INTERFACE INC (Form: 10-Q, Received: 05/10/2012 10:43:56)

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For Quarterly Period Ended April 1, 2012

Commission File Number 001-33994

INTERFACE, INC.

(Exact name of registrant as specified in its charter)

GEORGIA

58-1451243

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

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 x 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 x No ¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Shares outstanding of each of the registrant’s classes of common stock at May 6, 2012:


Class		Number of Shares
Common Stock, $.10 par value per share		65,961,892

INTERFACE, INC.

INDEX


			PAGE
PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements		3

		Consolidated Condensed Balance Sheets – April 1, 2012 and January 1, 2012		3

		Consolidated Condensed Statements of Operations - Three Months Ended April 1, 2012 and April 3, 2011		4

		Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended April 1, 2012 and April 3, 2011		5

		Consolidated Condensed Statements of Cash Flows – Three Months Ended April 1, 2012 and April 3, 2011		6

		Notes to Consolidated Condensed Financial Statements		7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		21

	Item 4.	Controls and Procedures		22

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings		22

	Item 1A.	Risk Factors		22

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23

	Item 3.	Defaults Upon Senior Securities		23

	Item 4.	Removed and Reserved		23

	Item 5.	Other Information		23

	Item 6.	Exhibits		23

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(IN THOUSANDS)


	APRIL 1, 2012			JANUARY 1, 2012
	(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents		63,083			50,635
Accounts Receivable, net		126,649			156,170
Inventories		171,902			166,073
Prepaid Expenses and Other Current Assets		27,663			23,407
Deferred Income Taxes		12,336			9,699

TOTAL CURRENT ASSETS		401,633			405,984
PROPERTY AND EQUIPMENT, less accumulated depreciation		196,845			190,119
DEFERRED TAX ASSET		49,027			47,290
GOODWILL		76,497			74,557
OTHER ASSETS		55,768			54,322

TOTAL ASSETS		779,770			772,272

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts Payable		50,618			55,289
Accrued Expenses		104,277			93,884

TOTAL CURRENT LIABILITIES		154,895			149,173
SENIOR NOTES		283,050			283,030
SENIOR SUBORDINATED NOTES		11,477			11,477
DEFERRED INCOME TAXES		8,734			8,391
OTHER		38,346			39,162

TOTAL LIABILITIES		496,502			491,233
Commitments and Contingencies
SHAREHOLDERS’ EQUITY:
Preferred Stock		—			—
Common Stock		6,594			6,548
Additional Paid-In Capital		363,841			361,400
Accumulated Deficit		(24,005	)		(16,764	)
Accumulated Other Comprehensive Income – Foreign Currency Translation Adjustment		(26,009	)		(33,883	)
Accumulated Other Comprehensive Income – Pension Liability		(37,153	)		(36,262	)

TOTAL SHAREHOLDERS’ EQUITY		283,268			281,039

		779,770			772,272

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
	APRIL 1, 2012			APRIL 3, 2011
NET SALES	$	232,760		$	245,402
Cost of Sales		156,557			158,474

GROSS PROFIT ON SALES		76,203			86,928
Selling, General and Administrative Expenses		59,368			65,400
Restructuring and Asset Impairment Charge		16,316			—

OPERATING INCOME		519			21,528
Interest Expense		6,653			6,656
Other Expense (Income)		437			(122	)

INCOME (LOSS) BEFORE INCOME TAX EXPENSE		(6,571	)		14,994
Income Tax Expense (Benefit)		(637	)		5,170

NET INCOME (LOSS)	$	(5,934	)	$	9,824

Earnings (Loss) Per Share– Basic	$	(0.09	)	$	0.15

Earnings (Loss) Per Share– Diluted	$	(0.09	)	$	0.15

Common Shares Outstanding – Basic		63,443			64,822
Common Shares Outstanding – Diluted		63,443			65,190

See accompanying notes to consolidated condensed financial statements.

-4-

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(IN THOUSANDS)


	THREE MONTHS ENDED
	APRIL 1, 2012			APRIL 3, 2011
Net Income (Loss)	$	(5,934	)	$	9,824
Other Comprehensive Income, Foreign Currency Translation
Adjustment and Pension Liability Adjustment		6,983			8,266

Comprehensive Income	$	1,049		$	18,090

See accompanying notes to consolidated condensed financial statements.

-5-

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)


	THREE MONTHS ENDED
	APRIL 1, 2012			APRIL 3, 2011
OPERATING ACTIVITIES:
Net income (loss)	$	(5,934	)	$	9,824
Adjustments to reconcile income to cash provided by (used in) operating activities:
Depreciation and amortization		6,246			5,321
Stock compensation amortization expense		1,298			7,261
Deferred income taxes and other		(3,276	)		766
Working capital changes:
Accounts receivable		31,890			6,583
Inventories		(3,766	)		(20,295	)
Prepaid expenses		(4,263	)		(5,404	)
Accounts payable and accrued expenses		2,131			(22,260	)

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		24,326			(18,204	)

INVESTING ACTIVITIES:
Capital expenditures		(10,354	)		(10,307	)
Other		(1,035	)		(1,450	)

CASH USED IN INVESTING ACTIVITIES		(11,389	)		(11,757	)

FINANCING ACTIVITIES:
Proceeds from issuance of common stock		131			1,468
Dividends paid		(1,307	)		(1,299	)
Other		—			(107	)

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:		(1,176	)		62

Net cash provided by (used in) operating, investing and financing activities		11,761			(29,899	)
Effect of exchange rate changes on cash		687			348

CASH AND CASH EQUIVALENTS:
Net change during the period		12,448			(29,551	)
Balance at beginning of period		50,635			69,236

Balance at end of period	$	63,083		$	39,685

See accompanying notes to consolidated condensed financial statements.

