our inventory
turns. Our global manufacturing capabilities in modular carpet production are an
important component of this strength, and give us an advantage in serving the
needs of multinational corporate customers that require products and services at
various locations around the world. Our manufacturing locations across four
continents enable us to compete effectively with local producers in our
international markets, while giving international customers more favorable
delivery times and freight costs.
Recognized Global Leadership in
Ecological Sustainability. Our
long-standing goal and commitment to be ecologically “sustainable” — that
is, the point at which we are no longer a net “taker” from the earth and do no
harm to the biosphere — has emerged as a competitive strength for our
business and remains a strategic initiative. It now includes Mission Zero™, our global
branding initiative, which represents our mission to eliminate any negative
impact our companies may have on the environment by the year 2020. Our
acknowledged leadership position and expertise in this area resonate deeply with
many of our customers and prospects around the globe, and provide us with a
differentiating advantage in competing for business among architects, designers
and end users of our products, who increasingly make purchase decisions based on
“green” factors. The 2008
Floor Focus survey, which named our InterfaceFLOR business the top among
“Green Leaders” and gave us the top honors for “Green Kudos”, found that 70% of
the designers surveyed consider sustainability an added benefit and 29% consider
it a “make or break” issue when deciding what products to recommend or
purchase.
Strong Operating Leverage
Position. Our
operating leverage, which we define as our ability to realize profit on
incremental sales, is strong and allows us to increase earnings at a higher rate
than our rate of increase in net sales. Our operating leverage position is
primarily a result of (1) the specified, high-end nature and premium
positioning of our principal products in the marketplace, and (2) the mix
of fixed and variable costs in our manufacturing processes that allow us to
increase production of most of our products without significant increases in
capital expenditures or fixed costs. For example, while net sales
from our Modular Carpet segment increased from $563.4 million in 2004 to
$946.8 million in 2008, our operating income (after $10.7 million
in restructuring charges in 2008) from that segment increased from
$63.9 million (11.3% of net sales) in 2003 to $109.3 million (11.5% of
net sales) in 2008.
Experienced and Motivated Management
and Sales Force. An
important component of our competitive position is the quality of our management
team and its commitment to developing and maintaining an engaged and accountable
workforce. Our team is highly skilled and dedicated to guiding our overall
growth and expansion into our targeted market segments, while maintaining our
leadership in traditional markets and our high contribution margins. We utilize
an internal marketing and predominantly commissioned sales force of
approximately 820 experienced personnel, stationed at over 70 locations in over
30 countries, to
market our products and services in person to our customers. We have also
developed special features for our incentive compensation and our sales and
marketing training programs in order to promote performance and facilitate
leadership by our executives in strategic areas.
Our
Business Strategy and Principal Initiatives
Our
business strategy is (1) to continue to use our leading position in the
Modular Carpet segment and our product design and global made-to-order
capabilities as a platform from which to drive acceptance of modular carpet
products across several industry segments, while maintaining our leadership
position in the corporate office market segment, and (2) to return to our
historical profit levels in the high-end, designer-oriented sector of the
broadloom carpet market. We will seek to increase revenues and profitability by
capitalizing on the above strengths and pursuing the following key strategic
initiatives:
Continue to Penetrate Non-Corporate
Office Market Segments. We will continue our strategic focus on
product design and marketing and sales efforts for non-corporate office market
segments such as government, education, healthcare, hospitality, retail and
residential space. We began this initiative as part of our market
diversification strategy in 2001 (when our initial objective was reducing our
exposure to the more severe economic cyclicality of the corporate office
segment), and it has become a principal strategy generally for growing our
business and enhancing profitability. We have shifted our mix of corporate
office versus non-corporate office modular carpet sales in the Americas to 45%
and 55%, respectively, for fiscal 2008 from 64% and 36%, respectively, in fiscal
2001. To implement this strategy, we:
|
·
|
introduced
specialized product offerings tailored to the unique demands of these
segments, including specific designs, functionalities and
prices;
|
|
·
|
created
special sales teams dedicated to penetrating these segments at a high
level, with a focus on specific customer accounts rather than geographic
territories; and
|
|
·
|
realigned
incentives for our corporate office segment sales force generally in order
to encourage their efforts, and where appropriate, to assist our
penetration of these other
segments.
|
As part
of this strategy, we launched our FLOR and Prince Street House and Home
lines of products in 2003 to focus on the approximately $11 billion
U.S. residential carpet market segment. These products were specifically
created to bring high style modular and broadloom floorcovering to the
U.S. residential market. FLOR is offered
by many specialty retailers, over the Internet and in a number of major retail
catalogs. Through such direct and indirect retailing, FLOR sales have grown over
four-fold from 2004 to 2008.
Prince Street House and Home brings new colors and patterns to the
high-end consumer market with a collection of broadloom carpet and rugs sold
through hundreds of retail stores and interior designers. Through agreements
between our FLOR brand
and both Martha Stewart Living Omnimedia and the national homebuilder KB Home,
we are further expanding our penetration of the U.S. residential market
with a line of Martha Stewart-branded carpet tiles. Through our Heuga Home division, we have been
increasing our marketing of modular carpet to the residential segment of
international soft floorcovering markets, the size of which we believe to be
approximately $2.3 billion in Western Europe alone.
Penetrate Expanding Geographic
Markets for Modular Products. The
popularity of modular carpet continues to increase compared with other
floorcovering products across most markets, internationally as well as in the
United States. While maintaining our leadership in the corporate office segment,
we will continue to build upon our position as the worldwide leader for modular
carpet in order to promote sales in all market segments globally. A principal
part of our international focus – which utilizes our global marketing
capabilities and sales infrastructure – is the significant opportunities in
several emerging geographic markets for modular carpet. Some of these markets,
such as China, India and Eastern Europe, represent large and growing economies
that are essentially new markets for modular carpet products. Others, such as
Germany, are established markets that are transitioning to the use of modular
carpet from historically low levels of penetration. Each of these emerging
markets represents a significant growth opportunity for our modular carpet
business. Our initiative to penetrate these markets will include drawing upon
our internationally recognized InterfaceFLOR and Heuga brands.
Continue to Minimize Expenses and
Invest Strategically. We have steadily trimmed costs from our
operations for several years through multiple and sometimes painful initiatives,
which have made us leaner today and for the future. Our supply chain and other
cost containment initiatives have improved our cost structure and yielded the
operating efficiencies we sought. While we still seek to minimize our expenses
in order to increase profitability, we will also take advantage of strategic
opportunities to invest in systems, processes and personnel that can help us
grow our business and increase profitability and value.
