Slide 1: Investor Presentation: $275,000,000 Senior Notes due 2018
Interface’ Investor Presentation $275,000,000Senior Notes due 2018 November2010
Slide 2: 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 believes that the expectations ref
Slide 3: Transaction Overview: Summary of Indicative Terms
Issuer: Interface, Inc (the “Issuer”) Issue: $275,000,000 of Senior Unsecured Notes Guarantors: All existing and future material U.S. subsidiaries of the Issuer Maturity: 8 years (2018) Optional Redemption: Non Call 4; Except that for the first 4 years, up to 10% of the Notes may be redeemed during
Slide 4: Presenters
Daniel Hendrix § President and Chief Executive Officer Patrick Lynch § Senior Vice President and Chief Financial Officer Presenters
Slide 5: Transaction Overview: Sources and Uses
Sources & Uses ($ in millions) Transaction Overview: Sources and Uses (1) Assumes 100% Early Tender for Senior Secured Notes at 123 (2) Assumes 100% Early Tender for Senior Subordinated Notes at 103 § Interface intends to issue $275 million principal amount of Senior Notes § The proceeds from the No
Slide 6: Transaction Overview: Pro Forma Capitalization
Capitalization As of As Adjusted Maturity 10/3/10 EBITDAx (1) Adjustments 10/3/10 EBITDAx (1) Transaction Overview: Pro Forma Capitalization (1) Assumes a last twelve month September 30, 2010 Adjusted EBITDA of $112.1 million (see the Appendix for a reconciliation of Adjusted EBITDA to Operating Inc
Slide 7: Investment Highlights
§ Interface’s global sales and marketing capabilities have created significant growth in emerging markets which will experience growth faster than developed countries. § Interface is creating a consumer brand (FLOR) as modular carpet is moving from a concept to awareness for the home . § Interface i
Slide 8: Interface Brands - Most Recognized in the Industry
Interface Brands - Most Recognized in the Industry
Slide 9: Market Outlook: Global Growth Momentum
Assessing Global Growth Momentum (Figures based on industrial production, real retail sales, merchandise exports, and purchasing managers index (PMI). Some of the ratings—particularly for recent months—are based on both actual data as well as projections of the underlying variables) Market Outlook:
Slide 10: Architecture Billings Index and UK Commercial Construction Output
Architecture Billings Index (U.S.) UK Commercial Construction Output* (Index: 50 = no change from previous month) § The Architecture Billings Index indicated growth in design activity for the first time since January 2008, coming in at 50.4 in September 2010 . § There has been a strong upturn in the
Slide 11: Interface Continues to Outperform the Office Furniture Industry
Interface U.S. Orders Received vs. BIFMA Orders (year-over-year change in trailing-twelve-month orders) Interface rebounding faster than industry Market Outlook: Interface Continues to Outperform the Office Furniture Industry
Slide 12: Strategic Priorities
Leadership Position in Sustainability Global Marketing Capabilities Global Make-to-Order Manufacturing and Local Distribution Rapid Innovation and Designs Customer Intimacy Invest in the Growth of Emerging Markets Grow a Consumer Brand Diversify End Use Markets Maintain Leading Share in the Office M
Slide 13: Modular Carpet Moving from a Niche to a Category
1. 2. 3. 4. 5. 6. 7. 2010 Floor Focus U.S. Top 250 Design Survey: Hot Products Benefits of Modular Creative DESIGN freedom NO glue, NO pad LOWER COST to change Produces LESS WASTE FASTER and more PROFITABLE INSTALLATION for contractors Easier to RECONFIGURE and MAINTAIN Easily RECYCLED and REPURPOSE
Slide 14: Easy Repairs
EASY REPAIRS
Slide 15: Long-Term Strategy: Organic Growth of Modular Carpet
Sales by Business Type 40% 93% Long-Term Strategy Has Been to Focus on Organic Growth of Modular Carpet Divested Raised Access Flooring Divested European Fabrics Divested N. American Fabrics Divested European Broadloom Divested Installation & Maintenance Divested Vinyl Matting Divested $500M in Reve
Slide 16: Functionality and Design Create a Secular Shift in Modular Carpet
($ in millions) What if modular carpet reached 65% market share of the commercial market by 2020? Carpet Tile Share of U.S. Commercial Carpet Market Functionality and Design Create a Secular Shift in Modular Carpet From a Niche to a Category Pioneering Stage Functionality Stage Secular Shift 2009 To
Slide 17: European Market Opportunity
