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Commission on October 13, 2009.
TO
UNDER
THE SECURITIES ACT OF 1933
Georgia | 2273 | 58-1451243 | ||
(State or Other Jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer | ||
Incorporation or Organization) | Classification Code Number) | Identification Number) |
(Exact Name of Registrants as Specified in Their Charters)
(770) 437-6800
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Senior Vice President-Administration, General Counsel and Secretary
Interface, Inc.
2859 Paces Ferry Road, Suite 2000, Atlanta, Georgia 30339
(770) 437-6800
(Name, address, including zip code, and telephone number, including area code, of agent for service)
W. Randy Eaddy, Esquire
Kilpatrick Stockton LLP
1100 Peachtree Street, Atlanta, Georgia 30309-4530
Telephone: (404) 815-6500
Large accelerated filerþ | Accelerated filero | Non-accelerated filero (Do not check if a smaller reporting company) | Smaller reporting companyo |
Title of each class of | Amount to be | Proposed Maximum Offering | Proposed Maximum | Amount of registration | ||||||||||
securities to be registered | Registered | Price per Unit (1) | Aggregate Offering Price | fee | ||||||||||
11 3/8 % Senior Secured Notes, Series B, Due 2013 | $150,000,000 | 100% | $150,000,000 | $8,370 | ||||||||||
Subsidiary Guarantees of 11 3/8 % Senior Secured Notes, Series B, Due 2013 | (2) | (2) | (2) | (2) | ||||||||||
(1) | Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(f). | |
(2) | Pursuant to Rule 457(f), no registration fee is required for guarantees. |
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State or Other | I.R.S. | Address, Including Zip Code, | ||||||
Jurisdiction of | Employer | and Telephone Number, | ||||||
Incorporation or | File | Identification | Including Area Code, of Registrant’s | |||||
Exact Name of Registrant* | Organization | Number | Number | Principal Executive Offices | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Bentley Mills, Inc. | Nevada | 333-160858-24 | 58-2271568 | (770) 437-6800 | ||||
14641 East Don Julian Road | ||||||||
City of Industry, California 91746 | ||||||||
Bentley Prince Street, Inc. | Delaware | 333-160858-23 | 68-0123642 | (800) 423-4209 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Commercial Flooring Systems, Inc. | Pennsylvania | 333-160858-22 | 23-2144454 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Flooring Consultants, Inc. | Arizona | 333-160858-21 | 58-2274454 | (770) 437-6800 | ||||
116 N. York, Suite 300 | ||||||||
Elmhurst, Illinois 60126 | ||||||||
FLOR, Inc. | Georgia | 333-160858-20 | 56-2302232 | (866) 281-3567 | ||||
1503 Orchard Hill Road | ||||||||
LaGrange, Georgia 30241 | ||||||||
Interface Americas, Inc. | Georgia | 333-160858-17 | 58-2132517 | (800) 336-0225 | ||||
1503 Orchard Hill Road | ||||||||
LaGrange, Georgia 30241 | ||||||||
Interface Americas Holdings, LLC | Georgia | 333-160858-19 | 58-1409883 | (800) 336-0225 | ||||
1503 Orchard Hill Road | ||||||||
LaGrange, Georgia 30241 | ||||||||
Interface Americas Re:Source Technologies, LLC | Georgia | 333-160858-18 | 58-1722967 | (800) 336-0225 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Interface Architectural Resources, Inc. | Michigan | 333-160858-16 | 38-2391670 | (770) 437-6800 | ||||
Dampfaergvej 3 st. tv. | ||||||||
DK 2100 Copenhagen, Denmark | ||||||||
Interface Global Company ApS | Delaware and Denmark | 333-160858-15 | 98-0217280 | +45-7730-4247 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Interface Overseas Holdings, Inc. | Georgia | 333-160858-14 | 58-1967211 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Interface Real Estate Holdings, LLC | Georgia | 333-160858-13 | 58-2576895 | (770) 437-6800 | ||||
1503 Orchard Hill Road | ||||||||
LaGrange, Georgia 30241 | ||||||||
InterfaceFLOR, LLC | Georgia | 333-160858-12 | 58-1765146 | (800) 336-0225 | ||||
322 Northpoint Parkway, Suite G | ||||||||
Acworth, Georgia 30102 | ||||||||
InterfaceSERVICES, Inc. | Georgia | 333-160858-11 | 22-3856499 | (800) 336-0225 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Quaker City International, Inc. | Pennsylvania | 333-160858-10 | 58-2221600 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Re:Source Americas Enterprises, Inc. | Georgia | 333-160858-09 | 58-2223733 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Re:Source Minnesota, Inc. | Minnesota | 333-160858-08 | 58-2339867 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Re:Source New York, Inc. | New York | 333-160858-07 | 58-2248952 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Re:Source North Carolina, Inc. | North Carolina | 333-160858-06 | 58-2250817 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Re:Source Oregon, Inc. | Oregon | 333-160858-05 | 58-2246368 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Re:Source Southern California, Inc. | California | 333-160858-04 | 58-2315287 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Re:Source Washington, D.C., Inc. | Virginia | 333-160858-03 | 58-2246309 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Southern Contract Systems, Inc. | Georgia | 333-160858-02 | 58-2246313 | (770) 437-6800 | ||||
2859 Paces Ferry Road, Suite 2000 | ||||||||
Atlanta, Georgia 30339 | ||||||||
Superior/Reiser Flooring Resources, Inc. | Texas | 333-160858-01 | 58-2221598 | (770) 437-6800 |
* | The Primary Standard Industrial Classification Code (PSICC) for each of the Additional Registrants is 2273, except that: Interface Americas Re:Source Technologies, LLC’s PSICC is 2891; Interface Architectural Resources, Inc.’s PSICC is 1700; and, Interface Real Estate Holdings, LLC’s PSICC is 6500. |
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October 13, 2009
11 3/8 % Senior Secured Notes due 2013, Series B
for
11 3/8 % Senior Secured Notes due 2013, Series A
11 3/8 % Senior Secured Notes due 2013, Series B
for the same principal amount of our outstanding
11 3/8 % Senior Secured Notes due 2013, Series A.
We are making this offer to satisfy our obligation in the Registration Rights Agreement, dated June 5, 2009, relating to the original issuance of the original notes.
¨ Maturity Date | |||
The exchange notes will mature on November 1, 2013. | |||
¨ Interest | |||
The exchange notes will bear interest at the rate of 11 3/8 % per year. Interest on the exchange notes is payable semi-annually in cash on May 1 and November 1 of each year, beginning on November 1, 2009. | |||
¨ Optional Redemption | |||
Before November 1, 2013, we may redeem some or all of the exchange notes at a redemption price equal to 100% of the principal amount of each exchange note to be redeemed plus a make-whole premium described in this prospectus. In addition, at any time prior to May 1, 2012, we may redeem up to 35% of the exchange notes with the net cash proceeds from specified equity offerings at a redemption price equal to 111.375% of the principal amount of each exchange note to be redeemed, plus accrued and unpaid interest, if any, to the date of redemption. However, we may only make such a redemption if at least 65% of the aggregate principal amount of the exchange notes remains outstanding immediately after the redemption and such redemption occurs within 180 days after the closing of such specified equity offering. | |||
¨ Change of Control | |||
If we undergo a change of control or sell certain of our assets, we may be required to offer to purchase the exchange notes from holders at a price of 101% of the principal amount, plus accrued interest at the purchase date. | |||
¨ Subsidiary Guarantees | |||
The exchange notes will be fully and unconditionally guaranteed, jointly and severally, on a secured, senior basis by each of our material U.S. subsidiaries. | |||
¨ Security and Ranking | |||
The exchange notes and the guarantees will be senior secured obligations of Interface and the guarantors. The exchange notes will rank equally with any of the existing and future senior indebtedness of Interface and the guarantors, and will be senior in right of payment to any senior unsecured indebtedness of Interface and the guarantors to the extent of the assets securing the obligations, and senior to any subordinated indebtedness of Interface and the guarantors. | |||
¨ No Trading Market Listing | |||
We do not intend to list the exchange notes for trading or quotation on any national securities exchange or the Nasdaq Stock Market. |
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EX-5 | ||||||||
EX-8 | ||||||||
EX-23.2 CONSENT OF BDO SEIDMAN, LLP |
• | Annual Report on Form 10-K for the fiscal year ended December 28, 2008, as amended; | ||
• | Quarterly Reports on Form 10-Q for the quarters ended April 5, 2009 and July 5, 2009; | ||
• | Current Reports on Form 8-K filed December 30, 2008, January 2, 2008, April 29, 2009, May 28, 2009 (solely with respect to Items 5.02 and 8.01 thereto), June 2, 2009, June 11, 2009, July 27, 2009, July 29, 2009 and September 9, 2009; and | ||
• | All other documents and reports filed after the date of this prospectus and before termination of this exchange offer pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. |
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• | introduced specialized product offerings tailored to the unique demands of these segments, including specific designs, functionalities and prices; | ||
• | created special sales teams dedicated to penetrating these segments at a high level, with a focus on specific customer accounts rather than geographic territories; and | ||
• | realigned incentives for our corporate office segment sales force generally in order to encourage their efforts, and where appropriate, to assist our penetration of these other segments. |
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The Exchange Offer | We are offering to exchange up to $150,000,000 in principal amount of our 11 3/8 % Senior Secured Notes due 2013, Series B, for up to $150,000,000 in principal amount of our outstanding 11 3/8 % Senior Secured Notes due 2013, Series A. | |
The Exchange Notes | The exchange notes we will issue in this exchange offer are identical in all material respects to the original notes, except for transfer restrictions, registration rights and penalty interest provisions relating to the original notes. We will issue the exchange notes without legends restricting their transfer. See “Description of the Notes”, beginning on page 66. | |
Expiration Date; Withdrawal of Tender | The exchange offer will expire at , Eastern Time, on , 2009, unless we extend the offer. Until the offer expires, you may withdraw any original notes that you previously tendered. If we do not accept your original notes for exchange for any reason, we will return them to you at our cost, promptly after the exchange offer. | |
Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, including the following: | |
• there is no threatened or pending lawsuit that may materially impair our ability to proceed with the exchange offer, | ||
• there is no law, statute, rule or regulation that might materially impair our ability to proceed with the exchange offer, and | ||
• we receive any governmental approval necessary to complete the exchange offer. | ||
We may waive one or more of these conditions in our reasonable discretion. These conditions are discussed in more detail below under “The Exchange Offer — Conditions to the Exchange Offer” on page 24. | ||
Procedures for Tendering Original Notes | If you hold original notes and wish to accept the exchange offer, you must: | |