Sustain Leadership in Product Design
and Development. As
discussed above, our leadership position for product design and development is a
competitive advantage and key strength, especially in the Modular Carpet
segment, where our i2
products and recent
TacTiles installation system have confirmed our position as an innovation
leader. We will continue initiatives to sustain, augment and capitalize upon
that strength to continue to increase our market share in targeted market
segments. Our Mission
Zero global branding initiative, which draws upon and promotes our
ecological sustainability commitment, is part of those initiatives and includes
placing our Mission
Zero logo on many of our marketing and merchandising materials
distributed throughout the world.
Use Strong Free Cash Flow Generation
to De-leverage Our Balance Sheet. Our principal businesses
have been structured – including through our rationalization and
repositioning initiatives over the past seven years – to yield high contribution
margins and generate strong free cash flow (by which we mean cash available to
apply towards debt service). Our historical investments in global manufacturing
capabilities and mass customization techniques and facilities, which we have
maintained, also contribute to our ability to generate substantial levels of
free cash flow. We will use our strong free cash flow generation capability to
continue to repay debt and strengthen our financial position. We will also
continue to execute programs to reduce costs further and enhance free cash
flow. In addition, our existing capacity to increase production
levels without significant capital expenditures will further enhance our
generation of free cash flow if and when demand for our products
rises.
Floorcovering
Products and Services
Interface
is the world’s largest manufacturer and marketer of modular carpet, with a
global specified carpet tile market share that we believe is approximately 35%.
We also manufacture and sell broadloom carpet, which generally consists of
tufted carpet sold primarily in twelve-foot rolls, under the Bentley Prince Street brand.
Our broadloom operations focus on the high quality, designer-oriented sector of
the U.S. broadloom carpet market and select international
markets.
Modular
Carpet.
Our
modular carpet system, which is marketed under the established global
brands InterfaceFLOR
and Heuga, and more
recently under the Bentley
Prince Street brand, utilizes carpet tiles cut in precise, dimensionally
stable squares (usually 50 cm x 50 cm) or rectangles to produce a
floorcovering that combines the appearance and texture of traditional soft
floorcovering with the advantages of a modular carpet system. Our GlasBac® technology
employs a fiberglass-reinforced polymeric composite backing that provides
dimensional stability and reduces the need for adhesives or fasteners. We also
make carpet tiles with a backing containing post-industrial and/or post-consumer
recycled materials, which we market under the GlasBacRE brand. In
2008, we introduced the Convert™ collection of
carpet tile designed and manufactured with yarn containing varying degrees of
post-consumer nylon, depending on the style and color.
Our
carpet tile has become popular for a number of reasons. Carpet tile
incorporating this reinforced backing may be easily removed and replaced,
permitting rearrangement of furniture without the inconvenience and expense
associated with removing, replacing or repairing other soft surface flooring
products, including broadloom carpeting. Because a relatively small portion of a
carpet installation often receives the bulk of traffic and wear, the ability to
rotate carpet tiles between high traffic and low traffic areas and to
selectively replace worn tiles can significantly increase the average life and
cost efficiency of the floorcovering. In addition, carpet tile facilitates
access to sub-floor air delivery systems and telephone, electrical, computer and
other wiring by lessening disruption of operations. It also eliminates the
cumulative damage and unsightly appearance commonly associated with frequent
cutting of conventional carpet as utility connections and disconnections are
made. We believe that, within the overall floorcovering market, the worldwide
demand for modular carpet is increasing as more customers recognize these
advantages.
We use a
number of conventional and technologically advanced methods of carpet
construction to produce carpet tiles in a wide variety of colors, patterns,
textures, pile heights and densities. These varieties are designed to meet both
the practical and aesthetic needs of a broad spectrum of commercial
interiors – particularly offices, healthcare facilities, airports,
educational and other institutions, hospitality spaces, and retail
facilities – and residential interiors. Our carpet tile systems permit
distinctive styling and patterning that can be used to complement interior
designs, to set off areas for particular purposes and to convey graphic
information. While we continue to manufacture and sell a substantial portion of
our carpet tile in standard styles, an increasing percentage of our modular
carpet sales is custom or made-to-order product designed to meet customer
specifications.
In
addition to general uses of our carpet tile, we produce and sell a specially
adapted version of our carpet tile for the healthcare facilities market. Our
carpet tile possesses characteristics — such as the use of the Intersept antimicrobial,
static-controlling nylon yarns, and thermally pigmented, colorfast yarns —
which make it suitable for use in these facilities in place of hard surface
flooring. Moreover, we launched our FLOR line of products to
specifically target modular carpet sales to the residential market segment.
Through our relationship with David Oakey Designs, we also have created modular
carpet products (some of which are part of our i2 product line)
specifically designed for each of the education, hospitality and retail market
segment.
We also
manufacture and sell two-meter roll goods that are structure-backed and offer
many of the advantages of both carpet tile and broadloom carpet. These roll
goods are often used in conjunction with carpet tiles to create special design
effects. Our current principal customers for these products are in the
education, healthcare and government market segments.
Broadloom
Carpet.
We
maintain a significant share of the high-end, designer-oriented broadloom carpet
segment by combining innovative product design and short production and delivery
times with a marketing strategy aimed at interior designers, architects and
other specifiers. Our Bentley
Prince Street designs emphasize the dramatic use of color and
multi-dimensional texture. In addition, we have launched the Prince Street House and Home
collection of high-style broadloom carpet and area rugs targeted at
design-oriented residential consumers. We received the 2007 Best of NeoCon
Silver Award in the modular category for the Saturnia™ Collection, which is made up
of carpet tile and broadloom products.
Other Products.
We sell a
proprietary antimicrobial chemical compound under the registered trademark Intersept. We
incorporate Intersept
in all of our modular carpet products and have licensed Intersept to another company
for use in air filters. We also sell our TacTiles carpet tile
installation system, along with a variety of traditional adhesives and products
for carpet installation and maintenance that are manufactured by a third party.
In addition, we continue to manufacture and sell our Intercell® brand
raised/access flooring product in Europe.
Services
For
several years, we provided or arranged for commercial carpet installation
services, primarily through our Re:Source® service provider network.
