10-Q

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 1, 2017

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐   Emerging Growth Company ☐ Smaller reporting company ☐ 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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 3, 2017:

Class	Number of Shares
Common Stock, $.10 par value per share	60,251,423

INTERFACE, INC.

INDEX

			PAGE
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Consolidated Condensed Balance Sheets – October 1, 2017 and January 1, 2017	3
		Consolidated Condensed Statements of Operations – Three Months and Nine Months Ended October 1, 2017 and October 2, 2016	4
		Consolidated Statements of Comprehensive Income – Three Months and Nine Months Ended October 1, 2017 and October 2, 2016	5
		Consolidated Condensed Statements of Cash Flows – Nine Months Ended October 1, 2017 and October 2, 2016	6
		Notes to Consolidated Condensed Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
	Item 4.	Controls and Procedures	19
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	19
	Item 1A.	Risk Factors	19
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
	Item 3.	Defaults Upon Senior Securities	20
	Item 4.	Mine Safety Disclosures	20
	Item 5.	Other Information	20
	Item 6.	Exhibits	20

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(IN THOUSANDS)

	OCTOBER 1, 2017			JANUARY 1, 2017
	(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	78,108		$	165,672
Accounts Receivable, net		133,869			126,004
Inventories		186,126			156,083
Prepaid Expenses and Other Current Assets		24,358			23,123
TOTAL CURRENT ASSETS		422,461			470,882
PROPERTY AND EQUIPMENT, less accumulated depreciation		212,332			204,508
DEFERRED TAX ASSETS		30,805			33,117
GOODWILL		68,029			61,218
OTHER ASSETS		68,772			65,714
TOTAL ASSETS	$	802,399		$	835,439
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts Payable	$	52,313		$	45,380
Current Portion of Long-Term Debt		15,000			15,000
Accrued Expenses		101,346			98,703
TOTAL CURRENT LIABILITIES		168,659			159,083
LONG-TERM DEBT		219,506			255,347
DEFERRED INCOME TAXES		5,819			4,728
OTHER		76,223			75,552
TOTAL LIABILITIES		470,207			494,710
Commitments and Contingencies
SHAREHOLDERS’ EQUITY:
Preferred Stock		0			0
Common Stock		6,025			6,424
Additional Paid-In Capital		282,424			359,451
Retained Earnings		183,423			140,238
Accumulated Other Comprehensive Income (Loss) – Foreign Currency Translation Adjustment		(79,844	)		(110,522	)
Accumulated Other Comprehensive Income (Loss) – Pension Liability		(59,836	)		(54,862	)
TOTAL SHAREHOLDERS’ EQUITY		332,192			340,729
	$	802,399		$	835,439

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
	OCTOBER 1, 2017		OCTOBER 2, 2016		OCTOBER 1, 2017		OCTOBER 2, 2016
NET SALES	$	257,431	$	248,349	$	730,233	$	719,110
Cost of Sales		158,887		155,431		445,990		440,434
GROSS PROFIT ON SALES		98,544		92,918		284,243		278,676
Selling, General and Administrative Expenses		67,633		67,175		197,660		200,108
Restructuring and Asset Impairment Charges		0		0		7,299		0
OPERATING INCOME		30,911		25,743		79,284		78,568
Interest Expense		1,851		1,654		5,150		4,763
Other Expense		651		739		1,816		1,072
INCOME BEFORE INCOME TAX EXPENSE		28,409		23,350		72,318		72,733
Income Tax Expense		8,970		7,446		23,394		23,278
NET INCOME	$	19,439	$	15,904	$	48,924	$	49,455
Earnings Per Share – Basic	$	0.32	$	0.25	$	0.78	$	0.76
Earnings Per Share – Diluted	$	0.32	$	0.25	$	0.78	$	0.76
Common Shares Outstanding – Basic		61,018		64,805		62,630		65,285
Common Shares Outstanding – Diluted		61,060		64,842		62,672		65,322

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
	OCTOBER 1, 2017			OCTOBER 2, 2016		OCTOBER 1, 2017			OCTOBER 2, 2016
Net Income	$	19,439		$	15,904	$	48,924		$	49,455
Other Comprehensive Income (Loss), Foreign
Currency Translation Adjustment		9,848			2,759		30,678			3,827
Other Comprehensive Income (Loss), Pension Liability Adjustment		(1,994	)		834		(4,974	)		3,632
Comprehensive Income	$	27,293		$	19,497	$	74,628		$	56,914

See accompanying notes to consolidated condensed financial statements.

-5-

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

	NINE MONTHS ENDED
	OCTOBER 1, 2017			OCTOBER 2, 2016
OPERATING ACTIVITIES:
Net Income	$	48,924		$	49,455
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Depreciation and Amortization		22,203			22,474
Stock Compensation Amortization Expense		4,479			3,390
Deferred Income Taxes and Other		5,926			5,049
Working Capital Changes:
Accounts Receivable		(1,397	)		1,449
Inventories		(22,377	)		(454	)
Prepaid Expenses and Other Current Assets		(653	)		(1,008	)
Accounts Payable and Accrued Expenses		10,804			(1,462	)
CASH PROVIDED BY OPERATING ACTIVITIES:		67,909			78,893
INVESTING ACTIVITIES:
Capital Expenditures		(22,809	)		(20,912	)
Other		(421	)		1,140
CASH USED IN INVESTING ACTIVITIES:		(23,230	)		(19,772	)
FINANCING ACTIVITIES:
Borrowing of Long-Term Debt		20,000			20,329
Repayment of Long-Term Debt		(62,085	)		(17,500	)
Tax Withholding Payments for Share-Based Compensation		(1,477	)		(4,661	)
Repurchase of Common Stock		(81,061	)		(10,443	)
Debt Issuance Cost		(1,418	)		0
Dividends Paid		(11,571	)		(10,429	)
CASH USED IN FINANCING ACTIVITIES:		(137,612	)		(22,704	)
Net Cash Provided By (Used In) Operating, Investing and
Financing Activities		(92,933	)		36,417
Effect of Exchange Rate Changes on Cash		5,369			1,616
CASH AND CASH EQUIVALENTS:
Net Change During the Period		(87,564	)		38,033
Balance at Beginning of Period		165,672			75,696
Balance at End of Period	$	78,108		$	113,729

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 January 1, 2017, 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 January 1, 2017, 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.

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on reporting income, comprehensive income, cash flows, total assets or shareholders equity as previously reported.

NOTE 2 – INVENTORIES

Inventories are summarized as follows:

	Oct. 1, 2017		Jan. 1, 2017
	(In thousands)
Finished Goods	$	123,708	$	104,742
Work in Process		13,046		8,711
Raw Materials		49,372		42,630
	$	186,126	$	156,083

NOTE 3 – EARNINGS 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. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
Earnings Per Share
Basic Earnings Per Share
Distributed Earnings	$	0.07	$	0.06	$	0.19	$	0.10
Undistributed Earnings		0.25		0.19		0.59		0.66
Total	$	0.32	$	0.25	$	0.78	$	0.76
Diluted Earnings Per Share
Distributed Earnings	$	0.07	$	0.06	$	0.19	$	0.10
Undistributed Earnings		0.25		0.19		0.59		0.66
Total	$	0.32	$	0.25	$	0.78	$	0.76
Basic Earnings Per Share	$	0.32	$	0.25	$	0.78	$	0.76
Diluted Earnings Per Share	$	0.32	$	0.25	$	0.78	$	0.76

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

	Three Months Ended				Nine Months Ended
	Oct. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
			(In millions)
Net Income Attributable to Participating Securities	$	0.1	$	0.1	$	0.4	$	0.4

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

	Three Months Ended				Nine Months Ended
	Oct. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
			(In thousands)
Weighted Average Shares Outstanding		60,555		64,241		62,167		64,721
Participating Securities		463		564		463		564
Shares for Basic Earnings Per Share		61,018		64,805		62,630		65,285
Dilutive Effect of Stock Options		42		37		42		37
Shares for Diluted Earnings Per Share		61,060		64,842		62,672		65,322

For all periods presented, there were no stock options or participating securities excluded from the computation of diluted EPS.

NOTE 4 – LONG-TERM DEBT

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. Interest on base rate loans is charged at varying rates computed by applying a margin depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. Interest on LIBOR-based loans and fees for letters of credit are charged at varying rates computed by applying a margin over the applicable LIBOR rate, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. 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 October1, 2017, the Company had outstanding $173.8 million of term loan borrowing and $60.8 million of revolving loan borrowings under the Facility, and had $6.0 million in letters of credit outstanding under the Facility. As of October 1, 2017, the weighted average interest rate on borrowings outstanding under the Facility was 2.6%.

The Company is required to make quarterly amortization payments of the term loan borrowing. The amortization payments are due on the last day of the calendar quarter. The quarterly amortization payment amount was $3.75 million for the third quarter of 2017 and will remain this amount for all future quarters until maturity.

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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.

In the third quarter of 2017, the Company amended and restated the syndicated credit facility. The terms and conditions of the amended and restated credit facility (the “Amended Facility”) are substantially similar to the preceding Facility, with the following key changes:

● The Amended Facility matures in August of 2022;

● The restricted payments covenant in the Amended Facility has been liberalized (and now allows for, among other things, the repurchase of the full amount of the new share repurchase program described below); and

● Permits the potential release of the lenders’ liens on certain real property and equipment in connection with an anticipated property tax abatement transaction in Georgia.

Interest Rate Risk Management

Shortly after entering into the Amended Facility, the Company entered into an interest rate swap transaction to fix the variable interest rate on a portion of its term loan borrowings in order to manage a portion of its exposure to interest rate fluctuations. The Company’s objective and strategy with respect to this interest rate swap is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability to cash flows relating to interest payments on a portion of its outstanding debt. The Company is meeting its objective by hedging the risk of changes in its cash flows (interest payments) attributable to changes in LIBOR, the designated benchmark interest rate being hedged (the “hedged risk”), on an amount of the Company’s debt principal equal to the outstanding swap notional amount.