-6-

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 financial statements and notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended January 1, 2012, 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, 2012 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.

As described below in Note 9, the Company has sold its Fabrics Group business segment. The results of operations and related disposal costs, gains and losses for this business are classified as discontinued operations, where applicable.

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

NOTE 2 – INVENTORIES

Inventories are summarized as follows:


	April 1, 2012		January 1, 2012
	(In thousands)
Finished Goods	$	101,993	$	98,894
Work in Process		19,267		17,606
Raw Materials		50,642		49,573

	$	171,902	$	166,073

NOTE 3 – EARNINGS PER SHARE

The Company computes basic earnings per share (“EPS”) by dividing net income (loss), 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.

-7-

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 when the Company is in an income position. 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
	April 1, 2012			April 3, 2011
Earnings Per Share
Basic Earnings (Loss) Per Share Attributable to Common Stockholders:
Distributed Earnings	$	(0.02	)	$	0.02
Undistributed Earnings		(0.07	)		0.13

Total	$	(0.09	)	$	0.15

Diluted Earnings (Loss) Per Share Attributable to Common Stockholders:
Distributed Earnings	$	(0.02	)	$	0.02
Undistributed Earnings		(0.07	)		0.13

Total	$	(0.09	)	$	0.15

The following table presents net income (loss) that was attributable to participating securities.


	Three Months Ended
	April 1, 2012		April 3, 2011
	(In millions)
Net Income (Loss)		—		0.2

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


	Three Months Ended
	April 1, 2012		April 3, 2011
	(In thousands)
Weighted Average Shares Outstanding		63,443		63,246
Participating Securities		—		1,576

Shares for Basic Earnings Per Share		63,443		64,822
Dilutive Effect of Stock Options		—		368

Shares for Diluted Earnings Per Share		63,443		65,190

For the three months ended April 1, 2012 and April 3, 2011, options to purchase 535,000 shares and 219,000 shares of common stock, respectively, were not included in the computation of diluted EPS as their impact would be anti-dilutive. For the three months ended April 1, 2012, 2,009,000 shares of participating securities were excluded from the computation of EPS as their impact would be anti-dilutive.

-8-

NOTE 4 – SEGMENT INFORMATION

Based on the quantitative thresholds specified in applicable accounting standards, the Company has determined that it has two reportable segments: (1) the Modular Carpet segment, which includes its InterfaceFLOR, Heuga and FLOR modular carpet businesses, and (2) the Bentley Prince Street segment, which includes its Bentley Prince Street broadloom, modular carpet and area rug businesses. In 2007, the Company sold its former Fabrics Group business segment (see Note 9 for further information). Accordingly, the Company has included the operations of the former Fabrics Group segment in discontinued operations, where applicable.

The accounting policies of the operating segments are the same as those described in the Summary of Significant Accounting Policies contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2012, as filed with the Commission. Segment amounts disclosed are prior to any elimination entries made in consolidation, except in the case of net sales, where intercompany sales have been eliminated. The chief operating decision maker evaluates performance of the segments based on operating income. Costs excluded from this profit measure primarily consist of allocated corporate expenses, interest/other expense and income taxes. Corporate expenses are primarily comprised of corporate overhead expenses. Thus, operating income includes only the costs that are directly attributable to the operations of the individual segment. Assets not identifiable to any individual segment are corporate assets, which are primarily comprised of cash and cash equivalents, short-term investments, intangible assets and intercompany amounts, which are eliminated in consolidation.

Segment Disclosures

Summary information by segment follows:


	Modular Carpet		Bentley Prince Street			Total
	(In thousands)
Three Months Ended April 1, 2012
Net sales	$	210,016	$	22,744		$	232,760
Depreciation and amortization		6,361		537			6,898
Operating income (loss)		1,052		(564	)		488
Three Months Ended April 3, 2011
Net sales	$	219,280	$	26,122		$	245,402
Depreciation and amortization		8,103		558			8,661
Operating income (loss)		25,334		(157	)		25,177

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


	Three Months Ended
	April 1, 2012		April 3, 2011
	(In thousands)
DEPRECIATION AND AMORTIZATION
Total segment depreciation and amortization	$	6,898	$	8,661
Corporate depreciation and amortization		646		3,921

Reported depreciation and amortization	$	7,544	$	12,582

OPERATING INCOME
Total segment operating income	$	488	$	25,177
Corporate expenses and other reconciling amounts		31		(3,649	)

Reported operating income	$	519	$	21,528


	April 1, 2012		January 1, 2012
	(In thousands)
ASSETS
Total segment assets	$	654,177	$	658,190
Corporate assets and eliminations		125,593		114,082

Reported total assets	$	779,770	$	772,272

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NOTE 5 – LONG-TERM DEBT

7 5/8% Senior Notes

As of both April 1, 2012, and April 3, 2011, the Company had outstanding $275 million in 7 5/8% Senior Notes due 2018 (the “7 5/8% Senior Notes”). The estimated fair value of the 7 5/8% Senior Notes as of April 1, 2012, and April 3, 2011, based on then current market prices, was $296.7 million and $291.5 million, respectively.