During the years leading up to 2004, our owned Re:Source dealer businesses
experienced decreased sales volume and intense pricing pressure, primarily due
to the economic downturn in the commercial interiors industry. As a result, we
decided to exit our owned
Re:Source dealer businesses, and in 2005 we completed the exit activities
related to the owned dealer businesses. In early 2006, we sold certain assets
relating to our aligned non-owned dealer network, and have since discontinued
its operations as well. We continue to provide “turnkey” project
management services for national accounts and other large customers through our
InterfaceSERVICES™ business. For
each of the past three years, this business represented less than 5% of our
consolidated net sales.
Marketing
and Sales
We have
traditionally focused our carpet marketing strategy on major accounts, seeking
to build lasting relationships with national and multinational end-users, and on
architects, engineers, interior designers, contracting firms, and other
specifiers who often make or significantly influence purchasing decisions. While
most of our sales are in the corporate office segment, both new construction and
renovation, we also emphasize sales in other segments, including retail space,
government institutions, schools, healthcare facilities, tenant improvement
space, hospitality centers, residences and home office space. Our marketing
efforts are enhanced by the established and well-known brand names of our carpet
products, including the
InterfaceFLOR, FLOR and
Heuga brands in modular carpet and Bentley Prince Street brand
in broadloom carpet. Our exclusive consulting agreement with the award-winning,
premier design firm David Oakey Designs enabled us to introduce more than 38 new
carpet designs in the United States in 2008 alone.
An
important part of our marketing and sales efforts involves the preparation of
custom-made samples of requested carpet designs, in conjunction with the
development of innovative product designs and styles to meet the customer’s
particular needs. Our mass customization initiative simplified our carpet
manufacturing operations, which significantly improved our ability to respond
quickly and efficiently to requests for samples. In most cases, we can produce
samples to customer specifications in less than five days, which significantly
enhances our marketing and sales efforts and has increased our volume of higher
margin custom or made-to-order sales. In addition, through our websites, we have
made it easy to view and request samples of our products. We also have
technology which allows us to provide digital, simulated samples of our
products, which helps reduce raw material and energy consumption associated with
our samples.
We
primarily use our internal marketing and sales force to market our carpet
products. In order to implement our global marketing efforts, we have product
showrooms or design studios in the United States, Canada, Mexico, Brazil,
Denmark, England, Northern Ireland, France, Germany, Spain, Belgium, the
Netherlands, India, Australia, Japan, Italy, Norway, United Arab Emirates,
Russia, Singapore, Hong Kong and China. We expect to open offices in other
locations around the world as necessary to capitalize on emerging marketing
opportunities.
Manufacturing
We
manufacture carpet at three locations in the United States and at facilities in
the Netherlands, the United Kingdom, Australia and Thailand. Pursuant
to our restructuring plan adopted in the fourth quarter of 2008, we are ceasing
manufacturing operations at our facility in Canada.
Having
foreign manufacturing operations enables us to supply our customers with carpet
from the location offering the most advantageous delivery times, duties and
tariffs, exchange rates, and freight expense, and enhances our ability to
develop a strong local presence in foreign markets. We believe that the ability
to offer consistent products and services on a worldwide basis at attractive
prices is an important competitive advantage in servicing multinational
customers seeking global supply relationships. We will consider additional
locations for manufacturing operations in other parts of the world as necessary
to meet the demands of customers in international markets.
We are in
the process of further standardizing our worldwide modular carpet manufacturing
procedures. In connection with the implementation of this plan, we are seeking
to establish global standards for our tufting equipment, yarn systems and
product styling. We previously had changed our standard carpet tile size to be
50 cm x 50 cm, which we believe has allowed us to reduce operational waste
and fossil fuel energy consumption and to offer consistent product sizing for
our global customers.
We also
implemented a new, flexible-inputs carpet backing line at our modular carpet
manufacturing facility in LaGrange, Georgia. Using next generation thermoplastic
technology, the custom-designed backing line dramatically improves our ability
to keep reclaimed and waste carpet in the production “technical loop,” and
further permits us to explore other plastics and polymers as inputs. This new
process, which we call “Cool
Blue™”, came on line for production of certain carpet styles in late
2005. In 2007, we implemented new technology that more cleanly
separates the face fiber and backing of reclaimed and waste carpet, thus making
it easier to recycle some of its components and providing a purer supply of
inputs for the Cool
Blue process. This technology, which is part of our ReEntry®2.0 carpet reclamation
program, allows us to send some of the reclaimed face fiber back to our fiber
supplier to be blended with virgin or other post-industrial materials and
extruded into new fiber.
The
environmental management systems of our floorcovering manufacturing facilities
in LaGrange, Georgia, West Point, Georgia, City of Industry, California, Shelf,
England, Northern Ireland, Australia, the Netherlands and Thailand are certified
under International Standards Organization (ISO) Standard
No. 14001.
Our
significant international operations are subject to various political, economic
and other uncertainties, including risks of restrictive taxation policies,
foreign exchange restrictions, changing political conditions and governmental
regulations. We also receive a substantial portion of our revenues in currencies
other than U.S. dollars, which makes us subject to the risks inherent in
currency translations. Although our ability to manufacture and ship products
from facilities in several foreign countries reduces the risks of foreign
currency fluctuations we might otherwise experience, we also engage from time to
time in hedging programs intended to further reduce those risks.
Competition
We
compete, on a global basis, in the sale of our floorcovering products with other
carpet manufacturers and manufacturers of vinyl and other types of
floorcoverings. Although the industry has experienced significant consolidation,
a large number of manufacturers remain in the industry. We believe we are the
largest manufacturer of modular carpet in the world, possessing a global market
share that we believe is approximately twice that of our nearest competitor.
However, a number of domestic and foreign competitors manufacture modular carpet
as one segment of their business, and some of these competitors have financial
resources greater than ours. In addition, some of the competing carpet
manufacturers have the ability to extrude at least some of their requirements
for fiber used in carpet products, which decreases their dependence on third
party suppliers of fiber.
We
believe the principal competitive factors in our primary floorcovering markets
are brand recognition, quality, design, service, broad product lines, product
performance, marketing strategy and pricing. In the corporate office market
segment, modular carpet competes with various floorcoverings, of which broadloom
carpet is the most common. The quality, service, design, better and longer
average product performance, flexibility (design options, selective rotation or
replacement, use in combination with roll goods) and convenience of our modular
carpet are our principal competitive advantages.
