Table Of Contents

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For Quarterly Period Ended June 29, 2014July 5, 2015

 

Commission File Number 001-33994

 

INTERFACE, INC.

(Exact name of registrant as specified in its charter)

 

GEORGIA

 

58-1451243

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

2859 PACES FERRY ROAD, SUITE 2000, ATLANTA, GEORGIA 30339

(Address of principal executive offices and zip code)

 

(770) 437-6800

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑    No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☑

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes ☐     No ☑

 

Shares outstanding of each of the registrant’s classes of common stock at July 28, 2014:August 4, 2015:

 

Class

 

Number of Shares

 

Common Stock, $.10 par value per share

 66,474,705

65,854,724

 

 

 
 

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INTERFACE, INC.

 

INDEX

PAGE

PART I.

FINANCIAL INFORMATION

 
   
 

Item 1.

Financial Statements

3

    
  

Consolidated Condensed Balance Sheets – June 29,July 5, 2015 andDecember 28, 2014 andDecember 29, 2013

3

    
  

Consolidated Condensed Statements of Operations – Three Months and Six Months Ended July 5, 2015 and June 29, 2014 and June 30, 2013

4

    
  

Consolidated Statements of Comprehensive Income – Three Months and Six Months Ended July 5, 2015 and June 29, 2014 and June 30, 2013

5

    
  

Consolidated Condensed Statements of Cash Flows – Six Months Ended July 5, 2015 and June 29, 2014 and June 30, 2013

6

    
  

Notes to Consolidated Condensed Financial Statements

7

    
 

Item 2.

Management’s Discussion and Analysis of Financial Conditionand Results of Operations

1913

    
 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

2216

    
 

Item 4.

Controls and Procedures

2317

   

PART II.

OTHER INFORMATION

 
   
 

Item 1.

Legal Proceedings

2418

    
 

Item 1A.

Risk Factors

2418

    
 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

2418

    
 

Item 3.

Defaults Upon Senior Securities

2418

    
 

Item 4.

Mine Safety Disclosures

2418

    
 

Item 5.

Other Information

2418

    
 

Item 6.

Exhibits

2419

 

 
 

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PARTI - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSEDBALANCE SHEETS

(IN THOUSANDS)

 

JUNE 29, 2014

  

DECEMBER 29, 2013

  

JULY 5, 2015

  

DECEMBER 28, 2014

 
 

(UNAUDITED)

      

(UNAUDITED)

     

ASSETS

                

CURRENT ASSETS:

                

Cash and Cash Equivalents

 $50,012  $72,883  $71,821  $54,896 

Accounts Receivable, net

  149,927   131,936   137,546   157,093 

Inventories

  172,452   149,643   164,205   142,167 

Prepaid Expenses and Other Current Assets

  23,715   23,411   21,989   20,780 

Deferred Income Taxes

  10,532   10,232   9,617   9,732 

TOTAL CURRENT ASSETS

  406,638   388,105   405,178   384,668 
                
        

PROPERTY AND EQUIPMENT, less accumulated depreciation

  242,132   230,845   216,681   227,347 

DEFERRED TAX ASSET

  30,529   34,162   24,988   33,138 

GOODWILL

  77,683   77,941   64,530   70,509 

OTHER ASSETS

  66,501   65,282   58,788   59,252 

TOTAL ASSETS

 $823,483  $796,335  $770,165  $774,914 
                

LIABILITIES AND SHAREHOLDERS’ EQUITY

                
        

CURRENT LIABILITIES:

                

Accounts Payable

 $57,062  $52,515  $56,273  $49,464 

Current Portion of Long-Term Debt

  7,500   0 

Accrued Expenses

  78,452   77,672   80,421   94,323 

TOTAL CURRENT LIABILITIES

  135,514   130,187   144,194   143,787 
                

SENIOR NOTES

  247,500   247,500 

LONG-TERM DEBT

  31,513   26,326   251,615   263,338 

DEFERRED INCOME TAXES

  16,457   15,049   11,240   11,002 

OTHER

  34,534   36,486   47,217   50,148 

TOTAL LIABILITIES

  465,518   455,548   454,266   468,275 
                

Commitments and Contingencies

                
                

SHAREHOLDERS’ EQUITY:

                

Preferred Stock

  0   0   0   0 

Common Stock

  6,648   6,631   6,585   6,597 

Additional Paid-In Capital

  375,682   374,597   368,725   368,603 

Retained Earnings

  37,333   24,226   68,481   39,737 

Accumulated Other Comprehensive Loss – Foreign Currency Translation Adjustment

  (26,403)  (30,585)  (79,175)  (58,936)

Accumulated Other Comprehensive Loss – Pension Liability

  (35,295)  (34,082)  (48,717)  (49,362)

TOTAL SHAREHOLDERS’ EQUITY

  357,965   340,787   315,899   306,639 
 $823,483  $796,335  $770,165  $774,914 

 

See accompanying notes to consolidated condensed financial statements.

 

 

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INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSEDSTATEMENTS OF OPERATIONS

(UNAUDITED)

 

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 

 

THREE MONTHS ENDED

  

SIX MONTHS ENDED

 
                 

THREE MONTHS ENDED

  

SIX MONTHS ENDED

 
                                
 

JUNE 29, 2014

  

JUNE 30, 2013

  

JUNE 29, 2014

  

JUNE 30, 2013

  

JULY 5, 2015

  

JUNE 29, 2014

  

JULY 5, 2015

  

JUNE 29, 2014

 
                                

NET SALES

 $260,624  $243,483  $479,616  $453,852  $263,637  $260,624  $500,541  $479,616 

Cost of Sales

  170,239   157,250   314,545   296,367   162,385   170,239   313,857   314,545 
                                

GROSS PROFIT ON SALES

  90,385   86,233   165,071   157,485   101,252   90,385   186,684   165,071 

Selling, General and Administrative Expenses

  66,042   64,430   128,701   121,688   68,033   66,042   132,065   128,701 

OPERATING INCOME

  24,343   21,803   36,370   35,797   33,219   24,343   54,619   36,370 
                                

Interest Expense

  5,420   5,907   10,918   12,065   1,790   5,420   3,678   10,918 

Other Expense (Income)

  (128)  (2)  (154)  405   (446)  (128)  826   (154)
                                

INCOME BEFORE INCOME TAX EXPENSE

  19,051   15,898   25,606   23,327   31,875   19,051   50,115   25,606 

Income Tax Expense

  5,980   4,933   8,510   5,365   10,153   5,980   16,071   8,510 
                                

NET INCOME

 $13,071  $10,965  $17,096  $17,962  $21,722  $13,071  $34,044  $17,096 
                                
                                

Earnings Per Share – Basic

 $0.20  $0.17  $0.26  $0.27  $0.33  $0.20  $0.51  $0.26 
                                

Earnings Per Share – Diluted

 $0.20  $0.17  $0.26  $0.27  $0.33  $0.20  $0.51  $0.26 
                                

Common Shares Outstanding – Basic

  66,473   66,180   66,472   66,148   65,995   66,473   66,208   66,472 

Common Shares Outstanding – Diluted

  66,550   66,329   66,558   66,297   66,044   66,550   66,253   66,558 

 

See accompanying notes to consolidated condensed financial statements.

 

 

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INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME

(UNAUDITED)

 

(IN THOUSANDS)

 

  

THREE MONTHS ENDED

  

SIX MONTHS ENDED

 
                 
                 
  

JUNE 29, 2014

  

JUNE 30, 2013

  

JUNE 29, 2014

  

JUNE 30, 2013

 
                 

Net Income

 $13,071  $10,965  $17,096  $17,962 

Other Comprehensive Income (Loss), Foreign

                

Currency Translation Adjustment

  1,078   (6,766)  4,182   (12,925)

Other Comprehensive Income (Loss), Pension Liability Adjustment

  (776)  (318)  (1,213)  1,567 

Comprehensive Income

 $13,373  $3,881  $20,065  $6,604 

  

THREE MONTHS ENDED

  

SIX MONTHS ENDED

 
                 
  

JULY 5, 2015

  

JUNE 29, 2014

  

JULY 5, 2015

  

JUNE 29, 2014

 
                 

Net Income

 $21,722  $13,071  $34,044  $17,096 

Other Comprehensive Income (Loss), Foreign

                

Currency Translation Adjustment

  5,060   1,078   (20,239)  4,182 

Other Comprehensive Income (Loss), Pension Liability Adjustment

  (2,557)  (776)  645   (1,213)

Comprehensive Income

 $24,225  $13,373  $14,450  $20,065 

 

See accompanying notes to consolidated condensed financial statements.