Cash Flow Interest Rate Swap

The Company’s interest rate swap is designated and qualifies as a cash flow hedge of forecasted interest payments. The Company reports the effective portion of the fair value gain or loss on the swap as a component of other comprehensive income (or other comprehensive loss). Gains or losses (if any) on any ineffective portion of derivative instruments in cash flow hedging relationships are recorded in the period in which they occur as a component of other expense (or other income) in the Consolidated Condensed Statement of Operations. There were no such gains or losses in the third quarter of 2017. The aggregate notional amount of the swap as of October 1, 2017 was $100 million.

As of October 1, 2017, the fair value of the cash flow interest rate swap liability was $0.2 million and was recorded in accrued liabilities.

Other Lines of Credit

Subsidiaries of the Company have an aggregate of the equivalent of $9.8 million of other lines of credit available at interest rates ranging from 2.5% to 6.5%. As of October 1, 2017, 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.

There were no stock options granted during 2015-2017. All outstanding stock options vested prior to the end of 2013, and therefore there was no stock option compensation expense in the first nine months of 2016 or 2017.

As of October 1, 2017, there were 82,500 stock options outstanding and exercisable, at an average exercise price of $8.53 per share. There were 5,000 stock options exercised in the first nine months of 2017. There were no forfeitures during the 2017 period. The aggregate intrinsic value of the outstanding and exercisable stock options was $1.1 million as of October 1, 2017.

-9-

Restricted Stock Awards

During the nine months ended October 1, 2017, the Company granted restricted stock awards for 248,000 shares of common stock. Awards of restricted stock (or a portion thereof) vest with respect to each recipient over a one to three-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, certain awards (or a portion thereof) could vest (or 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 grants was $2.0 million and $2.4 million for the nine months ended October 1, 2017 and October 2, 2016, 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 outstanding as of October 1, 2017, as well as activity during the nine months then ended:

	Restricted Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017		505,000	$	17.05
Granted		248,000		17.89
Vested		284,000		16.61
Forfeited or canceled		6,000		16.99
Outstanding at October 1, 2017		463,000	$	17.77

As of October 1, 2017, the unrecognized total compensation cost related to unvested restricted stock was $5.0 million. That cost is expected to be recognized by the end of 2020.

Performance Share Awards

In 2017, the Company issued awards of performance shares to certain employees. These awards vest based on the achievement of certain performance-based goals over a performance period of one to three years, subject to the employee’s continued employment through the last date of the performance period, and will be settled in shares of our common stock or in cash at the Company’s election. The number of shares that may be issued in settlement of the performance shares to the award recipients may be greater (up to 200%) or lesser than the nominal award amount depending on actual performance achieved as compared to the performance targets set forth in the awards.

The following table summarizes the performance shares outstanding as of October 1, 2017, as well as the activity during the nine months then ended:

	Performance Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017		368,500	$	17.20
Granted		354,000		17.80
Vested		31,000		17.22
Forfeited or canceled		22,000		17.29
Outstanding at October 1, 2017		669,500	$	17.51

Compensation expense related to the performance shares for the nine months ended October 1, 2017 was $2.4 million. Unrecognized compensation expense related to these performance shares was approximately $6.2 million as of October 1, 2017.

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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 1, 2017, and October 2, 2016, respectively:

	Three Months Ended						Nine Months Ended
Defined Benefit Retirement Plans (Europe)	Oct. 1, 2017			Oct. 2, 2016			Oct. 1, 2017			Oct. 2, 2016
	(In thousands)						(In thousands)
Service cost	$	423		$	260		$	1,204		$	781
Interest cost		1,426			1,610			4,138			5,058
Expected return on assets		(1,697	)		(1,876	)		(4,920	)		(5,880	)
Amortization of prior service costs		9			9			26			27
Recognized net actuarial losses		318			169			930			537
Net periodic benefit cost	$	479		$	172		$	1,378		$	523

	Three Months Ended				Nine Months Ended
Salary Continuation Plan (SCP)	Oct. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
	(In thousands)				(In thousands)
Service cost	$	0	$	110	$	0	$	330
Interest cost		314		317		942		952
Amortization of loss		91		203		273		608
Net periodic benefit cost	$	405	$	630	$	1,215	$	1,890

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.

While the Company operates as one reporting segment for the reasons discussed, included below is selected information on our operating segments.

	AMERICAS		EUROPE		ASIA-PACIFIC		TOTAL
Three Months Ended October 1, 2017:
Net Sales	$	148,082	$	66,677	$	42,672	$	257,431
Depreciation and amortization		3,386		1,646		2,211		7,243
Total assets		274,946		255,330		186,966		717,242
Three Months Ended October 2, 2016:
Net Sales	$	147,500	$	62,682	$	38,167	$	248,349
Depreciation and amortization		3,635		1,253		2,213		7,101
Nine Months Ended October 1, 2017:
Net Sales	$	433,461	$	180,506	$	116,266	$	730,233
Depreciation and amortization		10,064		4,257		6,458		20,779
Nine Months Ended October 2, 2016:
Net Sales	$	426,677	$	181,904	$	110,529	$	719,110
Depreciation and amortization		10,903		3,824		6,598		21,325

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A reconciliation of the Company’s total operating segment depreciation and amortization, and assets to the corresponding consolidated amounts follows:

	Three Months Ended
DEPRECIATION AND AMORTIZATION	October 1, 2017		October 2, 2016
	(In thousands)
Total segment depreciation and amortization	$	7,243	$	7,101
Corporate depreciation and amortization		539		413
Reported depreciation and amortization	$	7,782	$	7,514

	Nine Months Ended
DEPRECIATION AND AMORTIZATION	October 1, 2017		October 2, 2016
	(In thousands)
Total segment depreciation and amortization	$	20,779	$	21,325
Corporate depreciation and amortization		1,424		1,149
Reported depreciation and amortization	$	22,203	$	22,474

ASSETS	October 1, 2017
	(In thousands)
Total segment assets	$	717,242
Corporate assets and eliminations		85,157
Reported total assets	$	802,399

NOTE 8 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest amounted to $4.6 million and $4.0 million for the nine months ended October 1, 2017 and October 2, 2016, respectively. Income tax payments amounted to $14.8 million and $9.9 million for the nine months ended October 1, 2017 and October 2, 2016, respectively.

NOTE 9 – 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 that will supersede the existing revenue recognition under U.S. GAAP. In summary, the core principle of this standard, along with amendments in 2015 and 2016, 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. Additionally, the new standard requires enhanced disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including revenue recognition policies to identify performance obligations, assets recognized from costs incurred to obtain and fulfill a contract, and significant judgments in measurements and recognition. The standard, as amended, will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Nearly 95% of the Company’s current revenue is produced from the sale of carpet, hard surface flooring and related products (TacTiles installation system, etc.) and the revenue from sales of these products is recognized upon shipment, or in certain cases upon delivery to the customer.  There does not exist any performance or any other obligation after the sale of these products outside of the product warranty, which has not historically been of significance compared to total product sales.  There is a small portion of the Company’s revenues (less than 6%) that is for the sale and installation of carpet and related products.  Of these projects, the overwhelming majority are completed in less than 5 days and therefore the Company does not expect a significant shift in the timing of revenue recognition for these sales either.  While the Company is continuing its review of this new standard and the manner in which it will be implemented, given the nature of the Company’s sales it currently believes that revenue recognition under the new standard will be mostly consistent under both the current and new standards, with performance obligations being satisfied under the majority of contracts with customers upon shipment.

In July 2015, the FASB issued an accounting standard to simplify the accounting for inventory. This standard requires all inventories to be measured at the lower of cost and net realizable value, except for inventory that is accounted for using the LIFO or the retail inventory method, which will be measured under existing accounting standards. The new guidance must be applied on a prospective basis and is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The adoption of this new standard did not have any significant impact on the Company’s consolidated financial statements.

In November 2015, the FASB issued an accounting standard which requires deferred tax assets and liabilities, as well as any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will only have one net noncurrent deferred tax asset or liability. This standard does not change the existing requirement that only permits offsetting within a jurisdiction. The amendments in the standard may be applied either prospectively or retrospectively to all prior periods presented. The new guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company adopted this standard in the first quarter of 2017, and recorded a reduction of current assets of $10.0 million and a corresponding increase in long term assets of $5.9 million as well as a reduction of long term liabilities of $4.1 million. The Company applied this standard retrospectively and as a result has adjusted the balance sheet as of the end of 2016 by these amounts as well.

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In March 2016, the FASB issued an accounting standard update to simplify several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. In addition, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, which is the current U.S. GAAP practice, or account for forfeitures when they occur.  This update will be effective for fiscal periods beginning after December 15, 2016, including interim periods within that reporting period. The element of the new standard that will have the most impact on the Company’s financial statements will be income tax consequences. Excess tax benefits and tax deficiencies on stock-based compensation awards will now be included in the tax provision within the consolidated statement of operations as discrete items in the reporting period in which they occur, rather than the previous accounting of recording them in additional paid-in capital on the consolidated balance sheet. The adoption of this standard resulted in an increase in deferred tax assets of approximately $5.8 million, with a corresponding increase to equity accounts, as of implementation in the first quarter of 2017. There was an impact of this standard on the consolidated statement of cash flows upon adoption, as under the standard when an employer withholds shares for tax withholding purposes those related tax payments will be treated as financing activities, not as operating activities. Upon adoption in the first quarter of 2017, this resulted in a reclassification of $4.6 million of such tax payments in the first quarter of 2016 from operating activities to financing activities. The Company has elected to continue our current policy of estimating forfeitures of stock-based compensation awards at the time of grant and revising in subsequent periods to reflect actual forfeitures, which is allowable under the new standard.