We
believe we have competitive advantages in several other areas as well. First,
our exclusive relationship with David Oakey Designs allows us to introduce
numerous innovative and attractive floorcovering products to our customers.
Additionally, we believe that our global manufacturing capabilities are an
important competitive advantage in serving the needs of multinational corporate
customers. We believe that the incorporation of the Intersept antimicrobial
chemical agent into the backing of our modular carpet enhances our ability to
compete successfully across all of our market segments generally, and
specifically with resilient tile in the healthcare market.
In
addition, we believe that our goal and commitment to be ecologically
“sustainable” by 2020 is a brand-enhancing, competitive strength as well as
a strategic initiative. Increasingly, our customers are concerned about the
environmental and broader ecological implications of their operations and the
products they use in them. Our leadership, knowledge and expertise in the area,
especially in the “green building” movement and the related LEED certification
program, resonate deeply with many of our customers and prospects around the
globe, and these businesses are increasingly making purchase decisions based on
“green” factors. Our modular carpet products historically have had inherent
installation and maintenance advantages that translated into greater efficiency
and waste reduction. We have further enhanced the “green” quality of our modular
carpet in our highly successful i2 product line, and we are
using raw materials and production technologies, such as our Cool Blue and our ReEntry 2.0 reclaimed carpet
separation processes, that directly reduce the adverse impact of those
operations on the environment and limit our dependence on
petrochemicals.
To
further raise awareness of our goal of becoming sustainable, we launched our
Mission Zero global
branding initiative, which represents our mission to eliminate any negative
impact our companies may have on the environment by the year 2020. As part of
this initiative, our Mission
Zero logo appears on many of our marketing and merchandising materials
distributed throughout the world. To further our Misson Zero goals, we
partnered with other like-minded organizations to launch the website
missionzero.org in 2008 to facilitate the sharing of ideas, best practices and
resources in the area of sustainability.
Interior
Fabrics
During
the years leading up to 2007, we decided to focus on leveraging the
opportunities within our core modular carpet and Bentley Prince Street
divisions, which have delivered consistently strong performance. In
July 2007, we sold our Fabrics Group business segment to a third
party. This business designs, manufactures and markets specialty
fabrics for open plan office furniture systems and other commercial
interiors. In April 2006, we sold our European fabrics business to an
entity formed by the business’s management team. Current and prior
periods have been restated to include the results of operations and related
disposal costs, gains and losses for these businesses as discontinued
operations. In addition, assets and liabilities of these businesses
have been reported in assets and liabilities held for sale for all reported
periods.
Specialty
Products
In March
2007, we sold Pandel, Inc., our subsidiary that historically conducted our
Specialty Products business segment. Pandel produces vinyl carpet
tile backing and specialty mat and foam products.
Product
Design, Research and Development
We
maintain an active research, development and design staff of approximately 70
people and also draw on the research and development efforts of our suppliers,
particularly in the areas of fibers, yarns and modular carpet backing materials.
Our research and development costs were $15.3 million, $15.8 million and $13.6
million in 2008, 2007, and 2006, respectively.
Our
research and development team provides technical support and advanced materials
research and development for the entire family of Interface companies. The team
assisted in the development of our NexStep® backing, which
employs moisture-impervious polycarbite precoating technology with a
chlorine-free urethane foam secondary backing, and also helped develop a
post-consumer recycled content, polyvinyl chloride, or PVC, extruded sheet
process that has been incorporated into our GlasBacRE modular carpet
backing. Our post-consumer recycled content PVC extruded sheet exemplifies our
commitment to “closing-the-loop” in recycling. More recently, this
team developed our patent-pending TacTiles carpet tile
installation system, which uses small squares of adhesive plastic film to
connect intersecting carpet tiles. The team also helped implement our Cool Blue flexible inputs
backing line and our ReEntry
2.0 reclaimed carpet separation technology and post-consumer recycling
technology for nylon face fibers. With a goal of supporting
sustainable product designs in floorcoverings applications, we continue to
evaluate 100% renewable polymers based on corn-derived polylactic acid (PLA) for
use in our products.
Our
research and development team also is the coordinator of our QUEST and EcoSense
initiatives (discussed below under “Environmental Initiatives”) and supports the
dissemination, consultancies and technical communication of our global
sustainability endeavors. This team also provides all biochemical and technical
support to Intersept
antimicrobial chemical product initiatives.
Innovation
and increased customization in product design and styling are the principal
focus of our product development efforts. Our carpet design and development team
is recognized as an industry leader in carpet design and product engineering for
the commercial and institutional markets.
David
Oakey Designs provides carpet design and consulting services to our
floorcovering businesses pursuant to a consulting agreement with
us. David Oakey Designs’ services under the agreement include
creating commercial carpet designs for use by our floorcovering businesses
throughout the world, and overseeing product development, design and coloration
functions for our modular carpet business in North America. The current
agreement runs through April 2011. While the agreement is in effect, David Oakey
Designs cannot provide similar services to any other carpet company. Through our
relationship with David Oakey Designs, we introduced more than 38 new carpet
designs in 2008 alone, and have enjoyed considerable success in winning
U.S. carpet industry awards.
David
Oakey Designs also contributed to our implementation of the product development
concept — “simple inputs, pretty outputs” — resulting in the ability
to efficiently produce many products from a single yarn system. Our mass
customization production approach evolved, in major part, from this concept. In
addition to increasing the number and variety of product designs, which enables
us to increase high margin custom sales, the mass customization approach
increases inventory turns and reduces inventory levels (for both raw materials
and standard products) and their related costs because of our more rapid and
flexible production capabilities.
More
recently, our i2
product line — which includes, among others, our patented Entropy modular carpet
product — represents an innovative breakthrough in the design of modular
carpet. The i2 line
introduced and features mergeable dye lots, cost-efficient installation and
maintenance, interactive flexibility and recycled and recyclable materials. Some
of these products may be installed without regard to the directional orientation
of the carpet tile, and their features also make installation, maintenance and
replacement of modular carpet easier, less expensive and less
wasteful.
Bentley
Prince Street received the 2007 Best of NeoCon Silver Award in the modular
category for our Saturnia
Collection, which is made up of carpet tile and broadloom
products.