11 3/8% Senior Secured Notes

As of April 1, 2012, and April 3, 2011, the Company had outstanding $8.0 million in 11 3/8% Senior Secured Notes due 2013 (the “11 3/8% Senior Secured Notes”). The estimated fair value of the 11 3/8% Senior Secured Notes as of both April 1, 2012, and April 3, 2011, based on then current market prices, was $8.1 million.

9.5% Senior Subordinated Notes

As of both April 1, 2012 and April 3, 2011, the Company had outstanding $11.5 million in 9.5% Senior Subordinated Notes due 2014 (the “9.5% Senior Subordinated Notes”). The estimated fair value of the 9.5% Senior Subordinated Notes as of both April 1, 2012 and April 3, 2011, based on then current market prices, was $11.5 million. On April 9, 2012, subsequent to the end of the first quarter of 2012, the Company redeemed all of the outstanding 9.5% Senior Subordinated Notes at a price equal to 100% of the principal amount of the notes, plus accrued interest through the redemption date.

Credit Facilities

The Company maintains a domestic revolving credit agreement (the “Facility”) that provides a maximum aggregate amount of $100 million of loans and letters of credit available to us at any one time (subject to a borrowing base) with an option for us to increase that maximum aggregate amount to $150 million (upon the satisfaction of certain conditions, and subject to a borrowing base). The Company is presently in compliance with all covenants under the Facility and anticipates that it will remain in compliance with the covenants for the foreseeable future. As of April 1, 2012, there were zero borrowings and $4.1 million in letters of credit outstanding under the Facility. As of April 1, 2012, the Company could have incurred $69.7 million of additional borrowings under the Facility.

Interface Europe B.V. (the Company’s modular carpet subsidiary based in the Netherlands) and certain of its subsidiaries maintain a Credit Agreement with The Royal Bank of Scotland N.V. (“RBS”). Under this Credit Agreement, RBS provides a credit facility, until further notice, for borrowings and bank guarantees of €20 million. As of April 1, 2012, there were no borrowings outstanding under this facility, and the Company could have incurred €20 million (approximately $26.6 million) of additional borrowings under the facility.

Other non-U.S. subsidiaries of the Company have an aggregate of the equivalent of $18.9 million of lines of credit available. As of April 1, 2012 there were no borrowings outstanding under these lines of credit.

NOTE 6 – 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. The grant date fair value for options and similar instruments will be estimated using option pricing models. Under accounting standards, the Company is required to select a valuation technique or option pricing model that meets the criteria as stated in the standard. The Company uses the Black-Scholes model. Accounting standards require that the Company estimate forfeitures for stock options and reduce compensation expense accordingly. The Company has reduced its stock compensation expense by the assumed forfeiture rate and will evaluate experience against this forfeiture rate going forward.

During the first three months of 2012 and 2011, the Company recognized stock option compensation costs of $0.2 million and $0.3 million, respectively. The remaining unrecognized compensation cost related to unvested awards at April 1, 2012, approximated $0.4 million, and the weighted average period of time over which this cost will be recognized is approximately one and one-half years.

-10-

There were no stock options granted during the first three months of fiscal 2012 or 2011. The following table summarizes stock options outstanding as of April 1, 2012, as well as activity during the three months then ended:


	Shares		Weighted Average Exercise Price
Outstanding at January 1, 2012		592,500	$	9.12
Granted		—		—
Exercised		23,500		5.59
Forfeited or canceled		34,000		11.72

Outstanding at April 1, 2012		535,000	$	8.85

Exercisable at April 1, 2012		419,200	$	7.80

At April 1, 2012, the aggregate intrinsic value of in-the-money options outstanding and options exercisable was $2.7 million and $2.6 million, respectively (the intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option).

Cash proceeds and intrinsic value related to total stock options exercised during the first three months of 2012 and 2011 are provided in the following table:


	Three Months Ended
	April 1, 2012		April 3, 2011
	(In thousands)
Proceeds from stock options exercised	$	131	$	1,468
Intrinsic value of stock options exercised	$	179	$	2,744

The Company did not recognize any significant tax benefit with regard to stock options in either period presented.

Restricted Stock Awards

During the three months ended April 1, 2012 and April 3, 2011, the Company granted restricted stock awards for 557,500 and 468,000 shares of common stock. Awards of restricted stock (or a portion thereof) vest with respect to each recipient over a two to five-year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date. Additionally, awards (or a portion thereof) could vest earlier upon the attainment of certain performance criteria, in the event of a change in control of the Company, or upon involuntary termination without cause.

Compensation expense related to restricted stock grants was $1.3 million and $7.3 million for the three months ended April 1, 2012, and April 3, 2011, 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 activity as of April 1, 2012, and during the three months then ended:


	Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2012		1,749,000	$	15.08
Granted		557,500		13.25
Vested		241,500		13.20
Forfeited or canceled		56,000		15.11

Outstanding at April 1, 2012		2,009,000	$	14.80

As of April 1, 2012, the unrecognized total compensation cost related to unvested restricted stock was $15.7 million. That cost is expected to be recognized by the end of 2015.

