10-Q

Table Of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For Quarterly Period Ended October 4, 2015

Commission File Number 001-33994

INTERFACE, INC.

(Exact name of registrant as specified in its charter)

GEORGIA	58-1451243
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

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

(Address of principal executive offices and zip code)

(770) 437-6800

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐

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

Yes ☐     No ☑

Shares outstanding of each of the registrant’s classes of common stock at November 6, 2015:

Class	Number of Shares
Common Stock, $.10 par value per share	65,850,558

INTERFACE, INC.

INDEX

			PAGE
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Consolidated Condensed Balance Sheets – October 4, 2015 and December 28, 2014	3
		Consolidated Condensed Statements of Operations – Three Months and Nine Months Ended October 4, 2015 and September 28, 2014	4
		Consolidated Statements of Comprehensive Income – Three Months and Nine Months Ended October 4, 2015 and September 28, 2014	5
		Consolidated Condensed Statements of Cash Flows – Nine Months Ended October 4, 2015 and September 28, 2014	6
		Notes to Consolidated Condensed Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
	Item 4.	Controls and Procedures	17
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	18
	Item 1A.	Risk Factors	18
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
	Item 3.	Defaults Upon Senior Securities	18
	Item 4.	Mine Safety Disclosures	18
	Item 5.	Other Information	18
	Item 6.	Exhibits	18

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(IN THOUSANDS)

	Oct. 4, 2015			Dec. 28, 2014
	(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	73,732		$	54,896
Accounts Receivable, net		132,748			157,093
Inventories		163,440			142,167
Prepaid Expenses and Other Current Assets		16,323			20,780
Deferred Income Taxes		8,141			9,732
TOTAL CURRENT ASSETS		394,384			384,668
PROPERTY AND EQUIPMENT, less accumulated depreciation		214,988			227,347
DEFERRED TAX ASSET		19,833			33,138
GOODWILL		65,148			70,509
OTHER ASSETS		55,542			59,252
TOTAL ASSETS	$	749,895		$	774,914
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts Payable	$	49,003		$	49,464
Accrued Expenses		85,059			94,323
Current Portion of Long-Term Debt		10,000			0
TOTAL CURRENT LIABILITIES		144,062			143,787
LONG TERM DEBT		222,545			263,338
DEFERRED INCOME TAXES		10,225			11,002
OTHER		46,058			50,148
TOTAL LIABILITIES		422,890			468,275
Commitments and Contingencies
SHAREHOLDERS’ EQUITY:
Preferred Stock		0			0
Common Stock		6,586			6,597
Additional Paid-In Capital		370,607			368,603
Retained Earnings		85,316			39,737
Accumulated Other Comprehensive Loss – Foreign Currency Translation Adjustment		(87,583	)		(58,936	)
Accumulated Other Comprehensive Loss – Pension Liability		(47,921	)		(49,362	)
TOTAL SHAREHOLDERS’ EQUITY		327,005			306,639
	$	749,895		$	774,914

See accompanying notes to consolidated condensed financial statements.

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INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

	THREE MONTHS ENDED					NINE MONTHS ENDED
	Oct. 4, 2015		Sept. 28, 2014			Oct. 4, 2015		Sept. 28, 2014
NET SALES	$	254,686	$	252,191		$	755,227	$	731,807
Cost of Sales		156,720		168,596			470,577		483,141
GROSS PROFIT ON SALES		97,966		83,595			284,650		248,666
Selling, General and Administrative Expenses		66,664		63,958			198,729		192,659
Restructuring and Asset Impairment Charge		0		12,386			0		12,386
OPERATING INCOME		31,302		7,251			85,921		43,621
Interest Expense		1,348		5,614			5,026		16,532
Other Expense		657		931			1,483		777
INCOME BEFORE INCOME TAX EXPENSE		29,297		706			79,412		26,312
Income Tax Expense		9,170		1,082			25,241		9,592
NET INCOME (LOSS)	$	20,127	$	(376	)	$	54,171	$	16,720
Earnings (Loss) Per Share – Basic	$	0.31	$	(0.01	)	$	0.82	$	0.25
Earnings (Loss) Per Share – Diluted	$	0.31	$	(0.01	)	$	0.82	$	0.25
Common Shares Outstanding – Basic		65,854		66,465			66,091		66,470
Common Shares Outstanding – Diluted		65,907		66,465			66,139		66,554

See accompanying notes to consolidated condensed financial statements.

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INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(IN THOUSANDS)

	THREE MONTHS ENDED						NINE MONTHS ENDED
	Oct. 4, 2015			Sept. 28, 2014			Oct. 4, 2015			Sept. 28, 2014
Net Income (Loss)	$	20,127		$	(376	)	$	54,171		$	16,720
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment		(8,408	)		(15,991	)		(28,647	)		(11,809	)
Other Comprehensive Income (Loss), Pension Liability Adjustment		796			2,049			1,441			836
Comprehensive Income (Loss)	$	12,515		$	(14,318	)	$	26,965		$	5,747

See accompanying notes to consolidated condensed financial statements.

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INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

	NINE MONTHS ENDED
	Oct. 4, 2015			Sept. 28, 2014
OPERATING ACTIVITIES:
Net Income	$	54,171		$	16,720
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Depreciation and Amortization		23,188			20,124
Stock Compensation Amortization Expense		10,928			2,989
Deferred Income Taxes and Other		15,403			1,739
Working Capital Changes:
Accounts Receivable		17,852			(7,373	)
Inventories		(28,670	)		(15,518	)
Prepaid Expenses and Other Current Assets		(377	)		1,799
Accounts Payable and Accrued Expenses		196			14,417
CASH PROVIDED BY OPERATING ACTIVITIES:		92,691			34,897
INVESTING ACTIVITIES:
Capital Expenditures		(23,734	)		(32,123	)
Other		(80	)		(1,950	)
CASH USED IN INVESTING ACTIVITIES:		(23,814	)		(34,073	)
FINANCING ACTIVITIES:
Borrowing of Long-Term Debt		0			5,952
Repayment of Long-Term Debt		(28,000	)		(4,075	)
Repurchase of Common Stock		(10,469	)		0
Proceeds from Issuance of Common Stock		359			159
Dividends Paid		(8,592	)		(6,647	)
Debt Issuance Costs		0			(106	)
CASH USED IN FINANCING ACTIVITIES:		(46,702	)		(4,717	)
Net Cash Provided By (Used In) Operating, Investing and
Financing Activities		22,175			(3,893	)
Effect of Exchange Rate Changes on Cash		(3,339	)		(527	)
CASH AND CASH EQUIVALENTS:
Net Change During the Period		18,836			(4,420	)
Balance at Beginning of Period		54,896			72,883
Balance at End of Period	$	73,732		$	68,463

See accompanying notes to consolidated condensed financial statements.

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INTERFACE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1 – CONDENSED FOOTNOTES

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

The financial information included in this report has been prepared by the Company, without audit. In the opinion of management, the financial information included in this report contains all adjustments (all of which are normal and recurring) necessary for a fair presentation of the results for the interim periods. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The December 28, 2014 consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The first nine months of 2015 were comprised of 40 weeks, while the first nine months of 2014 were comprised of 39 weeks. Each of the third quarters of 2015 and 2014 were comprised of 13 weeks.

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

NOTE 2 – INVENTORIES

Inventories are summarized as follows:

	Oct. 4, 2015		December 28, 2014
	(In thousands)
Finished Goods	$	105,328	$	89,688
Work in Process		11,102		9,898
Raw Materials		47,010		42,581
	$	163,440	$	142,167

NOTE 3 – EARNINGS (LOSS) PER SHARE

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

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

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	Three Months Ended					Nine Months Ended
	Oct. 4, 2015		Sept. 28, 2014			Oct. 4, 2015		Sept. 28, 2014
Earnings (Loss) Per Share
Basic Earnings (Loss) Per Share
Distributed Earnings	$	0.05	$	0.03		$	0.13	$	0.10
Undistributed Earnings		0.26		(0.04	)		0.69		0.15
Total	$	0.31	$	(0.01	)	$	0.82	$	0.25
Diluted Earnings (Loss) Per Share
Distributed Earnings	$	0.05	$	0.03		$	0.13	$	0.10
Undistributed Earnings		0.26		(0.04	)		0.69		0.15
Total	$	0.31	$	(0.01	)	$	0.82	$	0.25
Basic Earnings (Loss) Per Share	$	0.31	$	(0.01	)	$	0.82	$	0.25
Diluted Earnings (Loss) Per Share	$	0.31	$	(0.01	)	$	0.82	$	0.25

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

	Three Months Ended				Nine Months Ended
	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
			(In millions)
Net Income (Loss)	$	0.5	$	0.0	$	1.2	$	0.4

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

	Three Months Ended				Nine Months Ended
	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
			(In thousands)
Weighted Average Shares Outstanding		64,359		65,045		64,596		65,050
Participating Securities		1,495		1,420		1,495		1,420
Shares for Basic Earnings (Loss) Per Share		65,854		66,465		66,091		66,470
Dilutive Effect of Stock Options		53		0		48		84
Shares for Diluted Earnings (Loss) Per Share		65,907		66,465		66,139		66,554

For the three-month period ended September 28, 2014, no stock options have been included in the calculation of diluted EPS as the Company was in a net loss position and inclusion of these stock options would have been anti-dilutive. For all other periods presented, all outstanding stock options have been included in the calculation of diluted EPS

NOTE 4 – LONG-TERM DEBT

7.625% Senior Notes

As of September 28, 2014, the Company had outstanding $247.5 million in 7.625% Senior Notes due 2018 (the “7.625% Senior Notes”). These Notes were redeemed in their entirety in the fourth quarter of 2014. The estimated fair value of the 7.625% Senior Notes as of September 28, 2014, based on then current market prices, was $257.4 million.