Environmental
Initiatives
In the
latter part of 1994, we commenced a new industrial ecological sustainability
initiative called EcoSense, inspired in part by the interest of customers
concerned about the environmental implications of how they and their suppliers
do business. EcoSense, which includes our QUEST waste reduction initiative, is
directed towards the elimination of energy and raw materials waste in our
businesses, and, on a broader and more long-term scale, the practical
reclamation — and ultimate restoration — of shared environmental
resources. The initiative involves a commitment by us:
|
|
•
|
to
learn to meet our raw material and energy needs through recycling of
carpet and other petrochemical products and harnessing benign energy
sources; and
|
|
|
|
|
|
|
•
|
to
pursue the creation of new processes to help sustain the earth’s
non-renewable natural resources.
|
We have
engaged some of the world’s leading authorities on global ecology as
environmental advisors. The list of advisors includes: Paul Hawken, author
of The Ecology of Commerce: A
Declaration of Sustainability and The Next Economy, and
co-author with Amory Lovins and Hunter Lovins of Natural Capitalism: Creating the
Next Industrial Revolution; Mr. Lovins, energy consultant and
co-founder of the Rocky Mountain Institute; John Picard, President of E2
Environmental Enterprises; Jonathan Porritt, director of Forum for the Future;
Bill Browning, fellow and former director of the Rocky Mountain Institute’s
Green Development Services; Dr. Karl-Henrik Robert, founder of The Natural
Step; Janine M. Benyus, author of Biomimicry; Walter Stahel,
Swiss businessman and seminal thinker on environmentally responsible commerce;
and Bob Fox, renowned architect.
Our
leadership, knowledge and expertise in this area, especially in the “green
building” movement and the related LEED certification program, resonate deeply
with many of our customers and prospects around the globe, and these businesses
are increasingly making purchase decisions based on “green” factors. As more
customers in our target markets share our view that sustainability is good
business and not just good deeds, our acknowledged leadership position should
strengthen our brands and provide a differentiated advantage in competing for
business.
In 2006,
we launched InterfaceRAISE™, our consulting business
that helps clients imagine, plan and execute new ways of advancing business
goals while responding to the needs of society and the
environment. The operations of this business are not a significant
percentage of our consolidated operations.
Backlog
Our
backlog of unshipped orders (excluding discontinued operations) was
approximately $103.1 million at February 15, 2009, compared with approximately
$151.7 million at February 17, 2008. Historically, backlog is subject to
significant fluctuations due to the timing of orders for individual large
projects and currency fluctuations. All of the backlog orders at February 15,
2009 are expected to be shipped during the succeeding six to nine
months.
Patents
and Trademarks
We own
numerous patents in the United States and abroad on floorcovering and
raised/access flooring products, on manufacturing processes and on the use of
our Intersept
antimicrobial chemical agent in various products. The duration of United States
patents is between 14 and 20 years from the date of filing of a patent
application or issuance of the patent; the duration of patents issued in other
countries varies from country to country. We maintain an active patent and trade
secret program in order to protect our proprietary technology, know-how and
trade secrets. Although we consider our patents to be very valuable
assets, we consider our know-how and technology even more important to our
current business than patents, and, accordingly, believe that expiration of
existing patents or nonissuance of patents under pending applications would not
have a material adverse effect on our operations.
We also
own many trademarks in the United States and abroad. In addition to the United
States, the primary countries in which we have registered our trademarks are the
United Kingdom, Germany, Italy, France, Canada, Australia, Japan, and various
countries in Central and South America. Some of our more prominent registered
trademarks include:
Interface®, InterfaceFLOR, Heuga, Intersept, GlasBac, Bentley Prince Street, Intercell, and Mission Zero. Trademark
registrations in the United States are valid for a period of 10 years and
are renewable for additional 10-year periods as long as the mark remains in
actual use. The duration of trademarks registered in other countries varies from
country to country.
Financial
Information by Operating Segments and Geographic Areas
The Notes
to Consolidated Financial Statements appearing in Item 8 of this Report set
forth information concerning our sales, income and assets by operating segments,
and our sales and long-lived assets by geographic areas. Additional information
regarding sales by operating segment is set forth in Item 7, “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.”
Employees
At
December 28, 2008, we employed a total of 3,673 employees worldwide. Of such
employees, 1,931 were clerical, staff, sales, supervisory and management
personnel and 1,742 were manufacturing personnel. We also utilized the services
of 126 temporary personnel as of December 28, 2008.
Some of
our production employees in Australia and the United Kingdom are represented by
unions. In the Netherlands, a Works Council, the members of which are Interface
employees, is required to be consulted by management with respect to certain
matters relating to our operations in that country, such as a change in control
of Interface Europe B.V. (our modular carpet subsidiary based in the
Netherlands), and the approval of the Council is required for some of our
actions, including changes in compensation scales or employee benefits. Our
management believes that its relations with the Works Council, the unions and
all of our employees are good.
Environmental
Matters
Our
operations are subject to laws and regulations relating to the generation,
storage, handling, emission, transportation and discharge of materials into the
environment. The costs of complying with environmental protection laws and
regulations have not had a material adverse impact on our financial condition or
results of operations in the past and are not expected to have a material
adverse impact in the future. The environmental management systems of our
floorcovering manufacturing facilities in LaGrange, Georgia, West Point,
Georgia, City of Industry, California, Shelf, England, Northern Ireland,
Australia, the Netherlands, Canada and Thailand are certified under ISO Standard
No. 14001.
Executive
Officers of the Registrant
Our
executive officers, their ages as of December 28, 2008, and their principal
positions with us are set forth below. Executive officers serve at the pleasure
of the Board of Directors.
|
Name
|
|
Age
|
|
Principal Position(s)
|
|
Daniel
T. Hendrix
|
|
54
|
|
President
and Chief Executive Officer
|
|
Robert
A. Coombs
|
|
50
|
|
Senior
Vice President
|
|
Patrick
C. Lynch
|
|
39
|
|
Senior
Vice President and Chief Financial Officer
|
|
Lindsey
K. Parnell
|
|
51
|
|
Senior
Vice President
|
|
John
R. Wells
|
|
47
|
|
Senior
Vice President
|
|
Raymond
S. Willoch
|
|
50
|
|
Senior
Vice President-Administration, General Counsel and
Secretary
|
Mr. Hendrix
joined us in 1983 after having worked previously for a national accounting firm.