During the quarters ended April 1, 2012 and April 3, 2011, the Company recognized tax benefits of $0.2 million and $1.8 million, respectively, with regard to restricted stock.

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NOTE 7 – EMPLOYEE BENEFIT PLANS

The following tables provide the components of net periodic benefit cost for the three-month periods ended April 1, 2012, and April 3, 2011, respectively:


	Three Months Ended
Defined Benefit Retirement Plan (Europe)	April 1, 2012			April 3, 2011
Defined Benefit Retirement Plan (Europe)	(In thousands)
Service cost	$	116		$	71
Interest cost		2,544			2,838
Expected return on assets		(2,821	)		(2,934	)
Amortization of prior service costs		13			21
Recognized net actuarial (gains)/losses		229			150

Net periodic benefit cost	$	81		$	146


	Three Months Ended
Salary Continuation Plan (SCP)	April 1, 2012		April 3, 2011
Salary Continuation Plan (SCP)	(In thousands)
Service cost	$	113	$	98
Interest cost		254		284
Amortization of transition obligation		—		55
Amortization of prior service cost		12		12
Amortization of (gain)/loss		67		93

Net periodic benefit cost	$	446	$	542

NOTE 8 – RESTRUCTURING CHARGES

2012 Restructuring Charge

In March of 2012, the Company committed to a new restructuring plan in its continuing efforts to reduce costs across its worldwide operations and more closely align its operations with reduced demand levels in certain markets. The plan primarily consists of ceasing manufacturing and warehousing operations at its facility in Shelf, England. In connection with this restructuring plan, the Company incurred a pre-tax restructuring and asset impairment charge in the first quarter of 2012 in an amount of $16.3 million. The expected charge is comprised of employee severance expenses of $5.4 million, other related exit costs of $1.6 million, and a charge for impairment of assets of approximately $9.3 million. Approximately $7 million of the charge will result in future cash expenditures, primarily severance expense. The restructuring plan is expected to be substantially completed in the second quarter of 2012.

A summary of these restructuring activities is presented below:


	Total Restructuring Charge		Costs Incurred in 2012		Balance at April 1, 2012
	(In thousands)
Workforce Reduction		5,356		377		4,979
Fixed Asset Impairment		9,364		9,364		—
Other Related Exit Costs		1,596		—		1,596

-12-

The table below details these restructuring activities by segment:


	Modular Carpet		Bentley Prince Street		Corporate		Total
	(In thousands)
Total amounts expected to be incurred	$	16,316	$	—	$	—	$	16,316
Cumulative amounts incurred to date		9,741		—		—		9,741
Total amounts incurred in the three-month period ended April 1, 2012		9,741		—		—		9,741

2011 Restructuring Charge

In the fourth quarter of 2011, the Company committed to a restructuring plan intended to reduce costs across its worldwide operations and more closely align its operations with reduced demand in certain markets. As a result of this plan, the Company incurred pre-tax restructuring and asset impairment charges of $6.2 million in the fourth quarter of 2011. The majority of this charge ($5.4 million) relates to the severance of approximately 110 employees in Europe, Asia and the United States. The remainder of the charge ($0.8 million) relates to contract termination and fixed asset impairment costs. Approximately $5.4 million of this charge will result in cash expenditures, primarily severance expenses. Actions and expenses related to this plan were substantially completed by the end of 2011.

A summary of these restructuring activities is presented below:


	Restructuring Charge		Costs Incurred in 2011		Costs Incurred in 2012		Balance at April 1, 2012
	(In thousands)
Workforce Reduction		5,401		1,147		2,202		2,052
Fixed Asset Impairment		776		776		—		—

The table below details these restructuring activities by segment:


	Modular Carpet		Bentley Prince Street		Corporate		Total
	(In thousands)
Total amounts expected to be incurred	$	5,755	$	422	$	—	$	6,177
Cumulative amounts incurred to date		3,786		339		—		4,125
Total amounts incurred in 2012		2,143		59		—		2,202

NOTE 9 – DISCONTINUED OPERATIONS

In 2007, the Company sold its Fabrics Group business segment. All activity related to this business has been included in discontinued operations, where applicable. Assets and liabilities of this business segment have been reported in assets and liabilities held for sale, where applicable.

Discontinued operations had no net sales and no net income or loss in either of the three-month periods ended April 1, 2012 and April 3, 2011.

NOTE 10 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest amounted to $0.8 million and $0.9 million for the three month periods ended April 1, 2012, and April 3, 2011, respectively. Income tax payments amounted to $3.0 million and $5.4 million for the three month periods ended April 1, 2012, and April 3, 2011, respectively.

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NOTE 11 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In September 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting standard regarding the performance of a company’s annual goodwill impairment evaluation. This standard allows companies to assess qualitative factors to determine if it is more likely than not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test. This standard is effective for fiscal years beginning after December 31, 2011. At this time, we do not expect adoption of this standard to have any significant impact on our consolidated financial statements.