In February 2016, the FASB issued a new accounting standard regarding leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

In March 2017, the FASB issued a new accounting standard regarding the treatment of net periodic benefit costs. This standard will require segregation of these net benefit costs between operating and non-operating expenses. Currently, the Company reports the net benefit costs associated with its defined benefit plans as a component of operating income. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. When the new standard is implemented, only the service cost component of defined benefit plan costs will be reported within operating income, while all other components of net benefit cost will be presented within the “Other Expense (income)” line item on the Consolidated Statements of Operations. The standard requires retrospective application, and as such upon adoption of this standard will result in offsetting changes in operating income and “Other Expense (income)” on the Consolidated Statements of Operations for all periods of 2018 and 2017, with no impact on net income or earnings per share.

NOTE 10 – 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 2017, the Company increased its liability for unrecognized tax benefits by $0.8 million. As of October 1, 2017, the Company had accrued approximately $28.7 million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company’s deferred tax asset as of October 1, 2017 reflects a reduction for $3.3 million of these unrecognized tax benefits.

NOTE 11 – ITEMS RECLASSIFIED FROM OTHER COMPREHENSIVE INCOME

During the first nine months of 2017, 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 $1.2 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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NOTE 12 – 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. In the second quarter of 2016, the Company amended the share purchase program to authorize the repurchase of up to $50 million of common stock, with no specific expiration date. During the first three months of 2017, the Company repurchased and retired 1,601,896 shares of common stock at a weighted average purchase price of $19.36 per share. These repurchases completed the $50 million repurchase plan.

In the second quarter of 2017, the Company adopted a new share repurchase program in which the Company is authorized to repurchase up to $100 million of its outstanding shares of common stock. The program has no specific expiration date. During the second and third quarters of 2017, pursuant to this new program, the Company repurchased and retired an aggregate of 2,575,847 shares of common stock at a weighted average price of $19.38 per share.

NOTE 13 – RESTRUCTURING AND ASSET IMPAIRMENT CHARGES

In the fourth quarter of 2016, the Company committed to a new restructuring plan in its continuing efforts to improve efficiencies and decrease costs across its worldwide operations, and more closely align its operating structure with its business strategy. The plan involves (i) a substantial restructuring of the FLOR business model that includes closure of its headquarters office and most retail FLOR stores, (ii) a reduction of approximately 70 FLOR employees and a number of employees in the commercial carpet tile business, primarily in the Americas and Europe regions, and (iii) the write-down of certain underutilized and impaired assets that include information technology assets, intellectual property assets, and obsolete manufacturing, office and retail store equipment.

As a result of this plan, the Company incurred a pre-tax restructuring and asset impairment charge in the fourth quarter of 2016 of $19.8 million. In the first quarter of 2017, the Company recorded an additional charge of $7.3 million, primarily related to exit costs associated with the closure of most FLOR retail stores in the first quarter of 2017. The charge in the first quarter of 2017 was comprised of lease exit costs of $3.4 million, asset impairment charges of $3.3 million and severance charges of $0.6 million.

A summary of these restructuring activities is presented below:

	Total Restructuring Charge		Costs Incurred in 2016		Costs Incurred in 2017		Balance at October 1, 2017
			(in thousands)
Workforce Reduction	$	10,652	$	1,451	$	6,537	$	2,664
Asset Impairment		11,319		8,019		3,300		0
Lease Exit Costs		5,116		27		5,027		62

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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 January 1, 2017, 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 1, 2017, and the comparable periods of 2016 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 January 1, 2017, 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 1, 2017, we had net sales of $257.4 million, compared with net sales of $248.3 million in the third quarter last year. During the first nine months of fiscal year 2017, we had net sales of $730.2 million, compared with net sales of $719.1 million in the first nine months of last year. Fluctuations in currency exchange rates had positive impacts on our sales and operating income in the third quarter 2017 versus the prior year period; for the nine-month period ended October 1, 2017, fluctuations in currency exchange rates had a negative impact on our sales but a positive impact on operating income compared with the prior year period. The following table presents the amounts (in U.S. dollars) by which the exchange rates for converting foreign currencies into U.S. dollars have affected our net sales and operating income for the three months and nine months ended October 1, 2017. The impacts of changes in foreign currency presented in the tables are calculated based on applying the prior year period’s average foreign currency exchange rates to the current year period.

Impact of Changes in Foreign Currency on:	Three Months Ended October 1, 2017		Nine Months Ended October 1, 2017
	(In millions)
Net sales	$	4.0	$	(1.0	)
Operating income		0.6		0.2

During the third quarter of 2017, we had net income of $19.4 million, or $0.32 per diluted share, compared with net income of $15.9 million, or $0.25 per diluted share, in the third quarter of 2016. During the nine months ended October 1, 2017, we had net income of $48.9 million, or $0.78 per share, compared with net income of $49.5 million, or $0.76 per share, in the first nine months of 2016. The first nine months of 2017 include $7.3 million of restructuring and asset impairment charges (all of which were recorded in the first quarter) as a continuation of the plans announced in the fourth quarter of 2016, primarily related to closing our FLOR specialty retail stores.

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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 1, 2017 and October 2, 2016, respectively:

	Three Months Ended						Nine Months Ended
	Oct. 1, 2017			Oct. 2, 2016			Oct. 1, 2017			Oct. 2, 2016
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		61.7			62.6			61.1			61.2
Gross profit on sales		38.3			37.4			38.9			38.8
Selling, general and administrative expenses		26.3			27.0			27.1			27.8
Restructuring and Asset Impairment Charges		0.0			0.0			1.0			0.0
Operating income		12.0			10.4			10.9			10.9
Interest/Other expenses		1.0			1.0			0.9			0.8
Income before tax expense		11.0			9.4			9.9			10.1
Income tax expense		3.5			3.0			3.2			3.2
Net income		7.6			6.4			6.7			6.9

Net Sales

Below we provide information regarding net sales, and analyze those results, for the three-month and nine-month periods ended October 1, 2017, and October 2, 2016, respectively.

	Three Months Ended				Percentage
	Oct. 1, 2017		Oct. 2, 2016		Change
	(In thousands)
Net Sales	$	257,431	$	248,349		3.7	%

	Nine Months Ended				Percentage
	Oct. 1, 2017		Oct. 2, 2016		Change
	(In thousands)
Net Sales	$	730,233	$	719,110		1.5	%

For the quarter ended October 1, 2017, net sales increased $9.1 million (3.7%) versus the comparable period in 2016. Currency fluctuations had an approximately $4.0 million (2.0%) positive impact on the 2017 third quarter sales compared to the third quarter of 2016. This positive impact was the result of a strengthening Euro and Australian dollar as compared to the prior year period. On a geographic basis, sales increased in all regions, with Americas commercial sales (defined as Americas sales less the FLOR residential sales) up 2%, sales in Europe up 6% as translated into U.S. dollars (2% in local currency), and sales in Asia-Pacific up 12%. Third quarter sales were negatively impacted by the exit of the FLOR specialty retail stores at the end of the first quarter of 2017, although this was partially offset by gains in FLOR’s other sales channels. Global sales increased most significantly in the corporate office, education, government and healthcare segments. These increases were partially offset by declines in the retail segment and in the residential segment, which is largely a result of the exit of the FLOR specialty retail stores. In the Americas, the increase in sales was primarily due to sales of luxury vinyl tile (“LVT”), which is a hard surface modular flooring product line launched in the first quarter of 2017. In Europe, sales increased 2% in local currency, with increases in the United Kingdom, Germany and Southern and Central Europe. As noted above, due to the strengthening of the Euro, our sales in Europe improved by 6% as translated into U.S. dollars. Sales in Asia-Pacific saw increases across the region with the exception of China.

For the nine months ended October 1, 2017, net sales increased $11.1 million (1.5%) versus the comparable period in 2016. Currency fluctuations had an approximately $1.0 million (less than 1%) negative impact on sales for the first nine months of 2017 as compared to the same period in 2016. On a geographic basis, sales were up 2% in the Americas commercial business and up 5% in Asia-Pacific. In Europe, sales were down approximately 1% both in local currency and as translated into U.S. dollars. We experienced sales increases in our corporate office, education and government segments. These increases were offset by declines in the healthcare and hospitality segments. Sales were also negatively impacted by the exit of FLOR specialty retail stores at the end of the first quarter of 2017. As noted above, we launched LVT in the first quarter of 2017. Sales of these products are progressing according to plan and have been primarily in the Americas, although they were launched in Europe and Asia-Pacific in the second quarter of this year and sales activity in those regions is progressing in line with expectations as well.

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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 1, 2017 and October 2, 2016, respectively:

	Three Months Ended				Percentage
Cost and Expenses	Oct. 1, 2017		Oct. 2, 2016		Change
	(In thousands)
Cost of sales	$	158,887	$	155,431		2.2	%
Selling, general and administrative expenses		67,633		67,175		0.7	%
Total	$	226,520	$	222,606		1.8	%

	Nine Months Ended				Percentage
Cost and Expenses	Oct. 1, 2017		Oct. 2, 2016		Change
	(In thousands)
Cost of sales	$	445,990	$	440,434		1.3	%
Selling, general and administrative expenses		197,660		200,108		(1.2%	)
Total	$	643,650	$	640,542		0.5	%

For the quarter ended October 1, 2017, costs of sales increased $3.5 million (2.2%) as compared to the third quarter of 2016. Fluctuations in currency exchange rates had a small (1%) impact on the comparison. The increase in costs of sales was a function of higher sales for the 2017 third quarter, as sales increased 3.7% versus the prior year period. The percentage increase in costs of sales was lower than the increase in sales due to improved manufacturing performance during the quarter, a result of our productivity and process improvement gains as well as savings from our restructuring activities undertaken in the fourth quarter of 2016. In addition, in the third quarter of 2016, there were costs related to our move to a centralized warehouse facility in the U.S. that did not repeat in 2017. As a percentage of sales, costs of sales decreased to 61.7% for the third quarter of 2017 as compared to 62.6% for the third quarter of 2016 due to the factors noted above. This improvement came despite slightly lower production volumes in the third quarter of 2017 versus the same period in 2016 as well as higher raw material input prices.

