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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Contents
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Page
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Report of Independent Registered Public Accounting Firm
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1
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Financial Statements
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Statements of Net Assets Available for Benefits –
December 31, 2009 and 2008
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2
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Statements of Changes in Net Assets Available for Benefits –
Years Ended December 31, 2009 and 2008
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3
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Notes to financial statements
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4
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Signatures
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12
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Exhibit Index
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13
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Supplemental Schedule
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Schedule H, Line 4i, Schedule of Assets (Held at End of Year) –
December 31, 2009
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15
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Plan Administrator and Trustee
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Interface, Inc. Savings and Investment Plan
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December 31,
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2009
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2008
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Assets
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Investments, at fair value
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Common collective trust
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$ | 18,362,065 | $ | 18,085,911 | ||||
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Mutual funds
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47,351,126 | 37,445,688 | ||||||
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Interface, Inc. stock fund
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8,179,332 | 3,253,532 | ||||||
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TradeLink Investments – self-directed brokerage
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274,271 | 229,096 | ||||||
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Participant loans
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3,030,851 | 3,065,380 | ||||||
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Cash and cash equivalents
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-- | 5,189 | ||||||
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Total Investments
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77,197,645 | 62,084,796 | ||||||
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Receivables
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Participant contributions
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110,507 | 176,115 | ||||||
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Employer contributions
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15,447 | 74,482 | ||||||
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Total Receivables
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125,954 | 250,597 | ||||||
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Net assets available for benefits at fair value
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77,323,599 | 62,335,393 | ||||||
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Adjustment from fair value to contract value for fully benefit-responsive investment contracts
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(551,407 | ) | 169,538 | |||||
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Net assets available for benefits
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$ | 76,772,192 | $ | 62,504,931 | ||||
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Year ended December 31,
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2009
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2008
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Additions to (deductions from) net assets
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Investment income (loss):
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Interest and dividend income from mutual funds
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$ | 692,953 | $ | 1,888,678 | ||||
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Interest income from common collective trust
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688,891 | 732,462 | ||||||
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Dividend income from Interface, Inc. stock fund
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9,587 | 74,929 | ||||||
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Interest income from participant loans
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184,478 | 208,589 | ||||||
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Net appreciation (depreciation) in fair value of Interface, Inc. stock fund
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5,174,559 | (7,377,077 | ) | |||||
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Net appreciation (depreciation) in fair value of mutual funds
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10,818,331 | (22,688,977 | ) | |||||
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Net investment income (loss)
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17,568,799 | (27,161,396 | ) | |||||
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Contributions:
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Participant
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4,828,061 | 6,243,808 | ||||||
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Employer
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503,808 | 2,511,291 | ||||||
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Rollovers
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36,621 | 139,034 | ||||||
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Total contributions
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5,368,490 | 8,894,133 | ||||||
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Deductions
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Benefits paid to participants
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8,649,298 | 7,485,955 | ||||||
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Administrative expenses
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20,730 | 21,170 | ||||||
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Total deductions
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8,670,028 | 7,507,125 | ||||||
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Net increase (decrease) in net assets
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14,267,261 | (25,774,388 | ) | |||||
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Net assets available for benefits, beginning of year
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62,504,931 | 88,279,319 | ||||||
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Net assets available for benefits, end of year
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$ | 76,772,192 | $ | 62,504,931 | ||||
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1. Description
of Plan
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The following description of the Interface, Inc. Savings and Investment Plan (the “Plan”) provides only general information. Participants should refer to the Plan’s Summary Plan Description and Plan document for a more complete description of the Plan’s provisions.
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a.
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General - The Plan is a defined contribution plan established on October 1, 1988 covering substantially all full-time employees of Interface, Inc. and adopting domestic subsidiaries (the “Company”) who have six months of service and are age eighteen or older. The Plan also covers part-time employees of the Company who have twelve months of service and are age eighteen or older. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
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As of January 1, 2008, the Company amended and restated the Plan to incorporate all prior changes. Eligible employees are automatically enrolled in the Plan at a three percent contribution rate. Eligible employees that do not want to contribute in the Plan are required to elect out of the Plan.
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b.
