During the secondfirst quarter of 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, in the second quarter of 2014. During the six months ended 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, in the first six months of 2014.

The first six months of 2015 werewas comprised of 2714 weeks, while the first six monthsquarter of 2014 were2016 was comprised of 2613 weeks. (The additional week was in the first quarter of 2015.) This is a factor in certain of the comparisons discussed in this Item 2.

During the first quarter of 2016, we had net income of $12.9 million, or $0.20 per diluted share, compared with net income of $12.3 million, or $0.19 per diluted share, in the first quarter last year.

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 JulyApril 3, 2016 and April 5, 2015, and June 29, 2014, respectively:

Net Sales

Below we provide information regarding net sales, and analyze those results, for the three-month and six-month periods ended JulyApril 3, 2016, and April 5, 2015, and June 29, 2014, respectively.

For the quarter ended July 5, 2015,April 3, 2016, net sales increased $3.0declined $14.4 million (1.2%(6.1%) versus the comparable period in 2014. As discussed above, the strengthening of the U.S. dollar versus certain foreign currencies (primarily, the Euro, Australian dollar and Canadian dollar)2015. Currency fluctuations had aan approximately $3.7 million (1.5%) negative impact of approximately $24 million on 2015 secondfirst quarter 2016 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 halfquarter of 2014.2015. On a geographic basis, we experienced sales increasesdeclines in the Americas (up 11%(down 6%) and Asia-Pacific (up 2%) versus the first six months of 2014. Due to the impact of currency fluctuations, Europe experienced a sales decline of 7% as reported(down 10% in U.S. dollars and 9% in local currency) but an increase of 3% in local currency of 14%.Asia-Pacific. In the Americas, the sales increase was almost 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 showed an increase for the first six months of 2015, with the exception of the retail (down 5%) and healthcare (essentially flat) segments. Hospitality (up 74%) and education (up 11%) market segments represented the most significant increases over the first six months of 2014. In local currency, the increase in Europe was mostlydecline occurred largely in the corporate office market which grew 21%. Non-office segments in Europe(down 5%), as many large customers, particularly in the aggregate were down 9%energy sector, deferred purchases in local currency, with the most significantlight of current market conditions. Also impacting this decline comingwas a deferral of retail projects for one of our largest customers in the sector to the second half of the year. Our residential FLOR business experienced a decline of 17%, as the Spring promotion was not as robust in the first quarter of 2016 as compared to 2015. The government market segment was down 31% due to a significant order in the continued austerity measuresfirst quarter of 2015 that was not expected to recur in place throughout2016, as well as delays in government spending surrounding the region.2016 election cycle. These decreases were offset slightly by essentially flat sales in our other market segments. In Asia-Pacific,Europe, the sales growth of 2% camedecline was primarily as a result of the significant uncertainty in the region with several geopolitical and economic disruptions underway, including the pending vote on the exit of the United Kingdom from the European Union, the terror attacks in the region, the refugee crisis and slowdowns in the financial services and energy sectors. All of these factors led to significant uncertainty in Europe and impacted buying decisions across all market segments, with the corporate office market.market (down 10%) taking the brunt of the negative impact. Our non-corporate office market segments in the region were down approximately 5% for the quarter as compared to last year, with increases in retail (up 32%) and hospitality (up 22%) market segments offset by declines in government (down 19%) and education (down 23%) market segments. In Asia-Pacific, the increase was primarily attributable to sales improvement in Asia, specifically Southeast Asia (up 9%) and India (up over 50%). The increase in the region was primarily due to increased new construction and refurbishment projects in Australia. With the exception of the hospitalitycorporate office segment (up 17%11%), allas non-office segments were down 12% in Asia-Pacific showed declines for the period,aggregate with retail (down 46%) and hospitality (down 37%) having the most significant beingdeclines. In Australia, we saw an increase of 5% in retail (down 35%) and healthcare (down 24%).local currency, as the favorable economic trends continue in that region, but this was effectively nullified by currency translation impacts. Sales in China were down approximately 7% for the first three months of 2016 as compared to the corresponding period of 2015.