• complete, sign and date the letter of transmittal that is included with this prospectus, and | ||
• mail or deliver the letter of transmittal to U.S. Bank National Association, our exchange agent. | ||
Be sure to include the original notes you wish to exchange, deliver the original notes by book entry transfer, or make guaranteed delivery. You must tender original notes for exchange in $1,000 multiples. |
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By executing the letter of transmittal, you will represent to us that, among other things, | ||
(1) you will acquire the exchange notes in the ordinary course of your business, | ||
(2) you are not engaging in or intending to engage in a distribution of the exchange notes, | ||
(3) you have no arrangement with any person to participate in the distribution of the exchange notes, and | ||
(4) you are not our “affiliate”, as defined in Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”). | ||
If any affiliates or broker-dealers acquired original notes directly from us, they would not be able to participate in the exchange offer. | ||
Special Procedures for Beneficial Owners | This paragraph applies to the beneficial owners of original notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee. If you are a beneficial owner and wish to tender your original notes in the exchange offer, please contact the registered holder and instruct it to tender on your behalf. If you wish to tender on your own behalf, you must either re-register the original notes in your name or obtain a properly completed bond power from the registered holder. You may not be able to re-register your original notes in time to participate in the exchange offer. | |
Guaranteed Delivery Procedures | If you wish to tender your original notes, but they are not immediately available, or you cannot deliver your original notes, the letter of transmittal, or any other required documents to U.S. Bank National Association before the offer expires, you must tender your original notes using the guaranteed delivery procedures described in “The Exchange Offer — Guaranteed Delivery Procedures”, beginning on page 27. | |
Registration Requirements | We will use our commercially reasonable best efforts to complete the registered exchange offer to allow you an opportunity to exchange your original notes for the exchange notes. In the event that applicable interpretations of the staff of the SEC do not permit us to effect the exchange offer or in certain other circumstances, we have agreed to file a shelf registration statement covering resales of the original notes. In such event, we will use our commercially reasonable best efforts to cause the shelf registration statement to be declared effective under the Securities Act and, subject to certain exceptions, to keep the shelf registration statement effective until the first anniversary of its original effective date, unless all the notes are sold under the shelf registration statement in a shorter timeframe. | |
Material U.S. Federal Income Tax Consequences | We discuss the material U.S. federal income tax consequences relating to the exchange notes in “Material U.S. Federal Income Tax Consequences”, beginning on page 109. | |
Use of Proceeds | We will not receive any proceeds from the exchange of notes in this exchange offer. The proceeds we received from the sale of the original notes were applied as described in connection with that offering. See “Use of Proceeds” on page 20. | |
Exchange Agent | U.S. Bank National Association is our exchange agent. Its address and telephone number are listed in “The Exchange Offer — Exchange Agent”, on page 28. |
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Issuer | Interface, Inc. | |
Notes Offered | $150,000,000 aggregate principal amount of 11 3/8 % Senior Secured Notes due 2013, Series B. | |
Maturity Date | November 1, 2013. | |
Interest Payment Dates | May 1 and November 1, commencing November 1, 2009. | |
Subsidiary Guarantees | Each of our material U.S. subsidiaries will guarantee the exchange notes. | |
Ranking | The exchange notes and the guarantees will be senior secured obligations of Interface, Inc. and the guarantors. The exchange notes will rank equally with Interface, Inc.’s and the guarantors’ existing and future senior indebtedness, senior in right of payment to any senior unsecured indebtedness of Interface, Inc. and the guarantors to the extent of the assets securing the obligations, and senior to any subordinated indebtedness of Interface, Inc. and the guarantors. The liens on the collateral securing the exchange notes will be expressly subordinated to the first-priority liens on the collateral securing the domestic revolving credit facility pursuant to an intercreditor agreement between the domestic agent under the domestic revolving credit facility and U.S. Bank National Association, the trustee (the “Trustee”) under the indenture governing the exchange notes (the “Indenture”). | |
As of July 5, 2009, we had $294.2 million of debt and we could have incurred an additional $49.9 million of debt under our domestic revolving credit facility, each of which would rank equally to the exchange notes. | ||
Security | The exchange notes and the guarantees will be secured by second-priority liens on substantially all of the assets of Interface, Inc. and its material U.S. subsidiaries (except for Interface Global Company ApS). These same assets also constitute the first-priority security for the obligations of Interface, Inc. and the guarantors under our domestic revolving credit facility. The second-priority liens granted to the holders of the exchange notes and the guarantees will be effectively subordinated to such facility pursuant to the terms of an intercreditor agreement. See “Description of the Notes — Security for the Notes and the Guarantees”. As of July 5, 2009, Interface, Inc. and the guarantors had total consolidated assets of $368.3 million, including cash of $57.9 million, accounts receivable of $52.8 million, inventory of $68.2 million and property and equipment, net, of $85.9 million. |
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Optional Redemption | Before November 1, 2013, we may redeem some or all of the exchange notes at a redemption price equal to 100% of the principal amount of each Note to be redeemed plus a make-whole premium described in this prospectus. | |
In addition, at any time prior to May 1, 2012, we may redeem up to 35% of the original aggregate principal amount of the exchange notes with the net cash proceeds from specified equity offerings at a redemption price equal to 111.375% of the principal amount of each exchange note to be redeemed, plus accrued and unpaid interest, if any, to the date of redemption. However, we may only make such a redemption if at least 65% of the aggregate principal amount of the exchange notes remains outstanding immediately after the redemption and such redemption occurs within 180 days after the closing of such specified equity offering. | ||
Change of Control | Upon a change of control, we must offer to repurchase the exchange notes at 101% of the principal amount plus accrued interest at the purchase date. | |
Certain Covenants | The Indenture contains several covenants, including limitations and restrictions on our ability to: | |
• incur additional indebtedness; | ||
• make dividend payments or other restricted payments; | ||
• create liens; | ||
• make asset sales; | ||
• sell securities of our subsidiaries; | ||
• enter into certain types of transactions with shareholders and affiliates; and | ||
• enter into mergers, consolidations, or sales of all or substantially all of our assets. | ||
These covenants are subject to important exceptions and qualifications, which are described in “Description of the Notes — Certain Covenants”. | ||
Risk Factors | Holders of original notes should carefully consider the matters set forth under the caption “Risk Factors” prior to making an investment decision with respect to the exchange notes. |
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As of and for the | ||||||||||||||||||||||||||||
As of and for the Year Ended(1) | Six Months Ended | |||||||||||||||||||||||||||
(dollars in thousands, | January 2, | January 1, | December 31, | December 30, | December 28, | June 29, | July 5, | |||||||||||||||||||||
except per share | 2005 | 2006 | 2006 | 2007 | 2008 | 2008 | 2009 | |||||||||||||||||||||
data) | (audited) | (unaudited) | ||||||||||||||||||||||||||
Statement of Income Data: | ||||||||||||||||||||||||||||
Net sales | $ | 695,250 | $ | 786,924 | $ | 914,659 | $ | 1,081,273 | $ | 1,082,344 | $ | 556,741 | $ | 410,605 | ||||||||||||||
Gross profit on sales | 226,085 | 259,277 | 311,108 | 377,522 | 372,045 | 199,599 | 132,275 | |||||||||||||||||||||
Selling, general and administrative expenses | 166,167 | 181,561 | 211,487 | 246,258 | 258,198 | 135,152 | 106,634 | |||||||||||||||||||||
Restructuring charge | — | — | — | — | 10,975 | — | 7,627 | |||||||||||||||||||||
Gain on litigation settlements | — | — | — | — | — | — | (5,926 | ) | ||||||||||||||||||||
Operating income | 59,918 | 77,716 | 99,621 | 129,391 | 41,659 | 64,407 | 23,940 | |||||||||||||||||||||
Interest expense | 46,023 | 45,541 | 42,204 | 34,110 | 31,480 | 15,936 | 15,399 | |||||||||||||||||||||
Income (loss) from continuing operations (2)(3) | 6,386 | 15,933 | 36,235 | 58,972 | (34,513 | ) | 30,589 | 426 | ||||||||||||||||||||
Income (loss) per share attributable to Interface, Inc. common shareholders from continuing operations(4): | ||||||||||||||||||||||||||||
Basic | $ | 0.11 | $ | 0.29 | $ | 0.65 | $ | 0.94 | $ | (0.58 | ) | $ | 0.48 | $ | 0.00 | |||||||||||||
Diluted | $ | 0.11 | $ | 0.28 | $ | 0.64 | $ | 0.93 | $ | (0.58 | ) | $ | 0.47 | $ | 0.00 | |||||||||||||
Cash dividends per common share | $ | — | $ | — | $ | — | $ | 0.08 | $ | 0.12 | $ | 0.06 | $ | 0.005 | ||||||||||||||
Other Data: | ||||||||||||||||||||||||||||
Adjusted EBITDA(5) | $ | 82,825 | $ | 98,164 | $ | 121,371 | $ | 151,878 | $ | 137,511 | $ | 76,391 | $ | 37,686 | ||||||||||||||
Depreciation and amortization | 22,907 | 20,448 | 21,750 | 22,487 | 23,664 | 11,984 | 12,045 | |||||||||||||||||||||
Capital expenditures | 11,600 | 19,354 | 28,540 | 40,592 | 29,300 | 14,079 | 7,401 | |||||||||||||||||||||
Ratio of earnings to fixed charges(6) | 1.2 | x | 1.5 | x | 2.0 | x | 3.1 | x | 1.2 | x | 3.3 | x | 1.1 | x |
As of | As of | |||||||||||||||||||||||||||
January 2, | January 1, | December 31, | December 30, | December 28, | June 29, | July 5, | ||||||||||||||||||||||
2005 | 2006 | 2006 | 2007 | 2008 | 2008 | 2009 | ||||||||||||||||||||||
(dollars in thousands) | (audited) | (unaudited) | ||||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 17,158 | $ | 47,275 | $ | 109,157 | $ | 82,375 | $ | 71,757 | $ | 83,616 | $ | 89,867 | ||||||||||||||
Accounts receivable, net | 114,980 | 114,070 | 143,025 | 178,625 | 144,783 | 175,263 | 122,758 | |||||||||||||||||||||
Inventories | 93,674 | 87,823 | 112,293 | 125,789 | 128,923 | 152,039 | 122,854 | |||||||||||||||||||||
Property and Equipment | 118,493 | 115,890 | 134,631 | 161,874 | 160,717 | 170,618 | 164,097 | |||||||||||||||||||||
Working capital | 344,460 | 317,668 | 380,253 | 238,578 | 221,323 | 263,478 | 221,209 | |||||||||||||||||||||
Current maturities of long-term debt | — | — | — | — | — | — | 14,586 | |||||||||||||||||||||
Total assets | 869,798 | 838,990 | 928,340 | 835,232 | 706,035 | 879,330 | 705,465 | |||||||||||||||||||||
Total long-term debt | 460,000 | 458,000 | 411,365 | 310,000 | 287,588 | 310,000 | 279,556 | |||||||||||||||||||||