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Contributions - Each year, participants may contribute up to 40 percent of pretax annual compensation, as defined in the Plan, up to a maximum of $16,500 for 2009 and $15,500 for 2008. Participants who have attained age 50 before the end of the plan year were eligible to make catch-up contributions of $5,000 for each of 2009 and 2008. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers a common collective trust, a Company common stock fund, twenty-five mutual funds and a self-directed brokerage account as investment options for participants. During 2008 and January and February 2009, the Company made a matching contribution in an amount equal to 50 percent of the first 6 percent of eligible compensation that a participant contributed to the Plan. Effective March 1, 2009, the Company reduced the matching contribution to an amount equal to 17 percent of the first 6 percent of eligible compensation that a participant contributed to the Plan. (Effective January 1, 2010, the Company match amount was restored to an amount equal to 50 percent of the first 6 percent of eligible compensation that a participant contributed to the Plan.) Additional profit-sharing amounts may be contributed at the option of the Company’s Board of Directors in the form of cash or Company common stock. No additional profit-sharing amounts were contributed by the Company to the Plan during the years ended December 31, 2009 and 2008. Contributions are subject to certain limitations.
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c.
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Participant Accounts - Each participant’s account is credited with the participant’s contribution and allocations of (i) the Company’s contributions, and (ii) Plan earnings, and charged with an allocation of certain administrative expenses. Allocations are based on participant account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
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d.
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Vesting - Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company’s contribution portion of their accounts is based on years of continuous service. A participant is 100 percent vested after five years of credited service beginning with 20 percent after year one.
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e.
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Participant Loans - Participants may borrow from their accounts a minimum of $1,000 up to a maximum amount equal to the lesser of $50,000 or 50 percent of their account balance. The maximum loan amount is also reduced by the balance of any self-directed brokerage accounts. Each loan is secured by the balance in the borrowing participant’s account and bears interest at a rate commensurate with local prevailing rates as determined by the Plan Administrator on the date of the loan. Interest rates are currently equal to the prime rate plus one percent. Principal and interest are paid ratably through payroll deductions.
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f.
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Payment of Benefits - On termination of service due to death, disability, retirement, or separation of service, a participant is eligible to receive a lump sum amount equal to the value of the participant’s vested interest in his or her account. Withdrawals from the Plan may also be made upon circumstances of financial hardship, in accordance with provisions specified in the Plan.
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g.
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Forfeited Accounts - Forfeited nonvested accounts are used to reduce employer contributions. During the Plan years ended December 31, 2009 and 2008, forfeited amounts were not material to the financial statements.
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h.
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Administrative Expenses - The Company pays the majority of the Plan’s administrative expenses. Fees recorded in the Plan for the 2009 and 2008 Plan years relate to recordkeeping fees and participant loans, and are charged directly to those participant accounts.
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2. Summary of
Significant
Accounting
Policies
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Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Accounting guidance requires investment contracts held by a defined contribution plan to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were able to initiate permitted transactions under the terms of the Plan. Accordingly, the Statement of Net Assets Available for Benefits presents the estimated fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
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Management Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
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Investment Valuation and Income Recognition
The Plan’s investments are stated at estimated fair value. Where available, quoted market prices are used to value investments. Shares of the mutual funds are valued at the net asset value of shares held by the Plan at year end. Common collective trusts are valued at contract value. Participant loans are valued at amortized cost, which approximates fair value. The Company common stock fund is valued based upon the quoted market price for Interface, Inc. Class A Common Stock. Self-directed brokerage accounts are valued at the asset value of investments held at year end.
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Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
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Payment of Benefits
Benefits are recorded when paid.
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3.
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Investments
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The estimated fair market value of individual investments that represent five percent or more of the Plan’s net assets are as follows:
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December 31,
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2009
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2008
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T. Rowe Price Stable Value Fund (common collective trust)
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$ | 18,362,065 | $ | 18,085,911 | |||||
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T. Rowe Price Balanced Fund
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7,654,507 | 6,708,200 | |||||||
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T. Rowe Price Blue Chip Growth Fund
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7,928,281 | 6,177,653 | |||||||
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T. Rowe Price Equity Income Fund
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8,500,843 | 8,002,332 | |||||||
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Interface, Inc. Stock Fund
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8,179,332 | 3,253,532 | |||||||
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4. Fair Value Measurements
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As of January 1, 2008, the Plan adopted a new accounting standard to which established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure estimated fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under accounting standards are described below:
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Level 1
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Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
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Level 2
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Inputs to the valuation methodology include
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· Quoted prices for similar assets in active markets;
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· Quoted prices for identical or similar assets in inactive markets;
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· Inputs other than quoted prices that are observable for the asset; and
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· Inputs that are derived principally from or corroborated by observable data by correlation or other means.
