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This presentation contains forward-looking statements, including, in particular, statements about
Interface’s plans, strategies and prospects. These are based on the Company’s current assumptions,
expectations and projections about future events.
Interface’s plans, strategies and prospects. These are based on the Company’s current assumptions,
expectations and projections about future events.
Although Interface believes that the expectations reflected in these forward-looking statements are
reasonable, the Company can give no assurance that these expectations will prove to be correct or that
savings or other benefits anticipated in the forward-looking statements will be achieved. Important
factors, some of which may be beyond the Company’s control, that could cause actual results to differ
materially from management’s expectations are discussed under the heading “Risk Factors” included
in Item 1A of the Company’s most recent Annual Report on Form 10-K, filed with the Securities and
Exchange Commission, which discussion is hereby incorporated by reference. Forward-looking
statements speak only as of the date made. The Company assumes no responsibility to update or
revise forward-looking statements and cautions listeners and conference attendees not to place undue
reliance on any such statements.
reasonable, the Company can give no assurance that these expectations will prove to be correct or that
savings or other benefits anticipated in the forward-looking statements will be achieved. Important
factors, some of which may be beyond the Company’s control, that could cause actual results to differ
materially from management’s expectations are discussed under the heading “Risk Factors” included
in Item 1A of the Company’s most recent Annual Report on Form 10-K, filed with the Securities and
Exchange Commission, which discussion is hereby incorporated by reference. Forward-looking
statements speak only as of the date made. The Company assumes no responsibility to update or
revise forward-looking statements and cautions listeners and conference attendees not to place undue
reliance on any such statements.
Forward Looking Statements
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_152.jpg)
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Daniel Hendrix
§ President and Chief Executive Officer
Patrick Lynch
§ Senior Vice President and Chief Financial Officer
Presenters
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_153.jpg)
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Positioning Interface for the Long-Term
§ Interface is leading the secular shift to modular carpet as it moves from a niche to a
category.
category.
§ Interface is the largest and only global manufacturer of modular carpet with a
presence on four continents.
presence on four continents.
§ Interface has a segmented sales portfolio with the non-office market representing
40% of the overall business.
40% of the overall business.
§ Interface is the recognized leader in sustainability - the marketplace is rewarding our
leading position.
leading position.
§ Interface’s global sales and marketing capabilities have created significant growth in
emerging markets such as India, China, Eastern Europe, Middle East, Africa and South
America - - 50% of sales are generated outside the U.S.
emerging markets such as India, China, Eastern Europe, Middle East, Africa and South
America - - 50% of sales are generated outside the U.S.
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_154.jpg)
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Current Realities
§ Our operating structure was built for a $1 billion+ revenue base, which has been right-
sized to meet current demand through our recent restructuring plans.
sized to meet current demand through our recent restructuring plans.
§ A secular shift to carpet tile in the commercial markets coupled with emerging
geographic regions represents a partial hedge against the declining office market.
geographic regions represents a partial hedge against the declining office market.
§ Our philosophy is to take market share from our competitors with our global platform
through better selling efforts, innovative products, pioneering designs and leadership in
sustainability.
through better selling efforts, innovative products, pioneering designs and leadership in
sustainability.
§ Raw material pricing should decline due to lower demand and low commodity input
costs, which will help offset margin erosion due to underabsorption.
costs, which will help offset margin erosion due to underabsorption.
§ There will be consolidation in our industry, particularly in the United States and Europe
due to the severity of this downturn and the undercapitalized nature of the industry.
due to the severity of this downturn and the undercapitalized nature of the industry.
§ The survivors of this downturn will have significant growth opportunities on the
backside of the recovery.
backside of the recovery.