Total shareholders’ equity(3) | 198,309 | 176,485 | 279,900 | 301,116 | 217,437 | 342,114 | 230,481 | |||||||||||||||||||||
Total capitalization(7) | 658,309 | 634,485 | 691,265 | 611,116 | 505,025 | 652,114 | 524,623 |
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(1) | In the third quarter of 2007, we sold our Fabrics Group business segment. In the third quarter of 2004, we also decided to discontinue the operations related to our Re:Source dealer businesses (as well as the operations of a small Australian dealer business and a small residential fabrics business). The data has been adjusted to reflect the discontinued operations of these businesses. | |
(2) | Included in our 2007 income from continuing operations is a loss of $1.9 million on the disposition of our Pandel business, which comprised our Specialty Products segment. Included in the 2008 loss from continuing operations is a non-cash charge of $61.2 million for impairment of goodwill of our Bentley Prince Street business segment, as well as tax expense of $13.3 million related to the anticipated repatriation in 2009 of foreign earnings. For further analysis, see the note entitled “Taxes on Income” in the notes to consolidated financial statements included in our Form 8-K filed July 27, 2009 incorporated by reference into this prospectus. | |
(3) | All periods presented have been adjusted to reflect the adoption of SFAS 160 “Noncontrolling Interests in Consolidated Financial Statements — an amendment to ARB No. 51”. This standard was adopted by us in the first quarter of 2009. | |
(4) | Amounts for all periods presented have been adjusted to reflect the adoption of FSP EITF 03-6-1. This standard was adopted by us in the first quarter of 2009. | |
(5) | Adjusted EBITDA represents operating income plus depreciation, amortization, goodwill impairment and restructuring charges, as indicated below. While adjusted EBITDA should not be construed as a substitute for operating income, which is determined in accordance with generally accepted accounting principles, it is included herein to provide additional information with respect to our ability to meet our future debt service, capital expenditures and working capital requirements. Adjusted EBITDA is not necessarily a measure of our ability to fund cash needs. The following are our components of adjusted EBITDA: |
For the | ||||||||||||||||||||||||||||
For the Year Ended | Six Months Ended | |||||||||||||||||||||||||||
January 2, | January 1, | December 31, | December 30, | December 28, | June 29, | July 5, | ||||||||||||||||||||||
2005 | 2006 | 2006 | 2007 | 2008 | 2008 | 2009 | ||||||||||||||||||||||
(dollars in thousands) | (audited) | (unaudited) | ||||||||||||||||||||||||||
Operating income | $ | 59,918 | $ | 77,716 | $ | 99,621 | $ | 129,391 | $ | 41,659 | $ | 64,407 | $ | 23,940 | ||||||||||||||
Depreciation and amortization | 22,907 | 20,448 | 21,750 | 22,487 | 23,664 | 11,984 | 12,045 | |||||||||||||||||||||
Goodwill impairment charges(8) | — | — | — | — | 61,213 | — | — | |||||||||||||||||||||
Restructuring charges(9) | — | — | — | — | 10,975 | — | 7,627 | |||||||||||||||||||||
Gain on litigation settlements | — | — | — | — | — | — | (5,926 | ) | ||||||||||||||||||||
Adjusted EBITDA | $ | 82,825 | $ | 98,164 | $ | 121,371 | $ | 151,878 | $ | 137,511 | $ | 76,391 | $ | 37,686 | ||||||||||||||
(6) | For purposes of computing the ratio of earnings to fixed charges: (a) fixed charges consist of interest on debt (including capitalized interest), amortization of debt expenses and a portion of rental expense determined to be representative of interest and (b) earnings consist of income (loss) from continuing operations before income taxes and fixed charges as described above. |
(7) | Total capitalization includes long-term debt (including current maturities of long-term debt) and total common shareholders’ equity. See “Capitalization”. |
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(8) | In the fourth quarter of 2008, we recognized a non-cash charge of $61.2 million for impairment of goodwill related to our Bentley Prince Street reporting unit. For further information, see the note entitled “Impairment of Goodwill” in our 2008 Form 10-K incorporated by reference into this prospectus. |
(9) | In the fourth quarter of 2008, we recorded a pre-tax restructuring charge of $11.0 million, comprised of employee severance expense of $7.8 million, impairment of assets of $2.6 million, and other exit costs of $0.7 million (primarily related to lease exit costs and other closure activities); approximately $8.3 million of the restructuring charge will involve cash expenditures, primarily severance expense. In the first six months of 2009, we recorded a pre-tax restructuring charge of $7.6 million, comprised of $5.9 million of employee severance expense and $1.7 million of other exit costs (primarily costs to exit the Canadian manufacturing facilities, lease exit costs and other costs); approximately $7.1 million of the 2009 restructuring charge will involve cash expenditures, primarily severance expense. |
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• | making it more difficult for us to satisfy our obligations with respect to such indebtedness; | ||
• | increasing our vulnerability to adverse general economic and industry conditions; | ||
• | limiting our ability to obtain additional financing to fund capital expenditures, acquisitions or other growth initiatives, and other general corporate requirements; | ||
• | requiring us to dedicate a substantial portion of our cash flow from operations to interest and principal payments on our indebtedness, thereby reducing the availability of our cash flow to fund capital expenditures, acquisitions or other growth initiatives, and other general corporate requirements; | ||
• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; | ||
• | placing us at a competitive disadvantage compared to our less leveraged competitors; and | ||
• | limiting our ability to refinance our existing indebtedness as it matures. |
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• | incurred the obligations with the intent to hinder, delay or defraud creditors; or | ||
• | received less than reasonably equivalent value in exchange for incurring those obligations; and |
(1) | was insolvent or rendered insolvent by reason of that incurrence; |
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(2) | was engaged in a business or transaction for which the subsidiary’s remaining assets constituted unreasonably small capital; or | ||
(3) | intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature. |
• | the sum of its debts, including contingent liabilities, is greater than the fair saleable value of all of its assets; | ||
• | the present fair saleable value of its assets is less than the amount that would be required to pay its probable liabilities on its existing debts, including contingent liabilities, as they become absolute and mature; or | ||
• | it cannot pay its debts as they become due. |
• | incur additional indebtedness; | ||
• | pay dividends or make other distributions on, redeem or repurchase capital stock; | ||
• | make investments or other restricted payments; | ||
• | create liens on our assets; | ||
• | sell all, or substantially all, of our assets; | ||
• | sell securities of our subsidiaries; | ||
• | engage in certain types of transactions with affiliates; and | ||
• | enter into mergers, consolidations or sales of all or substantially all of our assets. |
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As of July 5, 2009 | ||||
(dollars in thousands) | ||||
Cash and cash equivalents | $ | 89,867 | ||
Long-term debt (including current maturities): | ||||
Revolving credit facilities(1) | — | |||
10.375% Senior Notes due 2010 | 14,586 | |||
11.375% Senior Secured Notes due 2013(2) | 144,556 | |||
9.5% Senior Subordinated Notes due 2014 | 135,000 | |||
Total long-term debt (including current maturities) | 294,142 | |||
Total common shareholders’ equity | 230,481 | |||
Total capitalization(3) | $ | 524,623 | ||
(1) | Our maximum borrowing capacity under our domestic revolving senior credit facility is $100.0 million (subject to a borrowing base), with an option to increase the maximum aggregate amount to $150.0 million (subject to a borrowing base) upon the satisfaction of certain conditions. As of July 5, 2009, there were no borrowings (and $8.8 million in letters of credit) outstanding under the facility, and we had $49.9 million of additional borrowing capacity thereunder. We also maintain, as of September 1, 2009, a€32 million European credit facility for borrowings and bank guarantees in varying aggregate amounts over time. As of July 5, 2009, there were no borrowings outstanding under the European facility, and we could have incurred approximately $45.3 million of borrowings thereunder. | |
(2) | If and to the extent original notes are exchanged for exchange notes, this line item will then reflect exchange notes in addition to or in lieu of original notes, but the total amount of debt for this line item will remain the same. | |
(3) | We define total capitalization as total shareholders’ equity and total long-term debt. |
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(1) | is prohibited by applicable law or SEC policy from participating in the exchange offer, | ||
(2) | may not resell exchange notes to the public without delivering a prospectus and this prospectus is not appropriate or not available for such resales by such holder, or | ||
(3) | is a broker-dealer and holds original notes acquired directly from us or an affiliate of us |
• | will acquire the exchange notes in the ordinary course of its business, | ||
• | is not engaging in or intending to engage in a distribution of the exchange notes, and | ||
• | has no arrangement or understanding with any person to participate in the distribution of the exchange notes, and is not our “affiliate”, as defined in Rule 405 of the Securities Act, or, if the holder is our affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act. |
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• | any person sues, or threatens to sue, in any forum with respect to the exchange offer and, in our reasonable judgment, the suit might materially impair our ability to proceed with the exchange offer, | ||
• | a government proposes, adopts or enacts any law, statute, rule or regulation, or the SEC staff interprets any existing law, statute, rule or regulation in a way that, we believe, in our reasonable judgment, might materially impair our ability to proceed with the exchange offer, or | ||
• | we do not receive any governmental approval that we, in our reasonable judgment, deem necessary to complete the exchange offer. |
• | the registration statement of which this prospectus is a part, or | ||
• | the qualification of the indenture under the Trust Indenture Act of 1939. |
• | you must deliver your original notes to the exchange agent with your letter of transmittal, or | ||
• | you must comply with the guaranteed delivery procedures. |
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• | arrange to re-register the original notes in your name, or | ||
• | obtain a properly completed bond power from the registered holder of the original notes. |
• | the registered holder: |
(a) | endorses the original notes, or | ||
(b) | executes a properly completed bond power, and |
• | an eligible guarantor institution guarantees the registered holder’s signature. |