Syndicated Credit Facility

The Company has a syndicated credit facility (the “Facility”) pursuant to which the lenders provide to the Company and certain of its subsidiaries a multicurrency revolving credit facility and provide to the Company a term loan. The facility matures in October of 2019. Interest on base rate loans is charged at varying rates computed by applying a margin, which depends on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter, over the applicable base interest rate. Interest on LIBOR-based loans and fees for letters of credit are charged at varying rates computed by applying a margin, which also depends on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter, over the applicable LIBOR rate. In addition, the Company pays a commitment fee per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility.

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As of October 4, 2015, the Company had $200 million of term loan borrowing and $32.5 million of revolving loan borrowings outstanding under the Facility, and had $3.1 million in letters of credit outstanding under the Facility. As of October 4, 2015, the weighted average interest rate on borrowings outstanding under the Facility was 2.0%.

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

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

Other Lines of Credit

Subsidiaries of the Company have an aggregate of the equivalent of $14.5 million of other lines of credit available at interest rates ranging from 2% to 6%. As of October 4, 2015, there were no borrowings outstanding under these lines of credit.

NOTE 5 – STOCK-BASED COMPENSATION

Stock Option Awards

In accordance with accounting standards, the Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost will be recognized over the period in which the employee is required to provide the services – the requisite service period (usually the vesting period) – in exchange for the award.

All outstanding stock options vested prior to the end of 2013, and therefore there have been no stock option compensation expenses during 2014 or 2015.

There were no stock options granted in 2014 or 2015. The following table summarizes stock options outstanding as of October 4, 2015, as well as activity during the nine months then ended:

	Shares		Weighted Average Exercise Price
Outstanding at December 28, 2014		126,000	$	9.23
Granted		0		0
Exercised		38,500		9.27
Forfeited or canceled		0		0
Outstanding at October 4, 2015		87,500	$	8.75
Exercisable at October 4, 2015		87,500	$	8.75

At October 4, 2015, the aggregate intrinsic value of both in-the-money options outstanding and options exercisable was $1.2 million (the intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option).

Cash proceeds and intrinsic value related to total stock options exercised during the first nine months of fiscal years 2015 and 2014 are provided in the table below. The Company did not recognize any significant tax benefit with regard to stock options in either period presented.

	Nine Months Ended
	Oct. 4, 2015		Sept. 28, 2014
	(In millions)
Proceeds from stock options exercised	$	0.4	$	0.2
Intrinsic value of stock options exercised		0.4		0.3

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Restricted Stock Awards

During the nine months ended October 4, 2015, and September 28, 2014, the Company granted restricted stock awards for 597,000 and 490,000 shares, respectively, of common stock. Restricted stock awards (or a portion thereof) vest with respect to each recipient over a two to five year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date. Additionally, awards (or a portion thereof) could vest earlier upon the attainment of certain performance criteria, in the event of a change in control of the Company, or upon involuntary termination without cause.

Compensation expense related to restricted stock awards was $10.9 million and $3.0 million for the nine months ended October 4, 2015, and September 28, 2014, respectively. Accounting standards require that the Company estimate forfeitures for restricted stock and reduce compensation expense accordingly. The Company has reduced its expense by the assumed forfeiture rate and will evaluate experience against this forfeiture rate going forward.

The following table summarizes restricted stock awards outstanding as of October 4, 2015, and activity during the nine months then ended:

	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 28, 2014		1,391,000	$	17.12
Granted		597,000		16.43
Vested		290,500		13.99
Forfeited or canceled		202,000		13.66
Outstanding at October 4, 2015		1,495,500	$	17.92

As of October 4, 2015, the unrecognized total compensation cost related to unvested restricted stock was approximately $12.1 million. That cost is expected to be recognized by the end of 2019.

For the nine months ended October 4, 2015, and September 28, 2014, the Company recognized tax benefits with regard to restricted stock of $4.0 million and $0.6 million, respectively.

NOTE 6 – EMPLOYEE BENEFIT PLANS

The following tables provide the components of net periodic benefit cost for the three-month and nine-month periods ended October 4, 2015, and September 28, 2014, respectively:

	Three Months Ended						Nine Months Ended
Defined Benefit Retirement Plan (Europe)	Oct. 4, 2015			Sept. 28, 2014			Oct. 4, 2015			Sept. 28, 2014
	(In thousands)						(In thousands)
Service cost	$	265		$	176		$	799		$	539
Interest cost		2,124			2,664			6,328			8,028
Expected return on assets		(2,279	)		(2,988	)		(6,791	)		(9,008	)
Amortization of prior service costs		8			10			25			38
Recognized net actuarial losses		244			164			725			492
Net periodic benefit cost	$	362		$	26		$	1,086		$	89

	Three Months Ended				Nine Months Ended
Salary Continuation Plan (SCP)	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
	(In thousands)				(In thousands)
Service cost	$	148	$	125	$	445	$	375
Interest cost		278		268		834		803
Amortization of prior service cost		0		6		0		18
Amortization of loss		131		67		392		201
Net periodic benefit cost	$	557	$	466	$	1,671	$	1,397

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NOTE 7 – SEGMENT INFORMATION

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

NOTE 8 – 2014 RESTRUCTURING CHARGE

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

A summary of these restructuring activities is presented below:

	Total Restructuring Charge		Costs Incurred in 2014		Costs Incurred in 2015		Balance at Oct. 4, 2015
	(In thousands)
Workforce Reduction	$	9,669	$	2,732	$	6,307	$	630
Fixed Asset Impairment		2,584		2,584		0		0
Other Related Exit Costs		133		133		0		0

NOTE 9 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest amounted to $4.8 million and $10.6 million for the nine months ended October 4, 2015, and September 28, 2014, respectively. Income tax payments amounted to $5.9 million and $5.8 million for the nine months ended October 4, 2015, and September 28, 2014, respectively.

NOTE 10 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting standard regarding recognition of revenue from contracts with customers. In summary, the core principle of this standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance for this standard was initially effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. However, in August of 2015, the FASB delayed the effective date of the standard for one full year. While we are currently reviewing this new standard, we do not believe that the adoption of this standard will have a material impact on our financial condition or results of operations.

In January 2015, the FASB issued an accounting standard which eliminates the concept of extraordinary items from generally accepted accounting principles. The standard does not affect disclosure guidance for events or transactions that are unusual in nature or infrequent in their occurrence. The standard is effective for interim and annual periods in fiscal years beginning after December 15, 2015. The standard allows prospective or retrospective application. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. We do not believe the adoption of this standard will have any significant effect on our ongoing financial reporting.

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In February 2015, the FASB issued an accounting standard which changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity (“VIE”), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The new accounting standard is effective for annual and interim periods in fiscal years beginning after December 15, 2015. We are currently evaluating the impact, if any, this standard will have on our ongoing financial reporting, but we do not believe the adoption of this standard will have any significant effect on our ongoing financial reporting.

In April 2015, the FASB issued an accounting standard to simplify the presentation of debt issuance costs. This accounting standard requires debt issuance costs to be presented on the balance sheet as a direct reduction from the carrying amount of the related debt liability. In August 2015, the FASB issued an accounting standard update that allows the presentation of debt issuance costs related to line-of-credit arrangements as an asset on the balance sheet under the simplified guidance, regardless of whether there are any outstanding borrowings on the related arrangements. The guidance in these accounting standards is to be applied retrospectively and is effective for interim and annual reporting periods beginning after December 15, 2015. As these standards relate to presentation only, we do not believe the adoption of these accounting standards will have a material impact on our financial statements.