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_155.jpg)
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Interface Brands - Most Recognized in the Industry
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_156.jpg)
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Profitability Protection
First Mover in Sustainability
Rapid Innovation, Leading Brands and Designs
Global Make-to-Order Manufacturing and Local Distribution
Focus on the
Modular Core
Modular Core
Invest in the
Growth of
Emerging
Markets
Growth of
Emerging
Markets
Grow a
Residential
Residential
Brand
Lead the Secular
Shift through
Segmentation
Shift through
Segmentation
Growth Drivers
Interface Growth Platforms and Value Drivers
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_157.jpg)
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4
1
2
3
5
6
7
MODULAR carpet means NO
glue, NO pad
glue, NO pad
MODULAR lowers the cost of
change
change
MODULAR produces less waste
MODULAR means faster and
more profitable installations for
contractor
more profitable installations for
contractor
MODULAR is easier to
reconfigure and maintain
reconfigure and maintain
MODULAR means creative
design freedom
design freedom
MODULAR is easily recycled and
repurposed
repurposed
Modular Carpet is Becoming the Category for
Commercial Flooring - Secular Shift
Commercial Flooring - Secular Shift
Modular Core
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_158.jpg)
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Modular Carpet Now Represents 91% of Interface
Divested
Raised
Access
Flooring
Raised
Access
Flooring
Divested
European
Fabrics
European
Fabrics
Divested
N. American
Fabrics
Divested
European
Broadloom
Divested
Installation &
Maintenance
Installation &
Maintenance
Sales by Business Type
Divested
Vinyl
Vinyl
Matting
Modular Core
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_159.jpg)
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98% Commercial
2% Residential
2% Residential
70% Corporate Office
30% Non-Corporate Office
30% Non-Corporate Office
90% Refurbishment
10% New Construction
10% New Construction
95% Commercial
5% Residential
5% Residential
60% Corporate Office
40% Non-Corporate Office
40% Non-Corporate Office
90% Refurbishment
10% New Construction
10% New Construction
Modular Core
Over the Past Five Years, Interface Has Focused
on its Core Modular Business
on its Core Modular Business
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Source: Invista, Carpet and Rug Institute, Catalina Research Inc., U.S. Flooring Forecast and management estimates
§ Preferred interior design element
§ “Becoming the Flooring of Choice”
§ Random products merge design with
function
function
§ Sustainability drives recycled and
repurposed products
repurposed products
§ Stressed the functionality
of modular carpet
of modular carpet
§ Exploited the benefits of
modular vs. broadloom
modular vs. broadloom
§ Limited application and
design
design
§ Open office plans emerge
Pioneering Stage
Functionality Stage
Secular Shift
2008 Total U.S. Specified
Commercial Carpet Market = $3.0B
§ Celebrating the square
§ Sustainability is introduced
§ Pattern by tile
Liberation of Design
2020P Total U.S. Specified
Commercial Carpet Market = $3.8B
2.0%
CAGR
2008
34% Penetration
2020P
60% Penetration
U.S. Modular Carpet Sales
Specified Commercial Market
($ in millions)
What if modular
carpet reached
60% market
share of the
commercial
market by 2020?
carpet reached
60% market
share of the
commercial
market by 2020?
Modular Core
2004
26% Penetration
Functionality and Design Create a Secular Shift
From a Niche to a Category
From a Niche to a Category
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_161.jpg)
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Source: 2007 Floor Focus Magazine.