• | a member firm of a registered national securities exchange, | ||
• | a member firm of the Financial Industry Regulatory Authority, Inc., | ||
• | a commercial bank or trust company having an office or correspondent in the United States, or | ||
• | an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Exchange Act and which is a member of a recognized signature guarantee program identified in the letter of transmittal. |
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• | you do not check the “Special Issuance Instructions” or “Special Delivery Instructions” boxes on the letter of transmittal, or | ||
• | you are tendering for the account of an eligible institution. |
• | any original notes that are not validly tendered, or | ||
• | any original notes where our acceptance would, in the opinion of our counsel, be unlawful. |
• | either: |
(a) | the tendered original notes, or | ||
(b) | confirmation that they have been transferred by book entry into the exchange agent’s account at the Depository Trust Company, |
• | a properly completed, duly executed letter of transmittal, and | ||
• | all other documents that might be required as indicated above or in the letter of transmittal. |
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• | you do not have immediate access to your original notes; | ||
• | you cannot deliver your original notes, the letter of transmittal or any other required document to the exchange agent before the offer expires; or | ||
• | you are unable to complete the procedure for book-entry transfer on a timely basis. |
• | the tender is made through an eligible institution; | ||
• | the eligible institution, before the exchange offer expires, delivers a notice of guaranteed delivery (by fax, mail or hand delivery) to the exchange agent, which notice: |
• | identifies the name and address of the holder, | ||
• | identifies the registered number(s) and principal amount of the original notes tendered, | ||
• | states that the original notes are being tendered, and |
• | guarantees that the eligible institution will deliver the letter of transmittal, the original notes, and any other required documents to the exchange agent within three (3) Nasdaq trading days after the offer expires; and |
• | the exchange agent actually receives the letter of transmittal, the tendered original notes, and all other required documents within three (3) Nasdaq trading days after the offer expires. The eligible institution may deliver the original notes by book-entry transfer as described in the preceding section. |
• | identify the person who tendered the original notes, | ||
• | identify the original notes to be withdrawn, including their principal amount(s), and | ||
• | where certificates for original notes have been transmitted, specify the name of the registered holder of the original notes if different from the name of the withdrawing holder. |
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• | the serial numbers of the particular certificates to be withdrawn, and | ||
• | a signed notice of withdrawal with signatures guaranteed by an eligible institution, unless the withdrawing holder is itself an eligible institution. |
• | assistance, | ||
• | additional copies of this prospectus, | ||
• | additional copies of the letter of transmittal, or | ||
• | copies of the notice of guaranteed delivery. |
By Overnight Courier, Hand Delivery or Registered or Certified Mail: | By Facsimile (Eligible Institutions Only): | |
U.S. Bank National Association | (651) 495-8158 | |
West Side Flats Operations Center | Attention: Specialized Finance | |
Attention: Specialized Finance | ||
60 Livingston Avenue | Confirm by Telephone or for Information: | |
Mail Station—EP-MN-WS2N | ||
St. Paul, Minnesota 55107-2292 | (800) 934-6802 |
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• | the transfer, issuance or delivery of unexchanged original notes to any person other than their registered holder, or | ||
• | the registration of any original notes or exchange notes in the name of any person other than the tendering registered holder. |
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As of and for the | ||||||||||||||||||||||||||||
As of and for the Year Ended(1) | Six Months Ended | |||||||||||||||||||||||||||
(dollars in thousands, | January 2, | January 1, | December 31, | December 30, | December 28, | June 29, | July 5, | |||||||||||||||||||||
except per share | 2005 | 2006 | 2006 | 2007 | 2008 | 2008 | 2009 | |||||||||||||||||||||
data) | (audited) | (unaudited) | ||||||||||||||||||||||||||
Statement of Income Data: | ||||||||||||||||||||||||||||
Net sales | $ | 695,250 | $ | 786,924 | $ | 914,659 | $ | 1,081,273 | $ | 1,082,344 | $ | 556,741 | $ | 410,605 | ||||||||||||||
Gross profit on sales | 226,085 | 259,277 | 311,108 | 377,522 | 372,045 | 199,599 | 132,275 | |||||||||||||||||||||
Selling, general and administrative expenses | 166,167 | 181,561 | 211,487 | 246,258 | 258,198 | 135,152 | 106,634 | |||||||||||||||||||||
Restructuring charge | — | — | — | — | 10,975 | — | 7,627 | |||||||||||||||||||||
Gain on litigation settlements | — | — | — | — | — | — | (5,926 | ) | ||||||||||||||||||||
Operating income | 59,918 | 77,716 | 99,621 | 129,391 | 41,659 | 64,407 | 23,940 | |||||||||||||||||||||
Interest expense | 46,023 | 45,541 | 42,204 | 34,110 | 31,480 | 15,936 | 15,399 | |||||||||||||||||||||
Income (loss) from continuing operations (2)(3) | 6,386 | 15,933 | 36,235 | 58,972 | (34,513 | ) | 30,589 | 426 | ||||||||||||||||||||
Income (loss) per share attributable to Interface, Inc. common shareholders from continuing operations(4): | ||||||||||||||||||||||||||||
Basic | $ | 0.11 | $ | 0.29 | $ | 0.65 | $ | 0.94 | $ | (0.58 | ) | $ | 0.48 | $ | 0.00 | |||||||||||||
Diluted | $ | 0.11 | $ | 0.28 | $ | 0.64 | $ | 0.93 | $ | (0.58 | ) | $ | 0.47 | $ | 0.00 | |||||||||||||
Cash dividends per common share | $ | — | $ | — | $ | — | $ | 0.08 | $ | 0.12 | $ | 0.06 | $ | 0.005 | ||||||||||||||
Other Data: | ||||||||||||||||||||||||||||
Adjusted EBITDA(5) | $ | 82,825 | $ | 98,164 | $ | 121,371 | $ | 151,878 | $ | 137,511 | $ | 76,391 | $ | 37,686 | ||||||||||||||
Depreciation and amortization | 22,907 | 20,448 | 21,750 | 22,487 | 23,664 | 11,984 | 12,045 | |||||||||||||||||||||
Capital expenditures | 11,600 | 19,354 | 28,540 | 40,592 | 29,300 | 14,079 | 7,401 | |||||||||||||||||||||
Ratio of earnings to fixed charges(6) | 1.2 | x | 1.5 | x | 2.0 | x | 3.1 | x | 1.2 | x | 3.3 | x | 1.1 | x |
As of | As of | |||||||||||||||||||||||||||
January 2, | January 1, | December 31, | December 30, | December 28, | June 29, | July 5, | ||||||||||||||||||||||
2005 | 2006 | 2006 | 2007 | 2008 | 2008 | 2009 | ||||||||||||||||||||||
(dollars in thousands) | (audited) | (unaudited) | ||||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 17,158 | $ | 47,275 | $ | 109,157 | $ | 82,375 | $ | 71,757 | $ | 83,616 | $ | 89,867 | ||||||||||||||
Accounts receivable, net | 114,980 | 114,070 | 143,025 | 178,625 | 144,783 | 175,263 | 122,758 | |||||||||||||||||||||
Inventories | 93,674 | 87,823 | 112,293 | 125,789 | 128,923 | 152,039 | 122,854 | |||||||||||||||||||||
Property and Equipment | 118,493 | 115,890 | 134,631 | 161,874 | 160,717 | 170,618 | 164,097 | |||||||||||||||||||||
Working capital | 344,460 | 317,668 | 380,253 | 238,578 | 221,323 | 263,478 | 221,209 | |||||||||||||||||||||
Current maturities of long-term debt | — | — | — | — | — | — | 14,586 | |||||||||||||||||||||
Total assets | 869,798 | 838,990 | 928,340 | 835,232 | 706,035 | 879,330 | 705,465 | |||||||||||||||||||||
Total long-term debt | 460,000 | 458,000 | 411,365 | 310,000 | 287,588 | 310,000 | 279,556 | |||||||||||||||||||||
Total shareholders’ equity(3) | 198,309 | 176,485 | 279,900 | 301,116 | 217,437 | 342,114 | 230,481 | |||||||||||||||||||||
Total capitalization(7) | 658,309 | 634,485 | 691,265 | 611,116 | 505,025 | 652,114 | 524,623 |
(1) | In the third quarter of 2007, we sold our Fabrics Group business segment. In the third quarter of 2004, we also decided to discontinue the operations related to our Re:Source dealer businesses (as well as the operations of a small Australian dealer business and a small residential fabrics business). The data has been adjusted to reflect the discontinued operations of these businesses. |
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(2) | Included in our 2007 income from continuing operations is a loss of $1.9 million on the disposition of our Pandel business, which comprised our Specialty Products segment. Included in the 2008 loss from continuing operations is a non-cash charge of $61.2 million for impairment of goodwill of our Bentley Prince Street business segment, as well as tax expense of $13.3 million related to the anticipated repatriation in 2009 of foreign earnings. For further analysis, see the note entitled “Taxes on Income” in the notes to consolidated financial statements included in our Form 8-K filed July 27, 2009 incorporated by reference into this prospectus. | |
(3) | All periods presented have been adjusted to reflect the adoption of SFAS 160 “Noncontrolling Interests in Consolidated Financial Statements — an amendment to ARB No. 51”. This standard was adopted by us in the first quarter of 2009. | |
(4) | Amounts for all periods presented have been adjusted to reflect the adoption of FSP EITF 03-6-1. This standard was adopted by us in the first quarter of 2009. | |
(5) | Adjusted EBITDA represents operating income plus depreciation, amortization, goodwill impairment and restructuring charges, as indicated below. While adjusted EBITDA should not be construed as a substitute for operating income, which is determined in accordance with generally accepted accounting principles, it is included herein to provide additional information with respect to our ability to meet our future debt service, capital expenditures and working capital requirements. Adjusted EBITDA is not necessarily a measure of our ability to fund cash needs. The following are our components of adjusted EBITDA: |
For the | ||||||||||||||||||||||||||||
For the Year Ended | Six Months Ended | |||||||||||||||||||||||||||
January 2, | January 1, | December 31, | December 30, | December 28, | June 29, | July 5, | ||||||||||||||||||||||
2005 | 2006 | 2006 | 2007 | 2008 | 2008 | 2009 | ||||||||||||||||||||||
(dollars in thousands) | (audited) | (unaudited) | ||||||||||||||||||||||||||
Operating income | $ | 59,918 | $ | 77,716 | $ | 99,621 | $ | 129,391 | $ | 41,659 | $ | 64,407 | $ | 23,940 | ||||||||||||||
Depreciation and amortization | 22,907 | 20,448 | 21,750 | 22,487 | 23,664 | 11,984 | 12,045 | |||||||||||||||||||||
Goodwill impairment charges(8) | — | — | — | — | 61,213 | — | — | |||||||||||||||||||||
Restructuring charges(9) | — | — | — | — | 10,975 | — | 7,627 | |||||||||||||||||||||
Gain on litigation settlements | — | — | — | — | — | — | (5,926 | ) | ||||||||||||||||||||
Adjusted EBITDA | $ | 82,825 | $ | 98,164 | $ | 121,371 | $ | 151,878 | $ | 137,511 | $ | 76,391 | $ | 37,686 | ||||||||||||||
(6) | For purposes of computing the ratio of earnings to fixed charges: (a) fixed charges consist of interest on debt (including capitalized interest), amortization of debt expenses and a portion of rental expense determined to be representative of interest and (b) earnings consist of income (loss) from continuing operations before income taxes and fixed charges as described above. | |
(7) | Total capitalization includes long-term debt (including current maturities of long-term debt) and total common shareholders’ equity. See “Capitalization”. | |