NOTE 11 – INCOME TAXES

Accounting standards require that all tax positions be analyzed using a two-step approach. The first step requires an entity to determine if a tax position is more-likely-than-not to be sustained upon examination. In the second step, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis that is more-likely-than-not to be realized upon ultimate settlement. In the first nine months of 2015, the Company decreased its liability for unrecognized tax benefits by $0.1 million. As of October 4, 2015, the Company had accrued approximately $27.3 million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company’s deferred tax asset as of October 4, 2015 reflects a reduction for $21.9 million of these unrecognized tax benefits.

NOTE 12 – ITEMS RECLASSIFIED FROM OTHER COMPREHENSIVE INCOME

During the first nine months of 2015, the Company did not reclassify any significant amounts out of accumulated other comprehensive income. The reclassifications that occurred in that period were primarily comprised of $1.1 million related to the Company’s defined benefit retirement plan and salary continuation plan. These reclassifications were included in the selling, general and administrative expenses line item of the Company’s consolidated condensed statement of operations.

NOTE 13 – REPURCHASE OF COMMON STOCK

In the fourth quarter of 2014, the Company announced a program to repurchase up to 500,000 shares of common stock per fiscal year, commencing with the 2014 fiscal year. During the first quarter of 2015, the Company repurchased and retired 250,000 shares of common stock at a weighted average purchase price of $19.39 per share. During the second quarter of 2015, the Company repurchased and retired 250,000 shares of common stock at a weighted average purchase price of $22.41 per share. There were no repurchases in the third quarter of 2015. 

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

OPERATIONS

Our discussions below in this Item 2 are based upon the more detailed discussions about our business, operations and financial condition included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2014, under Item 7 of that Form 10-K. Our discussions here focus on our results during the quarter and nine months ended, or as of, October 4, 2015, and the comparable periods of 2014 for comparison purposes, and, to the extent applicable, any material changes from the information discussed in that Form 10-K or other important intervening developments or information since that time. These discussions should be read in conjunction with that Form 10-K for more detailed and background information.

Forward-Looking Statements

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

General

During the quarter ended October 4, 2015, we had net sales of $254.7 million, compared with net sales of $252.2 million in the third quarter last year. During the first nine months of fiscal year 2015, we had net sales of $755.2 million, compared with net sales of $731.8 million in the first nine months of last year. Fluctuations in currency exchange rates had negative impacts on our sales and operating income in the 2015 reported periods, compared with the prior year periods. The following table presents the amounts (in U.S. dollars) by which the exchange rates for converting foreign currencies into U.S. dollars have negatively affected our net sales and operating income for the three months and nine months ended October 4, 2015.

	Three Months Ended October 4, 2015			Nine Months Ended October 4, 2015
	(In millions)
Net sales	$	(21.9	)	$	(64.1	)
Operating income		(2.0	)		(6.9	)

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

During the third quarter of 2015, we had net income of $20.1 million, or $0.31 per share. During the third quarter of 2014, including the restructuring and asset impairment charge discussed above, we had a net loss of $0.4 million, or $0.01 per share. During the nine months ended October 4, 2015, we had net income of $54.2 million, or $0.82 per share. During the nine months ended September 28, 2014, including the restructuring and asset impairment charge discussed above, we had net income of $16.7 million, or $0.25 per share.

The first nine months of 2015 were comprised of 40 weeks, while the first nine months of 2014 were comprised of 39 weeks. (The additional week was in the first quarter of 2015.) This is a factor in certain of the comparisons discussed in this Item 2.

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Results of Operations

The following table presents, as a percentage of net sales, certain items included in our Consolidated Condensed Statements of Operations for the three-month and nine-month periods ended October 4, 2015, and September 28, 2014, respectively:

	Three Months Ended						Nine Months Ended
	Oct. 4, 2015			Sept. 28, 2014			Oct. 4, 2015			Sept. 28, 2014
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		61.5			66.9			62.3			66.0
Gross profit on sales		38.5			33.1			37.7			34.0
Selling, general and administrative expenses		26.2			25.4			26.3			26.3
Restructuring and asset impairment charge		0.0			4.9			0.0			1.7
Operating income		12.3			2.9			11.4			6.0
Interest/Other expenses		0.8			2.6			0.9			2.4
Income before tax expense		11.5			0.3			10.5			3.6
Income tax expense		3.6			0.4			3.3			1.3
Net income (loss)		7.9			(0.1	)		7.2			2.3

Net Sales

Below we provide information regarding net sales, and analyze those results, for the three-month and nine-month periods ended October 4, 2015, and September 28, 2014, respectively.

	Three Months Ended				Percentage
	Oct. 4, 2015		Sept. 28, 2014		Change
	(In thousands)
Net Sales	$	254,686	$	252,191		1.0	%

	Nine Months Ended				Percentage
	Oct. 4, 2015		Sept. 28, 2014		Change
	(In thousands)
Net Sales	$	755,227	$	731,807		3.2	%

For the quarter ended October 4, 2015, net sales increased $2.5 million (1.0%) versus the comparable period in 2014. As discussed above, the strengthening of the U.S. dollar versus certain foreign currencies (primarily, the Euro, Australian dollar and Canadian dollar) had a negative impact of approximately $22 million on 2015 third quarter sales as compared with the third quarter of 2014. On a geographic basis, we increased sales 4% in the Americas, and experienced flat sales in Europe (as reported in U.S. dollars) and a decline of 9% (as reported in U.S. dollars) in Asia-Pacific due to negative currency impacts. In the Americas, our sales increase was primarily in the corporate office segment (up 10%), as our growth continued to outpace the market, alongside the benefits of our enhanced presence in the hospitality segment (up 21%). These increases were partially offset by sales declines in the education (down 7%) and government (down 8%) segments. Our FLOR residential consumer business experienced a 3% sales increase for the quarter, due primarily to stronger web-based sales. In Europe, the impact of the strengthening U.S. dollar was substantial, as sales in local currency were up 20% versus the third quarter last year. The increase in local currency was driven by both the corporate office segment (up 20%) and non-office segments (up 19% in the aggregate), with the education (up 36%), retail (up 36%), and government (up 9%) segments leading the non-office increases. Small declines in local currency in the hospitality (down 11%) and residential (down 23%) segments mitigated the overall increase in Europe for the quarter. In Asia-Pacific, sales in local currency were up 5% for the third quarter compared with the prior year period, with strong gains in Australia (up 20%) partially offset by declines in China and India. The sales increase in local currency in Australia came across both corporate office and non-corporate office market segments.

For the nine months ended October 4, 2015, net sales increased $23.4 million (3.2%) versus the comparable period in 2014. The strengthening of the U.S. dollar versus certain foreign currencies had a negative impact of approximately $64 million on sales in the first nine months of 2015 versus the comparable prior year period. On a geographic basis, we increased sales 9% in the Americas, partially offset by declines of 5% in Europe (as reported in U.S. dollars) and 2% in Asia-Pacific (as reported in U.S. dollars) due to currency impacts. The sales increase in the Americas was primarily in the corporate office segment (up 11%) alongside strong improvements in the hospitality (up 53%) and education (up 5%) segments. The increase in education sales in the Americas occurred during the first six months of 2015, as we experienced a third quarter decline in the segment year-over-year. In Europe, sales in local currency increased 16%, primarily driven by the corporate office segment (up 21%). Local currency sales in non-corporate office segments in the aggregate were essentially flat, with a 35% increase in the education segment being offset by a 26% decrease in the government segment – although we did experience an increase in the government segment in the 2015 third quarter, perhaps suggesting that the negative impacts of government austerity programs in the region are being reduced. In Asia-Pacific, the sales decrease in U.S. dollars was experienced across non-office market segments, with the retail (down 46%), healthcare (down 32%) and government (down 28%) segments having the largest percentage declines, tempered by a 4% increase in the corporate office segment. Negative currency impacts in the Asia-Pacific region also were substantial, as sales in local currency were up 9% versus the first nine months last year. The greatest currency impact was in Australia, where sales in local currency were up 21%, but in U.S. dollars were up less than 1%.