In June 2011, the FASB amended an accounting standard regarding the presentation of comprehensive income. This amendment will require companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity. The amended guidance, which must be applied retroactively, was to be effective for interim and annual periods ending after December 31, 2012, with earlier adoption permitted. In December of 2011, the FASB issued an amendment to this statement which defers the requirements of this standard. As this amendment only effects presentation, there is not expected to be any impact on the Company’s consolidated financial statements.

NOTE 12 – 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 three months of 2012, the Company increased its liability for unrecognized tax benefits by $0.2 million. As of April 1, 2012, the Company had accrued approximately $7.9 million for unrecognized tax benefits.

NOTE 13 – SHARE CONVERSION

On March 5, 2012, the number of issued and outstanding shares of Class B Common Stock constituted less than 10% of the aggregate number of issued and outstanding shares of the Company’s Class A Common Stock and Class B Common Stock (that is, on that date, 6,459,556 shares of an aggregate of 65,372,375 shares), as the cumulative result of varied transactions that caused the conversion of shares of Class B Common Stock into shares of Class A Common Stock. Accordingly, in accordance with the respective terms for the Class B Common Stock and the Class A Common Stock in Article V of the Company’s Articles of Incorporation (the “Articles”), the Class A Common Stock and Class B Common Stock are now, irrevocably from March 5, 2012, a single class of Common Stock in all respects, with no distinction whatsoever between the voting rights or any other rights and privileges of the holders of Class A Common Stock and the holders of Class B Common Stock. The Company intends to eliminate future uses of (or references to) the terms “Class A” and “Class B” in connection with the Common Stock, except for historical purposes or to facilitate transition by certain stock listing or administrative services organizations who are accustomed to the old designations for the Common Stock

NOTE 14 – SUPPLEMENTAL CONDENSED CONSOLIDATING GUARANTOR FINANCIAL STATEMENTS

The Guarantor Subsidiaries, which consist of the Company’s principal domestic subsidiaries, are guarantors of the Company’s 11 3/8% Senior Secured Notes due 2013, its 9.5% Senior Subordinated Notes due 2014, and its 7 5/8% Senior Notes due 2018. These guarantees are full and unconditional. The Supplemental Guarantor Financial Statements are presented herein pursuant to requirements of the Commission.

-14-

INTERFACE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED APRIL 1, 2012


	GUARANTOR SUBSIDIARIES		NON- GUARANTOR SUBSIDIARIES			INTERFACE, INC. (PARENT CORPORATION)			CONSOLIDATION AND ELIMINATION ENTRIES			CONSOLIDATED TOTALS
	(In thousands)
Net sales	$	142,784	$	120,655		$	—		$	(30,679	)	$	232,760
Cost of sales		106,343		80,893			—			(30,679	)		156,557

Gross profit on sales		36,441		39,762			—			—			76,203
Selling, general and administrative expenses		26,819		27,605			4,944			—			59,368
Restructuring and asset impairment		1,143		15,173			—			—			16,316

Operating income (loss)		8,479		(3,016	)		(4,944	)		—			519
Interest/Other expense		7,235		3,733			(3,878	)		—			7,090

Income (loss) before taxes on income and equity in income of subsidiaries		1,244		(6,749	)		(1,066	)		—			(6,571	)
Income tax (benefit) expense		121		(655	)		(103	)		—			(637	)
Equity in income (loss) of subsidiaries		—		—			(4,971	)		4,971			—

Net income (loss)	$	1,123	$	(6,094	)	$	(5,934	)	$	4,971		$	(5,934	)

-15-

CONDENSED CONSOLIDATING BALANCE SHEET

APRIL 1, 2012


	GUARANTOR SUBSIDIARIES			NON- GUARANTOR SUBSIDIARIES			INTERFACE, INC. (PARENT CORPORATION)			CONSOLIDATION AND ELIMINATION ENTRIES			CONSOLIDATED TOTALS
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2,210		$	37,652		$	23,221		$	—		$	63,083
Accounts receivable		50,728			75,356			565			—			126,649
Inventories		93,243			78,659			—			—			171,902
Prepaids and deferred income taxes		10,735			19,812			9,452			—			39,999

Total current assets		156,916			211,479			33,238			—			401,633
Property and equipment less accumulated depreciation		82,631			110,385			3,829			—			196,845
Investment in subsidiaries		278,561			185,088			118,132			(581,781	)		—
Goodwill		6,954			69,543			—			—			76,497
Other assets		5,691			10,952			88,152			—			104,795

	$	530,753		$	587,447		$	243,351		$	(581,781	)	$	779,770

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	$	35,563		$	91,973		$	27,359		$	—		$	154,895
Senior notes and senior subordinated notes		—			—			294,527			—			294,527
Deferred income taxes		188			11,413			(2,867	)		—			8,734
Other		8,514			1,902			27,930			—			38,346

Total liabilities		44,265			105,288			346,949			—			496,502
Redeemable preferred stock		—			—			—			—			—
Common stock		94,145			102,199			6,594			(196,344	)		6,594
Additional paid-in capital		249,302			12,525			363,841			(261,827	)		363,841
Retained earnings (deficit)		144,740			419,616			(464,751	)		(123,610	)		(24,005	)
AOCI - Foreign currency translation adjustment		(1,699	)		(17,507	)		(6,803	)		—			(26,009	)
AOCI - Pension liability		—			(34,674	)		(2,479	)		—			(37,153	)

