Slide 1: Interface, Inc. Investor Presentation May 2006
I N T E R F A C E Interface, Inc. Investor Presentation May 2006
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements, including, in particular, statements about Interface’s plans, strategies and prospects. These are based on the Company’s current assumptions, expectations and projections about future events. Although Interface believe
Slide 3: Interface Building Blocks - A Foundation for Growth
Interface Building Blocks - A Foundation for Growth Global Manufacturer Modular Centric Design Leader Made to Order Philosophy Segmented Approach Inventor First Mover in Sustainability Preeminent Brands Customer Experience
Slide 4: Over the Past Three Years, Interface Has Focused on its Core Modular Markets
46% 12% 19% 1% 22% 70% 13% 2% 15%Over the Past Three Years, Interface Has Focused on its Core Modular Markets 99% Commercial 1% Residential l68% Corporate Office 32% Non-Corporate90% Refurbishment 10% New Construction Interface Portfolio (2002) 90% Commercial 10% Residential 50% Corporate Office 50%
Slide 5: History of Modular Carpet in the U.S. Market: Introduced in the 1970s
History of Modular Carpet in the U.S. Market Products are Introduced in the 1970’s 1970 2005 2000 1995 1990 1985 1980 1975 0 1,000 250 500 100 • Fusion bonded • Open office plan emerges • Cut pile only • Pricing premium US Modular Carpet Sales -Specified Commercial Market Modular Centric Source: Inv
Slide 6: The Functionality of Modular Carpet
Modular Centric History of Modular Carpet in the U.S. Market The Functionality of Modular Carpet 1970 2005 2000 1995 1990 1985 1980 1975 0 1,000 250 500 100 • Open office • Printed • Limited competitors • Limited application and Design US Modular Carpet Sales -Specified Commercial Market Source: Inv
Slide 7: Modular Gains Broader Acceptance as Design Improves
Modular Centric History of Modular Carpet in the U.S. Market Modular Gains Broader Acceptance as Design Improves 1970 2005 2000 1995 1990 1985 1980 1975 0 1,000 250 500 100 • Tufted tiles enter market • New competitors • Lower price • Interface late to change US Modular Carpet Sales -Specified Comme
Slide 8: Design Features Begin to be Recognized
Modular Centric History of Modular Carpet in the U.S. MarketDesign Features Begin to be Recognized 1970 2005 2000 1995 1990 1985 1980 1975 0 1,000 250 500 100 • Solution dyed tufted pattern • Mass customization • Speed to market • New market segments • Sustainability-Ray Anderson’s vision US Modular
Slide 9: Celebrating the Design Elements of Modular Carpet
History of Modular Carpet in the U.S. Market Celebrating the Design Elements of Modular Carpet Modular Centric 1970 2005 2000 1995 1990 1985 1980 1975 0 1,000 250 500 100 • Celebrating the square • Quarter turn • Embracing seams • Mixing patterns US Modular Carpet Sales -Specified Commercial MarketS
Slide 10: Functionality and Design Come Together - Interface Entropy
History of Modular Carpet in the U.S. Market Functionality and Design Come Together -Interface Entropy1970 2005 2000 1995 1990 1985 1980 1975 0 1,000 250 500 100 U.S. Patent 6,908,656 • Entropy • Inspired by nature • Entropy patent • Modular takes share of commercial market US Modular Carpet Sales -
Slide 11: Through Segmentation We Have Lessened Our Dependence on the Commercial Office Market
64% 58% 54% 49% 49% 36% 42% 46% 51% 51% 0% 25% 50% 75% 100% 2001 2002 2003 2004 2005 Through Segmentation We Have Lessened Our Dependence on the Commercial Office Market Americas Modular Office vs. Non-Office Sales Mix Percentage(2001 -2005)2001-2004 U.S. Modular -Office Segment % of Sales2005 U.S.