(8) | In the fourth quarter of 2008, we recognized a non-cash charge of $61.2 million for impairment of goodwill related to our Bentley Prince Street reporting unit. For further information, see the note entitled “Impairment of Goodwill” in our 2008 Form 10-K incorporated by reference into this prospectus. |
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(9) | In the fourth quarter of 2008, we recorded a pre-tax restructuring charge of $11.0 million, comprised of employee severance expense of $7.8 million, impairment of assets of $2.6 million, and other exit costs of $0.7 million (primarily related to lease exit costs and other closure activities); approximately $8.3 million of the restructuring charge will involve cash expenditures, primarily severance expense. In the first six months of 2009, we recorded a pre-tax restructuring charge of $7.6 million, comprised of $5.9 million of employee severance expense and $1.7 million of other exit costs (primarily costs to exit the Canadian manufacturing facilities, lease exit costs and other costs); approximately $7.1 million of the 2009 restructuring charge will involve cash expenditures, primarily severance expense. |
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• | There has been Significant Decline in Bentley Prince Street’s Performance, Primarily in the Last Three Months of 2008.This decline also was reflected in the forward projections of Bentley Prince Street’s budgeting process. The projections showed a decline in both sales and operating income over Bentley Prince Street’s three-year budgeting process. These declines impacted the value of the business from an income valuation approach. The declines in projections are primarily related to the global economic crisis and its impact on the broadloom carpet market. | ||
• | There has been an Increase in the Discount Rate used to Create the Present Value of Future Expected Cash Flows.This increase from approximately 12% to 16% is more reflective of our current market capitalization and risk premiums on a reporting unit level, which impacted the value of the business using an income valuation approach. | ||
• | There has been a Decrease in the Market Multiple Factors used for a Market Valuation Approach.This decrease is reflective of the general market conditions regarding current market activities and market valuation guidelines. |
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2006 | 2007 | 2008 | ||||||||||
(in millions) | ||||||||||||
Net sales | $ | 3.7 | $ | 31.1 | $ | 24.5 | ||||||
Operating income | 0.4 | 4.9 | 3.0 |
Fiscal Year | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
June 29, | July 5, | June 29, | July 5, | |||||||||||||||||||||||||
2006 | 2007 | 2008 | 2008 | 2009 | 2008 | 2009 | ||||||||||||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||
Cost of sales | 66.0 | 65.1 | 65.6 | 64.3 | 67.3 | 64.2 | 67.8 | |||||||||||||||||||||
Gross profit on sales | 34.0 | 34.9 | 34.4 | 35.7 | 32.7 | 35.8 | 32.2 | |||||||||||||||||||||
Selling, general and administrative expenses | 23.1 | 22.8 | 23.9 | 24.4 | 24.7 | 24.3 | 26.0 | |||||||||||||||||||||
Loss on disposal — Pandel | — | 0.2 | — | — | — | — | — | |||||||||||||||||||||
Impairment of goodwill | — | — | 5.7 | — | — | — | — | |||||||||||||||||||||
Income from litigation settlements | — | — | — | — | — | — | (1.4 | ) | ||||||||||||||||||||
Restructuring charge | — | — | 1.0 | — | 0.9 | — | 1.9 | |||||||||||||||||||||
Operating income | 10.9 | 11.9 | 3.8 | 11.3 | 9.9 | 11.6 | 5.8 | |||||||||||||||||||||
Bond retirement expenses | — | — | — | — | — | — | 1.5 | |||||||||||||||||||||
Interest/Other expense | 4.7 | 3.2 | 3.1 | 2.7 | 4.0 | 2.9 | 3.7 | |||||||||||||||||||||
Income (loss) from continuing operations before tax | 6.2 | 8.7 | 0.8 | 8.6 | 3.0 | 8.7 | 0.6 | |||||||||||||||||||||
Income tax expense (benefit) | 2.2 | 3.3 | 4.0 | 3.1 | 1.2 | 3.2 | 0.5 | |||||||||||||||||||||
Income (loss) from continuing operations | 4.0 | 5.5 | (3.2 | ) | 5.5 | 1.8 | 5.5 | 0.1 | ||||||||||||||||||||
Discontinued operations, net of tax | (2.6 | ) | (6.3 | ) | (0.5 | ) | — | — | — | (0.2 | ) | |||||||||||||||||
Loss on disposal | (0.2 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Net income (loss) | 1.1 | (0.9 | ) | (3.7 | ) | 5.5 | 1.8 | 5.5 | (0.1 | ) | ||||||||||||||||||
Net income (loss) attributable to Interface, Inc. | 1.1 | (1.0 | ) | (3.8 | ) | 5.4 | 1.7 | 5.4 | (0.1 | ) | ||||||||||||||||||
• | Modular Carpet segment, which includes ourInterfaceFLOR, HeugaandFLORmodular carpet businesses, and also includes ourIntersept antimicrobial chemical sales and licensing program; | ||
• | Bentley Prince Street segment, which includes ourBentley Prince Streetbroadloom, modular carpet and area rug businesses; and | ||
• | Specialty Products segment, which includes our former subsidiary Pandel, Inc. that we sold in March 2007. |
Fiscal Year | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
June 29, | July 5, | June 29, | July 5, | ||||||||||||||||||||||||||
Net Sales By Segment | 2006 | 2007 | 2008 | 2008 | 2009 | 2008 | 2009 | ||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
Modular Carpet | $ | 763,659 | $ | 930,717 | $ | 946,816 | $ | 259,313 | $ | 186,568 | $ | 485,386 | $ | 363,020 | |||||||||||||||
Bentley Prince Street | 137,920 | 148,364 | 135,528 | 35,692 | 24,729 | 71,355 | 47,585 | ||||||||||||||||||||||
Specialty Products | 13,080 | 2,192 | — | — | — | — | — | ||||||||||||||||||||||
Total | $ | 914,659 | $ | 1,081,273 | $ | 1,082,344 | $ | 295,005 | $ | 211,297 | $ | 556,741 | $ | 410,605 | |||||||||||||||
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Fiscal Year | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
June 29, | July 5, | June 29, | July 5, | |||||||||||||||||||||||||
Cost and Expenses | 2006 | 2007 | 2008 | 2008 | 2009 | 2008 | 2009 | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Cost of Sales | $ | 603,551 | $ | 703,751 | $ | 710,299 | $ | 189,712 | $ | 142,191 | $ | 357,182 | $ | 278,330 | ||||||||||||||
Selling, General and Administrative Expenses | 211,487 | 246,258 | 258,198 | 71,857 | 52,263 | 135,152 | 106,634 | |||||||||||||||||||||
Total | $ | 815,038 | $ | 950,009 | $ | 968,497 | $ | 261,569 | $ | 194,454 | $ | 492,334 | $ | 384,964 | ||||||||||||||
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Cost of Sales and Selling, | Fiscal Year | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
General and Administrative | June 29, | July 5, | June 29, | July 5, | ||||||||||||||||||||||||
Expenses (Combined) | 2006 | 2007 | 2008 | 2008 | 2009 | 2008 | 2009 | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Modular Carpet | $ | 665,415 | $ | 797,060 | $ | 826,807 | $ | 223,946 | $ | 167,560 | $ | 419,153 | $ | 332,005 | ||||||||||||||
Bentley Prince Street | 131,989 | 142,771 | 135,574 | 35,492 | 26,353 | 69,566 | 51,780 | |||||||||||||||||||||
Specialty Products | 12,716 | 2,052 | — | — | — | — | — | |||||||||||||||||||||
Corporate Expenses | 4,918 | 8,126 | 6,116 | 2,131 | 541 | 3,615 | 1,179 | |||||||||||||||||||||
Total | $ | 815,038 | $ | 950,009 | $ | 968,497 | $ | 261,569 | $ | 194,454 | $ | 492,334 | $ | 384,964 | ||||||||||||||
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• | improving our inventory turns by continuing to implement a made-to-order model throughout our organization; | ||
• | reducing our average days sales outstanding through improved credit and collection practices; and | ||
• | limiting the amount of our capital expenditures generally to those projects that have a short-term payback period. |
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• | The revolving credit facility currently matures on December 31, 2012; | ||
• | The revolving credit facility includes a domestic U.S. dollar syndicated loan and letter of credit facility made available to Interface, Inc. up to the lesser of (1) $100 million, or (2) a borrowing base equal to the sum of specified percentages of eligible accounts receivable and inventory in the United States (the percentages and eligibility requirements for the borrowing base are specified in the credit facility), less certain reserves; | ||
• | Advances under the revolving credit facility are secured by a first-priority lien on substantially all of Interface, Inc.’s assets and the assets of each of its material domestic subsidiaries, which have guaranteed the revolving credit facility; and | ||
• | The revolving credit facility contains a financial covenant (a fixed charge coverage ratio test) that becomes effective in the event that our excess borrowing availability falls below $20 million. In such event, we must comply with the financial covenant for a period commencing on the last day of the fiscal quarter immediately preceding such event (unless such event occurs on the last day of a fiscal quarter, in which case the compliance period commences on such date) and ending on the last day of the fiscal quarter immediately following the fiscal quarter in which such event occurred. |
• | incur indebtedness or contingent obligations; | ||
• | make acquisitions of or investments in businesses (in excess of certain specified amounts); |
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• | sell or dispose of assets (in excess of certain specified amounts); | ||
• | create or incur liens on assets; and | ||
• | enter into sale and leaseback transactions. |
• | declare all commitments of the lenders under the facility terminated; | ||
• | declare all amounts outstanding or accrued thereunder immediately due and payable; and | ||
• | exercise other rights and remedies available to them under the agreement and applicable law. |
• | increased pricing as outlined above; | ||
• | removal of equipment and real estate from the borrowing base; | ||
• | the modification of certain rights and procedures with respect to defaulting lenders; | ||
• | the consent to, in accordance with certain terms and procedures, the issuance of the 11 3/8% Senior Secured Notes due 2013, including the documentation related thereto and the grant of the security interest granted pursuant thereto; and | ||
• | certain thresholds relating to real property collateral requirements. |
• | The facility provides availability for borrowings and bank guarantees in varying aggregate amounts over time as follows: |
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Maximum | ||||
Amount in | ||||
Time Period | Euros | |||
(in millions) | ||||
May 1, 2009 — September 30, 2009 | 32 | |||
October 1, 2009 — September 30, 2010 | 26 | |||
October 1, 2010 — September 30, 2011 | 20 | |||
October 1, 2011 — September 30, 2012 | 14 | |||
From October 1, 2012 | 8 |
• | The facility is available to the Borrower for general working capital needs and for paying dividends. | ||
• | A sublimit of€5 million applies to bank guarantees with a tenor exceeding one year. | ||
• | Interest on borrowings under the facility is charged at varying rates computed by applying a margin of 1% over ABN AMRO’s Euro base rate (consisting of the leading refinancing rate as determined from time to time by the European Central Bank plus a debit interest surcharge), which base rate is subject to a minimum of 3.5% per annum. Fees on bank guarantees and documentary letters of credit are charged at a rate of 1% per annum or part thereof on the maximum amount and for the maximum duration of each guarantee or documentary letter of credit issued. A facility fee of 0.5% per annum is payable with respect to the facility amount. | ||