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Cost and Expenses

The following tables present, on a consolidated basis for our operations, our overall cost of sales and selling, general and administrative expenses for the three-month and nine-month periods ended October 4, 2015, and September 28, 2014, respectively:

	Three Months Ended				Percentage
Cost and Expenses	Oct. 4, 2015		Sept. 28, 2014		Change
	(In thousands)
Cost of sales	$	156,720	$	168,596		(7.0	)%
Selling, general and administrative expenses		66,664		63,958		4.2	%
Total	$	223,384	$	232,554		(3.9	)%

	Nine Months Ended				Percentage
Cost and Expenses	Oct. 4, 2015		Sept. 28, 2014		Change
	(In thousands)
Cost of sales	$	470,577	$	483,141		(2.6	)%
Selling, general and administrative expenses		198,729		192,659		3.2	%
Total	$	669,306	$	675,800		(1.0	)%

For the three months ended October 4, 2015, our cost of sales decreased $11.9 million (7.0%) versus the comparable period in 2014. Fluctuations in currency exchange rates had a favorable impact of approximately $8 million on our cost of sales for the quarter compared with the prior year period. As a percentage of sales, gross profit expanded across all of our operating regions, with Americas showing the most improvement. The reduction in cost of sales was primarily a function of (1) lower raw materials costs (down approximately 6-8%) and usage compared with the third quarter of 2014, (2) higher production costs in the third quarter last year due to disruptions in yarn supply that were not experienced in the current period, (3) a higher degree of manufacturing complexity related to new product introductions in the third quarter of 2014 that led to higher manufacturing costs at that time (and have since been rectified), (4) the benefits of our restructuring initiatives taken during the third quarter of 2014, and (5) increased absorption of fixed manufacturing costs due to higher production volumes in the current period. As a result of these factors, as a percentage of net sales, cost of sales decreased to 61.5% for the three months ended October 4, 2015, compared with 66.9% in the third quarter of 2014.

For the nine months ended October 4, 2015, our cost of sales decreased $12.6 million (2.6%) versus the comparable period in 2014. Fluctuations in currency exchange rates had a favorable impact of approximately $30 million on our cost of sales for the first nine months of 2015 versus the prior year period. As a percentage of sales, our cost of sales decreased to 62.3% for the nine months ended October 4, 2015 compared with 66.0% for the comparable period of 2014. The primary reasons for this decline were (1) lower raw materials costs and usage (down approximately 6-8%) compared with the first nine months of 2014, (2) continued stabilization of our supply chain and manufacturing footprint in the Asia-Pacific region following the January 2014 start-up of our new carpet tile plant in Australia, (3) increased absorption of fixed manufacturing costs associated with higher production volumes, especially in the Americas and Europe regions, (4) the cost savings associated with our 2014 restructuring actions, and (5) the resolution of yarn supply and production issues during the fourth quarter of 2014 and early 2015 that were particularly acute in the third quarter of 2014.

For the three months ended October 4, 2015, our selling, general and administrative expenses increased $2.7 million (4.2%) versus the comparable period in 2014. Currency fluctuation had a favorable impact on selling, general and administrative expenses; if currency rates had remained the same for the third quarter of 2015 versus that of the third quarter of 2014, our selling, general and administrative expenses would have been approximately $8.5 million higher than the third quarter last year. The majority of this currency neutral increase is additional incentive compensation (approximately $5.0 million) and performance based share-based compensation ($1.5 million) because our projected performance is better in 2015 versus 2014. The largest component of the remainder ($1.0 million) is higher selling expenses due to the improved sales levels in the third quarter of 2015 versus the prior year period, particularly in the Americas. As a result, as a percentage of sales, our selling, general and administrative expenses increased to 26.2% in the third quarter of 2015, versus 25.4% in the third quarter of 2014.

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For the nine months ended October 4, 2015, our selling, general and administrative expenses increased $6.1 million (3.2%) versus the comparable period in 2014. Currency fluctuation had a favorable impact on selling, general and administrative expenses; if currency rates had remained the same for the first nine months of 2015 versus that of the first nine months of 2014, our selling, general and administrative expenses would have been approximately $20 million higher than the first nine months last year. As in the three months ended October 4, 2015, substantially all of this increase can be attributed to higher incentive compensation (approximately $10 million) and performance based share-based compensation (approximately $8 million), as our projected performance is better in 2015 versus 2014. The primary factor mitigating the increase was the impact of the changes in foreign currency discussed above, as other spending categories within selling, general and administrative expenses remained relatively consistent in local currencies (due partially to cost control measures from our 2014 restructuring actions), despite the increased sales for the year to date period of 2015 versus 2014. As a result, selling, general, and administrative expenses remained consistent at 26.3% of net sales for both the first nine months of 2015 and 2014.

Interest Expense

For the three month period ended October 4, 2015, our interest expense decreased $4.3 million to $1.3 million, from $5.6 million in the third quarter of 2014. For the nine month period ended October 4, 2015, our interest expense decreased $11.5 million to $5.0 million, from $16.5 million in the comparable period last year. The reason for the decreases was the debt refinancing activities we completed in the fourth quarter of 2014, in which we redeemed all of our $247.5 million of outstanding 7.625% Senior Notes and replaced them with borrowings under our Syndicated Credit Facility. This facility is comprised of a term loan as well as a multi-currency revolving debt facility and incurs interest at a significantly lower rate than the 7.625% Senior Notes.

Liquidity and Capital Resources

General

At October 4, 2015, we had $73.7 million in cash. At that date, we had outstanding $200.0 million of term loan borrowings, $32.5 million of revolving loan borrowings and $3.1 million in letters of credit under our Syndicated Credit Facility. As of October 4, 2015, we could have incurred $214.4 million of additional borrowings under our Syndicated Credit Facility. In addition, we could have incurred an additional $14.5 million of borrowings under our other lines of credit in place at other non-U.S. subsidiaries.

Analysis of Cash Flows

We exited the quarter ended October 4, 2015 with $73.7 million in cash, an increase of $18.8 million during the first nine months of the year. The increase in cash was due to improved cash flow from operating activities of $92.7 million in the first nine months of 2015, versus $34.9 million in the first nine months of 2014. The factors driving the increase in cash from operating activities were (1) higher net income in 2015, due to better operational performance, (2) a $5.8 million reduction in cash paid for interest, as a result of our 2014 debt refinancing discussed above, and (3) $17.8 million due to a decrease in accounts receivable. The increase in cash from operating activities was partially offset by a use of $28.7 million for an increase in inventory levels. Our other primary uses of cash during the first nine months of 2015 were (1) $28.0 million of cash used to repay borrowings under our Syndicated Credit Facility, (2) $23.7 million of capital expenditures, (3) $10.5 million of cash used to repurchase and retire 500,000 shares of our outstanding common stock, and (4) $8.6 million for the payment of dividends.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our discussion below in this Item 3 is based upon the more detailed discussions of our market risk and related matters included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2014, under Item 7A of that Form 10-K. Our discussion here focuses on the period ended October 4, 2015, and any material changes from (or other important intervening developments since the time of) the information discussed in that Form 10-K. This discussion should be read in conjunction with that Form 10-K for more detailed and background information.

At October 4, 2015, we recognized a $28.6 million decrease in our foreign currency translation adjustment account compared to December 28, 2014, primarily because of the strengthening of the U.S. dollar against certain foreign currencies, particularly the Euro and Australian dollar.

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

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

Because the debt outstanding under our Syndicated Credit Facility has variable interest rates based on an underlying prime lending rate or LIBOR rate, we do not believe changes in interest rates would have any significant impact on the fair value of that debt instrument. Changes in the underlying prime lending rate or LIBOR rate would, however, impact the amount of our interest expense. For a discussion of these hypothetical impacts on our interest expense, please see the discussion in Item 7A of our Annual Report on Form 10-K for the year ended December 28, 2014.

As of October 4, 2015, a 10% decrease or increase in the levels of foreign currency exchange rates against the U.S. dollar, with all other variables held constant, would result in a decrease in the fair value of our financial instruments of $11.1 million or an increase in the fair value of our financial instruments of $9.0 million, respectively. As the impact of offsetting changes in the fair market value of our net foreign investments is not included in the sensitivity model, these results are not indicative of our actual exposure to foreign currency exchange risk.

ITEM 4. CONTROLS AND PROCEDURES

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

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

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There are no material changes in risk factors in the third quarter of 2015. For a discussion of risk factors, see Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2014.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

The following exhibits are filed with this report:

EXHIBIT NUMBER	DESCRIPTION OF EXHIBIT
3.1	Bylaws, as amended and restated October 28, 2015 (included as Exhibit 3.1 to the Company’s current report on Form 8-K filed on October 28, 2015, previously filed with the Commission and incorporated herein by reference).
10.1	Interface, Inc. Executive Bonus Plan, as amended October 28, 2015 (included as Exhibit 99.2 to the Company’s current report on Form 8-K filed on October 28, 2015, previously filed with the Commission and incorporated herein by reference).
31.1	Section 302 Certification of Chief Executive Officer.
31.2	Section 302 Certification of Chief Financial Officer.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Definition Linkbase Document.