For the nine months ended October 1, 2017, cost of sales increased $5.5 million (1.3%) versus the comparable period in 2016. Fluctuations in currency exchange rates did not have a significant impact on the comparison. This increase in costs of sales was largely because of increased sales for the period, as sales increased 1.5% versus the prior year period. As a percentage of sales, our cost of sales decreased slightly to 61.1% for the nine months ended October 1, 2017, from 61.2% for the comparable period in 2016. This decrease is a result of the Company’s productivity initiatives delivering benefits slightly in advance of higher raw material input prices and despite lesser absorption of fixed costs associated with lower production volumes. We expect continued raw material price inflation, as well as less absorption of fixed costs associated with lower production levels, for the balance of 2017 and, as a result, cost of sales as a percentage of sales is expected to increase for the remainder of 2017.

For the three months ended October 1, 2017, selling, general and administrative (“SG&A”) expenses increased $0.5 million (0.7%) versus the comparable period last year. Fluctuations in current exchange rates did not have a significant impact on the comparison. This increase in SG&A expenses is a result of additional incentive based compensation due to higher projected attainment of performance goals in the third quarter of 2017 as compared to the prior year period. This increase in incentive-based compensation was offset almost entirely by (1) lower selling expenses due to the exit of the FLOR specialty retail stores, (2) lower functional expenses as we continue our transition to more centralized services, and (3) savings as a result of our restructuring plans implemented in the fourth quarter of 2016. These savings were realized despite higher expenses associated with our LVT product launches in 2017. As a result of the savings discussed above, as a percentage of sales, our SG&A expenses declined to 26.3% for the three months ended October 1, 2017 versus 27.0% for the comparable period in 2016.

For the nine-month ended October 1, 2017, SG&A expenses decreased $2.5 million (1.2%) versus the comparable period in 2016. This decline was a function of decreases in the first six months of 2017 offset by a slight increae in the three months ended October 1, 2017. Fluctuations in currency exchanges rates did not have a significant impact on the comparison. The decline for the nine-month period was a result of (1) lower functional expenses, as we move towards more centralized services and realize associated savings, (2) lower selling expenses in the second and third quarters of 2017 associated with exiting the FLOR specialty retail stores, and (3) savings associated with our previously announced restructuring plans. These savings were offset by higher incentive compensation due to higher attainment of performance goals in 2017 versus 2016, as well as costs associated with the rollout of our LVT product offerings. Due to these decreases, as well as higher sales for the first nine months of 2017, our SG&A expenses declined to 27.1% of sales as compared to 27.8% of sales for the first nine months of 2016.

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Interest Expense

For the three-month period ended October 1, 2017, our interest expense increased $0.2 million to $1.9 million, from $1.7 million in the third quarter of 2016. For the nine-month period ended October 1, 2017, our interest expense increased $0.4 million to $5.2 million, from $4.8 million in the comparable period last year. The increases were due to higher weighted average borrowing rates for the 2017 periods versus those of the 2016 periods as well as higher average daily outstanding borrowing amounts under our Syndicated Credit Facility during the 2017 periods.

Liquidity and Capital Resources

General

At October 1, 2017, we had $78.1 million in cash and cash equivalents. At that date, we had outstanding $173.8 million of term loan borrowings, $60.8 million of revolving loan borrowings and $6.0 million in letters of credit under our Syndicated Credit Facility.

As of October 1, 2017, we could have incurred $183.2 million of additional borrowings under our Syndicated Credit Facility. In addition, we could have incurred an additional $9.8 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 1, 2017 with $78.1 million in cash, a decrease of $87.6 million during the first nine months of the year. The decrease in cash was primarily a result of cash outflows for financing activities, with the most significant factors being (1) $81.1 million of cash used to repurchase and retire 4.2 million shares of our outstanding common stock, (2) $62.1 million of cash used to repay borrowings under the Syndicated Credit Facility (including required amortization payments of $11.3 million), and (3) $11.6 million for the payments of dividends. These financing cash outflows were partially offset by $20.0 million of borrowings under our Syndicated Credit Facility. We also used cash of $22.8 million for capital expenditures in the first nine months of 2017. These uses were partially offset by $67.9 million of cash generated from operating activities during the nine-month period. The factors driving the cash from operations were (1) $48.9 million of net income for the period, and (2) $10.8 million of cash generated due to an increase in accounts payable and accruals. These inflows were partially offset by operating cash outflows of $22.4 million due to an increase in inventory.

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 January 1, 2017 under Item 7A of that Form 10-K. Our discussion here focuses on the period ended October 1, 2017, 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 1, 2017, we recognized a $30.7 million increase in our foreign currency translation adjustment account compared to January 1, 2017, primarily because of the weakening of the U.S. dollar against certain foreign currencies, particularly the Euro and the 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 January 1, 2017.

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As of October 1, 2017, 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 $9.6 million or an increase in the fair value of our financial instruments of $11.7 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 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 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.

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 2017. 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 January 1, 2017.

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

The following table contains information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the quarter ended October 1, 2017:

Period(1)	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
July 3-31, 2017(3)		21,638	$	19.67		20,010	$	75,037,949
August 1-31, 2017		1,311,102	$	19.04		1,311,102		50,077,293
September 1-30, 2017		0		N/A		0		50,077,293
October 1, 2017		0		N/A		0		50,077,293
Total		1,332,740	$	19.75		1,331,112		50,077,293

⁽¹⁾ The monthly periods identified above correspond to the Company’s fiscal third quarter of 2017, which commenced July 3, 2017 and ended October 1, 2017.

⁽²⁾ In April 2017, the Company announced a new share purchase program authorizing the repurchase of up to $100 million of common stock. This amended program has no specific expiration date.

⁽³⁾ Includes 1,628 shares acquired by the Company from employees at a price of $19.65 per share to satisfy income tax withholding obligations in connection with the vesting of previous grants of equity awards.

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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
10.1	Amended and Restated Syndicated Facility Agreement, dated as of August 8, 2017, among Interface, Inc., certain subsidiaries of the Company as borrowers, certain subsidiaries of the Company as guarantors, Bank of America, N.A. as Administrative Agent, and the other lenders party thereto (included as Exhibit 99.1 to the Company’s current report on Form 8-K filed on August 9, 2017, previously filed with the Commission and incorporated herein by reference).
10.2	Amended and Restated Security and Pledge Agreement, dated as of August 8, 2017, among Interface, Inc., certain subsidiaries of the Company as obligors, and Bank of America, N.A. as Administrative Agent (included as Exhibit 99.2 to the Company’s current report on Form 8-K filed on August 9, 2017, 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 9, 2017	By:	/s/ Bruce A. Hausmann
		Bruce A. Hausmann
		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.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jay D. Gould, 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 9, 2017
	/s/ Jay D. Gould
	Jay D. Gould
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Bruce A. Hausmann, 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 9, 2017
	/s/ Bruce A. Hausmann
	Bruce A. Hausmann
	Chief Financial Officer

EX-32.1

Exhibit 32.1

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

I, Jay D. Gould, 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 1, 2017 (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 9, 2017
	/s/ Jay D. Gould
	Jay D. Gould
	Chief Executive Officer

EX-32.2

Exhibit 32.2

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

I, Bruce A. Hausmann, 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 1, 2017 (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 9, 2017
	/s/ Bruce A. Hausmann
	Bruce A. Hausmann
	Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Oct. 01, 2017	Nov. 03, 2017
Document Information [Line Items]
Entity Registrant Name	INTERFACE INC
Entity Central Index Key	0000715787
Trading Symbol	tile
Current Fiscal Year End Date	--12-31
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)		60,251,423
Document Type	10-Q
Document Period End Date	Oct. 01, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Condensed Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Oct. 01, 2017	Jan. 01, 2017
ASSETS
Cash and Cash Equivalents	$ 78,108	$ 165,672
Accounts Receivable, net	133,869	126,004
Inventories	186,126	156,083
Prepaid Expenses and Other Current Assets	24,358	23,123
TOTAL CURRENT ASSETS	422,461	470,882
PROPERTY AND EQUIPMENT, less accumulated depreciation	212,332	204,508
DEFERRED TAX ASSETS	30,805	33,117
GOODWILL	68,029	61,218
OTHER ASSETS	68,772	65,714
TOTAL ASSETS	802,399	835,439
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts Payable	52,313	45,380
Current Portion of Long-Term Debt	15,000	15,000
Accrued Expenses	101,346	98,703
TOTAL CURRENT LIABILITIES	168,659	159,083
LONG-TERM DEBT	219,506	255,347
DEFERRED INCOME TAXES	5,819	4,728
OTHER	76,223	75,552
TOTAL LIABILITIES	470,207	494,710
Commitments and Contingencies
SHAREHOLDERS’ EQUITY:
Preferred Stock	0	0
Common Stock	6,025	6,424
Additional Paid-In Capital	282,424	359,451
Retained Earnings	183,423	140,238
Accumulated Other Comprehensive Income (Loss) – Foreign Currency Translation Adjustment	(79,844)	(110,522)
Accumulated Other Comprehensive Income (Loss) – Pension Liability	(59,836)	(54,862)
TOTAL SHAREHOLDERS’ EQUITY	332,192	340,729
	$ 802,399	$ 835,439

XML

Consolidated Condensed Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
NET SALES	$ 257,431	$ 248,349	$ 730,233	$ 719,110
Cost of Sales	158,887	155,431	445,990	440,434
GROSS PROFIT ON SALES	98,544	92,918	284,243	278,676
Selling, General and Administrative Expenses	67,633	67,175	197,660	200,108
Restructuring and Asset Impairment Charges	0	0	7,299	0
OPERATING INCOME	30,911	25,743	79,284	78,568
Interest Expense	1,851	1,654	5,150	4,763
Other Expense	651	739	1,816	1,072
INCOME BEFORE INCOME TAX EXPENSE	28,409	23,350	72,318	72,733
Income Tax Expense	8,970	7,446	23,394	23,278
NET INCOME	$ 19,439	$ 15,904	$ 48,924	$ 49,455
Earnings Per Share – Basic (in dollars per share)	$ 0.32	$ 0.25	$ 0.78	$ 0.76
Earnings Per Share – Diluted (in dollars per share)	$ 0.32	$ 0.25	$ 0.78	$ 0.76
Common Shares Outstanding – Basic (in shares)	61,018	64,805	62,630	65,285
Common Shares Outstanding – Diluted (in shares)	61,060	64,842	62,672	65,322