 

 

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INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OFCASH FLOWS

(UNAUDITED)

 

(IN THOUSANDS)

 

  

SIXMONTHS ENDED

 
         
  

JUNE 29, 2014

  

JUNE 30, 2013

 

OPERATING ACTIVITIES:

        

Net Income

 $17,096  $17,962 

Adjustments to Reconcile Net Income to Cash Provided by (Used in) Operating Activities:

        

Depreciation and Amortization

  13,312   13,021 

Stock Compensation Amortization Expense

  2,674   2,669 

Deferred Income Taxes and Other

  234   3,317 

Working Capital Changes:

        

Accounts Receivable

  (12,403)  2,575 

Inventories

  (21,929)  (19,673)

Prepaid Expenses and Other Current Assets

  (118)  (14,635)

Accounts Payable and Accrued Expenses

  1,938   (14,272)
         

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:

  804   (9,036)
         

INVESTING ACTIVITIES:

        

Capital Expenditures

  (22,017)  (33,822)

Cash Received from Insurance Company

  0   19,774 

Other

  (1,658)  (1,573)
         

CASH USED IN INVESTING ACTIVITIES:

  (23,675)  (15,621)
         

FINANCING ACTIVITIES:

        

Borrowing of Long-Term Debt

  3,663   0 

Proceeds from Issuance of Common Stock

  159   1,256 

Dividends Paid

  (3,989)  (3,309)
         

CASH USED IN FINANCING ACTIVITIES:

  (167)  (2,053)
         

Net Cash Used in Operating, Investing andFinancing Activities

  (23,038)  (26,710)

Effect of Exchange Rate Changes on Cash

  167   (2,453)
         

CASH AND CASH EQUIVALENTS:

        

Net Change During the Period

  (22,871)  (29,163)

Balance at Beginning of Period

  72,883   90,533 
         

Balance at End of Period

 $50,012  $61,370 

  

SIXMONTHS ENDED

 
         
  

JULY 5, 2015

  

JUNE 29, 2014

 

OPERATING ACTIVITIES:

        

Net Income

 $34,044  $17,096 

Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:

        

Depreciation and Amortization

  15,539   13,312 

Stock Compensation Amortization Expense

  9,100   2,674 

Deferred Income Taxes and Other

  9,287   234 

Working Capital Changes:

        

Accounts Receivable

  15,209   (12,403)

Inventories

  (27,150)  (21,929)

Prepaid Expenses and Other Current Assets

  (2,328)  (118)

Accounts Payable and Accrued Expenses

  (2,841)  1,938 
         

CASH PROVIDED BY OPERATING ACTIVITIES:

  50,860   804 
         

INVESTING ACTIVITIES:

        

Capital Expenditures

  (12,126)  (22,017)

Other

  (462)  (1,658)
         

CASH USED IN INVESTING ACTIVITIES:

  (12,588)  (23,675)
         

FINANCING ACTIVITIES:

        

Repayments of Long-Term Debt

  (3,000)  (2,289)

Borrowing of Long-Term Debt

  0   5,952 

Proceeds from Issuance of Common Stock

  359   159 

Repurchase of Common Stock

  (10,469)  0 

Dividends Paid

  (5,300)  (3,989)
         

CASH USED IN FINANCING ACTIVITIES:

  (18,410)  (167)
         

Net Cash Provided by (Used in) Operating, Investing andFinancing Activities

  19,862   (23,038)

Effect of Exchange Rate Changes on Cash

  (2,937)  167 
         

CASH AND CASH EQUIVALENTS:

        

Net Change During the Period

  16,925   (22,871)

Balance at Beginning of Period

  54,896   72,883 
         

Balance at End of Period

 $71,821  $50,012 

 

See accompanying notes to consolidated condensed financial statements.

 

 

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INTERFACE, INC. AND SUBSIDIARIES

NOTESTO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1 – CONDENSED FOOTNOTES

 

As contemplated by the Securities and Exchange Commission (the “Commission”) instructions to Form 10-Q, the following footnotes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to the Company’s year-end audited consolidated financial statements and notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended December 29, 2013,28, 2014, as filed with the Commission.

 

The financial information included in this report has been prepared by the Company, without audit. In the opinion of management, the financial information included in this report contains all adjustments (all of which are normal and recurring) necessary for a fair presentation of the results for the interim periods. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The December 29, 2013,28, 2014, consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The first quarter of 2015 was comprised of 14 weeks, while the first quarter of 2014 was comprised of 13 weeks. Each of the second quarters of 2015 and 2014 was comprised of 13 weeks.

 

Certain prior period amounts have been reclassified to conform to the current period presentation.

 

NOTE 2 – INVENTORIES

 

Inventories are summarized as follows:

 

 

June 29, 2014

  

December 29, 2013

  

July 5, 2015

  

December 28, 2014

 
 

(In thousands)

  

(In thousands)

 

Finished Goods

 $118,736  $96,199  $105,756  $89,688 

Work in Process

  9,578   9,569   10,915   9,898 

Raw Materials

  44,138   43,875   47,534   42,581 
 $172,452  $149,643  $164,205  $142,167 

NOTE 3 – EARNINGS PER SHARE

 

The Company computes basic earnings per share (“EPS”) by dividing net income by the weighted average common shares outstanding, including participating securities outstanding, during the period as discussed below.  Diluted EPS reflects the potential dilution beyond shares for basic EPS that could occur if securities or other contracts to issue common stock were exercised, converted into common stock or resulted in the issuance of common stock that would have shared in the Company’s earnings.

 

 

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The Company includes all unvested stock awards which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted EPS calculations when the inclusion of these shares would be dilutive. Unvested share-based awards of restricted stock are paid dividends equally with all other shares of common stock. As a result, the Company includes all outstanding restricted stock awards in the calculation of basic and diluted EPS. Distributed earnings include common stock dividends and dividends earned on unvested share-based payment awards. Undistributed earnings represent earnings that were available for distribution but were not distributed. The following tables show distributed and undistributed earnings:

 

 

Three Months Ended

  

Six Months Ended

  

Three Months Ended

  

Six Months Ended

 
 

June 29, 2014

  

June 30, 2013

  

June 29, 2014

  

June 30, 2013

  

July 5, 2015

  

June 29, 2014

  

July 5, 2015

  

June 29, 2014

 

Earnings Per Share:

                                
                                

Basic Earnings Per Share:

                                

Distributed Earnings

 $0.03  $0.03  $0.05  $0.05  $0.04  $0.03  $0.08  $0.05 

Undistributed Earnings

  0.17   0.14   0.21   0.22   0.29   0.17   0.43   0.21 

Total

 $0.20  $0.17  $0.26  $0.27  $0.33  $0.20  $0.51  $0.26 
                                

Diluted Earnings Per Share:

                                

Distributed Earnings

 $0.03  $0.03  $0.05  $0.05  $0.04  $0.03  $0.08  $0.05 

Undistributed Earnings

  0.17   0.14   0.21   0.22   0.29   0.17   0.43   0.21 

Total

 $0.20  $0.17  $0.26  $0.27  $0.33  $0.20  $0.51  $0.26 
                                

Basic earningsper share

 $0.20  $0.17  $0.26  $0.27  $0.33  $0.20  $0.51  $0.26 

Diluted earnings per share

 $0.20  $0.17  $0.26  $0.27  $0.33  $0.20  $0.51  $0.26 

 

The following tables present net income that was attributable to participating securities:

 

  

Three Months Ended

  

Six Months Ended

 
  

June 29, 2014

  

June 30, 2013

  

June 29, 2014

  

June 30, 2013

 
      

(In millions)

     

Net Income

 $0.3  $0.3  $0.4  $0.5 
  

Three Months Ended

  

Six Months Ended

 
  

July 5, 2015

  

June 29, 2014

  

July 5, 2015

  

June 29, 2014

 
      

(In millions)

     

Net Income

 $0.5  $0.3  $0.8  $0.4 

 

The weighted average shares outstanding for basic and diluted EPS were as follows:

 

 

Three Months Ended

  

Six Months Ended

  

Three Months Ended

  

Six Months Ended

 
 

June 29, 2014

  

June 30, 2013

  

June 29, 2014

  

June 30, 2013

  

July 5, 2015

  

June 29, 2014

  

July 5, 2015

  

June 29, 2014

 
     

(In thousands)

          

(In thousands)

     

Weighted Average Shares Outstanding

  65,012   64,486   65,011   64,454   64,497   65,012   64,710   65,011 

Participating Securities

  1,461   1,694   1,461   1,694   1,498   1,461   1,498   1,461 

Shares for Basic Earnings Per Share

  66,473   66,180   66,472   66,148   65,995   66,473   66,208   66,472 

Dilutive Effect of Stock Options

  77   149   86   149   49   77   45   86 

Shares for Diluted Earnings Per Share

  66,550   66,329   66,558   66,297   66,044   66,550   66,253   66,558 

 

For all periods presented, all outstanding stockthere were no options were included inor participating securities excluded from the computation of diluted earnings per share.EPS.

