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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 –
December 31, 2010 and 2009
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2
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Statements of Changes in Net Assets Available for Benefits –
Years Ended December 31, 2010 and 2009
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3
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Notes to financial statements
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4
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Signatures
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12
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Exhibit Index
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13
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Supplemental Schedules
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Schedule H, Line 4a, Schedule of Delinquent Participant Contributions
December 31, 2010
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15
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Schedule H, Line 4i, Schedule of Assets (Held at End of Year) –
December 31, 2010
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16
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Plan Administrator and Trustee
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Interface, Inc. Savings and Investment Plan
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December 31,
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2010
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2009
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Assets
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Investments, at fair value
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Common collective trust
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$ | 19,687,068 | $ | 18,362,065 | ||||
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Mutual funds
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57,509,675 | 47,351,126 | ||||||
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Interface, Inc. stock fund
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11,659,091 | 8,179,332 | ||||||
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TradeLink Investments – self-directed brokerage
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372,940 | 274,271 | ||||||
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Cash and cash equivalents
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6,000 | -- | ||||||
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Total Investments
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89,234,774 | 74,166,794 | ||||||
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Receivables
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Participant contributions
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126,639 | 110,507 | ||||||
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Promissory notes from participants
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3,228,188 | 3,030,851 | ||||||
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Employer contributions
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47,526 | 15,447 | ||||||
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Total Receivables
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3,402,353 | 3,156,805 | ||||||
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Net assets available for benefits at fair value
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92,637,127 | 77,323,599 | ||||||
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Adjustment from fair value to contract value for fully benefit-responsive investment contracts
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(711,573 | ) | (551,407 | ) | ||||
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Net assets available for benefits
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$ | 91,925,554 | $ | 76,772,192 | ||||
| Interface, Inc. | |
| Savings and Investment Plan | |
| Statements of Changes in Net Assets Available for Benefits |
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Year ended December 31,
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2010
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2009
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Additions to (deductions from) net assets
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Investment income (loss):
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Interest and dividend income from mutual funds
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$ | 763,383 | $ | 692,953 | ||||
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Interest income from common collective trust
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690,351 | 688,891 | ||||||
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Dividend income from Interface, Inc. stock fund
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34,844 | 9,587 | ||||||
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Interest income from participant loans
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157,886 | 184,478 | ||||||
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Net appreciation (depreciation) in fair value of Interface, Inc. stock fund
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6,244,746 | 5,174,559 | ||||||
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Net appreciation (depreciation) in fair value of mutual funds
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6,598,798 | 10,818,331 | ||||||
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Net investment income (loss)
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14,490,008 | 17,568,799 | ||||||
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Contributions:
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Participant
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5,314,730 | 4,828,061 | ||||||
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Employer
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1,913,609 | 503,808 | ||||||
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Rollovers
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211,177 | 36,621 | ||||||
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Total contributions
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7,439,516 | 5,368,490 | ||||||
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Deductions
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Benefits paid to participants
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6,755,254 | 8,649,298 | ||||||
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Administrative expenses
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20,908 | 20,730 | ||||||
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Total deductions
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6,776,162 | 8,670,028 | ||||||
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Net increase (decrease) in net assets
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15,153,362 | 14,267,261 | ||||||
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Net assets available for benefits, beginning of year
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76,772,192 | 62,504,931 | ||||||
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Net assets available for benefits, end of year
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$ | 91,925,554 | $ | 76,772,192 | ||||
| Interface, Inc. | |
| Savings and Investment Plan | |
| Notes to Financial Statements
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1. Description
of Plan
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The following description of the Interface, Inc. Savings and Investment Plan (the “Plan”) provides only general information. Participants should refer to the 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 January 1, 2008, the Company amended and restated the Plan to incorporate all prior changes. Eligible employees are automatically enrolled in the Plan at a three percent contribution rate. Eligible employees that do not want to contribute in the Plan are required to elect out of the Plan.