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 JulyApril 3, 2016, and April 5, 2015, and June 29, 2014, respectively:

For the three monthsquarter ended July 5, 2015,April 3, 2016, our cost of sales decreased $7.9$15.6 million (4.6%(10.3%) versusas compared to the comparable periodfirst quarter of 2015. Fluctuations in 2014. Currency fluctuation hadcurrency exchange rates did not have a favorablesignificant impact (approximately 1%) on the decline. Sales were down 6.1% for the quarter, which explains the majority of the decline in cost of sales; if currency rates had remainedsales. The remainder of the samedecrease was due to the following factors: (1) lower raw materials costs for the second quarterfirst three months of 2016 as compared to the corresponding period of 2015, versus thatas our per-unit input costs were down 6-8% during the quarter, primarily as a result of lower petroleum and related feedstock costs; (2) better material usage and production efficiencies as we continue to implement lean manufacturing practices; (3) higher average selling prices, particularly in the second quarterAmericas and Asia; and (4) introduction of 2014, our cost of sales would have been approximately $13 million higher. Asmargin accretive products such as additional skinny plank designs. These initiatives led to significant production efficiencies and gross margin improvements, as despite a percentage of sales,12% decline in units produced our cost of sales declined significantly to 61.6% 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 of 5-7% on a global level due to lower input prices and usage, (2) better absorption of fixed costs associated with higher production volumes, particularly in the Americas and Europe, (3) the normalization of operations in Australia and rebalancing of production in the Asia-Pacific region compared with the inefficiencies associated with the startup of the new facility in Australia in 2014, (4) continued implementation of lean manufacturing practices in our Americas business, and (5) the cost savings associated with our restructuring activities in the third quarter of 2014.

For the six months ended July 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 $2.0 million (3.0%) versus the comparable period in 2015. Currency fluctuation had a favorable impact on selling, general and administrative expense; if currency rates had remained the same for the second quarter of 2015 versus that of the second quarter of 2014, our selling, general and administrative expenses would 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 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%61.1% of sales for the three months ended July 5, 2015, versus 25.3% of sales inApril 3, 2016, as compared to 63.9% for the corresponding period in 2014. On a sequential basis, however, selling general and administrative expenses as a percentage of sales is lower, compared with 27.0% in the first quarter of 2015.

For the six month periodquarter ended July 5, 2015,April 3, 2016, our selling, general and administrative (“SG&A”) expenses increased $3.4$1.6 million (2.6%(2.4%) versus the comparable period in 2014. Currency fluctuation2015. Fluctuations in currency exchange rates had a positiveslight (approximately 1%) negative impact on selling, general and administrative expenses; if currency rates had remained the sameour SG&A expenses for the first six monthsquarter of 2015 versus2016. The change in these expenses was due to (1) higher marketing expense of approximately $2.8 million for budgeted strategic branding and market development campaigns across the global organization in order to continue to penetrate additional markets, particularly in Europe, (2) higher administrative costs of approximately $1.3 million, primarily at the corporate level for additional senior level personnel as we transition to a more globally integrated structure focusing on functional area alignment, and (3) higher selling costs of approximately $0.5 million associated with personnel additions in key markets and global selling initiatives. These increases were somewhat offset by $3.2 million less of performance-based share-based compensation amounts in the first six monthsquarter of 2014, our selling, general and administrative expenses2016 versus 2015, as in the prior year period it was deemed probable that shares would have been approximately $9 million higher. The increase was largely duevest based on 2015 performance. 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 betterthese budgeted spending initiatives, combined with the decline 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 downsales discussed above, as a percentage of sales versus the first six months of 2014, dueSG&A expenses increased to both higher sales as well as cost savings as a result of our restructuring actions which took place in the third quarter of 2014. Due to these initiatives, as a percentage of sales, selling, general and administrative expenses29.5% for the first six monthsquarter of 2015 declined2016 as compared to 26.4%, versus 26.8% in27.0% for the first six monthscorresponding period of 2014.2015.