	$	530,753		$	587,447		$	243,351		$	(581,781	)	$	779,770

-16-

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS

ENDED APRIL 1, 2012


	GUARANTOR SUBSIDIARIES			NON- GUARANTOR SUBSIDIARIES			INTERFACE, INC. (PARENT CORPORATION)			CONSOLIDATION AND ELIMINATION ENTRIES			CONSOLIDATED TOTALS
	(In thousands)
Net cash provided by (used for) operating activities	$	7,438		$	(609	)	$	14,460		$	3,037		$	24,326

Cash flows from investing activities:
Purchase of plant and equipment		(3,447	)		(6,905	)		(2	)		—			(10,354	)
Other		338			(2	)		(1,371	)		—			(1,035	)

Net cash used for investing activities		(3,109	)		(6,907	)		(1,373	)		—			(11,389	)

Cash flows from financing activities:
Proceeds from issuance of common stock		—			—			131			—			131
Other		(3,220	)		8,607			(2,350	)		(3,037	)		—
Dividends paid		—			—			(1,307	)		—			(1,307	)

Net cash provided by (used for) financing activities		(3,220	)		8,607			(3,526	)		(3,037	)		(1,176	)
Effect of exchange rate change on cash		—			687			—			—			687

Net increase in cash		1,109			1,778			9,561			—			12,448
Cash at beginning of period		1,101			35,874			13,660			—			50,635

Cash at end of period	$	2,210		$	37,652		$	23,221		$	—		$	63,083

-17-

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, 2012, under Item 7 of that Form 10-K. Our discussions here focus on our results during the quarter ended, or as of, April 1, 2012, and the comparable period of 2011 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, 2012, 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.

2012 Restructuring Charge

In March of 2012, we committed to a new restructuring plan in our continuing efforts to reduce costs across our worldwide operations and more closely align our operations with reduced demand levels in certain markets. The plan primarily consists of ceasing manufacturing and warehousing operations at our facility in Shelf, England. In connection with this restructuring plan, we incurred a pre-tax restructuring and asset impairment charge in the first quarter of 2012 in an amount of $16.3 million. The expected charge is comprised of employee severance expenses of $5.4 million, other related exit costs of $1.6 million, and a charge for impairment of assets of approximately $9.3 million. Approximately $7 million of the charge will result in future cash expenditures, primarily severance expense. The restructuring plan is expected to be substantially completed in the second quarter of 2012, and is expected to yield annualized cost savings of approximately $9 million.

2011 Restructuring Charge

In the fourth quarter of 2011, we committed to a restructuring plan intended to reduce costs across our worldwide operations and more closely align our operations with reduced demand in certain markets. As a result of this plan, we incurred pre-tax restructuring and asset impairment charges of $6.2 million in the fourth quarter of 2011. The majority of this charge ($5.4 million) relates to the severance of approximately 110 employees in Europe, Asia and the United States. The remainder of the charge ($0.8 million) relates to contract termination and fixed asset impairment costs. Approximately $5.4 million of this charge will result in cash expenditures, primarily severance expenses. Actions and expenses related to this plan were substantially completed by the end of 2011.

Discontinued Operations

In 2007, we sold our Fabrics Group business segment. In accordance with applicable accounting standards, we have reported the results of operations for the former Fabrics Group business segment as “discontinued operations,” where applicable.

Our discontinued operations had no net sales and no net income or loss in either of the three-month periods ended April 1, 2012 and April 3, 2011.

-18-

General

During the quarter ended April 1, 2012, we had net sales of $232.8 million, compared with net sales of $245.4 million in the first quarter last year. Fluctuations in currency exchange rates negatively impacted 2012 first quarter sales by 1% (approximately $3 million), compared with the prior year period.

During the first quarter of 2012, including the $16.3 million restructuring charge described above, we had a net loss of $5.9 million, or $0.09 per share, compared with net income of $9.8 million, or $0.15 per share, in the first quarter last year.

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 periods ended April 1, 2012, and April 3, 2011, respectively:


	Three Months Ended
	April 1, 2012			April 3, 2011
Net sales		100.0	%		100.0	%
Cost of sales		67.3			64.6

Gross profit on sales		32.7			35.4
Selling, general and administrative expenses		25.5			26.7
Restructuring charge		7.0			—

Operating income		0.2			8.8
Interest/Other expense		3.0			2.7

Income (loss) before tax expense		(2.8	)		6.1
Income tax expense (benefit)		(0.3	)		2.1

Net income (loss)		(2.5	)		4.0

Below we provide information regarding net sales for each of our operating segments, and analyze those results for the three-month periods ended April 1, 2012, and April 3, 2011, respectively.