Carpet Tile Penetration of European Contract Soft Flooring Market (millions of square meters) Significant Opportunity 8% 44% 24% 42% 24% 30% 23% 23% European Market Opportunity (Billions of square meters) 65% Target Penetration Carpet Tile Broadloom and Other Soft Flooring Source: BMW Associates and
Slide 18: Asia-Pacific Market Opportunity
Carpet Tile Penetration of the Asia-Pacific Contract Soft Flooring Market (millions of square meters) 28% 25% Significant Opportunity Asia-Pacific Market Opportunity ($ in millions) Carpet Tile Broadloom and Other Soft Flooring Source: BMW Associates and management estimates 65% Target Penetration S
Slide 19: Global Market Presence
Americas Europe & MEAI Australia/NZ Source: BMW Associates and management estimates § Interface has significant market presence in key major markets § Interface has manufacturing, sales & marketing support on four continents Secular Shift
Slide 20: Diversified End Use Markets
Diversified End Use Markets Segmented Market Approach Growth Platforms
Slide 21: Diversify End Use Markets
2003 2009 TARGET Diversify End Use Markets Growth Platforms Mature Office Market Non-Office Commercial Segments Emerging Markets Consumer
Slide 22: Renovation vs. New Construction
Interface Percentage Renovation vs. New Construction* § Commercial renovation typically follows a 7-9 year cycle § There is currently a lot of pent-up demand in commercial renovation, particularly in office space New Construction Renovation Growth Platforms Source: Management estimates Majority of I
Slide 23: Capture the Rebound in the Corporate Office Segment
Modular Mature Corporate Office Sales U.S. Office Construction Starts Capture the Rebound in the Corporate Office Segment Growth Platforms Excludes Latin America, Eastern Europe, Russia, Middle East, Africa, India and NE Asia § The timing of the recovery in the U.S. Nonresidential Construction marke
Slide 24: Strong Growth from Non-Corporate Segments
Modular Non-Office Commercial Sales Non-Office Commercial Sales by Segment Strong Growth from Non-Corporate Segments Growth Platforms (FYE 2009) 15% 14% 4% 10% 8% Continues to improve
Slide 25: New Segment Opportunities - Main Street Commercial
Main Street Commercial Market Opportunity Bravo Network New Segment Opportunities - Main Street Commercial U.S. Commercial Carpet Market ($ in billions) Main Street Commercial Contract Commercial $3.0B Growth Platforms § Access to secondary Contract and Main Street commercial markets in smaller rura
Slide 26: New Segment Opportunities - Airline Transportation
Benefits of Modular for Transportation Southwest Airlines Green Plane New Segment Opportunities - Airline Transportation § Single tile replace-ability § Longer life construction § Highest standards of Smoke Toxicity with Nylon § Lighter weight than current carpet options § Quick replacement - no “ou
Slide 27: New Segment Opportunities - Maritime Transport
Cruise and Shipping Industry Products New Segment Opportunities - Maritime Transport § Fusion bonded printed carpet tile for the Cruise and Shipping industry § 80% Wool 20% Nylon Pile § IMO (International Maritime Organization) certified § First ever ‘free lay’ carpet tile to meet the flammability s
Slide 28: Invest in Emerging Markets
Interface Target Emerging Markets Emerging Market Sales Invest in Emerging Markets Growth Platforms § Central America § South America § Eastern Europe § Russia § Middle East § Africa § India § China § Vietnam § Cambodia § Indonesia § Philippines 38% 10% 31% 31% 16% Continues to improve
Slide 29: Establishing Local Manufacturing in China
InterfaceFLOR Taicang Facility Benefits of China Manufacturing Plant Invest in Emerging Markets: Establishing Local Manufacturing in High Growth China Market Growth Platforms § Applied for LEED Gold certification for Office and Customer spaces § Full manufacturing operations are scheduled to go live
Slide 30: InterfaceFLOR China Facility
Showroom Canteen and Showroom Exterior Overlooking Factory Floor InterfaceFLOR China Facility Growth Platforms
Slide 31: China Sales: Multi-National vs. Local Business
China Sales: Multi-National vs. Local Business Our China Business Has Reduced Its Exposure to Multi- National Corporations as a Result of the Downturn Growth Platforms
Slide 32: Grow a Consumer Brand: Modular Goes in the Home
FLOR is… § A new way to think about floor covering § A new kind of customer experience § A new way to design for your life § A new standard in environmentally responsible residential design Grow a Consumer Brand: Modular Goes in the Home Growth Platforms
Slide 33: FLOR Connects Directly with Consumers