 

NOTE 4 – LONG-TERM DEBT

 

7.625%7.625% Senior Notes

 

As of June 29, 2014, and June 30, 2013, the Company had outstanding $247.5 million and $275.0 million in 7.625% Senior Notes due 2018 (the “7.625% Senior Notes”), respectively.. These notes were redeemed in their entirety in the fourth quarter of 2014. The estimated fair value of the 7.625% Senior Notes as of June 29, 2014, and June 30, 2013, based on then current market prices, was $259.9 million and $291.5 million, respectively.million.

 

11.375% Senior Secured NotesSyndicated Credit Facility

 

As of June 30, 2013, the Company had outstanding $8.1 million in 11.375% Senior Secured Notes due 2013 (the “11.375% Senior Secured Notes”). The estimated fair value of the 11.375% Senior Secured Notes as of June 30, 2013, based on then current market prices, was $8.1 million. The Company repaid the $8.1 million balance of these notes at maturity in November 2013.


Credit Facilities

On October 22, 2013, the Company entered intohas a Syndicated Facility Agreement among the Company, certain wholly-owned foreign subsidiaries of the Company as borrowers, certain subsidiaries of the Company as guarantors, Bank of America, N.A. as Administrative Agent, The Royal Bank of Scotland, as Syndication Agent, SunTrust Bank and Regions Bank, as Co-Documentation Agents, and the other lenders party thereto. Pursuantsyndicated credit facility (the “Facility”) pursuant to the Syndicated Facility Agreement,which the lenders provide to the Company and certain of its subsidiaries a multicurrency revolving credit facility (the “Syndicated Credit Facility”)and provide to the Company a term loan. The facility matures in October of up to2019. Interest on base rate loans is charged at varying rates computed by applying a margin depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. Interest on LIBOR-based loans and fees for letters of credit are charged at varying rates computed by applying a margin over the applicable LIBOR rate, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. In addition, the Company pays a commitment fee per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility.

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As of July 5, 2015, the Company had $200 million at any one time. of term loan borrowing and $59.1 million of revolving loan borrowings outstanding under the Facility, and had $3.1 million in letters of credit outstanding under the Facility. As of July 5, 2015, the weighted average interest rate on borrowings outstanding under the Facility was 1.9%.

The Company is required to make amortization payments of the term loan borrowing. The amortization payments are due on the last day of the calendar quarter, commencing with an initial amortization payment of $2.5 million on December 31, 2015. The quarterly amortization payment amount increases to $3.75 million on December 31, 2016. 

The Company is currently in compliance with all covenants under the Syndicated Credit Facility and anticipates that it will remain in compliance with the covenants for the foreseeable future.

 

AsOther Lines of June 29, 2014, the Company had $31.5 million of borrowings outstanding under the Syndicated Credit Facility with a weighted average interest rate of approximately 4.5%, and had $3.3 million in letters of credit outstanding under the Syndicated Credit Facility. As of June 29, 2014, the Company could have incurred $165.2 million of additional borrowings under the Syndicated Credit Facility.

 

Other non-U.S. subsidiariesSubsidiaries of the Company have an aggregate of the equivalent of $8.4$19.0 million of other lines of credit available.available at interest rates ranging from 2% to 6%. As of June 29, 2014,July 5, 2015, there were no borrowings outstanding under these lines of credit.

 

NOTE 5 – STOCK-BASED COMPENSATION

 

Stock OptionAwards

 

In accordance with accounting standards, the Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost will be recognized over the period in which the employee is required to provide the services – the requisite service period (usually the vesting period) – in exchange for the award. The grant date fair value for options and similar instruments will be estimated using option pricing models. Under accounting standards, the Company is required to select a valuation technique or option pricing model that meets the criteria stated in the standard. The Company uses the Black-Scholes model. Accounting standards require that the Company estimate forfeitures for stock options and reduce compensation expense accordingly. The Company has reduced its stock compensation expense by the assumed forfeiture rate and will evaluate experience against this forfeiture rate going forward.

 

During the first six months of 2013, the Company recognized stock option compensation expenses of $0.1 million. All outstanding stock options vested prior to 2014,the end of 2013, and therefore there have beenwas no stock option compensation expenses during 2014.expense in 2014 or 2015.

 

There were no stock options granted in 2014 or 2015. The following table summarizes stock options outstanding as of June 29, 2014,July 5, 2015, as well as activity during the six months then ended:

 

 

Shares

  

Weighted Average

Exercise Price

  

Shares

  

Weighted Average

Exercise Price

 

Outstanding at December 29, 2013

  184,000  $8.18 

Outstanding at December 28, 2014

  126,000  $9.23 

Granted

  0   0   0   0 

Exercised

  20,500   4.31   38,500   9.27 

Forfeited or canceled

  2,500   1.49   0   0 

Outstanding at June 29, 2014

  161,000  $8.99 

Outstanding at July 5, 2015

  87,500   8.75 
                

Exercisable at June 29, 2014

  161,000  $8.99 

Exercisable at July 5, 2015

  87,500  $8.75 

 

At June 29, 2014,July 5, 2015, the aggregate intrinsic value of both in-the-money options outstanding and options exercisable was $3.0$1.4 million (the intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option).

 


Cash proceeds and intrinsic value related to total stock options exercised during the first six months of 20142015 and 20132014 are provided in the table below. The Company did not recognize any significant tax benefit with regard to stock options in either period presented.

 

 

Six Months Ended

  

Six Months Ended

 
 

June 29, 2014

  

June 30, 2013

  

July 5, 2015

  

June 29, 2014

 
 

(In thousands)

  

(In thousands)

 

Proceeds from stock options exercised

 $159  $1,256  $359  $159 

Intrinsic value of stock options exercised

  299   741   421   299 

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Table Of Contents

 

Restricted Stock Awards

 

During the six months ended July 5, 2015, and June 29, 2014, and June 30, 2013, the Company granted restricted stock awards for 490,000597,000 and 598,000490,000 shares, respectively, of common stock. Restricted stock awards (or a portion thereof) vest with respect to each recipient over a two to five year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date. Additionally, awards (or a portion thereof) could vest earlier upon the attainment of certain performance criteria, in the event of a change in control of the Company, or upon involuntary termination without cause.

 

Compensation expense related to restricted stock grants was $2.7$9.1 million and $2.6$2.7 million for the six months ended July 5, 2015, and June 29, 2014, and June 30, 2013, respectively. Accounting standards require that the Company estimate forfeitures for restricted stock and reduce compensation expense accordingly. The Company has reduced its expense by the assumed forfeiture rate and will evaluate experience against this forfeiture rate going forward.

 

The following table summarizes restricted stock activity as of June 29, 2014,July 5, 2015, and during the six months then ended:

 

 

Shares

  

Weighted Average

Grant Date Fair Value

  

Shares

  

Weighted Average

Grant Date Fair Value

 

Outstanding at December 29, 2013

  1,707,500  $15.62 

Outstanding at December 28, 2014

  1,391,000  $17.12 

Granted

  490,000   21.28   597,000   16.43 

Vested

  526,000   16.26   290,500   13.99 

Forfeited or canceled

  211,000   17.08   199,500   13.58 

Outstanding at June 29, 2014

  1,460,500  $17.08 

Outstanding at July 5, 2015

  1,498,000  $17.92 

 

As of June 29, 2014,July 5, 2015, the unrecognized total compensation cost related to unvested restricted stock was approximately $13.9$14.3 million. That cost is expected to be recognized by the end of 2017.2019.

 

For the six months ended July 5, 2015, and June 29, 2014, and June 30, 2013, the Company recognized tax benefits with regard to restricted stock of $0.7$3.5 million and $1.3$0.7 million, respectively.

 


NOTE 6 – EMPLOYEE BENEFIT PLANS

 

The following tables provide the components of net periodic benefit cost for the three-month and six-month periods ended July 5, 2015, and June 29, 2014, and June 30, 2013, respectively:

 

 

Three Months Ended

  

Six Months Ended

  

Three Months Ended

  

Six Months Ended

 

Defined Benefit Retirement Plan (Europe)

 

June 29, 2014

  

June 30, 2013

  

June 29, 2014

  

June 30, 2013

  

July 5, 2015

  

June 29, 2014

  

July 5, 2015

  

June 29, 2014

 
 

(In thousands)

  

(In thousands)

  

(In thousands)

  

(In thousands)

 

Service cost

 $188  $209  $363  $420  $265  $188  $534  $363 

Interest cost

  2,849   2,366   5,364   4,756   2,111   2,849   4,204   5,364 

Expected return on assets

  (3,195)  (2,463)  (6,020)  (4,950)  (2,265)  (3,195)  (4,512)  (6,020)

Amortization of prior service costs

  13   22   25   44   9   13   17   25 

Recognized net actuarial losses

  175   241   328   484   242   175   481   328 

Net periodic benefit cost

 $30  $375  $60  $754  $362  $30  $724  $60 

 

 

Three Months Ended

  

Six Months Ended

  

Three Months Ended

  

Six Months Ended

 

Salary Continuation Plan (SCP)

 

June 29, 2014

  

June 30, 2013

  

June 29, 2014

  

June 30, 2013

  

July 5, 2015

  

June 29, 2014

  

July 5, 2015

  

June 29, 2014

 
 

(In thousands)

  

(In thousands)

  

(In thousands)

  

(In thousands)

 

Service cost

 $125  $134  $250  $267  $148  $125  $297  $250 

Interest cost

  268   249   535   499   278   268   556   535 

Amortization of prior service cost

  6   12   12   24   0   6   0   12 

Amortization of loss

  67   110   133   221   131   67   261   133 

Net periodic benefit cost

 $466  $505  $930  $1,011  $557  $466  $1,114  $930 

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Table Of Contents

NOTE 7 – SEGMENT INFORMATION

 

Based on applicable accounting standards, the Company has determined that it has three operating segments – namely, the Americas, Europe and Asia-Pacific geographic regions. Pursuant to accounting standards, the Company has aggregated the three operating segments into one reporting segment because they have similar economic characteristics, and the operating segments are similar in all of the following areas: (a) the nature of the products and services; (b) the nature of the production processes; (c) the type or class of customer for their products and services; (d) the methods used to distribute their products or provide their services; and (e) the nature of the regulatory environment.