• | The facility is secured by liens on certain real property, personal property and other assets of the Borrower. | ||
• | The facility also includes certain financial covenants (which require the Borrower and its subsidiaries to maintain a minimum interest coverage ratio, total debt/EBITDA ratio and tangible net worth/total assets) and affirmative and negative covenants, and other provisions that restrict the Borrower’s ability (and the ability of certain of the Borrower’s subsidiaries) to take certain actions. |
• | incur additional indebtedness; | ||
• | pay dividends or make other distributions on, redeem or repurchase capital stock; | ||
• | make investments or other restricted payments; | ||
• | create liens on our assets; | ||
• | sell all, or substantially all, of our assets; | ||
• | sell securities of our subsidiaries; | ||
• | enter into certain types of transactions with affiliates; and | ||
• | enter into mergers, consolidations or sales of all or substantially all of our assets. |
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Payments Due by Period | ||||||||||||||||||||
Total | Less | More | ||||||||||||||||||
Payments | Than | Than | ||||||||||||||||||
Due | 1 Year | 1-3 Years | 3-5 Years | 5 Years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Long-Term Debt Obligations(1) | $ | 299,586 | $ | 14,586 | $ | — | $ | 285,000 | $ | — | ||||||||||
Operating Lease Obligations(2) | 70,123 | 21,577 | 30,402 | 15,146 | 2,998 | |||||||||||||||
Expected Interest Payments(3) | 133,601 | 30,770 | 59,775 | 43,056 | — | |||||||||||||||
Unconditional Purchase Obligations(4) | 3,480 | 2,516 | 962 | 2 | — | |||||||||||||||
Pension Cash Obligations(5) | 115,905 | 10,566 | 21,719 | 22,660 | 60,960 | |||||||||||||||
Total Contractual Cash Obligations(6) | $ | 622,695 | $ | 80,015 | $ | 112,858 | $ | 365,864 | $ | 63,958 | ||||||||||
(1) | Includes future cash payments related to the repayment of the $150.0 million aggregate principal amount of our 11 3/8% Senior Secured Notes due 2013 issued on June 5, 2009. Also includes the $14.6 million aggregate principal amount of our 10.375% Notes that remain outstanding following the completion of our tender offer for such notes on June 5, 2009. | |
(2) | Our capital lease obligations are insignificant. | |
(3) | Expected Interest Payments include expected interest payments related to the remaining $14.6 million of our 10.375% Notes outstanding and our $135.0 million of outstanding 9.5% Notes at July 5, 2009. Also included are expected interest payments related to the $150.0 million of our 11 3/8% Senior Secured Notes due 2013 issued on June 5, 2009. We have assumed in the presentation that we will hold the 10.375% Notes, 11 3/8% Senior Secured Notes due 2013 and the 9.5% Notes until maturity. We have excluded from the presentation interest payments and fees related to our revolving credit facilities (discussed above), because of the variability and timing of advances and repayments thereunder. | |
(4) | Unconditional Purchase Obligations does not include unconditional purchase obligations that are included as liabilities in our Consolidated Balance Sheet. We do not have any significant capital expenditure commitments. | |
(5) | We have two foreign defined benefit plans and a domestic salary continuation plan. We have presented above the estimated cash obligations that will be paid under these plans over the next ten years. Such amounts are based on several estimates and assumptions and could differ materially should the underlying estimates and assumptions change. Our domestic salary continuation plan is an unfunded plan, and we do not currently have any commitments to make contributions to this plan. However, we do use insurance instruments to hedge our exposure under the salary continuation plan. Contributions to our other employee benefit plans are at our discretion. | |
The above table does not reflect unrecognized tax benefits of $8.3 million, the timing of which payments are uncertain. See the note entitled “Income Taxes” in the notes to consolidated condensed financial statements included in our Second Quarter 2009 Form 10-Q incorporated by reference into this prospectus. |
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• | The significant decline in the reporting unit performance, primarily in the last three months of 2008. This decline also was reflected in the forward projections of the reporting unit’s budgeting process. The projections showed a decline in both sales and operating income over the reporting unit’s three-year budgeting process. These declines impacted the value of the reporting unit from an income valuation approach. The declines in projections are primarily related to the global economic crisis and its impact on the broadloom carpet market. | ||
• | An increase in the discount rate used to create the present value of future expected cash flows. This increase from approximately 12% to 16% is more reflective of our current market capitalization and risk premiums on a reporting unit level, which impacted the value of the reporting unit using an income valuation approach. | ||
• | A decrease in the market multiple factors used for the market valuation approach. This decrease is reflective of the general market conditions regarding current market activities and market valuation guidelines. |
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Increase | ||||
(Decrease) in | ||||
Projected | ||||
Benefit | ||||
Foreign Defined Benefit Plans | Obligation | |||
(in millions) | ||||
1% increase in actuarial assumption for discount rate | $ | (28.2 | ) | |
1% decrease in actuarial assumption for discount rate | $ | 35.5 | ||
1% increase in actuarial assumption for wage increases | $ | 4.8 | ||
1% decrease in actuarial assumption for wage increases | $ | (4.0 | ) |
Increase | ||||
(Decrease) in | ||||
Projected | ||||
Benefit | ||||
Domestic Salary Continuation Plan | Obligation | |||
(in millions) | ||||
1% increase in actuarial assumption for discount rate | $ | (1.9 | ) | |
1% decrease in actuarial assumption for discount rate | $ | 2.3 | ||
1% increase in actuarial assumption for wage increases | $ | 0.7 | ||
1% decrease in actuarial assumption for wage increases | $ | (0.1 | ) |
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Fiscal Year Ended | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
Basic Earnings (Loss) Per Share from Continuing Operations attributable to Interface, Inc. Common Shareholders | ||||||||||||
As historically presented | $ | 0.66 | $ | 0.96 | $ | (0.58 | ) | |||||
Impact of FSP EITF 03-6-1 | (0.01 | ) | (0.02 | ) | — | |||||||
Adjusted for impact of FSP EITF 03-6-1 | $ | 0.65 | $ | 0.94 | $ | (0.58 | ) | |||||
Diluted Earnings (Loss) Per Share from Continuing Operations attributable to Interface, Inc. Common Shareholders | ||||||||||||
As historically presented | $ | 0.64 | $ | 0.94 | $ | (0.58 | ) | |||||
Impact of FSP EITF 03-6-1 | — | (0.01 | ) | — | ||||||||
Adjusted for impact of FSP EITF 03-6-1 | $ | 0.64 | $ | 0.93 | $ | (0.58 | ) | |||||
Basic Earnings (Loss) Per Share attributable to Interface, Inc. Common Shareholders | ||||||||||||
As historically presented | $ | 0.18 | $ | (0.18 | ) | $ | (0.67 | ) | ||||
Impact of FSP EITF 03-6-1 | — | — | — | |||||||||
Adjusted for impact of FSP EITF 03-6-1 | $ | 0.18 | $ | (0.18 | ) | $ | (0.67 | ) | ||||
Diluted Earnings (Loss) Per Share attributable to Interface, Inc. Common Shareholders | ||||||||||||
As historically presented | $ | 0.18 | $ | (0.18 | ) | $ | (0.67 | ) | ||||
Impact of FSP EITF 03-6-1 | — | — | — | |||||||||
Adjusted for impact of FSP EITF 03-6-1 | $ | 0.18 | $ | (0.18 | ) | $ | (0.67 | ) | ||||
As of and for the Year Ended | ||||||||||||
12/31/06 | 12/30/07 | 12/28/08 | ||||||||||
(in thousands) | ||||||||||||
Income (Loss) from Continuing Operations: | ||||||||||||
As historically presented | $ | 35,807 | $ | 57,848 | $ | (35,719 | ) | |||||
Impact of SFAS No. 160 | 428 | 1,124 | 1,206 | |||||||||
Adjusted for impact of SFAS No. 160 | $ | 36,235 | $ | 58,972 | $ | (34,513 | ) | |||||
Net Income (Loss): | ||||||||||||
As historically presented | $ | 9,992 | $ | (10,812 | ) | $ | (40,873 | ) | ||||
Impact of SFAS No. 160 | 428 | 1,124 | 1,206 | |||||||||
Adjusted for impact of SFAS No. 160 | $ | 10,420 | $ | (9,688 | ) | $ | (39,667 | ) | ||||
Shareholders’ Equity: | ||||||||||||
As historically presented | $ | 274,394 | $ | 294,142 | $ | 209,496 | ||||||
Impact of SFAS No. 160 | 5,506 | 6,974 | 7,941 | |||||||||
Adjusted for impact of SFAS No. 160 | $ | 279,900 | $ | 301,116 | $ | 217,437 | ||||||
For the Year Ended | ||||||||||||
12/31/06 | 12/30/07 | 12/28/08 | ||||||||||
(in thousands) | ||||||||||||
Net income attributable to noncontrolling interest in subsidiary | $ | (428 | ) | $ | (1,124 | ) | $ | (1,206 | ) | |||
Net income (loss) attributable to Interface, Inc. | $ | 9,992 | $ | (10,812 | ) | $ | (40,873 | ) |
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• | In 1998, we entered into a sale-leaseback transaction in which a gain was recognized at the time of sale as opposed to over the lease period. In addition, we did not use straight-line rental accounting for the expected lease payments related to this transaction. To correct these entries, in the fourth quarter of 2006, we recorded an entry to increase liabilities by approximately $3.3 million and decrease retained earnings by approximately $2.1 million, net of tax; | ||
• | Our previous methodology for recording legal expenses ensured that we incurred twelve months of expense in each year. However, the actual timing and amount of the legal bills received led to an understated liability on the balance sheet. In the fourth quarter of 2006, we recorded a liability of approximately $1.2 million and a decrease in retained earnings of approximately $0.5 million, net of taxes (as the remaining portion of these costs were capitalizable), to properly record incurred legal expenses; and | ||
• | We previously under-recorded the liability related to restricted stock by approximately $0.7 million, which was corrected in the fourth quarter of 2006. There was no impact to consolidated shareholders’ equity as a result of this correction, as the liability for restricted stock is recorded in equity. |
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• | introduced specialized product offerings tailored to the unique demands of these segments, including specific designs, functionalities and prices; | ||
• | created special sales teams dedicated to penetrating these segments at a high level, with a focus on specific customer accounts rather than geographic territories; and | ||
• | realigned incentives for our corporate office segment sales force generally in order to encourage their efforts, and where appropriate, to assist our penetration of these other segments. |
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• | sales of our principal products have been and may continue to be affected by adverse economic cycles in the renovation and construction of commercial and institutional buildings; | ||
• | we compete with a large number of manufacturers in the highly competitive commercial floorcovering products market, and some of these competitors have greater financial resources than we do; | ||
• | our success depends significantly upon the efforts, abilities and continued service of our senior management executives and our principal design consultant, and our loss of any of them could affect us adversely; | ||
• | our substantial international operations are subject to various political, economic and other uncertainties that could adversely affect our business results; | ||