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Level 3
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Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
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December 31, 2009
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Level 1
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Level 2
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Level 3
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Total
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Mutual funds
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$ | 47,351,126 | $ | -- | $ | -- | $ | 47,351,126 | ||||||||
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Common collective trust
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-- | 18,362,065 | -- | 18,362,065 | ||||||||||||
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Interface, Inc. stock fund
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8,179,332 | -- | -- | 8,179,332 | ||||||||||||
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TradeLink self-directed brokerage
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274,271 | -- | -- | 274,271 | ||||||||||||
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Participant loans
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-- | 3,030,851 | -- | 3,030,851 | ||||||||||||
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Total plan assets at fair value
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$ | 55,804,729 | $ | 21,392,916 | $ | -- | $ | 77,197,645 | ||||||||
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December 31, 2008
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Level 1
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Level 2
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Level 3
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Total
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Mutual funds
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$ | 37,445,688 | $ | -- | $ | -- | $ | 37,445,688 | ||||||||
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Common collective trust
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-- | 18,085,911 | -- | 18,085,911 | ||||||||||||
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Cash and cash equivalents
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5,189 | -- | 5,189 | |||||||||||||
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Interface, Inc. stock fund
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3,253,532 | -- | -- | 3,253,532 | ||||||||||||
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TradeLink self-directed brokerage
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229,096 | -- | -- | 229,096 | ||||||||||||
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Participant loans
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-- | 3,065,380 | -- | 3,065,380 | ||||||||||||
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Total plan assets at fair value
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$ | 40,933,505 | $ | 21,151,291 | $ | -- | $ | 62,084,796 | ||||||||
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5. Investment Contract
with Insurance Company
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The Plan has entered into a benefit-responsive investment contract with T. Rowe Price Trust Company (the “Trust Company” or “Trustee”). The Trust Company maintains the contributions in a general account within the T. Rowe Price Stable Value Fund, which is one of the Plan’s investment options and is also referred to as the “common collective trust.” The investment objective of the common collective trust is to maximize current income consistent with the maintenance of principal and to provide for withdrawals for certain participant-initiated transactions under a retirement plan without penalty or adjustment. The Trustee will attempt to achieve these objectives by investing principally in instruments that are intended to maintain a constant net asset value while permitting participant-initiated, benefit-responsive withdrawals for certain events.
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These instruments include the following:
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· guaranteed investment contracts issued by insurance companies;
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· investment contracts issued by banks;
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· structured or synthetic investment contracts issued by banks, insurance companies and other issuers, as well as the securities supporting such contracts; and
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· separate account contracts.
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As described in Note 2, since the guaranteed investment contract is fully benefit-responsive, contract value is the relevant measurement attribute for the portion of the net assets available for benefits attributable to the guaranteed investment contract. Contract value, as reported to the Plan by the Trustee, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawals or transfer all or a portion of their investment at contract value.
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There are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on a formula agreed upon with the contract issuer, but it may not be less than zero percent. Such interest rates are reviewed on a quarterly basis for resetting.
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Certain events limit the ability of the Plan to transact at contract value with the contract issuer. Such events include the following:
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· amendments to the Plan documents (including complete or partial Plan termination or merger with another plan);
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· changes to the Plan’s prohibition on competing investment options or deletion of equity wash provisions;
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· bankruptcy of the Plan sponsor or other Plan sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the Plan; or
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· the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA.
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The Plan Administrator does not believe that any event that would limit the Plan’s ability to transact at contract value is probable.
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The average yields (based on actual earnings) earned by the common collective trust for the years 2009 and 2008 were 4.23% and 4.57%, respectively.
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6.
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Related Party
Transactions
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Certain Plan investments are shares of mutual funds and units of a stable value fund managed by T. Rowe Price Trust Company. T. Rowe Price Trust Company is the Trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest.
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At December 31, 2009 and 2008, the Plan held 984,276 and 701,192 shares, respectively, of common stock of Interface, Inc., the sponsoring employer. The Plan also issues loans to participants, which are secured by the balances in the respective participants’ accounts.
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7.
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Plan Termination
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Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time, and to amend or terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100 percent vested in their employer contributions.
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8.
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Tax Status
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On January 6, 2009, the Company requested that a favorable letter of determination be issued to the Company to confirm that the Plan, as amended and restated, is qualified in its entirety pursuant to the applicable requirements of the Internal Revenue Code (“IRC”).
The Internal Revenue Service has determined and informed the Company by a letter dated July 22, 2009, that the Plan and related trust are designed in accordance with applicable sections of the IRC. The Plan has been amended since receiving the determination letter. However, the Plan Administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
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9.
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Risks and
Uncertainties
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The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statement of Net Assets Available for Benefits.
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10.
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Reconciliation to
Form 5500
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The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2009 and 2008 to Form 5500.