Interest Expense

For the three monththree-month period ended July 5, 2015, ourApril 3, 2016, interest expense decreased $3.6by $0.4 million to $1.8$1.5 million, from $5.4versus $1.9 million in the second quarter of 2014. For the six monthfor three-month period ended JulyApril 5, 2015, our interest expense decreased $7.2 million to $3.7 million, from $10.9 million in the comparable period last year.2015. The reason for the decreasesdecrease was the debt refinancing activities we completed in the fourth quarter of 2014, in which we redeemed all of our $247.5 million oflower daily average outstanding 7.625% Senior Notes and replaced them with borrowings under our Syndicated Credit Facility. This facility is comprisedFacility during the first quarter of a term loan2016 as well as a multi-currency revolving debt facility and incurs interest at a significantly lower rate thancompared to the 7.625% Senior Notes.first quarter of 2015.

Liquidity and Capital Resources

General

At July 5, 2015,April 3, 2016, we had $71.8$83.2 million in cash. At that date, we had $200.0$195.0 million in term loan borrowings, $59.1$37.6 million of revolving loan borrowings and $3.1 million in letters of credit outstanding under theour Syndicated Credit Facility. As of July 5, 2015,April 3, 2016, we could have incurred $187.8$209.3 million of additional borrowings under our Syndicated Credit Facility.InFacility. In addition, we could have incurred an additional $19.0$14.8 million of borrowings under our other lines of credit facilities in place at other non-U.S. subsidiaries.

Analysis of Cash Flows

Our primary sourcesources of cash during the sixthree months ended July 5, 2015 was $15.2April 3, 2016 were (1) $17.7 million due toof revolving loan borrowings under our Syndicated Credit Facility, and (2) $13.2 million from a reduction in accounts receivable during the quarter. Most of accounts receivable.the revolving loan borrowings were made by our Australian subsidiary in Australian dollars and then converted into U.S. dollars, to take advantage of a strong Australian dollar and lock in a favorable exchange rate into U.S. dollars, which are used by that business for certain raw material purchases. Our primary uses of cash during the six month then endedperiod were (1) $27.2$31.7 million from a reduction of accruals and accounts payable outstanding at the end of 2015, particularly in the areas of employee payroll, incentives and related items, (2) $9.4 million for increasedan increase in inventory, levels, (2) $12.1(3) $4.5 million for capital expenditures, (3) $10.5and (4) $3.3 million for stock repurchases, and (4) $5.3 million for dividend payments.the payment of dividends on our common stock.

ITEM 33.QUANTITATIVE. 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 28, 2014,January 3, 2016, under Item 7A of that Form 10-K. Our discussion here focuses on the periodquarter ended July 5, 2015,April 3, 2016, 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 July 5, 2015,April 3, 2016, we recognized a $20.2$9.4 million decreaseincrease in our foreign currency translation adjustment account compared to December 28, 2014,January 3, 2016, primarily because of the strengthening of the U.S.Euro and Australian dollar against certain foreign currencies, particularly the Euro and AustralianU.S. dollar.

Sensitivity Analysis. For purposes of specific risk analysis, we use sensitivity analysis to measure the impact that market risk may have on the fair values of our market sensitive instruments. To perform sensitivity analysis, we assess the risk of loss in fair values associated with the impact of hypothetical changes in interest rates and foreign currency exchange rates on market sensitive instruments.

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 that debt instrument. Changes in the underlying prime lending rate or LIBOR rate would, however, impact the amount 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 year ended December 28, 2014.January 3, 2016.

As of July 5, 2015,April 3, 2016, 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 $10.1$10.2 million or an increase in the fair value of our financial instruments of $8.3$12.4 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.CONTROLSAND 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 PresidentChairman 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 PresidentChairman 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.

PARTII - OTHER INFORMATION