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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 $16,500 for each of 2010 and 2009. Participants who have attained age 50 before the end of the plan year were eligible to make catch-up contributions of $5,500 for each of 2010 and 2009. 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 collective trust, a Company common stock fund, twenty-eight mutual funds and a self-directed brokerage account as investment options for participants. During January and February 2009, the Company made a matching contribution in an amount equal to 50 percent of the first 6 percent of eligible compensation that a participant contributed to the Plan. Effective March 1, 2009, the Company reduced the matching contribution to an amount equal to 17 percent of the first 6 percent of eligible compensation that a participant contributed to the Plan. The Company restored the matching contribution on January 1, 2010, to an amount equal to 50 percent of the first 6 percent of eligible compensation that a participant contributed to the Plan. 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 contributed by the Company to the Plan during the years ended December 31, 2010 and 2009. 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 (i) the Company’s contributions, and (ii) 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 – Promissory notes receivable represents loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Participants may borrow from their accounts a minimum of $1,000 up to a maximum amount equal to the lesser of $50,000 or 50 percent of their account balance. The maximum loan amount is also reduced by the balance of any self-directed brokerage accounts. Each loan is secured by the balance in the borrowing participant’s account and bears 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 - Upon 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, 2010 and 2009, 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 2010 and 2009 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.
Accounting guidance requires investment contracts held by a defined contribution plan 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 able to initiate permitted transactions under the terms of the Plan. Accordingly, the Statement of Net Assets Available for Benefits presents the estimated 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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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 expenses during the reporting period. Actual results could differ from those estimates.
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Investment Valuation and Income Recognition
The Plan’s investments are stated at estimated fair value. Where available, 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 amortized cost, which approximates fair value. The Company common stock fund is valued based upon the quoted market price for Interface, Inc. Class A Common Stock. Self-directed brokerage accounts are valued at the asset value of investments held at year end.
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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. Net appreciation (depreciation) includes the Plan’s gains and loses on investments bought and sold as well as held during the year.
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Payment of Benefits
Benefits are recorded when paid.
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Recently Issued Accounting Pronouncements
In September 2010, the Financial Accounting Standards Board (FASB) issued an accounting standard related to the valuation and presentation of participant loans. This standard requires participant loans to be measured at their unpaid principal balance plus any accrued but unpaid interest and to be classified as notes receivable from participants. Previously, loans were measured at fair value and classified as investments. The Company early adopted this standard for the year ended December 31, 2010. Participant loans have been reclassified to promissory notes receivable from participants as of December 31, 2010, and December 31, 2009. Interest income related to promissory notes has been reclassified to interest income promissory notes receivable.
In January 2010, the FASB issued an accounting standard, to clarify certain existing fair value disclosures and to require a number of additional disclosures. The guidance clarified that disclosures should be presented separately for each “class” of assets and liabilities measured at fair value and provided guidance on how to determine the appropriate classes of assets and liabilities to be presented. This standard also clarified the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. In addition, this standard introduced new requirements to disclose the amounts (on a gross basis) and reasons for any significant transfers between Levels 1, 2, and 3 of the fair value hierarchy and to present information regarding the purchases, sales, issuances, and settlements of Level 3 assets and liabilities on a gross basis. With the exception of the requirement to present changes in Level 3 measurements on a gross basis, which is delayed until 2011, the guidance in this standard is effective for reporting periods beginning after December 15, 2009. The adoption did not have any significant impact on the Plan’s net assets available for benefits or its changes in net assets available for benefits, as changes are related to the fair value measurement disclosures.
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3.
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Investments
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The estimated fair market value of individual investments that represent five percent or more of the Plan’s net assets are as follows:
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December 31,
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2010
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2009
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T. Rowe Price Stable Value Fund (common collective trust)
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$ | 19,687,068 | $ | 18,362,065 | |||||
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T. Rowe Price Equity Income Fund
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9,562,423 | 8,500,843 | |||||||
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T. Rowe Price Blue Chip Growth Fund
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9,035,964 | 7,928,281 | |||||||
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T. Rowe Price Balanced Fund
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8,130,134 | 7,654,507 | |||||||
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Interface, Inc. Stock Fund
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11,659,091 | 8,179,332 | |||||||
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4. Fair Value
Measurements
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As of January 1, 2008, the Plan adopted a new accounting standard to which established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure estimated fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under accounting standards are described below:
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Level 1
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Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
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Level 2
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Inputs to the valuation methodology include
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· Quoted prices for similar assets in active markets;
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· Quoted prices for identical or similar assets in inactive markets;
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· Inputs other than quoted prices that are observable for the asset; and
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· Inputs that are derived principally from or corroborated by observable data by correlation or other means.