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Net Income	$ 19,439	$ 15,904	$ 48,924	$ 49,455
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment	9,848	2,759	30,678	3,827
Other Comprehensive Income (Loss), Pension Liability Adjustment	(1,994)	834	(4,974)	3,632
Comprehensive Income	$ 27,293	$ 19,497	$ 74,628	$ 56,914

XML

Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016
OPERATING ACTIVITIES:
Net Income	$ 48,924	$ 49,455
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Depreciation and Amortization	22,203	22,474
Stock Compensation Amortization Expense	4,479	3,390
Deferred Income Taxes and Other	5,926	5,049
Working Capital Changes:
Accounts Receivable	(1,397)	1,449
Inventories	(22,377)	(454)
Prepaid Expenses and Other Current Assets	(653)	(1,008)
Accounts Payable and Accrued Expenses	10,804	(1,462)
CASH PROVIDED BY OPERATING ACTIVITIES:	67,909	78,893
INVESTING ACTIVITIES:
Capital Expenditures	(22,809)	(20,912)
Other	(421)	1,140
CASH USED IN INVESTING ACTIVITIES:	(23,230)	(19,772)
FINANCING ACTIVITIES:
Borrowing of Long-Term Debt	20,000	20,329
Repayment of Long-Term Debt	(62,085)	(17,500)
Tax Withholding Payments for Share-Based Compensation	(1,477)	(4,661)
Repurchase of Common Stock	(81,061)	(10,443)
Debt Issuance Cost	(1,418)	0
Dividends Paid	(11,571)	(10,429)
CASH USED IN FINANCING ACTIVITIES:	(137,612)	(22,704)
Net Cash Provided By Operating, Investing and Financing Activities	(92,933)	36,417
Effect of Exchange Rate Changes on Cash	5,369	1,616
CASH AND CASH EQUIVALENTS:
Net Change During the Period	(87,564)	38,033
Balance at Beginning of Period	165,672	75,696
Balance at End of Period	$ 78,108	$ 113,729

XML

Note 1 - Condensed Footnotes

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [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

January 1, 2017,

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 f

or the full year. The

January 1, 2017,

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.

C

ertain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had

no

effect on reporting income, comprehensive income, cash flows, total assets or shareholders equity as previously reported.

XML

Note 2 - Inventories

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

2

– INVENTORIES

Inventories are summarized as follows:

	O ct. 1 , 201 7		Jan. 1, 2017
	(In thousands)
Finished Goods	$	123,708	$	104,742
Work in Process		13,046		8,711
Raw Materials		49,372		42,630
	$	186,126	$	156,083

XML

Note 3 - Earnings Per Share

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

3

– EARNINGS 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. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
Earnings Per Share
Basic Earnings Per Share
Distributed Earnings	$	0.07	$	0.06	$	0.19	$	0.10
Undistributed Earnings		0.25		0.19		0.59		0.66
Total	$	0.32	$	0.25	$	0.78	$	0.76
Diluted Earnings Per Share
Distributed Earnings	$	0.07	$	0.06	$	0.19	$	0.10
Undistributed Earnings		0.25		0.19		0.59		0.66
Total	$	0.32	$	0.25	$	0.78	$	0.76
Basic Earnin gs Per Share	$	0.32	$	0.25	$	0.78	$	0.76
Diluted Earnings Per Share	$	0.32	$	0.25	$	0.78	$	0.76

The following table

s present net income that was attributable to participating securities:

	Three Months Ended				N i ne Months Ended
	Oct. 1 , 201 7		Oct. 2, 2016		Oct. 1, 2017		Oct. 2 , 201 6
			( I n millions)
Net Income Attributable to Participating Securities	$	0.1	$	0.1	$	0.4	$	0.4

The weighted average shares

outstanding for basic and diluted EPS were as follows:

	Three Months Ended				N i ne Months Ended
	Oct. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
			(In thousands)
Weighted Average Shares Outstanding		60,555		64,241		62,167		64,721
Participating Securities		463		564		463		564
Shares for Basic Earnings Per Share		61,018		64,805		62,630		65,285
Dilutive Effect of Stock Options		42		37		42		37
Shares for Diluted Earnings Per Share		61,060		64,842		62,672		65,322

For all periods presented,

there were

no

stock options or participating securities excluded from the computation of diluted EPS.

XML

Note 4 - Long-term Debt

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

4

– LONG-TERM DEBT

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. Interest on base rate loans is charged at varying rates computed by applying a margin depending on the Company

’s consolidated net leverage ratio as of the most recently completed fiscal quarter. Interest on LIBOR-based loans and fees for letters of credit are charged at varying rates computed by applying a margin over the applicable LIBOR rate, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. 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

October1,

2017,

the Company had outstanding

$173.8

million of term loan borrowing and

$60.8

million of revolving loan borrowings under the Facility, and had

$6.0

million in letters of credit outstanding under the Facility. As of

October 1, 2017,

the weighted average interest rate on borrowings outstanding under the Facility was

2.6%.

The

Company is required to make quarterly amortization payments of the term loan borrowing. The amortization payments are due on the last day of the calendar quarter. The quarterly amortization payment amount was

$3.75

million for the

third

quarter of

2017

and will remain this amount for all future quarters until maturity.

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.

In the

third

quarter of

2017

, the Company amended and restated the syndicated credit facility. The terms and conditions of the amended and restated credit facility (the “Amended Facility”) are substantially similar to the preceding Facility, with the following key changes:

● The Amended Facility matures in August of 2022;

● The restricted payments covenant in the Amended Facility has been liberalized (and now allows for, among other things, the repurchase of the full amount of the new share re purchase program described below); and

● Permits the potential release of the lenders ’ liens on certain real property and equipment in connection with an anticipated property tax abatement transaction in Georgia.

Interest Rate Risk Management

Shortly after entering into the Amended Facility,

the Company entered into an interest rate swap transaction to fix the variable interest rate on a portion of its term loan borrowings in order to manage a portion of its exposure to interest rate fluctuations. The Company’s objective and strategy with respect to this interest rate swap is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability to cash flows relating to interest payments on a portion of its outstanding debt. The Company is meeting its objective by hedging the risk of changes in its cash flows (interest payments) attributable to changes in LIBOR, the designated benchmark interest rate being hedged (the “hedged risk”), on an amount of the Company’s debt principal equal to the outstanding swap notional amount.

Cash Flow Interest Rate Swap

The C

ompany’s interest rate swap is designated and qualifies as a cash flow hedge of forecasted interest payments. The Company reports the effective portion of the fair value gain or loss on the swap as a component of other comprehensive income (or other comprehensive loss). Gains or losses (if any) on any ineffective portion of derivative instruments in cash flow hedging relationships are recorded in the period in which they occur as a component of other expense (or other income) in the Consolidated Condensed Statement of Operations. There were

no

such gains or losses in the

third

quarter of

2017.

The aggregate notional amount of the swap as of

October 1, 2017

was

$100

million.

As of

October 1, 2017,

the fair value of the cash flow interest rate swap liability was

$0.2

 million and was recorded in accrued liabilities.

Other Lines of Credit

Subsidiaries of the Company have an aggregate of the equivalent of

$9.8

million of other lines of credit available at interest rates ranging from

2.5%

to

6.5%.

As of

October 1, 2017,

there were

no

borrowings outstanding under these lines of credit. 

XML

Note 5 - Stock-based Compensation

9 Months Ended

Oct. 01, 2017

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.

There were

no

stock options granted during

2015

-

2017.

All outstanding stock options vested prior to the end of

2013,

and therefore there was

no

stock option compensation expense in the

first

nine

months of

2016

or

2017.

As of

October 1, 2017,

there were

82,500

stock options outstanding and exercisable, at an average exercise price

of

$8.53

per share. There were

5,000

stock options exercised in the

first

nine

months of

2017.

There were

no

forfeitures during the

2017

period. The aggregate intrinsic value of the outstanding and exercisable stock options was

$1.1

million as of

October 1, 2017.

Restricted Stock Awards

During the

nine

months ended

October 1, 2017,

the Company granted restricted stock awards for

248,000

shares of common stock. Awards of restricted stock (or a portion thereof) vest with respect to each recipient over a

one

to

three

-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, certain awards (or a portion thereof) could vest (or 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 grants was $

2.0

million and

$2.4

million for the

nine

months ended

October 1, 2017

and

October 2, 2016,

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 outstanding as of

October 1, 2017,

as well as activity during the

nine

months then ended:

	Restricted Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017		505,000	$	17.05
Granted		248,000		17.89
Vested		284,000		16.61
Forfeited or canceled		6,000		16.99
Outstanding at October 1, 2017		463,000	$	17.77

As of

October 1, 2017,

the unrecognized total compensation cost related to unvested restricted stock was

$5.0

million. That cost is expected to be recognized by the end of

2020.

Performance Share Awards

In

2017

, the Company issued awards of performance shares to certain employees. These awards vest based on the achievement of certain performance-based goals over a performance period of

one

to

three

years, subject to the employee’s continued employment through the last date of the performance period, and will be settled in shares of our common stock or in cash at the Company’s election. The number of shares that

may

be issued in settlement of the performance shares to the award recipients

may

be greater (up to

200%

) or lesser than the nominal award amount depending on actual performance achieved as compared to the performance targets set forth in the awards.