He was promoted to Treasurer in 1984, Chief Financial Officer in 1985, Vice
President-Finance in 1986, Senior Vice President in October 1995, Executive Vice
President in October 2000, and President and Chief Executive Officer in July
2001. He was elected to the Board in October 1996 and has served on the
Executive Committee of the Board since July 2001.
Mr. Coombs
originally worked for us from 1988 to 1993 as a marketing manager for our Heuga carpet tile operations
in the United Kingdom and later for all of our European floorcovering
operations. In 1996, Mr. Coombs returned to us as Managing Director of our
Australian operations. He was promoted in 1998 to Vice President-Sales and
Marketing, Asia-Pacific, with responsibility for Australian operations and sales
and marketing in Asia, which was followed by a promotion to Senior Vice
President, Asia-Pacific. He was promoted to Senior Vice President, European
Sales, in May 1999 and Senior Vice President, European Sales and Marketing, in
April 2000. In February 2001, he was promoted to President and Chief Executive
Officer of Interface Overseas Holdings, Inc. with responsibility for all of our
floorcoverings operations in both Europe and the Asia-Pacific region, and he
became a Vice President of Interface. In September 2002, Mr. Coombs
relocated back to Australia, retaining responsibility for our floorcovering
operations in the Asia-Pacific region while Mr. Parnell (see below) assumed
responsibility for floorcovering operations in Europe. Mr. Coombs was
promoted to Senior Vice President of Interface in July 2008.
Mr. Lynch
joined us in 1996 after having previously worked for a national accounting firm.
He became Assistant Corporate Controller in 1998 and Assistant Vice President
and Corporate Controller in 2000. Mr. Lynch was promoted to Vice President
and Chief Financial Officer in July 2001. Mr. Lynch was promoted to
Senior Vice President in March 2007.
Mr. Parnell
was the Production Director for Firth Carpets (our former European broadloom
operations) at the time it was acquired by us in 1997. In 1998, Mr. Parnell
was promoted to Vice President, Operations for the United Kingdom, and in 1999
he was promoted to Senior Vice President, Operations for our entire European
floorcovering division. In September 2002, he was promoted to President and
Chief Executive Officer of our floorcovering operations in Europe, and became a
Vice President of Interface in October 2002. Mr. Parnell was promoted
to Senior Vice President of Interface in July 2008.
Mr. Wells
joined us in February 1994 as Vice President-Sales of Interface Flooring
Systems, Inc. (now InterfaceFLOR, LLC), our principal U.S. modular carpet
subsidiary. Mr. Wells was promoted to Senior Vice
President-Sales & Marketing of Interface Flooring Systems in October
1994. He was promoted to Vice President of Interface and President of Interface
Flooring Systems in July 1995. In March 1998, Mr. Wells was also named
President of both Prince Street Technologies, Ltd. and Bentley Mills, Inc.,
making him President of all three of our U.S. carpet mills at that time. In
November 1999, Mr. Wells was named Senior Vice President of Interface, and
President and Chief Executive Officer of Interface Americas Holdings, LLC
(formerly Interface Americas, Inc.), thereby assuming operations responsibility
for all of our floorcovering businesses in the Americas.
Mr. Willoch,
who previously practiced with an Atlanta law firm, joined us in June 1990 as
Corporate Counsel. He was promoted to Assistant Secretary in 1991, Assistant
Vice President in 1993, Vice President in January 1996, Secretary and General
Counsel in August 1996, and Senior Vice President in February 1998. In July
2001, he was named Senior Vice President-Administration and assumed corporate
responsibility for various staff functions.
Available
Information
We make
available free of charge on or through our Internet website our annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the
SEC. Our Internet address is http://www.interfaceglobal.com.
Forward-Looking
Statements
This
report on Form 10-K contains “forward-looking statements” within the meaning of
the Securities Act of 1933, and the Securities Exchange Act of 1934, and the
Private Securities Litigation Reform Act of 1995. Words such as
“believes,” “anticipates,” “plans,” “expects” and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements include statements regarding the intent, belief or current
expectations of our management team, as well as the assumptions on which such
statements are based. Any forward-looking statements are not guarantees of
future performance and involve a number of risks and uncertainties that could
cause actual results to differ materially from those contemplated by such
forward-looking statements. We undertake 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.
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 in Item 1A, “Risk
Factors”.
PART
IV
ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The
following exhibits are included as part of 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 and
filed on March 17, 2008, previously filed with the Commission and
incorporated herein by reference).
|
|
3.2
|
—
|
Bylaws,
as amended and restated (included as Exhibit 3.1 to the Company’s
quarterly report on Form 10-Q for the quarter ended September 30,
2007, previously filed with the Commission and incorporated herein by
reference).
|
|
4.1
|
—
|
See
Exhibits 3.1 and 3.2 for provisions in the Company’s Articles of
Incorporation and Bylaws defining the rights of holders of Common Stock of
the Company.
|
|
4.2
|
—
|
Rights
Agreement dated March 7, 2008 and effective as of March 17, 2008 between
the Company and Computershare Trust Company, N.A. (included as Exhibit 4.1
to the Company’s current report on Form 8-K dated March 7, 2008 and filed
on March 7, 2008, previously filed with the Commission and incorporated
herein by reference).
|
|
4.3
|
—
|
Indenture
governing the Company’s 10.375% Senior Notes due 2010, among the Company,
certain U.S. subsidiaries of the Company, as Guarantors, and First Union
National Bank, as Trustee (the “2002 Indenture”) (included as Exhibit 4.5
to the Company’s annual report on Form 10-K for the year ended December
30, 2001 (the “2001 10-K”), previously filed with the Commission and
incorporated herein by reference); Supplemental Indenture related to the
2002 Indenture, dated as of December 31, 2002 (included as Exhibit 4.5 to
the Company’s annual report on Form 10-K for the year ended December 29,
2002 (the “2002 10-K”), previously filed with the Commission and
incorporated herein by reference); Second Supplemental Indenture related
to the 2002 Indenture, dated as of June 18, 2003 (included as Exhibit 4.3
to the Company’s quarterly report on Form 10-Q for the quarter ended June
29, 2003 (the “2003 Second Quarter 10-Q”), previously filed with the
Commission and incorporated herein by reference); and Third Supplemental
Indenture related to the 2002 Indenture, dated as of January 10, 2005
(included as Exhibit 99.2 to the Company’s current report on Form 8-K
dated February 15, 2005 and filed on February 16, 2005, previously filed
with the Commission and incorporated herein by
reference).