• | large increases in the cost of petroleum-based raw materials could adversely affect us if we are unable to pass these cost increases through to our customers; | ||
• | unanticipated termination or interruption of any of our arrangements with our primary third party suppliers of synthetic fiber could have a material adverse effect on us; and | ||
• | we have a significant amount of indebtedness, which could have important negative consequences to us. |
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• | to learn to meet our raw material and energy needs through recycling of carpet and other petrochemical products and harnessing benign energy sources; and | ||
• | to pursue the creation of new processes to help sustain the earth’s non-renewable natural resources. |
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Floor | ||||||
Space | ||||||
Location | Segment | (Sq. Ft.) | ||||
Bangkok, Thailand(1) | Modular Carpet | 129,000 | ||||
Craigavon, N. Ireland | Modular Carpet | 80,986 | ||||
LaGrange, Georgia | Modular Carpet | 375,000 | ||||
LaGrange, Georgia | Modular Carpet | 160,545 | ||||
Picton, Australia | Modular Carpet | 98,774 | ||||
Scherpenzeel, the Netherlands | Modular Carpet | 245,424 | ||||
Shelf, England | Modular Carpet | 206,882 | ||||
West Point, Georgia | Modular Carpet | 250,000 | ||||
City of Industry, California(2) | Bentley Prince Street | 539,641 |
(1) | Owned by a joint venture in which we have a 70% interest. | |
(2) | Leased. |
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• | The revolving credit facility currently matures on December 31, 2012; | ||
• | The revolving credit facility includes a domestic U.S. dollar syndicated loan and letter of credit facility made available to Interface, Inc. up to the lesser of (1) $100 million, or (2) a borrowing base equal to the sum of specified percentages of eligible accounts receivable and inventory in the United States (the percentages and eligibility requirements for the borrowing base are specified in the credit facility), less certain reserves; | ||
• | Advances under the revolving credit facility are secured by a first-priority lien on substantially all of Interface, Inc.’s assets and the assets of each of its material domestic subsidiaries, which have guaranteed the revolving credit facility; and | ||
• | The revolving credit facility contains a financial covenant (a fixed charge coverage ratio test) that becomes effective in the event that our excess borrowing availability falls below $20 million. In such event, we must comply with the financial covenant for a period commencing on the last day of the fiscal quarter immediately preceding such event (unless such event occurs on the last day of a fiscal quarter, in which case the compliance period commences on such date) and ending on the last day of the fiscal quarter immediately following the fiscal quarter in which such event occurred. |
• | incur indebtedness or contingent obligations; | ||
• | make acquisitions of or investments in businesses (in excess of certain specified amounts); | ||
• | sell or dispose of assets (in excess of certain specified amounts); | ||
• | create or incur liens on assets; and | ||
• | enter into sale and leaseback transactions. |
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• | declare all commitments of the lenders under the facility terminated; | ||
• | declare all amounts outstanding or accrued thereunder immediately due and payable; and | ||
• | exercise other rights and remedies available to them under the agreement and applicable law. |
• | increased pricing as outlined above; | ||
• | removal of equipment and real estate from the borrowing base; | ||
• | the modification of certain rights and procedures with respect to defaulting lenders; | ||
• | the consent to, in accordance with certain terms and procedures, the issuance of the 11 3/8% Senior Secured Notes due 2013, including the documentation related thereto and the grant of the security interest granted pursuant thereto; and | ||
• | certain thresholds relating to real property collateral requirements. |
• | The facility provides availability for borrowings and bank guarantees in varying aggregate amounts over time as follows: |
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Maximum | ||||
Amount | ||||
Time Period | in Euros | |||
(in millions) | ||||
May 1, 2009 — September 30, 2009 | 32 | |||
October 1, 2009 — September 30, 2010 | 26 | |||
October 1, 2010 — September 30, 2011 | 20 | |||
October 1, 2011 — September 30, 2012 | 14 | |||
From October 1, 2012 | 8 |
• | The facility is available to the Borrower for general working capital needs and for paying dividends. | ||
• | A sublimit of€5 million applies to bank guarantees with a tenor exceeding one year. | ||
• | Interest on borrowings under the facility is charged at varying rates computed by applying a margin of 1% over ABN AMRO’s Euro base rate (consisting of the leading refinancing rate as determined from time to time by the European Central Bank plus a debit interest surcharge), which base rate is subject to a minimum of 3.5% per annum. Fees on bank guarantees and documentary letters of credit are charged at a rate of 1% per annum or part thereof on the maximum amount and for the maximum duration of each guarantee or documentary letter of credit issued. A facility fee of 0.5% per annum is payable with respect to the facility amount. | ||
• | The facility is secured by liens on certain real property, personal property and other assets of the Borrower. | ||
• | The facility also includes certain financial covenants (which require the Borrower and its subsidiaries to maintain a minimum interest coverage ratio, total debt/EBITDA ratio and tangible net worth/total assets) and affirmative and negative covenants, and other provisions that restrict the Borrower’s ability (and the ability of certain of the Borrower’s subsidiaries) to take certain actions. |
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• | are general obligations of the Company; | ||
• | are secured by Second Priority Liens on the Collateral; | ||
• | arepari passuin right of payment to all existing and future senior Indebtedness of the Company but, to the extent of the value of the Collateral, are effectively senior to all of the Company’s unsecured senior Indebtedness; | ||
• | are senior in right of payment to the Company’s existing subordinated Indebtedness and any future Indebtedness of the Company, which, by its terms, is subordinated to the Notes; | ||
• | are effectively subordinated to the Company’s First Lien Obligations, to the extent of the value of the Collateral and any other assets of the Company securing such First Lien Obligations; and | ||
• | are fully and unconditionally guaranteed, jointly and severally, by the Guarantors. |
• | are general obligations of each Guarantor; | ||
• | are secured by Second Priority Liens on the Collateral; | ||
• | arepari passuin right of payment to all existing and future senior Indebtedness of each Guarantor but, to the extent of the value of the Collateral, are effectively senior to each Guarantor’s unsecured senior Indebtedness; |
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• | are senior in right of payment to each Guarantor’s existing subordinated Indebtedness and any future Indebtedness of any Guarantor which, by its terms, is subordinated to the Guarantees; and | ||
• | are effectively subordinated to each Guarantor’s First Lien Obligations, to the extent of the value of the Collateral and any other assets of each Guarantor securing such First Lien Obligations. |
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• | intercompany notes, | ||
• | investment property (i.e., stock or membership interests in domestic and material first-tier subsidiaries), together with the related dividends and distributions payable in respect thereto (except for the stock of any such foreign subsidiary, in which case only 65% of the ownership interest will be pledged), | ||
• | equipment, goods, fixtures, and furniture, | ||
• | inventory, | ||
• | accounts receivables, | ||
• | intellectual property, | ||
• | deposit accounts, | ||
• | money, cash or cash equivalents, | ||
• | books and records, | ||
• | general intangibles and other tangible and intangible property and rights, | ||
• | supporting obligations and letter-of-credit rights, | ||
• | commercial tort claims, | ||
• | rights in a specific litigation, | ||
• | all proceeds of the foregoing, and | ||
• | all of the Company’s and the Guarantors’ right, title and interest in the following real properties owned by the Company and the Guarantors (including all fixtures, easements and appurtenances relating thereto and improvements thereon): |
Location | Type of Property | |
LaGrange, Georgia | Two Manufacturing Facilities | |
West Point, Georgia | Manufacturing Facility |
• | motor vehicles, | ||
• | owned real property with a fair market value of less than $1.5 million, | ||
• | leasehold interests in real property, | ||
• | the Company’s fractional interest in an airplane, and | ||
• | certain foreign stock. |
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• | “Limitations on Indebtedness and Issuance of Redeemable Capital Stock”, | ||
• | “Limitation on Restricted Payments”, | ||
• | “Disposition of Proceeds of Asset Sales” (but only with respect to the sale of Assets other than the Collateral), | ||
• | “Limitation on Transactions with Interested Persons”, | ||
• | “Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries”, | ||
• | “Sale and Leaseback Transactions” (but only as described in such discussion), and | ||
• | “Merger, Sale of Assets, Etc,” (but only as described in such discussion) (collectively, the “Suspended Covenants”). |
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• | an individual who is a citizen or resident of the United States; | ||
• | a corporation (or an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | ||
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or | ||
• | a trust (i) if a court within the U.S. is able to exercise primary supervision over its administration and one or more U.S. persons have authority to control all substantial decisions of the trust or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. |
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• | acquired the exchange notes in the ordinary course of its business, and | ||
• | is not participating in, and does not intend to participate in, a distribution of the exchange notes, either alone or in cooperation with another. |
• | our “affiliates” within the meaning of Rule 405 under the Securities Act, | ||
• | broker-dealers who acquire exchange notes directly from us, or | ||
• | broker-dealers who acquire exchange notes as a result of market-making or other trading activities. |
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• | in the over-the-counter market, | ||
• | in negotiated transactions, | ||
• | by writing options on the exchange notes, or | ||
• | by a combination of these methods. |
• | the market price prevailing at the time of resale, | ||
• | prices related to the prevailing market price, or | ||
• | negotiated prices. |
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for
11 3/8 % Senior Secured Notes due 2013, Series B
West Side Flats Operations Center
Attention: Specialized Finance
60 Livingston Avenue
Mail Station—EP-MN-WS2N
St. Paul, Minnesota 55107-2292
Telephone: (800) 934-6802
Fax: (651) 495-8158