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SIGNATURE

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

	INTERFACE, INC.
Date: November 12, 2015	By:	/s/ Patrick C. Lynch
		Patrick C. Lynch
		Senior Vice President
		(Principal Financial Officer)

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EXHIBITS INCLUDED HEREWTIH

EXHIBIT NUMBER	DESCRIPTION OF EXHIBIT
31.1	Section 302 Certification of Chief Executive Officer.
31.2	Section 302 Certification of Chief Financial Officer.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Definition Linkbase Document.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Daniel T. Hendrix, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Interface, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015
	/s/ Daniel T. Hendrix
	Daniel T. Hendrix
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Patrick C. Lynch, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Interface, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015
	/s/ Patrick C. Lynch
	Patrick C. Lynch
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

I, Daniel T. Hendrix, Chief Executive Officer of Interface, Inc. (the “Company”), certify, pursuant to 18 U.S.C. § 1350 as adopted by § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended October 4, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2015
	/s/ Daniel T. Hendrix
	Daniel T. Hendrix
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

I, Patrick C. Lynch, Chief Financial Officer of Interface, Inc. (the “Company”), certify, pursuant to 18 U.S.C. § 1350 as adopted by § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended October 4, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2015
	/s/ Patrick C. Lynch
	Patrick C. Lynch
	Chief Financial Officer

XML

Note 12 - Items Reclassified from Other Comprehensive Income (Details Textual) $ in Millions	9 Months Ended
	Oct. 04, 2015 USD ($)
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, Net of Tax	$ 1.1

XML

Note 6 - Net Periodic Benefit Cost (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Defined Benefit Retirement Plan Europe [Member]
Service cost	$ 265,000	$ 176,000	$ 799,000	$ 539,000
Interest cost	2,124,000	2,664,000	6,328,000	8,028,000
Expected return on assets	(2,279,000)	(2,988,000)	(6,791,000)	(9,008,000)
Amortization of prior service cost	8,000	10,000	25,000	38,000
Recognized net actuarial losses	244,000	164,000	725,000	492,000
Net periodic benefit cost	362,000	26,000	1,086,000	89,000
Salary Continuation Plan SCP [Member]
Service cost	148,000	125,000	445,000	375,000
Interest cost	278,000	268,000	834,000	803,000
Amortization of prior service cost	0	6,000	0	18,000
Net periodic benefit cost	557,000	466,000	1,671,000	1,397,000
Amortization of loss	$ 131,000	$ 67,000	$ 392,000	$ 201,000

XML

Note 3 - Earnings Per Share (Details Textual)	3 Months Ended
	Sep. 28, 2014 shares
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0

XML

Note 9 - Supplemental Cash Flow Information (Details Textual) - USD ($) $ in Millions	9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014
Interest Paid	$ 4.8	$ 10.6
Income Taxes Paid	$ 5.9	$ 5.8

XML

Note 4 - Long-term Debt

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 4 – LONG-TERM DEBT

7.625% Senior Notes

As of September 28, 2014, the Company had outstanding $247.5 million in 7.625% Senior Notes due 2018 (the “7.625% Senior Notes”). These Notes were redeemed in their entirety in the fourth quarter of 2014. The estimated fair value of the 7.625% Senior Notes as of September 28, 2014, based on then current market prices, was $257.4 million.

Syndicated Credit Facility

The Company has a syndicated credit facility (the “Facility”) pursuant to which the lenders provide to the Company and certain of its subsidiaries a multicurrency revolving credit facility and provide to the Company a term loan. The facility matures in October of 2019. Interest on base rate loans is charged at varying rates computed by applying a margin, which depends on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter, over the applicable base interest rate. Interest on LIBOR-based loans and fees for letters of credit are charged at varying rates computed by applying a margin, which also depends on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter, over the applicable LIBOR rate. In addition, the Company pays a commitment fee per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility.

As of October 4, 2015, the Company had $200 million of term loan borrowing and $32.5 million of revolving loan borrowings outstanding under the Facility, and had $3.1 million in letters of credit outstanding under the Facility. As of October 4, 2015, the weighted average interest rate on borrowings outstanding under the Facility was 2.0%.

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

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

Other Lines of Credit

Subsidiaries of the Company have an aggregate of the equivalent of $14.5 million of other lines of credit available at interest rates ranging from 2% to 6%. As of October 4, 2015, there were no borrowings outstanding under these lines of credit.

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Note 5 - Stock-based Compensation (Details Textual) - USD ($)	9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014
Employee Stock Option [Member]
Allocated Share-based Compensation Expense	$ 0	$ 0
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	2 years
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Restricted Stock [Member]
Allocated Share-based Compensation Expense	$ 10,900,000	3,000,000
Employee Service Share-based Compensation, Tax Benefit Realized from Exercise of Stock Options	$ 4,000,000	$ 600,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	597,000	490,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 12,100,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0	0
Employee Service Share-based Compensation, Tax Benefit Realized from Exercise of Stock Options	$ 0	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	$ 1,200,000

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Note 4 - Long-term Debt (Details Textual) - USD ($)	9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014
Other Line Of Credit [Member] | Minimum [Member]
Line of Credit Facility, Interest Rate During Period	2.00%
Other Line Of Credit [Member] | Maximum [Member]
Line of Credit Facility, Interest Rate During Period	6.00%
Other Line Of Credit [Member]
Long-term Line of Credit	$ 0
Line of Credit Facility, Maximum Borrowing Capacity	14,500,000
Syndication Facility Agreement [Member] | Term Loan A [Member]
Long-term Line of Credit	200,000,000
Syndication Facility Agreement [Member]
Letters of Credit Outstanding, Amount	$ 3,100,000
Long-term Debt, Weighted Average Interest Rate	2.00%
Revolving Credit Facility [Member]
Long-term Line of Credit	$ 32,500,000
Senior Notes 7.625% [Member]
Debt Instrument, Interest Rate, Stated Percentage		7.625%
Long-term Debt, Gross		$ 247,500,000
Long-term Debt, Fair Value		$ 257,400,000
Term Loan A [Member]
Initial Amortization Payment	2,500,000
Subsequent Amortization Payment	$ 3,750,000

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Note 5 - Stock Options Outstanding (Details)	9 Months Ended
	Oct. 04, 2015 $ / shares shares
Outstanding Shares (in shares) | shares	126,000
Weighted Average Exercise Price (in dollars per share)	$ 9.23
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares	0
Granted (in dollars per share)	$ 0
Exercised (in shares) | shares	38,500
Exercised (in dollars per share)	$ 9.27
Forfeited or canceled (in shares) | shares	0
Forfeited or canceled (in dollars per share)	$ 0
Outstanding Shares (in shares) | shares	87,500
Weighted Average Exercise Price (in dollars per share)	$ 8.75
Exercisable at October 4, 2015 (in shares) | shares	87,500
Exercisable at October 4, 2015 (in dollars per share)	$ 8.75

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Note 5 - Cash Proceeds and Intrinsic Value Related to Total Stock Options Exercised (Details) - USD ($) $ in Millions	9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014
Proceeds from stock options exercised	$ 0.4	$ 0.2
Intrinsic value of stock options exercised	$ 0.4	$ 0.3

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Note 3 - Earnings Per Share

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE 3 – EARNINGS (LOSS) PER SHARE

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

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

	Three Months Ended					Nine Months Ended
	Oct. 4, 2015		Sept. 28, 2014			Oct. 4, 2015		Sept. 28, 2014
Earnings (Loss) Per Share
Basic Earnings (Loss) Per Share
Distributed Earnings	$	0.05	$	0.03		$	0.13	$	0.10
Undistributed Earnings		0.26		(0.04	)		0.69		0.15
Total	$	0.31	$	(0.01	)	$	0.82	$	0.25
Diluted Earnings (Loss) Per Share
Distributed Earnings	$	0.05	$	0.03		$	0.13	$	0.10
Undistributed Earnings		0.26		(0.04	)		0.69		0.15
Total	$	0.31	$	(0.01	)	$	0.82	$	0.25
Basic Earnings (Loss) Per Share	$	0.31	$	(0.01	)	$	0.82	$	0.25
Diluted Earnings (Loss) Per Share	$	0.31	$	(0.01	)	$	0.82	$	0.25

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

	Three Months Ended				N i ne Months Ended
	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
			(In millions)
Net Income (Loss)	$	0.5	$	0.0	$	1.2	$	0.4