Slide 12: Interface Continues to be the FIRST in Innovation
Interface Continues to be the FIRST in Innovation …1.INVENTEDcarpet tile In Europe -1950’s2.PIONEERED The modular concept In the U.S.-1970’s3 .FIRST To move away from the monolithic broadloom look for carpet tile4.FIRST In the industry to recognize the importance of sustainability 5.FIRST to introdu
Slide 13: Design Leader and Market Leader in Product Design and Fashion
Design Leader …and the Market Leader in Product DESIGN and FASHION
Slide 14: Preeminent Brands
Preeminent Brands …by Establishing Brands That Deliver Our Promise of High End Functionality, Quality and Design SERVICEQUALITYDESIGNPERFORMANCEVALUE1. INTERFACE1. INTERFACE1. INTERFACE1. INTERFACE1. INTERFACE SHAW CONTRACT2. BPS2. BPS2. LEES SHAW2. BENTLEY PRINCE3. SHAW CONTRACT SHAW3. BPS2. LEES S
Slide 15: Strong Competitive Advantage Through Made to Order Philosophy
Interface Maintains a Strong Competitive Advantage Through its Made to Order Philosophy Americas Modular Asia Pacific Modular Europe Modular Fabrics Bentley Prince Street Interface Businesses Percentage Make to Order Business Actual vs. TARGET 1.Increases speed to market 2.Offers unique custom produ
Slide 16: Global Manufacturing Capabilities
7%68%25%…and Global Manufacturing Capabilities Global Americas Europe Guilford, ME(Panel & Upholstery)LaGrange, GA(Modular) Picton, Australia(Modular)Belleville, Canada(Modular) Chonburi, Thailand(Modular)City of Industry, CA(Broadloom)Holland(Modular)China(Future Modular)Elkin, NC(Panel & Upholster
Slide 17: Impact to Interface: Leader in Sustainability
IMPACT to Interface • Galvanized a culture of higher purpose • Creates goodwill in the marketplace with architects, designers and end-users • Breakthrough product innovation and design based on sustainability pursuits •Terrace (100% recycled) is now 66% of U.S. fabric sales •$8M contract solidified
Slide 18: The Turnaround Story Becomes a Growth Story
…Becomes a Growth Story The Turnaround Story …
Slide 19: 2001 Was the Start of an Unprecedented Downturn in the Industry
7000 8000 9000 10000 11000 12000 13000 14000 2001 Was the Start of an Unprecedented Downturn in the Industry …The Office Market Rebound has Now Begun !!!US Office Furniture Market TTM Shipments 36% decline from Peak to Trough (2000 -2003)01/9509/05Source: Raymond James, BIFMAPEAK January 2001 (13,35
Slide 20: Turnaround Timeline
Europe returns to Double Digit growth Developed and launched I²campaign (random products)US and Asia Pacific modular businesses have RECORD year!!!…As a Result, Interface was Forced Into a Strategy of Survival, In Order to Build a Foundation for Long Term Growth Divested Re:Source Americas (15 Owned
Slide 21: Turnaround Timeline
Europe returns to Double Digit growth Developed and launched I²campaign (random products)US and Asia Pacific modular businesses have RECORD year!!!…As a Result, Interface was Forced Into a Strategy of Survival, In Order to Build a Foundation for Long Term Growth Divested Re: Source Americas (15 Owne
Slide 22: Poised for Growth
Poised for Growth In The Survival Period, Interface Built a Foundation for Growth Improved liquidity Increased share in the corporate office market Executed market segmentation Accelerated the acceptance Of modular carpet Established positive sales and profitability trends in Europe Established a fo
Slide 23: Significant Top-Line Growth Despite a Sluggish Corporate Office Market
$876 $745 $767 $881 $986 $1,002 $0 $200 $400 $600 $800 $1,000 $1,200 2001 2002 2003 2004 2005 LTM 2006 Interface Achieved Significant Top-Line Growth, Despite a Sluggish Corporate Office Market …US$ (000’s)Growth occurred through the execution of Interface’s strategic platforms Interface Net Sales R
Slide 24: Double Digit Operating Income Growth
4.5 24.9 31.4 60.7828354.622.46.23 $0 $25 $50 $75 $100 2001 2002 2003 2004 2005 LTM 2006…That resulted in DOUBLE DIGIT Operating Income Growth !!! Interface Gross Profit and Gross Profit % of Net Sales Interface SG&A Totals and SG&A % of Net Sales Restructuring Charges Interface Operating Income2001
Slide 25: Worldwide Modular Net Sales and Operating Profit Margin
$444 $483 $589 $646 $658 2002 50 300 350 400 450 500 550 600 650 700 2002 2003 2004 2005 LTM 20065%10%15%20%Interface Worldwide Modular Net Sales and Operating Profit Margin(2001 -LTM 2006)Interface is the Worldwide Leader in the Design and Manufacture of Carpet Tile $ in Millions% Operating Profit
Slide 26: Bentley Prince Street has Returned to Profitability
$141 $115 $110 $119 $125 $126 0 20 40 60 80 100 120 140 160 2001 2002 2003 2004 2005 LTM 2006 - 10% - 5% 0% 5% 10% 15% Bentley Prince Street has Returned to Profitability …Poised to Take Advantage of the Corporate Office Rebound Bentley Prince Street Net Sales and Operating Profit Margin2001 -LTM 20