NOTE 8 – SUPPLEMENTAL CASH FLOW INFORMATION

 

Cash payments for interest amounted to $9.9$3.3 million and $11.4$9.9 million for the six months ended July 5, 2015, and June 29, 2014, and June 30, 2013, respectively. Income tax payments amounted to $4.0$3.5 million and $3.8$4.0 million for the six months ended July 5, 2015, and June 29, 2014, and June 30, 2013, respectively.

NOTE 9 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

In May 2014,January 2015, the Financial Accounting Standards Board (“FASB”) issued an accounting standard regarding recognitionwhich eliminates the concept of revenueextraordinary items from contracts with customers. In summary, the core principle of thisgenerally accepted accounting principles. The standard isdoes not affect disclosure guidance for events or transactions that an entity recognizes revenue to depict the transfer of promised goodsare unusual in nature or services to customersinfrequent in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.their occurrence. The guidancestandard is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016, including interim periods within that reporting period, and early application2015. The standard allows prospective or retrospective application. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. We do not permitted. While the Company is currently reviewing this new standard, it is not expected thatbelieve the adoption of this guidancestandard will have a material impactany significant effect on our ongoing financial condition or results of operations.reporting.


 

In July 2013,February 2015, the FASB issued an accounting standard regardingwhich changes the presentation of unrecognized tax benefits when a net operating loss carryforward, orway reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar tax credit carryforward, exists. This standard clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reductionentities, (b) fees paid to a deferred tax asset fordecision maker or service provider are variable interests in a net operating loss carryforward,variable interest entity (“VIE”), and (c) variable interests in a similar tax loss, or a tax credit carryforward, if such settlement is required or expected in the event the uncertain tax benefit is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, is not available atVIE held by related parties of the reporting date underenterprise require the tax law ofreporting enterprise to consolidate the applicable jurisdiction orVIE. The new accounting standard is effective for annual and interim periods in fiscal years beginning after December 15, 2015. We are currently evaluating the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be netted with the deferred tax asset. The Company implementedimpact, if any, this standard inwill have on our ongoing financial reporting, but we do not believe the first quarteradoption of 2014, which resulted in reductions of deferred tax asset (long-term) and long-term other liabilities of approximately $21.8 million each. Pursuant to this standard the Company also adjusted its December 29, 2013 consolidated balance sheet, resulting in decreases in its deferred tax asset (long-term) and long-term other liabilities of approximately $21.8 million each.will have any significant effect on our ongoing financial reporting.

 

NOTE 10 – INCOMETAXES

In the first quarter of 2013, the Company executed advance pricing agreements for tax years 2006 through 2011 with the Canada Revenue Agency and the U.S. Internal Revenue Service in relation to the U.S. bilateral advanced pricing agreement filed in 2008. As a result of executing the advance pricing agreements, the Company was able to reduce its liability for unrecognized tax benefits in the first quarter of 2013 by $1.9 million. This benefit has been included in the “Income Tax Expense (Benefit)” line of the Company’s consolidated condensed statement of operations for the six months ended June 30, 2013.

 

Accounting standards require that all tax positions be analyzed using a two-step approach. The first step requires an entity to determine if a tax position is more-likely-than-not to be sustained upon examination. In the second step, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, that is more-likely-than-not to be realized upon ultimate settlement. In the first six months of 2014,2015, the Company decreased its liability for unrecognized tax benefits by $0.6$0.1 million. As of June 29, 2014,July 5, 2015, the Company had accrued approximately $26.8$27.2 million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company��sCompany’s deferred tax asset as of June 29, 2014July 5, 2015 reflects a reduction for $21.8$21.9 million of these unrecognized tax benefits (see Note 9 for additional information).benefits.

 

NOTE 11 – FIRE AT AUSTRALIAN MANUFACTURING FACILITY

In July 2012, a fire occurred at the Company’s manufacturing facility in Picton, Australia, rendering the facility inoperable. In January 2014, the Company commenced operations at a new facility in Minto, Australia to service the Australia and New Zealand markets. For further information, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2013.

NOTE 1211 – ITEMS RECLASSIFIED FROM OTHER COMPREHENSIVE INCOME

 

During the first six months of 2014,2015, the Company did not reclassify any significant amounts out of accumulated other comprehensive income. The reclassifications that occurred in that period were primarily comprised of $0.5$0.8 million related to the Company’s defined retirement benefit plan and salary continuation plan. These reclassifications were included in the selling, general and administrative expenses line item of the Company’s consolidated condensed statement of operations.

 

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Table Of Contents

 

NOTE 12 – 2014 RESTRUCTURING PLAN

In the third quarter of 2014, the Company committed to a new restructuring plan in its continuing efforts to reduce costs across its worldwide operations. In connection with this restructuring plan, the Company incurred a pre-tax restructuring and asset impairment charge in the third quarter of 2014 in an amount of $12.4 million. The charge was comprised of severance expenses of $9.7 million for a reduction of 100 employees, other related exit costs of $0.1 million, and a charge for impairment of assets of $2.6 million. Approximately $10 million of the charge will result in cash expenditures, primarily severance expense.

A summary of these restructuring activities is presented below:

  

Total

RestructuringCharge

  

Costs Incurred

in 2014

  

Cost Incurredin2015

  

Balance at

July 5, 2015

 
  

(In thousands)

 

Workforce Reduction

 $9,669  $2,732  $5,801  $1,136 

Fixed Asset Impairment

  2,584   2,584   0   0 

Other Related Exit Costs

  133   133   0   0 

NOTE 13 – SUPPLEMENTAL CONDENSED CONSOLIDATING GUARANTOR FINANCIAL STATEMENTSREPURCHASE OF COMMON STOCK

 

The Guarantor Subsidiaries, which consistIn the fourth quarter of the Company’s principal domestic subsidiaries, are guarantors of the Company’s 7.625% Senior Notes due 2018. The Guarantor Subsidiaries are 100% owned by2014, the Company announced a program to repurchase up to 500,000 shares of common stock per fiscal year, commencing with the 2014 fiscal year. During the first quarter of 2015, the Company repurchased and these guarantees are fullretired 250,000 shares of common stock at a weighted average purchase price of $19.39 per share. During the second quarter of 2015, the Company repurchased and unconditional. The Supplemental Guarantor Financial Statements are presented herein pursuant to requirementsretired 250,000 shares of the Commission.common stock at a weighted average purchase price of $22.41 per share.

 

 

-12-

INTERFACE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 29, 2014

  

GUARANTORSUBSIDIARIES

  

NON-GUARANTORSUBSIDIARIES

  

INTERFACE, INC.

(PARENTCORPORATION)

  

CONSOLIDATION AND ELIMINATIONENTRIES

  

CONSOLIDATEDTOTALS

 
  

(In thousands)

 

Net sales

 $170,896  $131,622  $0  $(41,894) $260,624 

Cost of sales

  123,170   88,963   0   (41,894)  170,239 

Gross profit on sales

  47,726   42,659   0   0   90,385 

Selling, general and administrative expenses

  29,845   30,215   5,982   0   66,042 

Operating income (loss)

  17,881   12,444   (5,982)  0   24,343 

Interest/Other expense

  7,505   2,637   (4,850)  0   5,292 

Income (loss) before taxes on income and equity in income of subsidiaries

  10,376   9,807   (1,132)  0   19,051 

Income tax expense (benefit)

  3,257   3,078   (355)  0   5,980 

Equity in income (loss) of subsidiaries

  0   0   13,848   (13,848)  0 

Net income (loss)

 $7,119  $6,729  $13,071  $(13,848) $13,071 


Table Of Contents
 

INTERFACE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 29, 2014

  

GUARANTOR

SUBSIDIARIES

  

NON-

GUARANTOR

SUBSIDIARIES

  

INTERFACE, INC.