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

	Three Months Ended				N i ne Months Ended
	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
			(In thousands)
Weighted Average Shares Outstanding		64,359		65,045		64,596		65,050
Participating Securities		1,495		1,420		1,495		1,420
Shares for Basic Earnings (Loss) Per Share		65,854		66,465		66,091		66,470
Dilutive Effect of Stock Options		53		0		48		84
Shares for Diluted Earnings (Loss) Per Share		65,907		66,465		66,139		66,554

For the three-month period ended September 28, 2014, no stock options have been included in the calculation of diluted EPS as the Company was in a net loss position and inclusion of these stock options would have been anti-dilutive. For all other periods presented, all outstanding stock options have been included in the calculation of diluted EPS

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Note 5 - Restricted Stock Outstanding (Details) - Restricted Stock [Member]	9 Months Ended
	Oct. 04, 2015 $ / shares shares
Shares, beginning of period (in shares) | shares	1,391,000
Weighted Average Grant Date Fair Value, beginning of period (in dollars per share)	$ 17.12
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares	597,000
Granted (in dollars per share)	$ 16.43
Vested (in shares) | shares	290,500
Vested (in dollars per share)	$ 13.99
Forfeited or canceled (in shares) | shares	202,000
Forfeited or canceled (in dollars per share)	$ 13.66
Shares, end of period (in shares) | shares	1,495,500
Weighted Average Grant Date Fair Value, end of period (in dollars per share)	$ 17.92

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Note 13 - Repurchase of Common Stock (Details Textual) - $ / shares	3 Months Ended
	Oct. 04, 2015	Jul. 05, 2015	Apr. 05, 2015	Dec. 28, 2014
Treasury Stock, Shares, Acquired	0	250,000	250,000
Stock Repurchase Program, Number of Shares Authorized to be Repurchased				500,000
Treasury Stock Acquired, Average Cost Per Share		$ 22.41	$ 19.39

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Consolidated Condensed Balance Sheets (Current Period Unaudited) - USD ($)	Oct. 04, 2015	Dec. 28, 2014
CURRENT ASSETS:
Cash and Cash Equivalents	$ 73,732,000	$ 54,896,000
Accounts Receivable, net	132,748,000	157,093,000
Inventories	163,440,000	142,167,000
Prepaid Expenses and Other Current Assets	16,323,000	20,780,000
Deferred Income Taxes	8,141,000	9,732,000
TOTAL CURRENT ASSETS	394,384,000	384,668,000
PROPERTY AND EQUIPMENT, less accumulated depreciation	214,988,000	227,347,000
DEFERRED TAX ASSET	19,833,000	33,138,000
GOODWILL	65,148,000	70,509,000
OTHER ASSETS	55,542,000	59,252,000
TOTAL ASSETS	749,895,000	774,914,000
CURRENT LIABILITIES:
Accounts Payable	49,003,000	49,464,000
Accrued Expenses	85,059,000	94,323,000
Current Portion of Long-Term Debt	10,000,000	0
TOTAL CURRENT LIABILITIES	144,062,000	143,787,000
LONG TERM DEBT	222,545,000	263,338,000
DEFERRED INCOME TAXES	10,225,000	11,002,000
OTHER	46,058,000	50,148,000
TOTAL LIABILITIES	$ 422,890,000	$ 468,275,000
Commitments and Contingencies
SHAREHOLDERS’ EQUITY:
Preferred Stock	$ 0	$ 0
Common Stock	6,586,000	6,597,000
Additional Paid-In Capital	370,607,000	368,603,000
Retained Earnings	85,316,000	39,737,000
Accumulated Other Comprehensive Loss – Foreign Currency Translation Adjustment	(87,583,000)	(58,936,000)
Accumulated Other Comprehensive Loss – Pension Liability	(47,921,000)	(49,362,000)
TOTAL SHAREHOLDERS’ EQUITY	327,005,000	306,639,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 749,895,000	$ 774,914,000

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Note 1 - Condensed Footnotes

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Condensed Footnotes [Text Block]

NOTE 1 – CONDENSED FOOTNOTES

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

The financial information included in this report has been prepared by the Company, without audit. In the opinion of management, the financial information included in this report contains all adjustments (all of which are normal and recurring) necessary for a fair presentation of the results for the interim periods. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The December 28, 2014 consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The first nine months of 2015 were comprised of 40 weeks, while the first nine months of 2014 were comprised of 39 weeks. Each of the third quarters of 2015 and 2014 were comprised of 13 weeks.

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

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Note 8 - 2014 Restructuring Plan (Details Textual) - Restructuring Charge 2014 [Member]	3 Months Ended	15 Months Ended
	Sep. 28, 2014 USD ($)	Oct. 04, 2015 USD ($)
Employee Severance [Member]
Restructuring Charges	$ 9,700,000	$ 9,669,000
Other Restructuring [Member]
Restructuring Charges	100,000	133,000
Fixed Asset Impairment [Member]
Restructuring Charges	2,600,000	$ 2,584,000
Restructuring Charges	$ 12,400,000
Restructuring and Related Cost, Number of Positions Eliminated	100
Effect on Future Cash Flows, Amount	$ 10,000,000

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Note 6 - Employee Benefit Plans (Tables)

9 Months Ended

Oct. 04, 2015

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

	Three Months Ended						Nine Months Ended
Defined Benefit Retirement Plan (Europe)	Oct. 4, 2015			Sept. 28, 2014			Oct. 4, 2015			Sept. 28, 2014
	(In thousands)						(In thousands)
Service cost	$	265		$	176		$	799		$	539
Interest cost		2,124			2,664			6,328			8,028
Expected return on assets		(2,279	)		(2,988	)		(6,791	)		(9,008	)
Amortization of prior service costs		8			10			25			38
Recognized net actuarial losses		244			164			725			492
Net periodic benefit cost	$	362		$	26		$	1,086		$	89

	Three Months Ended				Nine Months Ended
Salary Continuation Plan (SCP)	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
	(In thousands)				(In thousands)
Service cost	$	148	$	125	$	445	$	375
Interest cost		278		268		834		803
Amortization of prior service cost		0		6		0		18
Amortization of loss		131		67		392		201
Net periodic benefit cost	$	557	$	466	$	1,671	$	1,397

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Note 8 - Restructuring Plan One Activities (Details) - Restructuring Charge 2014 [Member] - USD ($)	6 Months Ended	9 Months Ended	15 Months Ended
	Dec. 28, 2014	Oct. 04, 2015	Oct. 04, 2015
Employee Severance [Member]
Restructuring Charges			$ 9,669,000
Costs incurred	$ 2,732,000	$ 6,307,000
Expecting remaining costs		630,000	630,000
Fixed Asset Impairment [Member]
Restructuring Charges			2,584,000
Costs incurred	2,584,000	0
Expecting remaining costs		0	0
Other Restructuring [Member]
Restructuring Charges			133,000
Costs incurred	$ 133,000	0
Expecting remaining costs		$ 0	$ 0

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Note 2 - Inventories Summary (Details) - USD ($) $ in Thousands	Oct. 04, 2015	Dec. 28, 2014
Finished Goods	$ 105,328	$ 89,688
Work in Process	11,102	9,898
Raw Materials	47,010	42,581
Inventory, net	$ 163,440	$ 142,167

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Note 2 - Inventories

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE 2 – INVENTORIES

Inventories are summarized as follows:

	Oct. 4, 2015		December 28, 2014
	(In thousands)
Finished Goods	$	105,328	$	89,688
Work in Process		11,102		9,898
Raw Materials		47,010		42,581
	$	163,440	$	142,167

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Consolidated Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
NET SALES	$ 254,686,000	$ 252,191,000	$ 755,227,000	$ 731,807,000
Cost of Sales	156,720,000	168,596,000	470,577,000	483,141,000
GROSS PROFIT ON SALES	97,966,000	83,595,000	284,650,000	248,666,000
Selling, General and Administrative Expenses	66,664,000	63,958,000	198,729,000	192,659,000
Restructuring and Asset Impairment Charge	0	12,386,000	0	12,386,000
OPERATING INCOME	31,302,000	7,251,000	85,921,000	43,621,000
Interest Expense	1,348,000	5,614,000	5,026,000	16,532,000
Other Expense	657,000	931,000	1,483,000	777,000
INCOME BEFORE INCOME TAX EXPENSE	29,297,000	706,000	79,412,000	26,312,000
Income Tax Expense	9,170,000	1,082,000	25,241,000	9,592,000
NET INCOME (LOSS)	$ 20,127,000	$ (376,000)	$ 54,171,000	$ 16,720,000
Earnings (Loss) Per Share – Basic (in dollars per share)	$ 0.31	$ (0.01)	$ 0.82	$ 0.25
Earnings (Loss) Per Share – Diluted (in dollars per share)	$ 0.31	$ (0.01)	$ 0.82	$ 0.25
Common Shares Outstanding – Basic (in shares)	65,854,000	66,465,000	66,091,000	66,470,000
Common Shares Outstanding – Diluted (in shares)	65,907,000	66,465,000	66,139,000	66,554,000

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Note 12 - Items Reclassified from Other Comprehensive Income

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Reclassifications [Text Block]

NOTE 12 – ITEMS RECLASSIFIED FROM OTHER COMPREHENSIVE INCOME

During the first nine months of 2015, the Company did not reclassify any significant amounts out of accumulated other comprehensive income. The reclassifications that occurred in that period were primarily comprised of $1.1 million related to the Company’s defined benefit retirement plan and salary continuation plan. These reclassifications were included in the selling, general and administrative expenses line item of the Company’s consolidated condensed statement of operations.