Net Sales by Business Segment

Net sales by operating segment and for our Company as a whole were as follows for the three-month periods ended April 1, 2012, and April 3, 2011, respectively:


	Three Months Ended				Percentage Change
Net Sales By Segment	04/01/12		04/03/11		Percentage Change
Net Sales By Segment	(In thousands)
Modular Carpet	$	210,016	$	219,280		(4.2	%)
Bentley Prince Street		22,744		26,122		(12.9	%)

Total	$	232,760	$	245,402		(5.2	%)

Modular Carpet Segment. For the quarter ended April 1, 2012, net sales for the Modular Carpet segment decreased $9.3 million (4.2%) versus the comparable period in 2011. On a geographic basic, in the Americas, sales were essentially level with the prior year period. Europe sales declined slightly in U.S. Dollars (down 3%) but were up 2% in local currencies. Asia-Pacific sales declined 17%. In the Americas, the corporate office market segment remained even versus the first quarter of 2011. The largest gaining segment in the Americas was residential (up 52%), largely due to the continued roll-out of our FLOR retail stores. In addition, the hospitality segment in the Americas experienced an increase of 40%. These increases were offset by declines in the government (down 20%) and healthcare (down 12%) market segments. In Europe, sales were down in all segments except for corporate office (up 3% in U.S. Dollars, 8% in local currency). The government segment in Europe experienced the greatest decline in sales (down 23% in U.S. dollars, 19% in local currencies). In Asia-Pacific, we experienced declines in all commercial market segments. The largest sales decline in Asia-Pacific was seen in the education market segment (down 63%) due to the curtailment of government stimulus programs that had been in place in 2011, particularly in Australia.

-19-

Bentley Prince Street. For the quarter ended April 1, 2012, net sales for this segment decreased $3.4 million (12.9%) versus the comparable period in 2011. This decrease was led by a decline in the corporate office market of 13%, primarily due to the premium nature of Bentley Prince Street’s products vis-à-vis the uncertain macroeconomic environment. The government market segment (down 34%) as well as the hospitality market segment (down 47%) also contributed to the sales decline. These declines were somewhat offset by gains in the healthcare (up 21%) and education (up 7%) market segments.

Cost and Expenses

Company Consolidated. The following table presents, on a consolidated basis for our operations, our overall cost of sales and selling, general and administrative expenses for the three-month periods ended April 1, 2012, and April 3, 2011, respectively:


	Three Months Ended				Percentage Change
Cost and Expenses	04/01/12		04/03/11		Percentage Change
Cost and Expenses	(In thousands)
Cost of sales	$	156,557	$	158,474		(1.2	%)
Selling, general and administrative expenses		59,368		65,400		(9.2	%)

Total	$	215,925	$	223,874		(3.6	%)

For the quarter ended April 1, 2012, our costs of sales decreased by $1.9 million (1.2%) versus the comparable period in the prior year. Currency negatively impacted cost of sales by approximately $2 million (1%) in the 2012 first quarter. Given this currency impact, the cost of sales in the first quarter of 2012 is essentially level with that of the 2011 first quarter. On a percentage of sales basis, however, cost of sales increased to 67.3% in the first three months of 2012 versus 64.6% in the corresponding period of 2011. The increase was due to (1) a 5-6% increase in raw materials prices for the first quarter of 2012 versus that of 2011, as well as (2) lower absorption of fixed manufacturing costs associated with lower production volumes. We expect improvement in costs of sales on a percentage of sales basis as the benefits of our recent restructuring actions (discussed above) are realized.

For the quarter ended April 1, 2012, our selling, general, and administrative expenses decreased $6.0 million (9.2%) versus the comparable period in 2011. Fluctuations in currency exchange rates accounted for approximately $1.0 million (1%) of the decline. The primary components of this decrease were (1) a $4.3 million reduction in administrative costs due to the lower levels of non-cash incentive compensation in the first three months of 2012 versus 2011 as well as the realization of savings from our 2011 restructuring actions (discussed above), and (2) a $0.5 million reduction in marketing costs. Due to these reductions, as a percentage of net sales, selling, general and administrative expenses improved to 25.5% for the first three months of 2012 versus 26.7% in the corresponding period of 2011.

Cost and Expenses by Segment. The following table presents the combined cost of sales and selling, general and administrative expenses for each of our operating segments:


Cost of Sales and Selling, General and Administrative Expenses (Combined)	Three Months Ended				Percentage Change
	04/01/12		04/03/11		Percentage Change
	(In thousands)
Modular Carpet	$	192,617	$	193,395		(0.4	%)
Bentley Prince Street		23,308		26,279		(11.3	%)
Corporate Expenses and Eliminations		—		4,200		(100.0	%)

Total	$	215,925	$	223,874		(3.6	%)

Interest Expense

For the three-month period ended April 1, 2012, interest expense remained level with the three-month period ended April 3, 2011 at $6.7 million. There were no significant changes in borrowings between the first quarter of 2012 and 2011.

-20-

Liquidity and Capital Resources

General

At April 1, 2012, we had $63.1 million in cash. At that date, we had no borrowings and $4.1 million in letters of credit outstanding under our domestic revolving credit facility, and no borrowings outstanding under our European credit facility. As of April 1, 2012, we could have incurred $69.7 million of additional borrowings under our domestic revolving credit facility, and €20 million (approximately $26.6 million) of additional borrowings under our European credit facility. In addition, we could have incurred an additional $18.9 million of borrowings under our other credit facilities in place at other non-U.S. subsidiaries.

Analysis of Cash Flows

Our primary sources of cash during the three months ended April 1, 2012 were (1) $31.9 million due to a reduction of accounts receivable, and (2) $2.1 million due to an increase of accounts payable and accruals. Our primary uses of cash during this period were (1) $10.4 million for capital expenditures, (2) $4.3 million for increases in prepaids and other current assets, and (3) $3.8 million due to increased inventory levels.