(PARENT

CORPORATION)

  

CONSOLIDATION

AND

ELIMINATION

ENTRIES

  

CONSOLIDATED

TOTALS

 
  

(In thousands)

 

Net sales

 $306,845  $247,585  $0  $(74,814) $479,616 

Cost of sales

  221,420   167,939   0   (74,814)  314,545 

Gross profit on sales

  85,425   79,646   0   0   165,071 

Selling, general and administrative expenses

  56,143   58,482   14,076   0   128,701 

Operating income (loss)

  29,282   21,164   (14,076)  0   36,370 

Interest/Other expense

  13,328   5,463   (8,027)  0   10,764 

Income (loss) before taxes on income and equity in income of subsidiaries

  15,954   15,701   (6,049)  0   25,606 

Income tax expense (benefit)

  5,410   5,353   (2,253)  0   8,510 

Equity in income (loss) of subsidiaries

  0   0   20,892   (20,892)  0 

Net income (loss)

 $10,544  $10,348  $17,096  $(20,892) $17,096 


INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE

INCOME FOR THE THREE MONTHS ENDED JUNE 29, 2014

  

GUARANTOR

SUBSIDIARIES

  

NON- GUARANTOR

SUBSIDIARIES

  

INTERFACE, INC.

(PARENT

CORPORATION)

  

CONSOLIDATION

AND ELIMINATION

ENTRIES

  

CONSOLIDATED

TOTAL

 
  

(In thousands)

 

Net Income (loss)

 $7,119  $6,729  $13,071  $(13,848) $13,071 

Currency Translation Adjustment

  227   965   (114)  0   1,078 

Pension Liability Adjustment

  0   (820)  44   0   (776)

Comprehensive Income (Loss)

 $7,346  $6,874  $13,001  $(13,848) $13,373 


INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE

INCOME FOR THE SIX MONTHS ENDED JUNE 29, 2014

  

GUARANTOR

SUBSIDIARIES

  

NON- GUARANTOR

SUBSIDIARIES

  

INTERFACE, INC.

(PARENT

CORPORATION)

  

CONSOLIDATION

AND ELIMINATION

ENTRIES

  

CONSOLIDATED

TOTAL

 
  

(In thousands)

 

Net Income (loss)

 $10,544  $10,348  $17,096  $(20,892) $17,096 

Currency Translation Adjustment

  299   3,874   9   0   4,182 

Pension Liability Adjustment

  0   (1,301)  88   0   (1,213)

Comprehensive Income (Loss)

 $10,843  $12,921  $17,193  $(20,892) $20,065 


INTERFACE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

JUNE 29, 2014

  

GUARANTORSUBSIDIARIES

  

NON-GUARANTORSUBSIDIARIES

  

INTERFACE, INC.

(PARENTCORPORATION)

  

CONSOLIDATION AND ELIMINATIONENTRIES

  

CONSOLIDATEDTOTALS

 
  

(In thousands)

 

ASSETS

                    

Current assets:

                    

Cash and cash equivalents

 $1,757  $32,984  $15,271  $0  $50,012 

Accounts receivable

  60,684   88,755   488   0   149,927 

Inventories

  84,292   88,160   0   0   172,452 

Prepaids and deferred income taxes

  5,818   22,124   6,305   0   34,247 

Total current assets

  152,551   232,023   22,064   0   406,638 

Property and equipment less accumulated depreciation

  87,658   151,694   2,780   0   242,132 

Investment in subsidiaries

  565,103   207,885   (75,108)  (697,880)  0 

Goodwill

  6,542   71,141   0   0   77,683 

Other assets

  1,870   10,783   84,377   0   97,030 
  $813,724  $673,526  $34,113  $(697,880) $823,483 
                     

LIABILITIES AND SHAREHOLDERS’ EQUITY

                    

Current liabilities

 $44,494  $75,705  $15,315  $0  $135,514 

Senior notes

  0   0   247,500   0   247,500 

Long term debt

  0   31,513   0   0   31,513 

Deferred income taxes

  0   18,840   (2,383)  0   16,457 

Other

  26   8,566   25,942   0   34,534 

Total liabilities

  44,520   134,624   286,374   0   465,518 
                     

Common stock

  94,145   102,199   6,648   (196,344)  6,648 

Additional paid-in capital

  249,302   12,525   375,682   (261,827)  375,682 

Retained earnings (deficit)

  427,920   475,116   (625,994)  (239,709)  37,333 

Foreign currency translation adjustment

  (2,163)  (18,183)  (6,057)  0   (26,403)

Pension liability

  0   (32,755)  (2,540)  0   (35,295)
  $813,724  $673,526  $34,113  $(697,880) $823,483 


INTERFACE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 29, 2014

  

GUARANTORSUBSIDIARIES

  

NON-GUARANTORSUBSIDIARIES

  

INTERFACE, INC.

(PARENTCORPORATION)

  

CONSOLIDATION AND ELIMINATIONENTRIES

  

CONSOLIDATEDTOTALS

 
  

(In thousands)

 

Net cash provided by (used in) operating activities

 $(11,248) $11,750  $6,059  $(5,757) $804 

Cash flows from investing activities:

                    

Purchase of plant and equipment

  (11,993)  (15,236)  (201)  5,413   (22,017)

Other

  (212)  (612)  (834)  0   (1,658)

Net cash provided by (used in) investing activities

  (12,205)  (15,848)  (1,035)  5,413   (23,675)

Cash flows from financing activities:

                    

Borrowing of long term debt

  0   3,663   0   0   3,663 

Other

  22,715   (19,462)  (3,597)  344   0 

Proceeds from issuance of common stock

  0   0   159   0   159 

Dividends paid

  0   0   (3,989)  0   (3,989)

Net cash provided by (used in) financing activities

  22,715   (15,799)  (7,427)  344   (167)

Effect of exchange rate change on cash

  0   167   0   0   167 

Net increase (decrease) in cash

  (738)  (19,730)  (2,403)  0   (22,871)

Cash at beginning of period

  2,495   52,714   17,674   0   72,883 

Cash at end of period

 $1,757  $32,984  $15,271  $0  $50,012 


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Our discussions below in this Item 2 are based upon the more detailed discussions about our business, operations and financial condition included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2013,28, 2014, under Item 7 of that Form 10-K. Our discussions here focus on our results during the quarter and six months ended, or as of, June 29, 2014,July 5, 2015, and the comparable periods of 20132014 for comparison purposes, and, to the extent applicable, any material changes from the information discussed in that Form 10-K or other important intervening developments or information since that time. These discussions should be read in conjunction with that Form 10-K for more detailed and background information.

 

Forward-Looking Statements

 

This report contains statements which may constitute “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include risks and uncertainties associated with economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed under the heading “Risk Factors” included in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2013,28, 2014, which discussion is hereby incorporated by reference. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

 

Fire at Australia Facility

In July 2012, a fire occurred at our manufacturing facility in Picton, Australia, which served customers throughout Australia and New Zealand. The fire caused extensive damage to the facility, as well as disruption to business activity in the region. Since the fire, we have utilized adequate production capacity at our manufacturing facilities in Thailand, China, the U.S. and Europe to meet customer demand formerly serviced from Picton. While this has been executed with success, there were, as expected, business disruptions and delays in shipments that affected sales following the fire. We have now completed the build-out of a new manufacturing facility in Minto, Australia, which commenced operations in January 2014. For additional information on the fire, please see the Note entitled “Fire at Australian Manufacturing Facility” in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2013.


General

 

During the quarter ended June 29, 2014,July 5, 2015, we had net sales of $260.6$263.6 million, compared with net sales of $243.5$260.6 million in the second quarter last year. Fluctuations in currency exchange rates did not have a significant impact during the quarter compared with the prior year period. During the first six months of fiscal year 2014,2015, we had net sales of $479.6$500.5 million, compared with net sales of $453.9$479.6 million in the first six months of last year. Fluctuations in currency exchange rates did nothad negative impacts on our sales and operating income in the 2015 reported periods, compared with the prior year periods. The following table presents the amounts (in U.S. dollars) by which the exchange rates for converting foreign currencies into U.S. dollars have a significant impact on this comparison.negatively affected our net sales and operating income for the three months and six months ended July 5, 2015.

  

Three Months Ended

July 5, 2015

  

Six Months Ended

July 5, 2015

 
  (In millions) 

Net sales

 $(24.1) $(43.3)

Operating income

  (3.4)  (5.5)

 

During the second quarter of 2014,2015, we had net income of $21.7 million, or $0.33 per diluted share, compared with net income of $13.1 million, or $0.20 per diluted share, compared with net income of $11.0 million, or $0.17 per diluted share, in the second quarter of 2013.2014. During the six months ended June 29, 2014,July 5, 2015, we had net income of $34.0 million, or $0.51 per diluted share, compared with net income of $17.1 million, or $0.26 per diluted share, compared with net income of $18.0 million, or $0.27 per diluted share, in the first six months of 2013. Included in the results for2014.