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Document And Entity Information - shares	9 Months Ended
	Oct. 04, 2015	Nov. 06, 2015
Entity Registrant Name	INTERFACE INC
Entity Central Index Key	0000715787
Trading Symbol	tile
Current Fiscal Year End Date	--01-03
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding (in shares)		65,850,558
Document Type	10-Q
Document Period End Date	Oct. 04, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false

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Note 13 - Repurchase of Common Stock

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 13 – REPURCHASE OF COMMON STOCK

In the fourth quarter of 2014, the Company announced a program to repurchase up to 500,000 shares of common stock per fiscal year, commencing with the 2014 fiscal year. During the first quarter of 2015, the Company repurchased and retired 250,000 shares of common stock at a weighted average purchase price of $19.39 per share. During the second quarter of 2015, the Company repurchased and retired 250,000 shares of common stock at a weighted average purchase price of $22.41 per share. There were no repurchases in the third quarter of 2015. 

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Net Income	$ 20,127,000	$ (376,000)	$ 54,171,000	$ 16,720,000
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment	(8,408,000)	(15,991,000)	(28,647,000)	(11,809,000)
Other Comprehensive Income (Loss), Pension Liability Adjustment	796,000	2,049,000	1,441,000	836,000
Comprehensive Income (Loss)	$ 12,515,000	$ (14,318,000)	$ 26,965,000	$ 5,747,000

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Note 7 - Segment Information

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 7 – SEGMENT INFORMATION

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

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Note 6 - Employee Benefit Plans

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE 6 – EMPLOYEE BENEFIT PLANS

The following tables provide the components of net periodic benefit cost for the three-month and nine-month periods ended October 4, 2015, and September 28, 2014, respectively:

	Three Months Ended						Nine Months Ended
Defined Benefit Retirement Plan (Europe)	Oct. 4, 2015			Sept. 28, 2014			Oct. 4, 2015			Sept. 28, 2014
	(In thousands)						(In thousands)
Service cost	$	265		$	176		$	799		$	539
Interest cost		2,124			2,664			6,328			8,028
Expected return on assets		(2,279	)		(2,988	)		(6,791	)		(9,008	)
Amortization of prior service costs		8			10			25			38
Recognized net actuarial losses		244			164			725			492
Net periodic benefit cost	$	362		$	26		$	1,086		$	89

	Three Months Ended				Nine Months Ended
Salary Continuation Plan (SCP)	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
	(In thousands)				(In thousands)
Service cost	$	148	$	125	$	445	$	375
Interest cost		278		268		834		803
Amortization of prior service cost		0		6		0		18
Amortization of loss		131		67		392		201
Net periodic benefit cost	$	557	$	466	$	1,671	$	1,397

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Note 8 - 2014 Restructuring Plan (Tables)

9 Months Ended

Oct. 04, 2015

Notes Tables

Restructuring and Related Costs [Table Text Block]

	Total Restructuring Charge		Costs Incurred in 201 4		Costs Incurred in 201 5		Balance at Oct. 4, 2015
	(In thousands)
Workforce Reduction	$	9,669	$	2,732	$	6,307	$	630
Fixed Asset Impairment		2,584		2,584		0		0
Other Related Exit Costs		133		133		0		0

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Note 2 - Inventories (Tables)

9 Months Ended

Oct. 04, 2015

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	Oct. 4, 2015		December 28, 2014
	(In thousands)
Finished Goods	$	105,328	$	89,688
Work in Process		11,102		9,898
Raw Materials		47,010		42,581
	$	163,440	$	142,167

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Note 10 - Recently Issued Accounting Pronouncements

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE 10 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting standard regarding recognition of revenue from contracts with customers. In summary, the core principle of this standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance for this standard was initially effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. However, in August of 2015, the FASB delayed the effective date of the standard for one full year. While we are currently reviewing this new standard, we do not believe that the adoption of this standard will have a material impact on our financial condition or results of operations.

In January 2015, the FASB issued an accounting standard which eliminates the concept of extraordinary items from generally accepted accounting principles. The standard does not affect disclosure guidance for events or transactions that are unusual in nature or infrequent in their occurrence. The standard is effective for interim and annual periods in fiscal years beginning after December 15, 2015. The standard allows prospective or retrospective application. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. We do not believe the adoption of this standard will have any significant effect on our ongoing financial reporting.

In February 2015, the FASB issued an accounting standard which changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity (“VIE”), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The new accounting standard is effective for annual and interim periods in fiscal years beginning after December 15, 2015. We are currently evaluating the impact, if any, this standard will have on our ongoing financial reporting, but we do not believe the adoption of this standard will have any significant effect on our ongoing financial reporting.

In April 2015, the FASB issued an accounting standard to simplify the presentation of debt issuance costs. This accounting standard requires debt issuance costs to be presented on the balance sheet as a direct reduction from the carrying amount of the related debt liability. In August 2015, the FASB issued an accounting standard update that allows the presentation of debt issuance costs related to line-of-credit arrangements as an asset on the balance sheet under the simplified guidance, regardless of whether there are any outstanding borrowings on the related arrangements. The guidance in these accounting standards is to be applied retrospectively and is effective for interim and annual reporting periods beginning after December 15, 2015. As these standards relate to presentation only, we do not believe the adoption of these accounting standards will have a material impact on our financial statements.

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Note 8 - 2014 Restructuring Plan

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

NOTE 8 – 2014 RESTRUCTURING CHARGE

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

A summary of these restructuring activities is presented below:

	Total Restructuring Charge		Costs Incurred in 201 4		Costs Incurred in 201 5		Balance at Oct. 4, 2015
	(In thousands)
Workforce Reduction	$	9,669	$	2,732	$	6,307	$	630
Fixed Asset Impairment		2,584		2,584		0		0
Other Related Exit Costs		133		133		0		0

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Note 9 - Supplemental Cash Flow Information

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

NOTE 9 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest amounted to $4.8 million and $10.6 million for the nine months ended October 4, 2015, and September 28, 2014, respectively. Income tax payments amounted to $5.9 million and $5.8 million for the nine months ended October 4, 2015, and September 28, 2014, respectively.

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Note 11 - Income Taxes

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 11 – INCOMETAXES

Accounting standards require that all tax positions be analyzed using a two-step approach. The first step requires an entity to determine if a tax position is more-likely-than-not to be sustained upon examination. In the second step, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis that is more-likely-than-not to be realized upon ultimate settlement. In the first nine months of 2015, the Company decreased its liability for unrecognized tax benefits by $0.1 million. As of October 4, 2015, the Company had accrued approximately $27.3 million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company’s deferred tax asset as of October 4, 2015 reflects a reduction for $21.9 million of these unrecognized tax benefits.