|
|
4.4
|
—
|
Indenture
governing the Company’s 9.5% Senior Subordinated Notes due 2014, dated as
of February 4, 2004, among the Company, certain U.S. subsidiaries of
the Company, as guarantors, and SunTrust Bank, as Trustee (the “2004
Indenture”) (included as Exhibit 4.6 to the Company’s annual report on
Form 10-K for the year ended December 28, 2003 (the “2003 10-K”),
previously filed with the Commission and incorporated herein by
reference); and First Supplemental Indenture related to the 2004
Indenture, dated as of January 10, 2005 (included as Exhibit 99.3 to the
Company’s current report on Form 8-K dated February 15, 2005 and filed on
February 16, 2005, previously filed with the Commission and incorporated
herein by reference).
|
|
10.1
|
—
|
Salary
Continuation Plan, dated May 7, 1982 (included as Exhibit 10.20 to the
Company’s registration statement on Form S-1, File No. 2-82188, previously
filed with the Commission and incorporated herein by
reference).*
|
|
10.2
|
—
|
Salary
Continuation Agreement, dated as of October 1, 2002, between the Company
and Ray C. Anderson (included as Exhibit 10.3 to the Company’s quarterly
report on Form 10-Q for the quarter ended September 29, 2002 (the “2002
Third Quarter 10-Q”), previously filed with the Commission and
incorporated herein by reference); and Amendment thereto dated September
29, 2006 (included as Exhibit 99.1 to the Company’s current report on Form
8-K dated September 29, 2006 and filed on October 2, 2006, previously
filed with the Commission and incorporated herein by
reference).*
|
|
10.3
|
—
|
Form
of Salary Continuation Agreement, dated as of January 1, 2008 (as used for
Daniel T. Hendrix, Raymond S. Willoch and John R. Wells) (included as
Exhibit 99.5 to the Company’s current report on Form 8-K dated January 2,
2008 and filed on January 7, 2008, previously filed with the Commission
and incorporated herein by reference).*
|
|
10.4
|
—
|
Interface,
Inc. Omnibus Stock Incentive Plan (as amended and restated effective
February 22, 2006) (included as Exhibit 99.1 to the Company’s current
report on Form 8-K dated May 18, 2006 and filed on May 23, 2006,
previously filed with the Commission and incorporated herein by
reference); Forms of Restricted Stock Agreement, as used for directors,
executive officers and other key employees/consultants (included as
Exhibits 99.1, 99.2 and 99.3, respectively, to the Company’s current
report on Form 8-K dated January 10, 2005 and filed on January 14, 2005,
previously filed with the Commission and incorporated herein by
reference); and Form of Restricted Stock Agreement, as used for executive
officers (included as Exhibit 10.5 to the Company’s annual report on Form
10-K for the year ended December 30, 2007, previously filed with the
Commission and incorporated herein by reference).*
|
|
10.5
|
—
|
Interface,
Inc. Executive Bonus Plan, adopted on February 18, 2004 (included as
Exhibit 99.1 to the Company’s current report on Form 8-K dated December
15, 2004 and filed on March 2, 2005, previously filed with the Commission
and incorporated herein by reference).*
|
|
10.6
|
—
|
Interface,
Inc. Nonqualified Savings Plan (as amended and restated effective January
1, 2002) (included as Exhibit 10.4 to the 2001 10-K, previously filed with
the Commission and incorporated herein by reference); First Amendment
thereto, dated as of December 20, 2002 (included as Exhibit 10.2 to the
2003 Second Quarter 10-Q, previously filed with the Commission and
incorporated herein by reference); Second Amendment thereto, dated as of
December 30, 2002 (included as Exhibit 10.3 to the 2003 Second Quarter
10-Q, previously filed with the Commission and incorporated herein by
reference); Third Amendment thereto, dated as of May 8, 2003 (included as
Exhibit 10.6 to the 2003 10-K, previously filed with the Commission and
incorporated herein by reference); and Fourth Amendment thereto, dated as
of December 31, 2003 (included as Exhibit 10.7 to the 2003 10-K,
previously filed with the Commission and incorporated herein by
reference).*
|
|
10.7
|
—
|
Interface,
Inc. Nonqualified Savings Plan II, dated as of January 1, 2005 (included
as Exhibit 4 to the Company’s registration statement on Form S-8
dated November 29, 2004, File No. 333-120813, previously filed with the
Commission and incorporated herein by reference); First Amendment thereto,
dated as of December 28, 2005 (included as Exhibit 10.9 to the Company’s
annual report on Form 10-K for the year ended January 1, 2006 (the “2005
10-K”), previously filed with the Commission and incorporated herein by
reference); Second Amendment thereto, dated as of December 20, 2006
(included as Exhibit 99.2 to the Company’s current report on Form 8-K
dated January 8, 2008 and filed on January 14, 2008, previously filed with
the Commission and incorporated herein by reference); and Third Amendment
thereto, dated January 8, 2008 (included as Exhibit 99.1 to the Company’s
current report on Form 8-K dated January 8, 2008 and filed on January 14,
2008, previously filed with the Commission and incorporated herein by
reference).*
|
|
10.8
|
—
|
Amended
and Restated Employment and Change in Control Agreement of Ray C. Anderson
dated July 23, 2008 (included as Exhibit 99.1 to the Company current
report on Form 8-K dated July 23, 2008 and filed on July 29, 2008,
previously filed with the Commission and incorporated herein by
reference).*
|
|
10.9
|
—
|
Amended
and Restated Employment and Change in Control Agreement of Daniel T.
Hendrix dated January 1, 2008 (included as Exhibit 99.2 to the Company’s
current report on Form 8-K dated January 2, 2008 and filed on January 7,
2008, previously filed with the Commission and incorporated herein by
reference).*
|
|
10.10
|
—
|
Amended
and Restated Employment and Change in Control Agreement of Patrick C.
Lynch dated January 1, 2008 (included as Exhibit 99.1 to the Company’s
current report on Form 8-K dated January 2, 2008 and filed on January 7,
2008, previously filed with the Commission and incorporated herein by
reference).*
|
|
10.11
|
—
|
Amended
and Restated Employment and Change in Control Agreement of John R. Wells
dated January 1, 2008 (included as Exhibit 99.3 to the Company’s current
report on Form 8-K dated January 2, 2008 and filed on January 7, 2008,
previously filed with the Commission and incorporated herein by
reference).*
|
|
10.12
|
—
|
Amended
and Restated Employment and Change in Control Agreement of Raymond S.