The first six months of 2015 were comprised of 27 weeks, while the first six months of 20132014 were comprised of 26 weeks. (The additional week was in the first quarter of 2015.) This is a one-time tax dispute resolution benefitfactor in certain of $1.9 million related to the execution of bilateral pricing agreements. See the discussioncomparisons discussed in Note 10 of Part I,this Item 1 of this Report, entitled “Income Taxes,” for further information.2.

 

 

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Results of Operations

 

The following table presents, as a percentage of net sales, certain items included in our Consolidated Condensed Statements of Operations for the three-month and six-month periods ended July 5, 2015, and June 29, 2014, and June 30, 2013, respectively:

 

 

Three Months Ended

  

Six Months Ended

  

Three Months Ended

  

Six Months Ended

 
 

June 29, 2014

  

June 30, 2013

  

June 29, 2014

  

June 30, 2013

  

July 5, 2015

  

June 29, 2014

  

July 5, 2015

  

June 29, 2014

 
                                

Net sales

  100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0% 

Cost of sales

  65.3   64.6   65.6   65.3   61.6   65.3   62.7   65.6 

Gross profit on sales

  34.7   35.4   34.4   34.7   38.4   34.7   37.3   34.4 

Selling, general and administrative expenses

  25.3   26.5   26.8   26.8   25.8   25.3   26.4   26.8 

Operating income

  9.3   9.0   7.6   7.9   12.6   9.3   10.9   7.6 

Interest/Other expenses

  2.0   2.4   2.2   2.7   0.5   2.0   0.9   2.2 

Income before tax expense

  7.3   6.5   5.3   5.1   12.1   7.3   10.0   5.3 

Income tax expense

  2.3   2.0   1.8   1.2   3.9   2.3   3.2   1.8 

Net income

  5.0   4.5   3.6   4.0   8.2   5.0   6.8   3.6 

 

Net Sales

 

Below we provide information regarding net sales and analyze those results for the three-month and six-month periods ended July 5, 2015, and June 29, 2014, and June 30, 2013, respectively.

 

  

Three Months Ended

  

Percentage

 
  

June 29, 2014

  

June 30, 2013

  

Change

 
  

(In thousands)

     

Net Sales

 $260,624  $243,483   7.0%
  

Three Months Ended

  

Percentage

 
  

July 5, 2015

  

June 29, 2014

  

Change

 
  

(In thousands)

     

Net Sales

 $263,637  $260,624   1.2%

 

  

Six Months Ended

  

Percentage

 
  

June 29, 2014

  

June 30, 2013

  

Change

 
  

(In thousands)

     

Net Sales

 $479,616  $453,852   5.7%
  

Six Months Ended

  

Percentage

 
  

July 5, 2015

  

June 29, 2014

  

Change

 
  

(In thousands)

     

Net Sales

 $500,541  $479,616   4.4%

 

For the quarter ended June 29, 2014,July 5, 2015, net sales increased $17.1$3.0 million (7.0%(1.2%) versus the comparable period in 2013.2014. As discussed above, the strengthening of the U.S. dollar versus certain foreign currencies (primarily, the Euro, Australian dollar and Canadian dollar) had a negative impact of approximately $24 million on 2015 second quarter sales as compared to the second quarter of 2014. In the Americas, we increased sales 7%, which was partially offset by declines of 7% in Europe (as reported in U.S. dollars) and 6% in Asia-Pacific (as reported in U.S. dollars) due to the negative currency impacts discussed above. In the Americas, the corporate office market segment led the way with a 12% increase, as the rebound in this market continued and we gained market share in the U.S. Non-office segments were up 3% in the aggregate, with increases in the hospitality (up 55%) and education (up 10%) segments being partially offset by declines in the retail (down 12%), healthcare (down 9%) and residential (down 4%) segments. The decline in the residential segment was primarily in the multi-family sector, as our FLOR residential consumer business posted a 4% sales increase for the 2015 second quarter, primarily due to stronger web-based sales. In Europe, the sales increase in local currency was approximately 16%, due to the strength of the corporate office market segment (up 21%) which comprises the bulk of the sales in the region. Non-office segments in Europe were down 3% in the aggregate in local currency, with the government segment showing the largest decline (down 48%) due to the continued austerity programs in place through the region. In Asia-Pacific, the sales increase in local currency was 4%, which was almost entirely due to the strength of the corporate office market, primarily in Australia.

For the six months ended July 5, 2015, net sales increased $20.9 million (4.4%) versus the comparable period in 2014. The strengthening of the U.S. dollar versus certain foreign currencies had a negative impact of approximately $43 million on 2015 first half sales as compared to the first half of 2014. On a geographic basis, we experienced sales increases across all of our geographic regions, within the Americas up 4%,(up 11%) and Asia-Pacific (up 2%) versus the first six months of 2014. Due to the impact of currency fluctuations, Europe up 15% (or 9%experienced a sales decline of 7% as reported in U.S. dollars, but an increase in local currency), and Asia-Pacific up 5%currency of 14%. In the Americas, the sales increase was largely driven byalmost evenly balanced between the corporate office and non-office segments, with corporate office sales increasing 12% and non-office segments increasing 10%. All non-office market segments with the largest percentage increases occurring in the hospitality (up 30%), retail (up 21%) and education (up 7%) market segments. Sales in the Americas corporate office market segment were up approximately 1%. These increases were partially offset by a 9% sales decline in our FLOR residential business, primarily due to somewhat disappointing results from our annual summer sale event. The Americas region also experienced smaller declines in the government (down 4%) and healthcare (down 2%) market segments. Europe showed strong sales growth during the quarter, as the economies of that region continue to recover. The corporate office market segment (up 18% in U.S. dollars, or 13% in local currency) led the way in the European region, followed by the government (up 9%) and education (up 15%) segments. The salesan increase in Asia-Pacific was due largely to performance in Australia, where we saw sales increase 9% (or 15% in local currency), alongside 6% growth in China. The increases in Asia-Pacific came largely in the healthcare (up over 100%) and education (up 50%) market segments, tempered by declines in the government (down 68%) and retail (down 16%) segments. The corporate office market segment was essentially even in Asia-Pacific versus the second quarter of 2013.

For the six months ended June 29, 2014, net sales increased $25.8 million (5.7%) versus the comparable period in 2013. On a geographic basis, we saw increases in the Americas (up 5%) and Europe (up 15% in U.S. dollars, or 10% in local currency). Sales in Asia-Pacific declined 7% in the first six months of 2014 versus the same period in 2013. The increase in the Americas was due primarily to the education (up 9%), hospitality (up 24%) and retail (up 15%) market segments. Only the government segment (down 4%) experienced a decline during the period. The corporate office segment in the Americas was essentially even for the first six months of 2014 versus the prior year period. Sales in Europe increased 15% in U.S. dollars (or 10% in local currency) for the six-month period, due primarily to the corporate office segment (16% increase in U.S. dollars, or 11% in local currency) and all non-office market segments2015, with the exception of the retail (down 5%) and healthcare (down 38%(essentially flat) segments. Hospitality (up 74%). The sales decline in Asia-Pacific was largely a result of a slow start in and education (up 11%) market segments represented the first quarter of 2014 due to softer demand and the impacts of transitioning from an import model in Australia to the start-up of our new plant there. As discussed above, sales began recovering in the Asia-Pacific region in the second quarter of 2014. Formost significant increases over the first six months of 2014 versus2014. In local currency, the comparable periodincrease in 2013, the sales decline in the Asia-Pacific regionEurope was primarilymostly in the corporate office (downmarket, which grew 21%. Non-office segments in Europe in the aggregate were down 9% in local currency, with the most significant decline coming in the government segment due to the continued austerity measures in place throughout the region. In Asia-Pacific, the sales growth of 2% came as a result of the corporate office market. (up 9%) primarily due to increased new construction and refurbishment projects in Australia. With the exception of the hospitality segment (up 17%), governmentall non-office segments in Asia-Pacific showed declines for the period, with the most significant being in retail (down 66%35%) and retailhealthcare (down 24%) market segments. These declines were offset somewhat by increases in the healthcare (up over 100%) and education (up 28%) segments..