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Note 7 - Segment Information (Details Textual)	9 Months Ended
	Oct. 04, 2015
Number of Operating Segments	3
Number of Reportable Segments	1

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Note 5 - Stock-based Compensation (Tables)

9 Months Ended

Oct. 04, 2015

Notes Tables

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Shares		Weighted Average Exercise Price
Outstanding at December 28, 2014		126,000	$	9.23
Granted		0		0
Exercised		38,500		9.27
Forfeited or canceled		0		0
Outstanding at October 4, 2015		87,500	$	8.75
Exercisable at October 4, 2015		87,500	$	8.75

Cash Proceeds and Intrinsic Value Related to Stock Options Exercised [Table Text Block]

	Nine Months Ended
	Oct. 4, 2015		Sept. 28, 2014
	(In millions )
Proceeds from stock options exercised	$	0.4	$	0.2
Intrinsic value of stock options exercised		0.4		0.3

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 28, 2014		1,391,000	$	17.12
Granted		597,000		16.43
Vested		290,500		13.99
Forfeited or canceled		202,000		13.66
Outstanding at October 4, 2015		1,495,500	$	17.92

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Note 3 - Distributed and Undistributed Earnings (Details) - $ / shares	3 Months Ended		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Basic Earnings (Loss) Per Share
Distributed Earnings (in dollars per share)	$ 0.05	$ 0.03	$ 0.13	$ 0.10
Undistributed Earnings (in dollars per share)	0.26	(0.04)	0.69	0.15
Total (in dollars per share)	0.31	(0.01)	0.82	0.25
Diluted Earnings (Loss) Per Share
Distributed Earnings (in dollars per share)	0.05	0.03	0.13	0.10
Undistributed Earnings (in dollars per share)	0.26	(0.04)	0.69	0.15
Total (in dollars per share)	0.31	(0.01)	0.82	0.25
Total (in dollars per share)	$ 0.31	$ (0.01)	$ 0.82	$ 0.25

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Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014
OPERATING ACTIVITIES:
Net Income	$ 54,171,000	$ 16,720,000
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Depreciation and Amortization	23,188,000	20,124,000
Stock Compensation Amortization Expense	10,928,000	2,989,000
Deferred Income Taxes and Other	15,403,000	1,739,000
Working Capital Changes:
Accounts Receivable	17,852,000	(7,373,000)
Inventories	(28,670,000)	(15,518,000)
Prepaid Expenses and Other Current Assets	(377,000)	1,799,000
Accounts Payable and Accrued Expenses	196,000	14,417,000
CASH PROVIDED BY OPERATING ACTIVITIES:	92,691,000	34,897,000
INVESTING ACTIVITIES:
Capital Expenditures	(23,734,000)	(32,123,000)
Other	(80,000)	(1,950,000)
CASH USED IN INVESTING ACTIVITIES:	(23,814,000)	(34,073,000)
FINANCING ACTIVITIES:
Borrowing of Long-Term Debt	0	5,952,000
Repayment of Long-Term Debt	(28,000,000)	(4,075,000)
Repurchase of Common Stock	(10,469,000)	0
Proceeds from Issuance of Common Stock	359,000	159,000
Dividends Paid	(8,592,000)	(6,647,000)
Debt Issuance Costs	0	(106,000)
CASH USED IN FINANCING ACTIVITIES:	(46,702,000)	(4,717,000)
Net Cash Provided By (Used In) Operating, Investing and Financing Activities	22,175,000	(3,893,000)
Effect of Exchange Rate Changes on Cash	(3,339,000)	(527,000)
CASH AND CASH EQUIVALENTS:
Net Change During the Period	18,836,000	(4,420,000)
Balance at Beginning of Period	54,896,000	72,883,000
Balance at End of Period	$ 73,732,000	$ 68,463,000

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Note 5 - Stock-based Compensation

9 Months Ended

Oct. 04, 2015

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 5 – STOCK-BASED COMPENSATION

Stock Option

Awards

In accordance with accounting standards, the Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost will be recognized over the period in which the employee is required to provide the services – the requisite service period (usually the vesting period) – in exchange for the award.

All outstanding stock options vested prior to the end of 2013, and therefore there have been no stock option compensation expenses during 2014 or 2015.

There were no stock options granted in 2014 or 2015. The following table summarizes stock options outstanding as of October 4, 2015, as well as activity during the nine months then ended:

	Shares		Weighted Average Exercise Price
Outstanding at December 28, 2014		126,000	$	9.23
Granted		0		0
Exercised		38,500		9.27
Forfeited or canceled		0		0
Outstanding at October 4, 2015		87,500	$	8.75
Exercisable at October 4, 2015		87,500	$	8.75

At October 4, 2015, the aggregate intrinsic value of both in-the-money options outstanding and options exercisable was $1.2 million (the intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option).

Cash proceeds and intrinsic value related to total stock options exercised during the first nine months of fiscal years 2015 and 2014 are provided in the table below. The Company did not recognize any significant tax benefit with regard to stock options in either period presented.

	Nine Months Ended
	Oct. 4, 2015		Sept. 28, 2014
	(In millions )
Proceeds from stock options exercised	$	0.4	$	0.2
Intrinsic value of stock options exercised		0.4		0.3

Restricted Stock Awards

During the nine months ended October 4, 2015, and September 28, 2014, the Company granted restricted stock awards for 597,000 and 490,000 shares, respectively, of common stock. Restricted stock awards (or a portion thereof) vest with respect to each recipient over a two to five year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date. Additionally, awards (or a portion thereof) could vest earlier upon the attainment of certain performance criteria, in the event of a change in control of the Company, or upon involuntary termination without cause.

Compensation expense related to restricted stock awards was $10.9 million and $3.0 million for the nine months ended October 4, 2015, and September 28, 2014, respectively. Accounting standards require that the Company estimate forfeitures for restricted stock and reduce compensation expense accordingly. The Company has reduced its expense by the assumed forfeiture rate and will evaluate experience against this forfeiture rate going forward.

The following table summarizes restricted stock awards outstanding as of October 4, 2015, and activity during the nine months then ended:

	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 28, 2014		1,391,000	$	17.12
Granted		597,000		16.43
Vested		290,500		13.99
Forfeited or canceled		202,000		13.66
Outstanding at October 4, 2015		1,495,500	$	17.92

As of October 4, 2015, the unrecognized total compensation cost related to unvested restricted stock was approximately $12.1 million. That cost is expected to be recognized by the end of 2019.

For the nine months ended October 4, 2015, and September 28, 2014, the Company recognized tax benefits with regard to restricted stock of $4.0 million and $0.6 million, respectively.

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Note 3 - Calculation of Income (Loss) Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Participating Securities [Member]
Net Income (Loss)	$ 500,000	$ 0	$ 1,200,000	$ 400,000
Weighted Average Shares Outstanding (in shares)	64,359,000	65,045,000	64,596,000	65,050,000
Participating Securities (in shares)	1,495,000	1,420,000	1,495,000	1,420,000
Shares for Basic Earnings (Loss) Per Share (in shares)	65,854,000	66,465,000	66,091,000	66,470,000
Dilutive Effect of Stock Options (in shares)	53,000	0	48,000	84,000
Shares for Diluted Earnings (Loss) Per Share (in shares)	65,907,000	66,465,000	66,139,000	66,554,000

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Note 11 - Income Taxes (Details Textual) $ in Millions	9 Months Ended	27 Months Ended
	Oct. 04, 2015 USD ($)	Oct. 04, 2015 USD ($)
Unrecognized Tax Benefits, Period Increase (Decrease)	$ (0.1)
Unrecognized Tax Benefits	$ 27.3	$ 27.3
Increase (Decrease) in Deferred Tax Assets		$ (21.9)

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Note 3 - Earnings Per Share (Tables)

9 Months Ended

Oct. 04, 2015

Notes Tables

Distributed And Undistributed Earnings [Table Text Block]

	Three Months Ended					Nine Months Ended
	Oct. 4, 2015		Sept. 28, 2014			Oct. 4, 2015		Sept. 28, 2014
Earnings (Loss) Per Share
Basic Earnings (Loss) Per Share
Distributed Earnings	$	0.05	$	0.03		$	0.13	$	0.10
Undistributed Earnings		0.26		(0.04	)		0.69		0.15
Total	$	0.31	$	(0.01	)	$	0.82	$	0.25
Diluted Earnings (Loss) Per Share
Distributed Earnings	$	0.05	$	0.03		$	0.13	$	0.10
Undistributed Earnings		0.26		(0.04	)		0.69		0.15
Total	$	0.31	$	(0.01	)	$	0.82	$	0.25
Basic Earnings (Loss) Per Share	$	0.31	$	(0.01	)	$	0.82	$	0.25
Diluted Earnings (Loss) Per Share	$	0.31	$	(0.01	)	$	0.82	$	0.25

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended				N i ne Months Ended
	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
			(In millions)
Net Income (Loss)	$	0.5	$	0.0	$	1.2	$	0.4

	Three Months Ended				N i ne Months Ended
	Oct. 4, 2015		Sept. 28, 2014		Oct. 4, 2015		Sept. 28, 2014
			(In thousands)
Weighted Average Shares Outstanding		64,359		65,045		64,596		65,050
Participating Securities		1,495		1,420		1,495		1,420
Shares for Basic Earnings (Loss) Per Share		65,854		66,465		66,091		66,470
Dilutive Effect of Stock Options		53		0		48		84
Shares for Diluted Earnings (Loss) Per Share		65,907		66,465		66,139		66,554