2010 catalog, online and in-store experiences bring the proposition to life for consumers Grow a Consumer Brand: FLOR Connects Directly with Consumers Growth Platforms
Slide 34: FLOR Is Creating a Category
FLOR Sales by Channel 75% 77% 88% 90% of FLOR sales are generated Online and via Catalog 90% Grow a Consumer Brand: FLOR is Creating a Category: “Modular Carpet for the Home” % Direct Sales Percent of Total Growth Platforms
Slide 35: FLOR Store Opened
FLOR Store Highlights Chicago store Santa Monica store Grow a Consumer Brand: FLOR Store Opened § First store opened in Chicago in June 2009 § Second store opened in Santa Monica in October 2010 § Opportunity to interact with the customer about the modular concept, design and sustainability § 8x10 g
Slide 36: Global Manufacturing Capabilities and Local Distribution
Holland Global Manufacturing Capabilities and Local Distribution Value Drivers City of California Yorkshire , England Picton, Australia Current Manufacturing Facility Americas Sales 58% Production 51% Employees 54% Note: Figures represent FYE 2009 Shanghai, China Future Manufacturing Facility Urugua
Slide 37: Strong Competitive Advantage Through Make-to-Order Philosophy
1. 2. 3. 4. 5. 6. 7. The Made-to-Order Advantage Interface Modular Percentage Make-to-Order Interface is the ONLY company with a “make-to-order” approach to the market Increases speed to market Promotes innovation Offers unique custom product capabilities Supports a constant flow of new products Off
Slide 38: Corporate Office
Corporate Office Value Drivers
Slide 39: Retail
Retail Value Drivers
Slide 40: Colleges & Universities
Colleges & Universities Value Drivers
Slide 41: K-12 Education
K-12 Education Value Drivers
Slide 42: Healthcare
Healthcare Value Drivers
Slide 43: Government & Public Spaces
Government & Public Spaces Value Drivers
Slide 44: Hospitality
Hospitality Value Drivers
Slide 45: Interface is a Recognized Leader in Sustainability
GlobeScan Corporate Sustainability Leaders 2009 Floor Focus Green Leaders 2010 Sustainability-Focused Innovation Interface is a Recognized Leader in Sustainability Unprompted, Combined Mentions 2009 Value Drivers Source: 2010 Floor Focus Top 250 Design Survey (U.S. Market) Source: The Sustainability
Slide 46: Green Building Trends
Firm Involvement in Green Building Top 5 Sectors for Green Building Growth (Globally) Green Building Trends Green Building Trends Value Drivers (% of firms) § Refurbishment/Retrofit - Shift away from new construction to energy efficient refurbishment § Green New Construction - Highest level of activ
Slide 47: ReEntry and Recycled Content
Recycled Content ReEntry Program - Cumulative Carpet Diverted from Landfill (millions of lbs) Recycled and Biobased Raw Materials Used at Carpet Manufacturing Facilities (percent of total raw materials used) ReEntry and Recycled Content Value Drivers § Reclaiming both Interface and competitor carpet
Slide 48: EcoMetrics Results
Waste Sent to Landfills from Carpet Manufacturing Facilities (millions of lbs) Net Greenhouse Gas Emissions (metric tons of CO 2 ) Energy from Renewable Resources at Carpet Manufacturing Facilities (percent of total energy use) Total Energy Use at Carpet Manufacturing Facilities (Btus per square yar
Slide 49: Interface, Inc. Financials
Interface, Inc. Financials
Slide 50: Consolidated Financial Results
Net Sales and Adjusted EBITDA (Continuing Operations)* Consolidated Financial Results * See the Appendix for a reconciliation of Adjusted EBITDA ($ in millions)
Slide 51: Quarterly Results: Q3 Comparison
Q3 Comparison Quarterly Results ($ in millions)
Slide 52: Net Sales and Gross Profit
Net Sales Gross Profit Interface Financial Results from Continuing Operations ($ in millions)
Slide 53: SG&A Expense and Adjusted Operating Income
SG&A Expense Adjusted Operating Income* $40.6 $41.7 $57.1 $83.4 Interface Financial Results from Continuing Operations ($ in millions) ($ in millions) (1) Reported Operating Income of $57.1M in 2009 excludes Income from Litigation Settlements of $5.9M * See the Appendix for a reconciliation of Adjus
Slide 54: Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings Per Share (Continuing Operations)* Interface Financial Results from Continuing Operations * See the Appendix for a reconciliation of Adjusted Diluted Earnings Per Share from Continuing Operations
Slide 55: Key Leverage Statistics
Ending Cash Balance Net Debt* Key Leverage Statistics * See the Appendix for a reconciliation of Net Debt and Adjusted EBITDA
Slide 56: Appendix: Reconciliation of Non-GAAP Financial Measures
Appendix: Reconciliation of Non-GAAP Financial Measures