U.S. Floorcovering Opportunity
2008 Specified Commercial Market
$1B
50%
26%
Carpet
Tile
Penetration
$2B
U.S. Commercial Market Opportunity
$3B
34%
Carpet
Tile
Penetration
Carpet Tile
Other Floor Coverings
($ in Billions)
Floor Focus Top 250 Design Survey 2008:
Hot Products
Modular Core
Source: Invista, Carpet and Rug Institute, Catalina Research Inc., U.S. Flooring Forecast and management estimates
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_162.jpg)
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Carpet Tile Penetration of the European Contract Soft Flooring Market
There is significant opportunity for growth as Interface continues to penetrate major markets across
Europe
Europe
~26% Penetration
of the European
Commercial Market
Note: WEUR = BEN and UK/Ireland; CEUR includes Germany; SEUR includes France
Source: BMW Associates and management estimates
German market poised for
considerable carpet tile
expansion
considerable carpet tile
expansion
European Market Opportunity
36%
9%
34%
33%
22%
(millions of square meters)
Modular Core
(millions of square meters)
German Market
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_163.jpg)
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Carpet Tile Penetration of the Asia-Pacific Commercial Carpet Market
Strong penetration of Chinese and Japanese markets with significant opportunity for growth in other major
Asian and Australian markets
Asian and Australian markets
~34% Penetration
of the Asia-Pacific
Commercial Market
(excluding Japan)
Source: BMW Associates and management estimates
Asia-Pacific Market Opportunity
(millions of square meters)
25%
40%
25%
39%
70%
26%
24%
Modular Core
Only 15% penetration of
Specified Commercial
Carpet Market in China
Specified Commercial
Carpet Market in China
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_164.jpg)
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Corporate
Office
Office
Government
Religious
Establishments
Establishments
Hospitals
Medical Office
Buildings
Buildings
Hotels/Resorts
Casinos
Stores
Malls
K-12
Colleges &
Universities
Universities
Assisted
Living
Boutique
Turnkey
Solutions
Segmented Market Approach
Institutional
Healthcare
Hospitality
Retail
Education
Commercial Segmentation
Financial
Service
Service
Fortune 1000
Main
Street
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_165.jpg)
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Sales from Mature Corporate Office Market
Strong Growth from Non-Corporate Segments
11%
Growth
(Education, Government, Healthcare, Hospitality, Retail)
16%
Growth
12%
Growth
Sales from Non-Corporate Office Market
15%
Growth
20%
Growth
6%
Decline
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_166.jpg)
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Corporate Office Segment
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_167.jpg)
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Retail
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_168.jpg)
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U.S. Commercial Market Sentiment
Segmentation
Retail
Bearish
Neutral
Bullish
Architect and Designer Sentiment of the U.S. Commercial Market
Source: DesignIntelligence
Corporate Office = 46%
of Interface Americas
Modular Business
Non-Corporate Office = 54%
of Interface Americas
Modular Business
Americas Modular
Corporate Office:
(9%) decline
year-over-year
Americas Modular
Retail:
6% growth
year-over-year
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_169.jpg)
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Higher Education
K-12 Education
Education
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_170.jpg)
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U.S. Commercial Market Sentiment
Segmentation
K-12 Education
Architect and Designer Sentiment of the U.S. Commercial Market
Source: DesignIntelligence
Americas Modular
Education:
25% growth
year-over-year
Bearish
Neutral
Bullish
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_171.jpg)
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Hospitality - - Interface Hospitality Installations
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_172.jpg)
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Hospitality
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_173.jpg)
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Healthcare
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_174.jpg)
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U.S. Commercial Market Sentiment
Segmentation
Hospitality
Architect and Designer Sentiment of the U.S. Commercial Market
Source: DesignIntelligence
Americas Modular
Healthcare:
9% growth
year-over-year
Americas Modular
Hospitality:
22% growth
year-over-year