 

 

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Cost and Expenses

 

The following table presents, on a consolidated basis for our operations, our overall cost of sales and selling, general and administrative expenses for the three-month and six-month periods ended July 5, 2015, and June 29, 2014, and June 30, 2013, respectively:

 

 

Three Months Ended

  

Percentage

  

Three Months Ended

  

Percentage

 

Cost and Expenses

 

June 29, 2014

  

June 30, 2013

  

Change

  

July 5, 2015

  

June 29, 2014

  

Change

 

(In thousands)

     

(In thousands)

     

Cost of sales

 $170,239  $157,250   8.3%  $162,385  $170,239   (4.6%)

Selling, general and administrative expenses

  66,042   64,430   2.5%   68,033   66,042   3.0%

Total

 $236,281  $221,680   6.6%  $230,418  $236,281   (2.5%)

 

 

Six Months Ended

  

Percentage

  

Six Months Ended

  

Percentage

 

Cost and Expenses

 

June 29, 2014

  

June 30, 2013

  

Change

  

July 5, 2015

  

June 29, 2014

  

Change

 
 

(In thousands)

      

(In thousands)

     

Cost of sales

 $314,545  $296,367   6.1%  $313,857  $314,545   (0.2%)

Selling, general and administrative expenses

  128,701   121,688   5.8%   132,065   128,701   2.6%

Total

 $443,246  $418,055   6.0 %  $445,922  $443,246   0.6%

 

For the quarterthree months ended June 29, 2014,July 5, 2015, our costscost of sales increased $13.0decreased $7.9 million (8.3%(4.6%) versus the comparable period in the prior year.2014. Currency translation did not havefluctuation had a significantfavorable impact on cost of sales; if currency rates had remained the comparison between the periods on a consolidated basis. On a per-unit basis, raw material prices remained flat to slightly downsame for the second quarter of 20142015 versus that of the second quarter of 2013. In absolute dollars, the increase in2014, our cost of sales is primarily attributablewould have been approximately $13 million higher. As a percentage of sales, our cost of sales declined significantly to higher61.6% for the second quarter of 2015 versus 65.3% for the second quarter of 2014. Gross profit margin improved across all three of our primary geographic regions, with the Americas showing the largest improvement versus 2014. The key factors in the improvement were (1) reduced raw material costs (approximately $9 million)of 5-7% on a global level due to lower input prices and laborusage, (2) better absorption of fixed costs (approximately $1.3 million) associated with higher production volumes, during the 2014 second quarter. As a percentage of net sales, cost of salesparticularly in the second quarterAmericas and Europe, (3) the normalization of 2014 increased to 65.3% versus 64.6%operations in Australia and rebalancing of production in the second quarter of 2013. The percentage increase was due to higher manufacturing costs and complexitiesAsia-Pacific region compared with the inefficiencies associated with new product introductions, as well as product expansion into new markets at initially lower selling prices. Costthe startup of sales declined as a percentage of net sales versus the first quarter of 2014, as the integration of our new manufacturing facility in Minto, Australia progressed. The sequential improvement also reflects thein 2014, (4) continued implementation of lean manufacturing procedures we continue to implement worldwide. We expect further gross margin expansion throughoutpractices in our Americas business, and (5) the balancecost savings associated with our restructuring activities in the third quarter of 2014.

 

For the six months ended July 29,5, 2015, our cost of sales decreased $0.7 million (0.2%) versus the comparable period of 2014. Currency fluctuation had a favorable impact on cost of sales; if currency rates had remained the same for the first half of 2015 versus that of the first half of 2014, our cost of sales would have been approximately $23 million higher. As a percentage of sales, our costs of sales for the first six months of 2015 experienced a significant decline to 62.7%, as compared to 65.6% for the comparable period of 2014. The reasons for the decline for the six month period are similar to the reasons addressed above for the three month period: (1) reduced raw materials costs of 5-7%, (2) higher production volumes which led to greater absorption of fixed costs, (3) the continued stabilization of the supply chain and manufacturing footprint in the Asia-Pacific region, (4) improvements in manufacturing efficiencies, and (5) the impacts of our restructuring activities in 2014. The gross margin improvements accelerated during 2015, and as such, the improvement is more significant in the three months ended July 5, 2015 versus the six month period ended July 5, 2015.

For the three month period ended July 5, 2015, our selling, general and administrative expenses increased $18.2$2.0 million (6.1%(3.0%) versus the comparable period in 2013.2015. Currency translation did not havefluctuation had a significantfavorable impact on the comparison between the periods on a consolidated basis. On a per-unit basis, raw material prices remained flat to slightly down for the first six months of 2014 versus the same period in 2014. In absolute dollars, the increase in cost of sales is primarily attributable to higher raw material costs (approximately $12 million) and labor costs (approximately $1.8 million) associated with higher production volumes in 2014. As a percentage of net sales, cost of sales increased to 65.6% for the first six months of 2014 versus 65.3% in the same period of 2013. This percentage increase was due to the factors discussed above regarding new product introductions and our product and market mix, as well as the costs and negative manufacturing variances associated with the ramp-up of our new plant in Australia in 2014.

For the quarter ended June 29, 2014, selling, general and administrative expense increased $1.6 million (2.5%)expense; if currency rates had remained the same for the second quarter of 2015 versus the comparable period in 2013. Currency translation did not have a significant impact on the comparison between the periods on a consolidated basis. The increase was a direct resultthat of the higher sales level during the second quarter of 2014, versus the second quarter of 2013, as selling expenses rose $2.1 million year-over-year. On a geographic basis, this increase in selling expense was seen evenly across our three regions. The increase was offset somewhat by lower levels of marketing expenditures in the Americas and Europe, as well as lower levels of incentive based pay, including stock compensation, in the current year period. As a percentage of net sales, selling, general and administrative expenses declinedwould have been approximately $5 million higher. The largest driver of the increase in selling, general and administrative expenses versus the 2014 period is approximately $5.2 million of higher administrative expenses largely comprised of share-based payment expenses and incentive compensation amounts, as our projected performance is better in 2015 versus 2014. This increase was offset by lower selling and marketing expenses, down $1.4 million and $1.7 million, respectively. These declines, however, were largely due to 25.3%the currency translation effects discussed above, as in local currencies these expenditures remained relatively consistent year over year. Due to the increased administrative expenses discussed above, our selling, general and administrative expenses increased to 25.8% of sales for the second quarterthree months ended July 5, 2015, versus 25.3% of 2014, compared with 26.5%sales in the second quarter of 2013. This percentage decline iscorresponding period in 2014. On a direct result of the tighter spending controls we implemented during 2014, particularly in the second quarter. We expect further reductions insequential basis, however, selling general and administrative expenses as a percentage of net sales is lower, compared with 27.0% in the second halffirst quarter of 2014.2015.

 

 

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For the six month period ended June 29,July 5, 2015, our selling, general and administrative expenses increased $3.4 million (2.6%) versus the comparable period in 2014. Currency fluctuation had a positive impact on selling, general and administrative expenses; if currency rates had remained the same for the first six months of 2015 versus the first six months of 2014, our selling, general and administrative expenses increased $7.0would have been approximately $9 million (5.8%)higher. The increase was largely due to higher administrative expenses of $8.9 million largely comprised of share-based payment expenses and incentive compensation amounts, as our projected performance is better in 2015 versus 2014.These increases were partially offset by lower marketing (down $3.3 million) and selling (down $1.7 million) costs. While currency impacts were the primary factor in these declines, across all regions selling and marketing expenses were down as a percentage of sales versus the comparable period in 2013. Mostfirst six months of this increase ($5.4 million)2014, due to both higher sales as well as cost savings as a result of our restructuring actions which took place in the first three months of 2014, primarily due to $2.2 million of incremental selling expenses as well as $2.1 million of administrative expenses mostly related to executive level stock forfeitures that occurred in the first quarter of 2013 that did not take place in the firstthird quarter of 2014. For the full six month period ended June 29, 2013,Due to these initiatives, as a percentage of sales, selling, expenses increased $4.3 million. Other increases were seen in the administrative area ($2.0 million), primarily due to the aforementioned forfeiture of executive stock compensation in the prior year period, as well as smaller increases in marketing ($0.5 million) and research and development ($0.3 million) costs. Selling, general and administrative expenses were 26.8% of net sales for the first six months of 2014, which is the same percentage of net sales for2015 declined to 26.4%, versus 26.8% in the first six months of 2013. However, as discussed above in the quarterly comparison, there was a decrease as a percentage of sales in the second quarter of 2014 versus that of 2013, which was a result of the sales acceleration as well as the implementation of our cost savings initiatives in the second quarter of 2014.

 

Interest Expense

 

For the three-monththree month period ended June 29, 2014,July 5, 2015, our interest expense decreased by $0.5$3.6 million to $1.8 million, from $5.4 million in the second quarter of 2014. For the six month period ended July 5, 2015, our interest expense decreased $7.2 million to $3.7 million, from $5.9$10.9 million in the comparable period oflast year. The reason for the prior year. Fordecreases was the six months ended June 29, 2014, interest expense decreased by $1.1 million to $10.9 million from $12.1 million in the prior year period. The primary reasons for these decreases were the redemption of $27.5 million of our 7.625% Senior Notesdebt refinancing activities we completed in the fourth quarter of 2013, as well as the repayment at maturity2014, in which we redeemed all of the remaining $8.1our $247.5 million of our 11.375%outstanding 7.625% Senior Subordinated Notes in the fourth quarter of 2013. While we did haveand replaced them with borrowings outstanding under our Syndicated Credit Facility for the second quarterFacility. This facility is comprised of a term loan as well as a multi-currency revolving debt facility and first six months of 2014, which were not present in the second quarter and first six months of 2013, these borrowings wereincurs interest at a significantly lower interest rate than the senior notes which were repaid and redeemed in the fourth quarter of 2013.7.625% Senior Notes.