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INFORMATION NOT REQUIRED IN PROSPECTUS
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Exhibit | ||||
Number | Description of Exhibit | |||
3.1 | — | Restated Articles of Incorporation (included as Exhibit 3.1 to the Company’s current report on Form 8-K filed with the SEC on March 17, 2008 and incorporated herein by reference). | ||
3.2 | — | Bylaws, as amended and restated (included as Exhibit 3.2 to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2007, previously filed with the SEC and incorporated herein by reference). | ||
4.1 | — | See Exhibits 3.1 and 3.2 for provisions in the Company’s Articles of Incorporation and Bylaws defining the rights of holders of Common Stock of the Company. | ||
4.2 | — | Indenture governing the Company’s 10.375% Senior Notes due 2010, among the Company, certain U.S. subsidiaries of the Company, as Guarantors, and First Union National Bank, as Trustee (the “2002 Indenture”) (included as Exhibit 4.5 to the Company’s annual report on Form 10-K for the year ended December 30, 2001, previously filed with the SEC and incorporated herein by reference); and Supplemental Indenture related to the 2002 Indenture, dated as of December 31, 2002 (included as Exhibit 4.5 to the Company’s annual report on Form 10-K for the year ended December 31, 2002 previously filed with the SEC and incorporated herein by reference); and Second Supplemental Indenture related to the 2002 Indenture, dated as of June 18, 2003 (included as Exhibit 4.3 to the Company’s quarterly report on Form 10-Q for the quarter ended June 29, 2003 previously filed with the SEC and incorporated herein by reference); and Third Supplemental Indenture related to the 2002 Indenture, dated as of January 10, 2005 (included as Exhibit 99.2 to the Company’s current report on Form 8-K previously filed with the SEC on February 16, 2005 and incorporated herein by reference); and Fourth Supplemental Indenture related to the 2002 Indenture, dated as of May 27, 2009 (included as Exhibit 4.1 to the Company’s current report on Form 8-K previously filed with the SEC on June 2, 2009 and incorporated herein by reference). | ||
4.3 | — | Indenture governing the Company’s 9.5% Senior Subordinated Notes due 2014, dated as of February 4, 2004, among the Company, certain subsidiaries of the Company, as guarantors, and SunTrust Bank, as Trustee (the “2004 Indenture”) (included as Exhibit 4.6 to the Company’s annual report on Form 10-K for the year ended December 28, 2003, previously filed with the SEC and incorporated herein by reference); and First Supplemental Indenture related to the 2004 Indenture, dated as of January 10, 2005 (included as Exhibit 99.3 to the Company’s current report on Form 8-K previously filed with the SEC on February 16, 2005 and incorporated herein by reference). | ||
4.4 | — | Indenture governing the Company’s 11 3/8 % Senior Secured Notes due 2013, dated as of June 5, 2009, among the Company, certain subsidiaries of the Company, as guarantors, and U.S. Bank National Association, as Trustee (included as Exhibit 4.1 to the Company’s current report on Form 8-K previously filed with the SEC on June 11, 2009 and incorporated herein by reference). | ||
4.5 | — | Intercreditor Agreement related to the Company’s 11 3/8% Senior Secured Notes due 2013, dated as of June 5, 2009, by any between the Company, certain subsidiaries of the Company, as guarantors, the domestic agent and collateral agent under the domestic revolving credit facility and U.S. Bank National Association, as collateral agent under the Indenture (included as Exhibit 4.2 to the Company’s current report on Form 8-K previously filed with the SEC on June 11, 2009 and incorporated herein by reference). | ||
4.6 | — | Registration Rights Agreement related to the Company’s 11 3/8 % Senior Secured Notes due 2013, dated as of June 5, 2009, among the Company, certain subsidiaries of the Company, as guarantors, and Banc of America Securities LLC, Citigroup Global Markets Inc., Wachovia Capital Markets, LLC and BB&T Capital Markets, a division of Scott & Stringfellow, LLC (included as Exhibit 4.3 to the Company’s current report on Form 8-K previously filed with the SEC on June 11, 2009 and incorporated herein by reference). | ||
4.7 | — | Form of exchange note (included in Exhibit 4.4). | ||
5 | — | Opinion of Kilpatrick Stockton LLP. | ||
8 | — | Tax Opinion of Kilpatrick Stockton LLP. | ||
10.1 | — | Credit Agreement, executed on April 24, 2009, among Interface Europe B.V. (and certain of its subsidiaries) and ABN AMRO Bank N.V. (included as Exhibit 99.1 to the Company’s current report on Form 8-K, previously filed with the SEC on April 29, 2009 and incorporated herein by reference). | ||
10.2 | — | Second Amendment to Sixth Amended and Restated Credit Agreement, dated as of May 14, 2009, among the Company, InterfaceFLOR, LLC (an indirect subsidiary of the Company), the lenders listed therein, and Wachovia Bank, National Association (included as Exhibit 10.2 to the Company’s quarterly report on Form 10-Q previously filed with the SEC on May 15, 2009 and incorporated herein by reference). | ||
12 | — | Computation of Ratio of Earnings to Fixed Charges.* | ||
21 | — | Subsidiaries of Interface, Inc.* | ||
23.1 | — | Consent of Kilpatrick Stockton LLP (see Exhibit 5). | ||
23.2 | — | Consent of BDO Seidman, LLP. |
II-15
Table of Contents
Exhibit | ||||
Number | Description of Exhibit | |||
24 | — | Power of Attorney (see signature pages of this Registration Statement). | ||
25 | — | Statement of Eligibility of Trustee under the Trust Indenture Act on Form T-1.* | ||
99.1 | — | Form of Transmittal Letter.* | ||
99.2 | — | Form of Notice of Guaranteed Delivery.* |
* | Previously filed. | |
(b) | Financial Statement Schedules: None | |
(c) | Reports, Opinions or Appraisals: Not Applicable. |
(a) | The undersigned Registrant hereby undertakes: |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: |
II-16
Table of Contents
II-17
Table of Contents
INTERFACE, INC. | ||||
By: | * | |||
Daniel T. Hendrix | ||||
President and Chief Executive Officer | ||||
Signature | Capacity | |
* | Chairman of the Board | |
Ray C. Anderson | ||
* | President, Chief Executive Officer and Director | |
Daniel T. Hendrix | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Chief Financial Officer | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) | |
* | Director | |
Edward C. Callaway | ||
* | Director | |
Dianne Dillon-Ridgley | ||
* | Director | |
Carl I. Gable | ||
* | Director | |
June M. Henton | ||
* | Director | |
Christopher G. Kennedy | ||
* | Director | |
K. David Kohler | ||
* | Director | |
James B. Miller, Jr. | ||
* | Director | |
Thomas R. Oliver | ||
* | Director | |
Harold M. Paisner |
*By: | /s/ Patrick C. Lynch | ||
Patrick C. Lynch | |||
as attorney-in-fact |
Table of Contents
BENTLEY PRINCE STREET, INC. | ||||
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President | ||||
Signature | Position | |
* | President | |
Anthony P. Minite | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) | |
* | Director | |
Daniel T. Hendrix |
*By: | /s/ Patrick C. Lynch | ||
Patrick C. Lynch | |||
as attorney-in-fact |
Table of Contents
INTERFACE REAL ESTATE HOLDINGS, LLC | ||||||
BY: | BENTLEY PRINCE STREET, INC., as sole member | |||||
By: | /s/ Patrick C. Lynch | |||||
Patrick C. Lynch | ||||||
Senior Vice President |
Signature | Position | |
* | President of Member | |
Anthony P. Minite | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer of Member | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) | |
Bentley Prince Street, Inc. | Member |
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
BENTLEY MILLS, INC. | ||||
COMMERCIAL FLOORING SYSTEMS, INC. | ||||
FLOORING CONSULTANTS, INC. | ||||
INTERFACE ARCHITECTURAL RESOURCES, INC. | ||||
QUAKER CITY INTERNATIONAL, INC. | ||||
RE:SOURCE AMERICAS ENTERPRISES, INC. | ||||
RE:SOURCE MINNESOTA, INC. | ||||
RE:SOURCE NEW YORK, INC. | ||||
RE:SOURCE NORTH CAROLINA, INC. | ||||
RE:SOURCE OREGON, INC. | ||||
RE:SOURCE SOUTHERN CALIFORNIA, INC. | ||||
RE:SOURCE WASHINGTON, D.C., INC. | ||||
SOUTHERN CONTRACT SYSTEMS, INC. | ||||
SUPERIOR/REISER FLOORING RESOURCES, INC. |
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President | ||||
Signature | Position | |
* | President and Director | |
Daniel T. Hendrix | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
INTERFACE OVERSEAS HOLDINGS, INC. | ||||
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President | ||||
Signature | Position | |
* | President, Chief Executive Officer and Director | |
Daniel T. Hendrix | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
INTERFACE AMERICAS, INC. | ||||
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President | ||||
Signature | Position | |
* | President | |
John R. Wells | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) | |
* | Director | |
Daniel T. Hendrix | �� |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
INTERFACEFLOR, LLC | ||||
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President | ||||
Signature | Position | |
* | President | |
John R. Wells | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) | |
Interface Americas Holdings, LLC | Manager |
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
INTERFACE AMERICAS RE:SOURCE TECHNOLOGIES, LLC | ||||||
BY: | INTERFACEFLOR, LLC, as sole member | |||||
By: | /s/ Patrick C. Lynch | |||||
Patrick C. Lynch | ||||||
Senior Vice President |
Signature | Position | |
* | President of Member | |
John R. Wells | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer of Member | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) | |
InterfaceFLOR, LLC | Member |
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
FLOR, INC. | ||||
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President | ||||
Signature | Position | |
* | President (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) | |
* | Director | |
Daniel T. Hendrix |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
INTERFACE AMERICAS HOLDINGS, LLC | ||||||
BY: | INTERFACE, INC., Manager | |||||
By: | /s/ Patrick C. Lynch | |||||
Patrick C. Lynch | ||||||
Senior Vice President |
Signature | Position | |
* | President and Chief Executive Officer | |
John R. Wells | (Principal Executive Officer) | |
/s/ Patrick C. Lynch | Senior Vice President and Assistant Treasurer | |
Patrick C. Lynch | (Principal Financial and Accounting Officer) | |
Interface, Inc. | Manager |
By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
Senior Vice President |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
INTERFACE GLOBAL COMPANY APS | ||||
By: | * | |||
Daniel T. Hendrix | ||||
Senior Vice President, Treasurer and Director | ||||
Signature | Position | |
* | President and Director | |
Jan Hasselman | (Principal Executive Officer and Principal Financial and Accounting Officer) | |
* | Senior Vice President, Treasurer, and Director | |
* | Senior Vice President, Secretary, and Director |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
By: | * | |||
John Costa | ||||
President | ||||
Signature | Position | |
* | President (Principal Executive Officer) | |
* | Treasurer (Principal Financial and Accounting Officer) | |
* | Director | |
/s/ Patrick C. Lynch | Director |
*By: | /s/ Patrick C. Lynch | |||
Patrick C. Lynch | ||||
as attorney-in-fact |
Table of Contents
Exhibit Number | Description of Exhibit | ||
5 | Opinion of Kilpatrick Stockton LLP. | ||
8 | Tax Opinion of Kilpatrick Stockton LLP. | ||
23.2 | Consent of BDO Seidman, LLP. |