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December 31,
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2009
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2008
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Net assets available for benefits per the financial statements:
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$ | 76,772,192 | $ | 62,504,931 | |||||
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Adjustment from fair value to contract value for common collective trust
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551,407 | (169,538 | ) | ||||||
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Net assets available for benefits per Form 5500
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$ | 77,323,599 | $ | 62,335,393 | |||||
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The following is a reconciliation of the net increase (decrease) in assets available for benefits per the financial statements for the years ended December 31, 2009 and 2008 to Form 5500.
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December 31,
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2009
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2008
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Net increase (decrease) in assets available for benefits per the financial statements:
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$ | 14,267,261 | $ | (25,774,388 | ) | ||||
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Adjustment from fair value to contract value for common collective trust
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720,945 | (268,023 | ) | ||||||
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Net increase (decrease) in assets available for benefits per Form 5500
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$ | 14,988,206 | $ | (26,042,411 | ) | ||||
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ADMINISTRATIVE COMMITTEE OF THE
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INTERFACE, INC. SAVINGS AND
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INVESTMENT PLAN
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Date: June 24, 2010
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By: __/s/ Patrick C. Lynch_____________________
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Patrick C. Lynch, Member
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Exhibit No.
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Document
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23.1
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Consent of Independent Registered Public Accounting Firm
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Employer Identification Number: 58-1451243
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Plan Number: 002
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Form: 5500
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(b)
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(c)
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(e)
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Identity of
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Description of
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(d)
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Current
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(a)
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Issuer
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Investment
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Cost
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Value
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Common Collective Trust:
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T. Rowe Price Stable Value Fund
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17,810,660 units
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a | $ | 18,362,065 | |||||||
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Mutual Funds:
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Ariel Appreciation Fund
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70,039 shares
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a | 2,482,890 | |||||||||
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N&B Socially Responsible Fund
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33,930 shares
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a | 704,727 | |||||||||
| Harbor International Fund | 32,699 shares | a | 1,794,175 | |||||||||
| Janus Overseas | 13,605 shares | a | 578,232 | |||||||||
| Munder Midcap Core GR FD |
92,933 shares
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a | 2,107,711 | |||||||||
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T. Rowe Price Equity Index 500 Fund
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66,135 shares
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a | 1,986,033 | ||||||||
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T. Rowe Price Balanced Fund
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435,906 shares
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a | 7,654,507 | ||||||||
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T. Rowe Price Equity Income Fund
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404,995 shares
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a | 8,500,843 | ||||||||
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T. Rowe Price Spectrum Income Fund
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230,599 shares
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a | 2,723,370 | ||||||||
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T. Rowe Price Blue Chip Growth Fund
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241,937 shares
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a | 7,928,281 | ||||||||
| William Blair Small Cap Growth Fund |
57,201 shares
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a | 1,143,440 | |||||||||
| Vanguard Prime Money Market |
1,543,281 shares
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a | 1,543,283 | |||||||||
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Allianz RCM Technology Admin
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22,474 shares
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a | 845,929 | |||||||||
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Retirement Income Fund
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8,120 shares
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a | 99,150 | |||||||||
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Retirement 2005 Fund
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1,595 shares
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a | 16,656 | |||||||||
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Retirement 2010 Fund
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34,416 shares
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a | 480,110 | |||||||||
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Retirement 2015 Fund
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88,516 shares
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a | 944,464 | |||||||||
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Retirement 2020 Fund
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97,385 shares
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a | 1,421,818 | |||||||||
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Retirement 2025 Fund
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123,998 shares
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a | 1,315,616 | |||||||||
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Retirement 2030 Fund
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58,192 shares
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a | 879,861 | |||||||||
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Retirement 2035 Fund
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67,679 shares
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a | 720,783 | |||||||||
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Retirement 2040 Fund
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46,160 shares
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a | 699,321 | |||||||||
| Retirement 2045 Fund | 60,766 shares | a | 613,733 | |||||||||
| Retirement 2050 Fund | 17,193 shares | a | 145,795 | |||||||||
| Retirement 2055 Fund | 2,434 shares | a | 20,398 | |||||||||
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Total Mutual Funds
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$ | 47,351,126 | ||||||||||
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TradeLink Investments – Self-Directed Brokerage
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274,271 shares
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a | 274,271 | |||||||||
| * |
Interface, Inc. Stock Fund – Employer Securities
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984,276 shares
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a | 8,179,332 | ||||||||
| * |
Participant Loans
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1,044 loans with interest rates ranging between 4.25 to 9.50 percent
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- | 3,030,851 | ||||||||
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Total Investments
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$ | 77,197,645 | ||||||||||
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*Party-in-interest
a – The cost of participant-directed investments is not required to be disclosed.
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