The following table summarizes the performance shares outstanding as of

October 1, 2017,

as well as the activity during the

nine

months then ended:

	Performance Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017		368,500	$	17.20
Granted		354,000		17.80
Vested		31,000		17.22
Forfeited or canceled		22,000		17.29
Outstanding at October 1, 2017		669,500	$	17.51

Compensation expense related to the performance shares for the

nine

months ended

October 1, 2017

was

$2.4

million. Unrecognized compensation expense related to these performance shares was approximately

$6.2

million as of

October 1, 2017.

XML

Note 6 - Employee Benefit Plans

9 Months Ended

Oct. 01, 2017

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 1, 2017,

and

October 2, 2016,

respectively:

	Three Months Ended						Nine Months Ended
Defined Benefit Retirement Plan s (Europe)	Oct. 1 , 201 7			Oct. 2, 2016			Oct. 1 , 201 7			Oct. 2, 2016
	(In thousands)						(In thousands)
Service cost	$	423		$	260		$	1,204		$	781
Interest cost		1,426			1,610			4,138			5,058
Expected return on assets		(1,697	)		(1,876	)		(4,920	)		(5,880	)
Amortization of prior service costs		9			9			26			27
Recognized net actuarial losses		318			169			930			537
Net periodic benefit cost	$	479		$	172		$	1,378		$	523

	Three Months Ended				Nine Months Ended
Salary Continuation Plan (SCP)	Oct. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
	(In thousands)				(In thousands)
Service cost	$	0	$	110	$	0	$	330
Interest cost		314		317		942		952
Amortization of loss		91		203		273		608
Net periodic benefit cost	$	405	$	630	$	1,215	$	1,890

XML

Note 7 - Segment Information

9 Months Ended

Oct. 01, 2017

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.

While the Company operates as

one

reporting segment for the reasons discussed, included below is selected information on our operating segments.

	AMERICAS		EUROPE		ASIA-PACIFIC		TOTAL
Three Months Ended October 1, 2017 :
Net Sales	$	148,082	$	66,677	$	42,672	$	257,431
Depreciation and amortization		3,386		1,646		2,211		7,243
Total assets		274,946		255,330		186,966		717,242
Three Months Ended October 2, 2016 :
Net Sales	$	147,500	$	62,682	$	38,167	$	248,349
Depreciation and amortization		3,635		1,253		2,213		7,101
Nine Months Ended October 1, 2017 :
Net Sales	$	433,461	$	180,506	$	116,266	$	730,233
Depreciation and amortization		10,064		4,257		6,458		20,779
Nine Months Ended October 2, 2016 :
Net Sales	$	426,677	$	181,904	$	110,529	$	719,110
Depreciation and amortization		10,903		3,824		6,598		21,325

A reconciliation of the Company

’s total operating segment depreciation and amortization, and assets to the corresponding consolidated amounts follows:

	Three Months Ended
DEPRECIATION AND AMORTIZATION	October 1, 2017		October 2, 2016
	(In thousands)
Total segment depreciation and amortization	$	7,243	$	7,101
Corporate depreciation and amortization		539		413
Reported depreciation and amortization	$	7,782	$	7,514

	Nine Months Ended
DEPRECIATION AND AMORTIZATION	October 1, 2017		October 2, 2016
	(In thousands)
Total segment depreciation and amortization	$	20,779	$	21,325
Corporate depreciation and amortization		1,424		1,149
Reported depreciation and amortization	$	22,203	$	22,474

ASSETS	October 1, 2017
	(In thousands)
Total segment assets	$	717,242
Corporate assets and eliminations		85,157
Reported total assets	$	802,399

XML

Note 8 - Supplemental Cash Flow Information

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

NOTE

8

– SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interes

t amounted to

$4.6

million and

$4.0

million for the

nine

months ended

October 1, 2017

and

October 2, 2016,

respectively. Income tax payments amounted to

$14.8

million and

$9.9

million for the

nine

months ended

October 1, 2017

and

October 2, 2016,

respectively.

XML

Note 9 - Recently Issued Accounting Pronouncements

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

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

NOTE

9

– 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 that will supersede the existing revenue recognition under U.S. GAAP. In summary, the core principle of this standard, along with amendments in

2015

and

2016,

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. Additionally, the new standard requires enhanced disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including revenue recognition policies to identify performance obligations, assets recognized from costs incurred to obtain and fulfill a contract, and significant judgments in measurements and recognition. The standard, as amended, will be effective for annual periods beginning after

December 15, 2017,

including interim periods within that reporting period. Nearly

95%

of the Company’s current revenue is produced from the sale of carpet, hard surface flooring and related products (TacTiles installation system, etc.) and the revenue from sales of these products is recognized upon shipment, or in certain cases upon delivery to the customer.  There does

not

exist any performance or any other obligation after the sale of these products outside of the product warranty, which has

not

historically been of significance compared to total product sales.  There is a small portion of the Company’s revenues (less than

6%

) that is for the sale and installation of carpet and related products.  Of these projects, the overwhelming majority are completed in less than

5

days and therefore the Company does

not

expect a significant shift in the timing of revenue recognition for these sales either.  While the Company is continuing its review of this new standard and the manner in which it will be implemented, given the nature of the Company’s sales it currently believes that revenue recognition under the new standard will be mostly consistent under both the current and new standards, with performance obligations being satisfied under the majority of contracts with customers upon shipment.

In

July 2015,

the FASB issued an accounting standard to simplify the accounting for inventory. This standard requires all inventories to be measured at the lower of cost and net realizable value, except for inventory that is accounted for using the LIFO or the retail inventory method, which will be measured under existing accounting standards. The new guidance must be applied on a prospective basis and is effective for fiscal years beginning after

December 15, 2016,

with early adoption permitted. The adoption of this new standard

did

not

have any significant impact on the Company’s consolidated financial statements.

In

November 2015,

the FASB issued an accounting standard which requires deferred tax assets and liabilities, as well as any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each juri

sdiction will only have

one

net noncurrent deferred tax asset or liability. This standard does

not

change the existing requirement that only permits offsetting within a jurisdiction. The amendments in the standard

may

be applied either prospectively or retrospectively to all prior periods presented. The new guidance is effective for annual periods beginning after

December 15, 2016,

and interim periods within those annual periods, with early adoption permitted. The Company adopted this standard in the

first

quarter of

2017,

and recorded a reduction of current assets of

$10.0

million and a corresponding increase in long term assets of

$5.9

million as well as a reduction of long term liabilities of

$4.1

million. The Company applied this standard retrospectively and as a result has adjusted the balance sheet as of the end of

2016

by these amounts as well.

In

March 2016,

the FASB issued an accounting standard update to simplify several aspects of accounting for share-based payment transactions, including the

income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. In addition, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, which is the current U.S. GAAP practice, or account for forfeitures when they occur.  This update will be effective for fiscal periods beginning after

December 15, 2016,

including interim periods within that reporting period. The element of the new standard that will have the most impact on the Company’s financial statements will be income tax consequences. Excess tax benefits and tax deficiencies on stock-based compensation awards will now be included in the tax provision within the consolidated statement of operations as discrete items in the reporting period in which they occur, rather than the previous accounting of recording them in additional paid-in capital on the consolidated balance sheet. The adoption of this standard resulted in an increase in deferred tax assets of approximately

$5.8

million, with a corresponding increase to equity accounts, as of implementation in the

first

quarter of

2017.

There was an impact of this standard on the consolidated statement of cash flows upon adoption, as under the standard when an employer withholds shares for tax withholding purposes those related tax payments will be treated as financing activities,

not

as operating activities. Upon adoption in the

first

quarter of

2017,

this resulted in a reclassification of

$4.6

million of such tax payments in the

first

quarter of

2016

from operating activities to financing activities. The Company has elected to continue our current policy of estimating forfeitures of stock-based compensation awards at the time of grant and revising in subsequent periods to reflect actual forfeitures, which is allowable under the new standard.

In

February 2016,

the FASB issued a new accounting standard regarding leases. The new standard establishes a right-of-use (ROU

) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

In

March 2017,

the FASB issued

a new accounting standard regarding the treatment of net periodic benefit costs. This standard will require segregation of these net benefit costs between operating and non-operating expenses. Currently, the Company reports the net benefit costs associated with its defined benefit plans as a component of operating income. The new standard is effective for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years. When the new standard is implemented, only the service cost component of defined benefit plan costs will be reported within operating income, while all other components of net benefit cost will be presented within the “Other Expense (income)” line item on the Consolidated Statements of Operations. The standard requires retrospective application, and as such upon adoption of this standard will result in offsetting changes in operating income and “Other Expense (income)” on the Consolidated Statements of Operations for all periods of

2018

and

2017,

with

no

impact on net income or earnings per share.

XML

Note 10 - Income Taxes

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

1

0

– 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

2017,

the Company increased its liability for unrecognized tax benefits by

$0.8

million. As of

October 1, 2017,

the Company had accrued approximately

$28.7

million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company’s deferred tax asset as of

October 1, 2017

reflects a reduction for

$3.3

million of these unrecognized tax benefits.

XML

Note 11 - Items Reclassified From Other Comprehensive Income

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Reclassifications [Text Block]

NOTE

1

1

– ITEMS RECLASSIFIED FROM OTHER COMPREHENSIVE INCOME

During the

first

nine

months of

2017,

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

$1.2

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.

XML

Note 12 - Repurchase of Common Stock

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

1

2

– 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. In the

second

quarter of

2016,

the Company amended the share purchase program to authorize the repurchase of up to

$50

million of common stock, with

no

specific expiration date. During the

first

three

months of

2017,

the Company repurchased and retired

1,601,896

shares of common stock at a weighted average purchase price of

$19.36

per share. These repurchases completed the

$50

million repurchase plan.

In the

second

quarter of

2017,

the Company

adopted a new share repurchase program in which the Company is authorized to repurchase up to

$100

million of its outstanding shares of common stock. The program has

no

specific expiration date. During the

second

and

third

quarters of

2017,

pursuant to this new program, the Company repurchased and retired an aggregate of

2,575,847

shares of common stock at a weighted average price of

$19.38

per share.