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Level 3
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Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
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As of December 31, 2010
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Investment Type
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Level 1
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Level 2
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Level 3
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Total
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Mutual Funds (by class)
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Money Market
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$ | 1,586,531 | $ | -- | $ | -- | $ | 1,586,531 | ||||||||
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Stock
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33,240,451 | -- | -- | 33,240,451 | ||||||||||||
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Bond
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3,834,930 | -- | -- | 3,834,930 | ||||||||||||
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Multi-Class
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8,130,134 | -- | -- | 8,130,134 | ||||||||||||
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Target Date Fund
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10,717,629 | -- | -- | 10,717,629 | ||||||||||||
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Interface, Inc. Stock Fund
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11,659,091 | -- | -- | 11,659,091 | ||||||||||||
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Common Collective Trust
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-- | 19,687,068 | -- | 19,687,068 | ||||||||||||
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Self Directed Brokerage
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Common Stock
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372,940 | -- | -- | 372,940 | ||||||||||||
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Total
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$ | 69,541,706 | $ | 19,687,068 | $ | -- | $ | 89,228,774 | ||||||||
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As of December 31, 2009
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Investment Type
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Level 1
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Level 2
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Level 3
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Total
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Mutual Funds (by class)
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Money Market
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$ | 1,543,283 | $ | -- | $ | -- | $ | 1,543,283 | ||||||||
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Stock
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28,072,261 | -- | -- | 28,072,261 | ||||||||||||
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Bond
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2,723,370 | -- | -- | 2,723,370 | ||||||||||||
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Multi-Class
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7,654,507 | -- | -- | 7,654,507 | ||||||||||||
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Target Date Fund
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7,357,705 | -- | -- | 7,357,705 | ||||||||||||
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Interface, Inc. Stock Fund
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8,179,332 | -- | -- | 8,179,332 | ||||||||||||
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Common Collective Trust
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-- | 18,362,065 | -- | 18,362,065 | ||||||||||||
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Self Directed Brokerage
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Common Stock
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274,271 | -- | -- | 274,271 | ||||||||||||
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Total
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$ | 55,804,729 | $ | 18,362,065 | $ | -- | $ | 74,166,794 | ||||||||
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5.
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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 the Trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest.
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At December 31, 2010 and 2009, the Plan held 743,565 and 984,276 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 respective participants’ accounts.
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6.
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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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7.
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Tax Status
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On January 6, 2009, the Company requested that a favorable letter of determination be issued to the Company to confirm that the Plan, as amended and restated, is qualified in its entirety pursuant to the applicable requirements of the Internal Revenue Code (“IRC”).
The Internal Revenue Service has determined and informed the Company by a letter dated July 22, 2009, that the Plan and related trust are designed in accordance with applicable sections of the IRC. The Plan has been amended since receiving the determination letter. However, the Plan Administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
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8.
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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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9.
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Reconciliation
to Form 5500
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The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2010 and 2009 to Form 5500.
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December 31,
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2010
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2009
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Net assets available for benefits per the financial statements:
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$ | 91,925,554 | $ | 76,772,192 | |||||
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Adjustment from fair value to contract value for common collective trust
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711,573 | 551,407 | |||||||
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Net assets available for benefits per Form 5500
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$ | 92,637,127 | $ | 77,323,599 | |||||
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The following is a reconciliation of the net increase (decrease) in assets available for benefits per the financial statements for the years ended December 31, 2010 and 2009 to Form 5500.
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December 31,
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2010
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2009
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Net increase (decrease) in assets available for benefits per the financial statements:
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$ | 15,153,362 | $ | 14,267,261 | |||||
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Adjustment from fair value to contract value for common collective trust
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160,166 | 720,945 | |||||||
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Net increase (decrease) in assets available for benefits per Form 5500
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$ | 15,313,528 | $ | 14,988,206 | |||||
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10.