 

Liquidity and Capital Resources

 

General

 

At June 29, 2014,July 5, 2015, we had $50.0$71.8 million in cash. At that date, we had $31.5$200.0 million in term loan borrowings, $59.1 million of revolving loan borrowings and $3.3$3.1 million in letters of credit outstanding under the Syndicated Credit Facility. As of June 29, 2014,July 5, 2015, we could have incurred $165.2$187.8 million of additional borrowings under our Syndicated Credit Facility.In addition, we could have incurred an additional $8.4$19.0 million of borrowings under our other lines of credit in place at other non-U.S. subsidiariessubsidiaries.

 

Analysis of Cash Flows

 

Our primary sourcessource of cash during the six months ended June 29, 2014 were (1) $3.7 million of borrowings under our Syndicated Credit Facility, and (2) $1.9July 5, 2015 was $15.2 million due to an increase ina reduction of accounts payable and accrued expenses.receivable. Our primary uses of cash during the six monthsmonth then ended June 29, 2014 were (1) $22.0$27.2 million for increased inventory levels, (2) $12.1 million for capital expenditures, (2) $21.9(3) $10.5 million due to increased inventory levels, (3) $12.4 million due to an increase in accounts receivable,for stock repurchases, and (4) $4.0$5.3 million for payment of dividends.dividend payments.

 

ITEM 3.3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our discussion below in this Item 3 is based upon the more detailed discussions of our market risk and related matters included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2013,28, 2014, under Item 7A of that Form 10-K. Our discussion here focuses on the period ended June 29, 2014,July 5, 2015, and any material changes from (or other important intervening developments since the time of) the information discussed in that Form 10-K. This discussion should be read in conjunction with that Form 10-K for more detailed and background information.

 

At June 29, 2014,July 5, 2015, we recognized a $4.2$20.2 million increasedecrease in our foreign currency translation adjustment account compared to December 29, 2013,28, 2014, primarily because of the weakeningstrengthening of the U.S. dollar against certain foreign currencies.currencies, particularly the Euro and Australian dollar.

 

Sensitivity Analysis. For purposes of specific risk analysis, we use sensitivity analysis to measure the impact that market risk may have on the fair values of our market sensitive instruments.

To perform sensitivity analysis, we assess the risk of loss in fair values associated with the impact of hypothetical changes in interest rates and foreign currency exchange rates on market sensitive instruments. The market

Because the debt outstanding under our Syndicated Credit Facility has variable interest rates based on an underlying prime lending rate or LIBOR rate, we do not believe changes in interest rates would have any significant impact on the fair value of instruments affected by interest rate and foreign currency exchange rate risk is computed based on the present value of future cash flows as impacted by the changesthat debt instrument. Changes in the rates attributable tounderlying prime lending rate or LIBOR rate would, however, impact the market risk being measured. The discount rates usedamount of our interest expense. For a discussion of these hypothetical impacts on our interest expense, please see the discussion in Item 7A of our Annual Report on Form 10-K for the present value computations were selected based on market interest and foreign currency exchange rates in effect at June 29,year ended December 28, 2014. The values that result from these computations are compared with the market values of these financial instruments at June 29, 2014. The differences in this comparison are the hypothetical gains or losses associated with each type of risk.

 

 

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As of June 29, 2014, based on a hypothetical immediate 150 basis point increase in interest rates, with all other variables held constant, the market value of our fixed rate long-term debt would be impacted by a net decrease of approximately $1.6 million. Conversely, a 150 basis point decrease in interest rates would result in a net increase in the market value of our fixed rate long-term debt of approximately $1.6 million.

As of June 29, 2014,July 5, 2015, a 10% decrease or increase in the levels of foreign currency exchange rates against the U.S. dollar, with all other variables held constant, would result in a decrease in the fair value of our financial instruments of $10.3$10.1 million or an increase in the fair value of our financial instruments of $8.4$8.3 million, respectively. As the impact of offsetting changes in the fair market value of our net foreign investments is not included in the sensitivity model, these results are not indicative of our actual exposure to foreign currency exchange risk.

 

ITEM 4.CONTROLS AND PROCEDURES

 

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was performed under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Act”), pursuant to Rule 13a-14(c) under the Act. Based on that evaluation, our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report.

 

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

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PARTII - OTHER INFORMATION

 

ITEM 1.LEGAL PROCEEDINGS

 

We are subject to various legal proceedings in the ordinary course of business, none of which is required to be disclosed under this Item 1.

 

ITEM 1A.RISK FACTORS

 

There are no material changes in risk factors in the second quarter of 2014.2015. For a discussion of risk factors, see Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2013.28, 2014.

 

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table contains information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the quarter ended July 5, 2015:

Period(1)

 

Total

Numberof Shares 

Purchased

  

Average

PricePaid

Per Share

  

Total Number

of Shares Purchased

as Part of Publicly

Announced Plans

or Programs(2)

  

Maximum Number of

Shares that May Yet Be

Purchased Under the

Plans orPrograms(2)

 
                 

April 6-30, 2015

  0   N/A   0   250,000 

May 1-31, 2015(3)

  251,232  $22.40   250,000   0 

June 1-30, 2015

  0   N/A   0   0 

July 1-5, 2015

  0   N/A   0   0 

Total

  251,232  $22.40   250,000   0 

(1)The monthly periods identified above correspond to the Company’s fiscal second quarter of 2015, which commenced April 6, 2015 and ended July 5, 2015.

(2) In 2014, the Company announced a program to repurchase up to 500,000 shares of common stock per fiscal year, commencing with the 2014 fiscal year.

(3) Includes certain shares acquired by the Company from employees to satisfy income tax withholding obligations in connection with the vesting of previous grants of restricted stock.

ITEM 3.DEFAULTS UPONSENIOR SECURITIES

 

None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.MINE SAFETYDISCLOSURES

 

Not applicable

 

ITEM 5.OTHER INFORMATION

 

None

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ITEM 6.EXHIBITS

 

The following exhibits are filed with this report:

 

EXHIBIT

NUMBER

 

DESCRIPTION OF EXHIBIT

10.1

Employment and Change in Control Agreement of Robert A. Coombs dated May 15, 2015 (included as Exhibit 99.1 to the Company’s current report on Form 8-K filed on May 19, 2015, previously filed with the Commission and incorporated herein by reference).

10.2

Interface, Inc. Omnibus Stock Incentive Plan, as amended and restated February 18, 2015 (included as Exhibit 99.1 to the Company’s current report on Form 8-K filed on May 20, 2015, previously filed with the Commission and incorporated herein by reference).

10.3

Employment Contract of Robert Boogaard dated as of July 6, 2015 (included as Exhibit 99.1 to the Company’s current report on Form 8-K filed on July 10, 2015, previously filed with the Commission and incorporated herein by reference).

31.1

Section 302 Certification of Chief Executive Officer.

31.2

Section 302 Certification of Chief Financial Officer.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350.

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350.

101.INS

XBRL Instance Document  

101.SCH

XBRL Taxonomy Extension Schema Document  

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document  

101.PRE

XBRL Taxonomy Presentation Linkbase Document  

101.DEF

XBRL Taxonomy Definition Linkbase Document

 

 

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Table Of Contents

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

INTERFACE, INC.

   

Date: August 7, 201410, 2015

By:

 /s/ Patrick C. Lynch

  

Patrick C. Lynch

  

Senior Vice President

  

(Principal Financial Officer)

 

 

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Table Of Contents

 

EXHIBITS INCLUDED HEREWITH

 

EXHIBIT

NUMBER

 

DESCRIPTION OF EXHIBIT

  

10.1

Employment and Change in Control Agreement of Robert A. Coombs dated May 15, 2015 (included as Exhibit 99.1 to the Company’s current report on Form 8-K filed on May 19, 2015, previously filed with the Commission and incorporated herein by reference).

10.2

Interface, Inc. Omnibus Stock Incentive Plan, as amended and restated February 18, 2015 (included as Exhibit 99.1 to the Company’s current report on Form 8-K filed on May 20, 2015, previously filed with the Commission and incorporated herein by reference).

10.3

Employment Contract of Robert Boogaard dated as of July 6, 2015 (included as Exhibit 99.1 to the Company’s current report on Form 8-K filed on July 10, 2015, previously filed with the Commission and incorporated herein by reference).

31.1

Section 302 Certification of Chief Executive Officer

31.2

Section 302 Certification of Chief Financial Officer

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350

101.INS

XBRL Instance Document  

101.SCH

XBRL Taxonomy Extension Schema Document  

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document  

101.PRE

XBRL Taxonomy Presentation Linkbase Document  

101.DEF

XBRL Taxonomy Definition Linkbase Document  

 

 

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