XML

Note 13 - Restructuring and Asset Impairment Charges

9 Months Ended

Oct. 01, 2017

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

NOTE

13

– RESTRUCTURING AND ASSET IMPAIRMENT CHARGES

In the

fourth

quarter of

2016,

the Company committed to a new restructuring plan in its continuing efforts to improve efficiencies and decrease costs across its worldwide operations, and more closely align its operating structure with its business strategy. The plan involves (i) a substantial restructuring of the FLOR business model that includes closure of its headquarters office and most retail FLOR stores, (ii) a reduction of approximately

70

FLOR employees and a number of employees in the commercial carpet tile business, primarily in the Americas and Europe regions, and (iii) the write-down of certain underutilized and impaired assets that include information technology assets, intellectual property assets, and obsolete manufacturing, office and retail store equipment.

As a result of this plan, the Company incurred a pre-tax restructuring and asset impairment charge in the

fourth

quarter of

2016

of

$19.8

million.

In the

first

quarter of

2017,

the Company recorded an additional charge of

$7.3

million, primarily related to exit costs associated with the closure of most FLOR retail stores in the

first

quarter of

2017.

The charge in the

first

quarter of

2017

was comprised of lease exit costs of

$3.4

million, asset impairment charges of

$3.3

million and severance charges of

$0.6

million.

A summary of these restructuring activities is presented below:

	Total Restructuring Charge		Costs Incurred in 2016		Costs Incurred in 201 7		Balance at October 1 , 2017
			(in thousands)
Workforce Reduction	$	10,652	$	1,451	$	6,537	$	2,664
Asset Impairment		11,319		8,019		3,300		0
Lease Exit Costs		5,116		27		5,027		62

XML

Note 2 - Inventories (Tables)

9 Months Ended

Oct. 01, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	O ct. 1 , 201 7		Jan. 1, 2017
	(In thousands)
Finished Goods	$	123,708	$	104,742
Work in Process		13,046		8,711
Raw Materials		49,372		42,630
	$	186,126	$	156,083

XML

Note 3 - Earnings Per Share (Tables)

9 Months Ended

Oct. 01, 2017

Notes Tables

Distributed And Undistributed Earnings [Table Text Block]

	Three Months Ended				Nine Months Ended
	Oct. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
Earnings Per Share
Basic Earnings Per Share
Distributed Earnings	$	0.07	$	0.06	$	0.19	$	0.10
Undistributed Earnings		0.25		0.19		0.59		0.66
Total	$	0.32	$	0.25	$	0.78	$	0.76
Diluted Earnings Per Share
Distributed Earnings	$	0.07	$	0.06	$	0.19	$	0.10
Undistributed Earnings		0.25		0.19		0.59		0.66
Total	$	0.32	$	0.25	$	0.78	$	0.76
Basic Earnin gs Per Share	$	0.32	$	0.25	$	0.78	$	0.76
Diluted Earnings Per Share	$	0.32	$	0.25	$	0.78	$	0.76

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

	Three Months Ended				N i ne Months Ended
	Oct. 1 , 201 7		Oct. 2, 2016		Oct. 1, 2017		Oct. 2 , 201 6
			( I n millions)
Net Income Attributable to Participating Securities	$	0.1	$	0.1	$	0.4	$	0.4

	Three Months Ended				N i ne Months Ended
	Oct. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
			(In thousands)
Weighted Average Shares Outstanding		60,555		64,241		62,167		64,721
Participating Securities		463		564		463		564
Shares for Basic Earnings Per Share		61,018		64,805		62,630		65,285
Dilutive Effect of Stock Options		42		37		42		37
Shares for Diluted Earnings Per Share		61,060		64,842		62,672		65,322

XML

Note 5 - Stock-based Compensation (Tables)

9 Months Ended

Oct. 01, 2017

Notes Tables

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

	Restricted Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017		505,000	$	17.05
Granted		248,000		17.89
Vested		284,000		16.61
Forfeited or canceled		6,000		16.99
Outstanding at October 1, 2017		463,000	$	17.77

Schedule of Nonvested Performance-based Units Activity [Table Text Block]

	Performance Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017		368,500	$	17.20
Granted		354,000		17.80
Vested		31,000		17.22
Forfeited or canceled		22,000		17.29
Outstanding at October 1, 2017		669,500	$	17.51

XML

Note 6 - Employee Benefit Plans (Tables)

9 Months Ended

Oct. 01, 2017

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

	Three Months Ended						Nine Months Ended
Defined Benefit Retirement Plan s (Europe)	Oct. 1 , 201 7			Oct. 2, 2016			Oct. 1 , 201 7			Oct. 2, 2016
	(In thousands)						(In thousands)
Service cost	$	423		$	260		$	1,204		$	781
Interest cost		1,426			1,610			4,138			5,058
Expected return on assets		(1,697	)		(1,876	)		(4,920	)		(5,880	)
Amortization of prior service costs		9			9			26			27
Recognized net actuarial losses		318			169			930			537
Net periodic benefit cost	$	479		$	172		$	1,378		$	523

	Three Months Ended				Nine Months Ended
Salary Continuation Plan (SCP)	Oct. 1, 2017		Oct. 2, 2016		Oct. 1, 2017		Oct. 2, 2016
	(In thousands)				(In thousands)
Service cost	$	0	$	110	$	0	$	330
Interest cost		314		317		942		952
Amortization of loss		91		203		273		608
Net periodic benefit cost	$	405	$	630	$	1,215	$	1,890

XML

Note 7 - Segment Information (Tables)

9 Months Ended

Oct. 01, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	AMERICAS		EUROPE		ASIA-PACIFIC		TOTAL
Three Months Ended October 1, 2017 :
Net Sales	$	148,082	$	66,677	$	42,672	$	257,431
Depreciation and amortization		3,386		1,646		2,211		7,243
Total assets		274,946		255,330		186,966		717,242
Three Months Ended October 2, 2016 :
Net Sales	$	147,500	$	62,682	$	38,167	$	248,349
Depreciation and amortization		3,635		1,253		2,213		7,101
Nine Months Ended October 1, 2017 :
Net Sales	$	433,461	$	180,506	$	116,266	$	730,233
Depreciation and amortization		10,064		4,257		6,458		20,779
Nine Months Ended October 2, 2016 :
Net Sales	$	426,677	$	181,904	$	110,529	$	719,110
Depreciation and amortization		10,903		3,824		6,598		21,325

Reconciliation of Depreciation, Amortization, and Assets from Segments to Consolidated [Table Text Block]

	Three Months Ended
DEPRECIATION AND AMORTIZATION	October 1, 2017		October 2, 2016
	(In thousands)
Total segment depreciation and amortization	$	7,243	$	7,101
Corporate depreciation and amortization		539		413
Reported depreciation and amortization	$	7,782	$	7,514

	Nine Months Ended
DEPRECIATION AND AMORTIZATION	October 1, 2017		October 2, 2016
	(In thousands)
Total segment depreciation and amortization	$	20,779	$	21,325
Corporate depreciation and amortization		1,424		1,149
Reported depreciation and amortization	$	22,203	$	22,474

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

ASSETS	October 1, 2017
	(In thousands)
Total segment assets	$	717,242
Corporate assets and eliminations		85,157
Reported total assets	$	802,399

XML

Note 13 - Restructuring and Asset Impairment Charges (Tables)

9 Months Ended

Oct. 01, 2017

Notes Tables

Restructuring and Related Costs [Table Text Block]

	Total Restructuring Charge		Costs Incurred in 2016		Costs Incurred in 201 7		Balance at October 1 , 2017
			(in thousands)
Workforce Reduction	$	10,652	$	1,451	$	6,537	$	2,664
Asset Impairment		11,319		8,019		3,300		0
Lease Exit Costs		5,116		27		5,027		62

XML

Note 2 - Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	Oct. 01, 2017	Jan. 01, 2017
Finished Goods	$ 123,708	$ 104,742
Work in Process	13,046	8,711
Raw Materials	49,372	42,630
Inventory, net	$ 186,126	$ 156,083

XML

Note 3 - Earnings Per Share (Details Textual) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	0	0	0

XML

Note 3 - Earnings Per Share - Distributed and Undistributed Earnings (Details) - $ / shares	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Basic Earnings Per Share
Distributed Earnings (in dollars per share)	$ 0.07	$ 0.06	$ 0.19	$ 0.10
Undistributed Earnings (in dollars per share)	0.25	0.19	0.59	0.66
Total (in dollars per share)	0.32	0.25	0.78	0.76
Diluted Earnings Per Share
Distributed Earnings (in dollars per share)	0.07	0.06	0.19	0.10
Undistributed Earnings (in dollars per share)	0.25	0.19	0.59	0.66
Total (in dollars per share)	0.32	0.25	0.78	0.76
Basic Earnings Per Share (in dollars per share)	0.32	0.25	0.78	0.76
Diluted Earnings Per Share (in dollars per share)	$ 0.32	$ 0.25	$ 0.78	$ 0.76

XML

Note 3 - Earnings Per Share - Calculation of Income (Loss) Per Share (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Net Income	$ 19,439	$ 15,904	$ 48,924	$ 49,455
Weighted Average Shares Outstanding (in shares)	60,555	64,241	62,167	64,721
Participating Securities (in shares)	463	564	463	564
Shares for Basic Earnings Per Share (in shares)	61,018	64,805	62,630	65,285
Dilutive Effect of Stock Options (in shares)	42	37	42	37
Shares for Diluted Earnings Per Share (in shares)	61,060	64,842	62,672	65,322
Participating Securities [Member]
Net Income	$ 100	$ 100	$ 400	$ 400