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Nonexempt
Transactions
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On August 8, 2010, the Company remitted participant contributions of $2,152.13 to the Plan. This deposit was due on July 14, 2010. The accounts of the respective participants were credited with the appropriate amount of investment income.
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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 28, 2011
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By: /s/ Patrick C. Lynch
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Patrick C. Lynch, 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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Participant
Contributions
Transferred Late to Plan
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Total that Constitute
Nonexempt Prohibited
Transactions
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Late Remittance for Pay Period Ended July 8, 2010
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$2,152.13
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$2,152.13
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Employer Identification Number: 58-1451243
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Plan Number: 002
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Form: 5500
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(b)
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(c)
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(e)
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Identity of Issuer,
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Description of
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(d)
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Current
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||||||
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(a)
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Borrower, Lessor, or Similar Party
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Investment
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Cost**
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Value
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| * |
T.Rowe Price Settlement Fund
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Uninvested Cash
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$ | 6,000 | |||||
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Common Collective Trust:
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| * |
T. Rowe Price Stable Value Fund
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18,975,495 units
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19,687,068 | ||||||
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Mutual Funds:
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Ariel Appreciation Fund
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78,432 shares
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3,324,743 | |||||||
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N&B Socially Responsible Fund
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36,442 shares
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928,187 | |||||||
| Harbor International Fund |
39,973 shares
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2,420,380 | |||||||
| Janus Overseas Fund |
15,297 shares
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774,646 | |||||||
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Munder Midcap Core GR FD Fund
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85,564 shares
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2,434,297 | |||||||
| * |
T. Rowe Price Equity Index 500 Fund
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64,833 shares
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2,195,256 | ||||||
| * |
T. Rowe Price Balanced Fund
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421,250 shares
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8,130,134 | ||||||
| * |
T. Rowe Price Equity Income Fund
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403,648 shares
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9,562,423 | ||||||
| * |
T. Rowe Price Spectrum Income Fund
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252,727 shares
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3,123,704 | ||||||
| * |
T. Rowe Price Blue Chip Growth Fund
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236,978 shares
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9,035,964 | ||||||
| William Blair Small Cap Growth Fund |
56,097 shares
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1,302,578 | |||||||
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Vanguard Prime Money Market Fund
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1,586,531 shares
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1,586,531 | |||||||
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Allianz RCM Technology Admin Fund
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25,631 shares
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1,239,514 | |||||||
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Stadion Managed Portfolio A Fund
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2,183 shares
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22,465 | |||||||
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Oppenheimer International Bond Fund
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23,977 shares
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157,288 | |||||||
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PIMCO Total Return Admin Fund
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51,054 shares
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553,938 | |||||||
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Retirement Income Fund
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5,066 shares
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66,411 | |||||||
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Retirement 2005 Fund
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2,005 shares
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22,733 | |||||||
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Retirement 2010 Fund
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32,547shares
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499,271 | |||||||
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Retirement 2015 Fund
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65,519 shares
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779,023 | |||||||
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Retirement 2020 Fund
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134,503 shares
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2,211,234 | |||||||
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Retirement 2025 Fund
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152,693 shares
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1,838,424 | |||||||
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Retirement 2030 Fund
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95,884 shares
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1,656,874 | |||||||
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Retirement 2035 Fund
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100,831 shares
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1,233,168 | |||||||
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Retirement 2040 Fund
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63,485 shares
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1,105,915 | |||||||
| Retirement 2045 Fund |
82,263 shares
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955,075 | |||||||
| Retirement 2050 Fund |
27,779 shares
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270,565 | |||||||
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Retirement 2055 Fund
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8,197 shares
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78,934 | |||||||
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Total Mutual Funds
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$ | 57,509,675 | |||||||
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TradeLink Investments – Self-Directed Brokerage
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372,940 shares
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372,940 | |||||||
| * |
Interface, Inc. Stock Fund – Employer Securities
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743,565 shares
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11,659,091 | ||||||
| * |
Participant Loans
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1,099 loans with interest rates ranging between 4.25 to 9.50 percent
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-
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3,228,188 | |||||
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Total Investments
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$ | 92,462,962 | |||||||
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*Party-in-interest
** – The cost of participant-directed investments is not required to be disclosed.
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