Slide 27: Interface Fabrics has Returned to Profitability
Interface Fabrics has Returned to Profitability Despite the Unprecedented Decline in the Commercial Office Furniture Market Interface Fabrics Net Sales and Operating Profit Margin > Src 2001 - 2005 in Milions 7 ge 160 140 120 100 $162 2001 2002-2008 2004 DB Actual Fabrics Net Sales === Fabrics Opera
Slide 28: The Modular Carpet Explosion: Becoming the Flooring of Choice
…Becoming the Flooring of Choice The Modular Carpet Explosion …
Slide 29: Historically, Interface has Focused on the Commercial Office Market
Historically, Interface has Focused on the Commercial Office Market MARKET SIZECURRENT MODULAR PENETRATION50%0%Specified Corporate Office Segment$ 800M$ 25B$1BInterface U.S. Market Opportunity Expansion Source: Invista, Carpet and Rug Institute, Catalina Research, Inc., and management expectations M
Slide 30: Projections are for a Continued Corporate Office Rebound
Projections are for a Continue Offices5012520027535042580828486889092949698000204 06Millions of Square Feet U.S. Office Construction1980 -2005d Corporate Office Rebound Change in Office Employment-3000300600900120015008486889092949698000204Thousands of Workers Change in U.S. Office Employment1984 -2
Slide 31: Defining the Modular Promise
Defining the Modular Promise ...•Modular carpet enables dynamic design and supports creativity in ways that traditional broadloom cannot • Modular carpet instillations typically produce 67% less waste than conventional broadloom carpet-More of the investment goes into the floor versus the dumpster •
Slide 32: Corporate Office Segment
Corporate Office Segment
Slide 33: Driving Modular Acceptance into ALL Commercial Segments
TODAY, Interface is Driving the Modular Acceptance into ALL Commercial Segments -Healthcare, Education, Hospitality, Institutional and Retail MARKET SIZE CURRENT MODULAR PENETRATION 50% 0% $2B Specified Corporate Office Segment Non-Corporate Specified Market $ 800M $ 25B Specified Commercial Soft Fl
Slide 34: Modular Carpet Continues to be a Hot Product for Architects and Designers
Modular Carpet Continues to be a “Hot Product” for Architects and Designers 2005 2004 2003 Corporate 81% 63% 75% Tenant Improvement 67% N/A N/A Healthcare 64% 46% 25% Education 60% 54% 28% Retail 43% 35% 16% Hospitality 43% 26% 5% Public Spaces 47% 6% 7% Do NOT Specify Carpet Tile 11% 9% N/AWhere ar
Slide 35: Taking Advantage of the Opportunity in ALL Segments
…Taking Advantage of the Opportunity in ALL Segments -Office, Healthcare, Education, Hospitality and Retail Specified Commercial Flooring Market Percentage (%) of Carpet Tile by Segment
Slide 36: Higher Education Segment
Higher Education Segment Acadia Alumni Center and Dorm Room
Slide 37: K-12 Education Segment
K-12 Education Segment
Slide 38: Hospitality
Hospitality Hotel Monaco -Room and Common Area
Slide 39: Entertainment
Entertainment Movie Theatre
Slide 40: Healthcare Segment
Healthcare Segment Parker Adventist Hospital and Clarian Healthcare Center
Slide 41: Retail
Retail In-Store Retail and Shopping Mall Applications
Slide 42: Institutional Segment: Religious Establishments
Institutional Segment Religious Establishments
Slide 43: Institutional Segment - Government
Institutional Segment -Government South Florida and Toronto, Canada Airports
Slide 44: Expanded Opportunity into the $11B Residential Markets
With the Introduction of Interface FLOR and Heuga at Home, Interface has Expanded it Opportunity into the $11B Residential Markets MARKET SIZECURRENT MODULAR PENETRATION 50% 0% $2 BSpecified Corporate Office Segment Non-Corporate Specified Market$ 800M $ 25B Specified Commercial Soft Floorcovering M
Slide 45: Modular Goes in the Home
Modular Goes in the Home...
Slide 46: FLOR is Expanding its Retail Presence
FLOR is Expanding its Retail Presence
Slide 47: Interface is NOW Changing The Game
Interface is NOW Changing “The Game”-Driving the Acceptance of Modular Carpet Through Segmentation into ALL Categories MARKET SIZECURRENT MODULAR PENETRATION 50% 0% $2B Specified Corporate Office Segment Non-Corporate Specified Market $ 800M $ 25B Specified Commercial Soft Floorcovering Market -ALL
Slide 48: Investment Thesis, Why Interface?
Investment Thesis, Why Interface …?The U.S. office market is beginning to rebound-Indications are that we are in the early days (second year) of the recovery with tremendous pent-up demand, which should create a robust office market Carpet Tile is reaching the “tipping point” in the commercial marke
Slide 49: We Don't Know How Far Modular Can Go
…We Don’t Know How Far Modular Can Go