Bearish
Neutral
Bullish
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_175.jpg)
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Public Spaces
Library
Government
Segmentation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_176.jpg)
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Government | Education | Hotels | Retail | Healthcare | Total | |
UK | 1.7 | 9.6 | 11.3 | |||
France | 1.1 | 1.6 | 1.4 | 4.2 | ||
Holland | 1.2 | 0.7 | 0.6 | 2.5 | ||
Spain | .8 | 0.3 | 1.3 | 2.4 | ||
Poland | 1.5 | 2.3 | 0.3 | 4.1 | ||
Ireland | 0.1 | 0.2 | 0.2 | 0.4 | ||
Total | 6.5 | 14.5 | 3.1 | 0.6 | 24.8 |
Europe Segmentation Strategy
Segmentation
(million square meters)
A segment potential of 25M sqm or $470M in our target markets
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_177.jpg)
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Successfully Penetrating Emerging Markets
Sales from Emerging Markets
Emerging Market Opportunities
Emerging
Markets
Markets
(Latin America, South America, Eastern Europe, China,
India, Middle East and Africa)
India, Middle East and Africa)
Emerging Markets represent a
significant growth opportunity
significant growth opportunity
Emerging Markets
31%
Growth
38%
Growth
10%
Growth
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_178.jpg)
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Carpet Tile
<1%
FLOR Sales by Channel
FLOR is Creating a Category
“Modular Carpet for the Home”
“Modular Carpet for the Home”
↑
44%
44%
↑ 4%
↑
39%
39%
Carpet Tile Penetration of the $11B
U.S. Residential Floorcovering Market
↑ 121%
↑ Online Sales
Y-o-Y Growth
Residential
Opportunity
Opportunity
Area Rugs
41%
Other
Floorcoverings
58%
Orders up 15% y-o-y
in the first
8 weeks of 2009
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_179.jpg)
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FLOR is Expanding its Retail Presence
Residential
Opportunity
Opportunity
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_180.jpg)
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Modular Goes in the Home
Residential
Opportunity
Opportunity
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_181.jpg)
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Global Manufacturing Capabilities and Local
Distribution
Distribution
N. Ireland
Picton,
Australia
Australia
Manufacturing Facility
LaGrange,
Georgia
Georgia
Americas
55% of Sales
50% of Production
Europe
34% of Sales
34% of Production
Asia-Pacific
11% of Sales
16% of Production
Note: Figures represent FYE 2008
Global Make-to-Order
Value Drivers
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_182.jpg)
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1. Increases speed to market
2. Promotes innovation
3. Offers unique custom product
capabilities
capabilities
4. Supports a constant flow of new
products
products
5. Offers sales force the opportunity to
visit the customer with new products
visit the customer with new products
6. Decreases lead time to customers
7. Increases inventory turns
The Made-to-Order ADVANTAGE
Interface Modular Businesses
Percentage Make-to-Order
Interface is the ONLY company with a “make-to-order” approach to the market
75% TARGET Level
Strong Competitive Advantage Through Make-to-
Order Philosophy
Order Philosophy
Note: Figures represent FYE 2008
Global Make-to-Order
Value Drivers
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_183.jpg)
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Interface Innovation
1. INVENTED carpet tile in Europe (1950s) and PIONEERED the modular concept
In the U.S. (1970s)
In the U.S. (1970s)
2. FIRST to move away from the monolithic broadloom look for carpet tile
3. FIRST to introduce a make-to-order offering
4. FIRST in the industry to recognize the importance of sustainability
5. FIRST to introduce 100% post-consumer recycled backing
6. FIRST to introduce “random” modular products with the i2 collection
7. EARLY adopter in the residential market
8. FIRST to introduce a “glueless” installation - TacTiles
9. FIRST to introduce post-consumer recycled content face yarns
10. FIRST to introduce moisture vapor barrier
Interface Leads with INNOVATION
Value Drivers
Innovation & Design
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_184.jpg)
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TacTiles Sales Exceed $2 Million as We Drive
“Glueless” Installation
“Glueless” Installation
Value Drivers
Innovation & Design
($ in mms)
Sales of TacTiles*
* Includes TacTiles and TacTiles dispensers
$0.2
$1.2
$2.1
TacTiles have led to
the development of
Moisture Guard 2.0
moisture vapor barrier
Moisture Guard 2.0
moisture vapor barrier
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_185.jpg)