XML

Note 4 - Long-term Debt (Details Textual) $ in Thousands	3 Months Ended	9 Months Ended
	Oct. 01, 2017 USD ($)	Oct. 01, 2017 USD ($)
Interest Rate Swap [Member]
Derivative, Notional Amount	$ 100,000	$ 100,000
Interest Rate Swap [Member] | Accrued Liabilities, Current [Member]
Derivative Liability, Fair Value, Gross Liability	200	200
Interest Rate Swap [Member] | Other Nonoperating Income (Expense) [Member]
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net	0
Syndicated Facility Agreement [Member]
Long-term Line of Credit	173,800	173,800
Letters of Credit Outstanding, Amount	$ 6,000	$ 6,000
Long-term Debt, Weighted Average Interest Rate, at Point in Time	2.60%	2.60%
Debt Instrument, Periodic Payment	$ 3,750
Revolving Credit Facility [Member]
Long-term Line of Credit	60,800	$ 60,800
Other Line Of Credit [Member]
Long-term Line of Credit	0	0
Line of Credit Facility, Maximum Borrowing Capacity	$ 9,800	$ 9,800
Other Line Of Credit [Member] | Minimum [Member]
Line of Credit Facility, Interest Rate During Period		2.50%
Other Line Of Credit [Member] | Maximum [Member]
Line of Credit Facility, Interest Rate During Period		6.50%

XML

Note 5 - Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended			12 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2016	Jan. 01, 2017	Jan. 02, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0			0	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	82,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 8.53
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	5,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	$ 1,100
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	1,100
Employee Stock Option [Member]
Allocated Share-based Compensation Expense	0		$ 0
Restricted Stock [Member]
Allocated Share-based Compensation Expense	$ 2,000	$ 2,400
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	248,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 5,000
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Performance Shares [Member]
Allocated Share-based Compensation Expense	$ 2,400
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	354,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 6,200
Share-Based Compensation Arrangement By Share-Based Payment Award, Equity Instruments Other Than Options, Shares Issued During Exercise of Instrument, Upper Limit, Percentage	200.00%
Performance Shares [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Performance Shares [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years

XML

Note 5 - Stock-based Compensation - Restricted Stock Outstanding (Details) - Restricted Stock [Member]	9 Months Ended
	Oct. 01, 2017 $ / shares shares
Outstanding at January 1, 2017 (in shares) | shares	505,000
Outstanding at January 1, 2017 (in dollars per share) | $ / shares	$ 17.05
Granted (in shares) | shares	248,000
Granted (in dollars per share) | $ / shares	$ 17.89
Vested (in shares) | shares	284,000
Vested (in dollars per share) | $ / shares	$ 16.61
Forfeited or canceled (in shares) | shares	6,000
Forfeited or canceled (in dollars per share) | $ / shares	$ 16.99
Outstanding at October 1, 2017 (in shares) | shares	463,000
Outstanding at October 1, 2017 (in dollars per share) | $ / shares	$ 17.77

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Note 5 - Stock-based Compensation - Performance Shares Outstanding (Details) - Performance Shares [Member]	9 Months Ended
	Oct. 01, 2017 $ / shares shares
Outstanding at January 1, 2017 (in shares) | shares	368,500
Outstanding at January 1, 2017 (in dollars per share) | $ / shares	$ 17.20
Granted (in shares) | shares	354,000
Granted (in dollars per share) | $ / shares	$ 17.80
Vested (in shares) | shares	31,000
Vested (in dollars per share) | $ / shares	$ 17.22
Forfeited or canceled (in shares) | shares	22,000
Forfeited or canceled (in dollars per share) | $ / shares	$ 17.29
Outstanding at October 1, 2017 (in shares) | shares	669,500
Outstanding at October 1, 2017 (in dollars per share) | $ / shares	$ 17.51

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Note 6 - Employee Benefit Plans - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Pension Plan [Member] | Foreign Plan [Member]
Service cost	$ 423	$ 260	$ 1,204	$ 781
Interest cost	1,426	1,610	4,138	5,058
Expected return on assets	(1,697)	(1,876)	(4,920)	(5,880)
Amortization of prior service costs	9	9	26	27
Recognized net actuarial losses	318	169	930	537
Net periodic benefit cost	479	172	1,378	523
Salary Continuation Plan [Member] | Domestic Plan [Member]
Service cost	0	110	0	330
Interest cost	314	317	942	952
Recognized net actuarial losses	91	203	273	608
Net periodic benefit cost	$ 405	$ 630	$ 1,215	$ 1,890

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Note 7 - Segment Information (Details Textual)	9 Months Ended
	Oct. 01, 2017
Number of Operating Segments	3
Number of Reportable Segments	1

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Note 7 - Segment Information - Operating Segment Summary Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016	Jan. 01, 2017
Net Sales	$ 257,431	$ 248,349	$ 730,233	$ 719,110
Depreciation and Amortization	7,782	7,514	22,203	22,474
Assets	802,399		802,399		$ 835,439
Operating Segments [Member]
Net Sales	257,431	248,349	730,233	719,110
Depreciation and Amortization	7,243	7,101	20,779	21,325
Assets	717,242		717,242
Americas [Member]
Net Sales	148,082	147,500	433,461	426,677
Depreciation and Amortization	3,386	3,635	10,064	10,903
Assets	274,946		274,946
Europe [Member]
Net Sales	66,677	62,682	180,506	181,904
Depreciation and Amortization	1,646	1,253	4,257	3,824
Assets	255,330		255,330
Asia Pacific [Member]
Net Sales	42,672	38,167	116,266	110,529
Depreciation and Amortization	2,211	$ 2,213	6,458	$ 6,598
Assets	$ 186,966		$ 186,966

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Note 7 - Segment Information - Reconciliation of Segment Depreciation and Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Depreciation and amortization	$ 7,782	$ 7,514	$ 22,203	$ 22,474
Operating Segments [Member]
Depreciation and amortization	7,243	7,101	20,779	21,325
Corporate, Non-Segment [Member]
Depreciation and amortization	$ 539	$ 413	$ 1,424	$ 1,149

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Note 7 - Segment Information - Reconciliation of Segment Assets (Details) - USD ($) $ in Thousands	Oct. 01, 2017	Jan. 01, 2017
Assets	$ 802,399	$ 835,439
Operating Segments [Member]
Assets	717,242
Corporate, Non-Segment [Member]
Assets	$ 85,157

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Note 8 - Supplemental Cash Flow Information (Details Textual) - USD ($) $ in Millions	9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016
Interest Paid	$ 4.6	$ 4.0
Income Taxes Paid	$ 14.8	$ 9.9

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Note 9 - Recently Issued Accounting Pronouncements (Details Textual) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Apr. 02, 2017	Oct. 01, 2017
Reclassification from Current Deferred Tax Assets to Noncurrent Deferred Tax Assets [Member] | Fiscal Year End January 1, 2017 [Member]
Prior Period Reclassification Adjustment	$ 10.0
Reclassification from Current Deferred Tax Assets and Noncurrent Deferred Tax Liabilities to Noncurrent Deferred Tax Assets [Member] | Fiscal Year End January 1, 2017 [Member]
Prior Period Reclassification Adjustment	5.9
Rreclassification from Noncurrent Deferred Tax Liabilities to Noncurrent Deferred Tax Assets [Member] | Fiscal Year End January 1, 2017 [Member]
Prior Period Reclassification Adjustment	4.1
Accounting Standards Update 2016-09 [Member]
Deferred Tax Assets, Gross	5.8
Cumulative Effect of New Accounting Principle in Period of Adoption	5.8
Reclassification of Tax Withholdings from Cash from Operating Activities to Cash from Financing Activities [Member] | April 3, 2016 [Member]
Prior Period Reclassification Adjustment	$ 4.6
Sales Revenue, Net [Member] | Product Concentration Risk [Member] | Carpet, Hard Surface Flooring and Related Products [Member]
Concentration Risk, Percentage		95.00%

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Note 10 - Income Taxes (Details Textual) $ in Millions	9 Months Ended
	Oct. 01, 2017 USD ($)
Unrecognized Tax Benefits, Period Increase (Decrease)	$ 0.8
Unrecognized Tax Benefits	28.7
Increase (Decrease) in Deferred Tax Assets	$ (3.3)

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Note 11 - Items Reclassified From Other Comprehensive Income (Details Textual) $ in Millions	9 Months Ended
	Oct. 01, 2017 USD ($)
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, after Tax	$ 1.2

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Note 12 - Repurchase of Common Stock (Details Textual) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Apr. 02, 2017	Oct. 01, 2017	Jul. 02, 2017	Jul. 03, 2016	Dec. 28, 2014
Stock Repurchase Program, Number of Shares Authorized to be Repurchased					500,000
Stock Repurchase Program, Authorized Amount			$ 100	$ 50
Treasury Stock, Shares, Acquired	1,601,896	2,575,847
Treasury Stock Acquired, Average Cost Per Share	$ 19.36	$ 19.38
Treasury Stock, Shares, Retired	1,601,896	2,575,847

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Note 13 - Restructuring and Asset Impairment Charges (Details Textual) - Restructuring Charge 2014 [Member] $ in Thousands	3 Months Ended		12 Months Ended
	Apr. 02, 2017 USD ($)	Jan. 01, 2017 USD ($)	Oct. 01, 2017 USD ($)
Restructuring and Related Cost, Number of Positions Eliminated		70
Restructuring Charges	$ 7,300	$ 19,800
Other Restructuring [Member]
Restructuring Charges	3,400		$ 5,116
Fixed Asset Impairment [Member]
Restructuring Charges	3,300		11,319
Employee Severance [Member]
Restructuring Charges	$ 600		$ 10,652

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Note 13 - Restructuring and Asset Impairment Charges - Restructuring Activities (Details) - Restructuring Charge 2014 [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended	12 Months Ended
	Apr. 02, 2017	Jan. 01, 2017	Oct. 01, 2017	Oct. 01, 2017
Total restructuring charge	$ 7,300	$ 19,800
Employee Severance [Member]
Total restructuring charge	600			$ 10,652
Cost incurred		1,451	$ 6,537
Balance			2,664	2,664
Fixed Asset Impairment [Member]
Total restructuring charge	3,300			11,319
Cost incurred		8,019	3,300
Balance			0	0
Other Restructuring [Member]
Total restructuring charge	$ 3,400			5,116
Cost incurred		$ 27	5,027
Balance			$ 62	$ 62