Willoch dated January 1, 2008 (included as Exhibit 99.4 to the Company’s
current report on Form 8-K dated January 2, 2008 and filed on January 7,
2008, previously filed with the Commission and incorporated herein by
reference).*
|
|
10.13
|
—
|
UK
Service Agreement between Interface Europe, Ltd. and Lindsey Kenneth
Parnell dated March 13, 2007 (included as Exhibit 10.12 to the Company’s
annual report on Form 10-K for the year ended December 31, 2006 (the “2006
10-K”), previously filed with the Commission and incorporated herein by
reference).*
|
|
10.14
|
—
|
Overseas
Service Agreement between Interface Europe, Ltd. and Lindsey Kenneth
Parnell dated March 13, 2007 (included as Exhibit 10.13 to the 2006 10-K,
previously filed with the Commission and incorporated herein by
reference).*
|
|
10.15
|
—
|
Sixth
Amended and Restated Credit Agreement, dated as of June 30, 2006, among
the Company (and certain direct and indirect subsidiaries), the
lenders listed therein, Wachovia Bank, National Association, Bank of
America, N.A. and General Electric Capital Corporation (included as
Exhibit 99.1 to the Company’s current report on Form 8-K dated June 30,
2006 and filed on July 7, 2006, previously filed with the Commission and
incorporated herein by reference); and First Amendment thereto, dated
January 1, 2008 (included as Exhibit 99.1 to the Company’s current report
Form 8-K dated January 1, 2008 and filed on January 4, 2008, previously
filed with the Commission and incorporated herein by
reference).
|
|
10.16
|
—
|
Split
Dollar Agreement, dated September 11, 2006, between the Company, Ray C.
Anderson and Mary Anne Anderson Lanier, as Trustee of the Ray C. Anderson
Family Trust (included as Exhibit 99.1 to the Company’s current report on
Form 8-K dated September 11, 2006 and filed on September 15, 2006,
previously filed with the Commission and incorporated herein by
reference).*
|
|
10.17
|
—
|
Split
Dollar Insurance Agreement, dated February 21, 1997, between the Company
and Daniel T. Hendrix (included as Exhibit 10.2 to the Company’s quarterly
report on Form 10-Q for the quarter ended October 4, 1998, previously
filed with the Commission and incorporated herein by reference); and
Amendment thereto, dated December 29, 2008 (included as Exhibit 99.1 to
the Company’s current report on Form 8-K dated December 29, 2008 and filed
on January 2, 2009, previously filed with the Commission and incorporated
herein by reference).*
|
|
10.18
|
—
|
Form
of Indemnity Agreement of Director (as used for directors of the Company)
(included as Exhibit 99.1 to the Company’s current report on Form 8-K
dated November 29, 2005 and filed on November 30, 2005, previously filed
with the Commission and incorporated herein by
reference).*
|
|
10.19
|
—
|
Form
of Indemnity Agreement of Officer (as used for certain officers of the
Company, including Daniel T. Hendrix, John R. Wells, Patrick C. Lynch,
Raymond S. Willoch and Lindsey K. Parnell) (included as Exhibit 99.2 to
the Company’s current report on Form 8-K dated November 29, 2005 and filed
on November 30, 2005, previously filed with the Commission and
incorporated herein by reference).*
|
|
10.20
|
—
|
Interface,
Inc. Long-Term Care Insurance Plan and related Summary Plan Description
(included as Exhibit 99.2 to the Company’s current report on Form 8-K
dated December 14, 2005 and filed on December 20, 2005, previously filed
with the Commission and incorporated herein by
reference).*
|
|
10.21
|
—
|
Credit
Agreement, executed on March 9, 2007, among Interface Europe B.V. (and
certain of its subsidiaries) and ABN AMRO Bank N.V. (included as Exhibit
99.1 to the Company’s current report on Form 8-K dated March 7, 2007 and
filed on March 13, 2007, previously filed with the Commission and
incorporated herein by reference).
|
|
21
|
—
|
Subsidiaries
of the Company.#
|
|
23
|
—
|
Consent
of BDO Seidman, LLP.#
|
|
24
|
—
|
Power
of Attorney (see signature page of this
Report).#
|
|
31.1(a)
|
—
|
Certification
of Chief Executive Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008 (as filed with the
Form 10-K).#
|
|
31.1(b)
|
—
|
Certification
of Chief Executive Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008 (as filed with the
Form 10-K/A).
|
|
31.2(a)
|
—
|
Certification
of Chief Financial Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008 (as filed with the
Form 10-K).#
|
|
31.2(b)
|
—
|
Certification
of Chief Financial Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008 (as filed with the
Form 10-K/A).
|
|
32.1(a)
|
—
|
Certification
Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
by Chief Executive Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008 (as filed with the
Form 10-K).#
|
|
32.1(b)
|
—
|
Certification
Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
by Chief Executive Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008 (as filed with the
Form 10-K/A).
|
|
32.2(a)
|
—
|
Certification
Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
by Chief Financial Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008 (as filed with the
Form 10-K).#
|
|
32.2(b)
|
—
|
Certification
Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
by Chief Financial Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008 (as filed with the
Form 10-K/A).
|
__________
|
|
*
Management contract or compensatory plan or agreement required to be filed
pursuant to Item 15(b) of this
Report.
|
|
|
#
Filed with the original filing of this Form
10-K.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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.
|
Date: March
3, 2009
|
|
INTERFACE,
INC.
|
|
|
|
|
|
|
By:
|
/s/ DANIEL T.
HENDRIX
|
|
|
|
Daniel
T. Hendrix
|
|
|
|
President
and Chief Executive Officer
|
EXHIBIT
INDEX
|
Exhibit
Number
|
|
|
|
|
|
31.1(b)
|
Certification
of Chief Executive Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008.
|
|
31.2(b)
|
Certification
of Chief Financial Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008.
|
|
32.1(b)
|
Certification
Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
by Chief Executive Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28, 2008.
|
|
32.2(b)
|
Certification
Pursuant to Section 1350 of Chapter 63 of Title 18 of United States Code
by Chief Financial Officer with respect to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 28,
2008.
|