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Market Leader in Product DESIGN and FASHION
Value Drivers
Innovation & Design
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_186.jpg)
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Brands that Deliver Our Promise of High End
Functionality, Quality and Design
Functionality, Quality and Design
Source: 2008 Floor Focus Magazine (U.S. Market)
Interface Rated the “Best
Overall Business
Experience” for the 5th
Year in a Row
Overall Business
Experience” for the 5th
Year in a Row
Favorite Carpet Manufacturers
Service
Quality
Design
Performance
Value
Value Drivers
Innovation & Design
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_187.jpg)
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Interface Continues to be Recognized as the
Leader in Sustainability
Leader in Sustainability
Sustainability
2007 Globescan Survey
Floor Focus Green Leaders 2008
Source: 2008 Floor Focus Magazine (U.S. Market)
§ Employee programs
§ NGO partnerships
§ Policy working groups
§ Standards development groups
Interface received
“Green Kudos”
for closed loop processes
and recycled content
Value Drivers
Stakeholder Engagement
MissonZero.org
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_188.jpg)
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Interface Continues to be Recognized as the Leader in
Sustainability
Sustainability
Sustainability
Value Drivers
Total Energy Use at Carpet Manufacturing Facilities
(Btus per square yard)
Energy from Renewable Resources at Carpet Manufacturing
Facilities (percent of total energy use)
Facilities (percent of total energy use)
§ Product/Process Innovation:
– Random Carpet Tile Patent
– TacTiles
– Cool Blue (100% Recycled Backing)
– Cool Carpet (Climate Neutral)
– Landfill Gas Project
– LEED innovation credits
– ReEntry Process (post-consumer content recycled face
yarn)
yarn)
§ The Federal Stimulus bill will provide potential opportunities
for funding of corporate research and development
incentives for projects focused on renewable energy and
carbon reductions
for funding of corporate research and development
incentives for projects focused on renewable energy and
carbon reductions
Sustainability-Focused Innovation
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_189.jpg)
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ReEntry and Cool Blue
ReEntry
Cool Blue
Sustainability
Value Drivers
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_190.jpg)
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Right-sizing our Business
Profitability
Value Drivers
Interface Headcount
↓ 530
Employees
↓ 290
Employees
Cost Savings Initiatives
↓ 35%
↓ 10%
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_191.jpg)
Interface, Inc. Financials
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_192.jpg)
43
Net Sales and Operating Income
(Continuing Operations)*
* See page 49 for a reconciliation of Operating Income from Continuing Operations
Consolidated Financial Results
($ in millions)
Operating Income
Net Sales
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_193.jpg)
44
Fiscal Year Performance
FYE Results
* See page 49 for a reconciliation of EBITDA and EBIT and Diluted EPS from Continuing Operations
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_194.jpg)
45
Net Sales
Gross Profit and
Gross Profit % of Net Sales
Net Sales
Gross Profit
Gross Profit % of Net Sales
Interface Financial Results From Continuing Operations
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_195.jpg)
46
SG&A Expense and
SG&A % of Net Sales
Operating Income and
Operating Income % of Net Sales*
SG&A Expense
SG&A % of Net Sales
Reported Operating Income
Restructuring Charges
Loss on Disposal ($1.9m)
Operating Income % of Net Sales
Goodwill Impairment
Decline in Insurance Value ($2.8m)
* See page 49 for a reconciliation of Operating Income from Continuing Operations
Interface Financial Results From Continuing Operations
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_196.jpg)
47
Diluted Earnings Per Share (Continuing Operations)
* See page 49 for a reconciliation of Diluted EPS from Continuing Operations
Interface Financial Results From Continuing Operations
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_197.jpg)
48
Key Credit Statistics (2007 data excludes the Fabrics Division)
Net Debt/ EBITDA*
Ending Cash Balance
Net Debt*
NOTE: Net Debt Excludes Securitization of $30M to $50M in 2003
* See page 49 for a reconciliation of Net Debt and EBITDA
![](https://capedge.com/proxy/8-K/0000715787-09-000012/exh99_198.jpg)
49
Appendix: Reconciliation of Non-GAAP Financial Measures
Net Debt (pg. 48)
Operating Income from continuing operations (EBIT) (pg. 43, 44 and 46)
EBITDA (pg. 44 and 48)
EPS (pg.44 & 47)