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, 2012, under Item 7A of that Form 10-K. Our discussion here focuses on the quarter ended April 1, 2012, 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 April 1, 2012, we recognized a $7.9 million increase in our foreign currency translation adjustment account compared to January 1, 2012, primarily because of the weakening of the U.S dollar against certain foreign currencies.

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. The market value of instruments affected by interest rate and foreign currency exchange rate risk is computed based on the present value of future cash flows as impacted by the changes in the rates attributable to the market risk being measured. The discount rates used for the present value computations were selected based on market interest and foreign currency exchange rates in effect at April 1, 2012. The values that result from these computations are compared with the market values of these financial instruments at April 1, 2012. The differences in this comparison are the hypothetical gains or losses associated with each type of risk.

As of April 1, 2012, based on a hypothetical immediate 150 basis point increase in interest rates, with all other variables held constant, the market value of our fixed rate long-term debt would experience a net decrease of approximately $16.5 million. Conversely, a 150 basis point decrease in interest rates would result in a net increase in the market value of our fixed rate long-term debt of approximately $31.5 million.

As of April 1, 2012, 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 $9.8 million or an increase in the fair value of our financial instruments of $8.0 million, respectively. As the impact of offsetting changes in the fair market value of our net foreign investments is not included in the sensitivity model, these results are not indicative of our actual exposure to foreign currency exchange risk.

-21-

ITEM 4. CONTROLS AND PROCEDURES

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

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

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

The specific risk factor under the heading “The estate of our former Chairman currently has sufficient voting power to elect a majority of our Board of Directors,” set forth in Part I, Item IA in our Annual Report on Form 10-K for fiscal year 2011, is no longer applicable. For a discussion of risk factors, see that Item in our 2011 Form 10-K.

-22-

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 our first quarter ended April 1, 2012:


Period ⁽¹⁾	Total Number of Shares Purchased ⁽²⁾		Average Price Paid Per Share ⁽³⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽⁴⁾		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs ⁽⁴⁾
January 2 – January 31, 2012		15,490	$	11.54		—		—
February 1 – February 29, 2012		44,774	$	12.61		—		—
March 1 – March 31, 2012		—		—		—		—
April 1, 2012		—		—		—		—

Total		60,264	$	12.33		—		—

⁽¹⁾	The monthly periods identified above correspond to the Company’s fiscal first quarter of 2012, which commenced January 2, 2012 and ended April 1, 2012.

⁽²⁾	The referenced shares were acquired by the Company from certain of our employees to satisfy income tax withholding obligations in connection with the vesting, in January and February 2012, of certain previous grants of restricted stock shares.

⁽³⁾

The referenced price paid per share represents the fair market value of all shares acquired from employees on the date the shares vested, which is equal to the closing price of the Company’s Class A Common stock on the NASDAQ stock exchange on the day preceding the vesting date. The total represents the weighted average price paid per share.

⁽⁴⁾	We do not currently have a publicly announced stock repurchase program in place.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

The following exhibits are filed with this report:


EXHIBIT NUMBER		DESCRIPTION OF EXHIBIT

3.1		Restated Articles of Incorporation

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.

-23-

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: May 10, 2012	By:	/s/ Patrick C. Lynch
		Patrick C. Lynch
		Senior Vice President
		(Principal Financial Officer)

-24-

EXHIBIT INDEX


EXHIBIT NUMBER		DESCRIPTION OF EXHIBIT

3.1		Restated Articles of Incorporation

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.

-25-

Exhibit 3.1

INTERFACE, INC.

Clarification Certificate to

Restated Articles of Incorporation

Interface, Inc., a corporation organized under the laws of the State of Georgia (the “ Company ”), does hereby certify that:

1. At a meeting duly convened and held on April 25, 2012, the Board of Directors of the Company (the “ Board ”) duly adopted the following as part of its resolutions in connection with the occurrence of certain events resulting in the Company’s Class A Common Stock, $0.10 par value per share, and Class B Common Stock, $0.10 par value per share, automatically becoming, pursuant to the respective terms thereof set forth in the Company’s Restated Articles of Incorporation, in all respects a single class of Common Stock, with no distinction whatsoever between the voting rights or any other rights or privileges of the holders of Class A Common Stock and Class B Common Stock:

RESOLVED, that the Certificate to Clarify References to Common Stock, in the form attached hereto as Exhibit A (the “ Common Stock References Clarification Certificate ”), be, and it hereby is, approved and adopted, with such technical modifications thereto as may be required by the Secretary of State of the State of Georgia (and approved by the Chief Executive Officer of the Company, in consultation with the Company’s legal counsel), and the officers of the Company are hereby authorized to execute, acknowledge, verify and deliver the Common Stock References Clarification Certificate and any and all other documents or instruments, and to take all actions otherwise necessary, advisable or convenient, to cause the Common Stock References Clarification Certificate to be filed with and accepted by said Secretary of State for publication as part of the Company’s Restated Articles of Incorporation.”

2. Attached hereto, and thereby made a part hereof, is such Exhibit A from the Board’s resolution approving and adopting the Certificate to Clarify References to Common Stock.

3. This Clarification Certificate to Restated Articles of Incorporation does not effect any substantive change to any matter contained in the Company’s Restated Articles of Incorporation.

4. The actions reflected in this Clarification Certificate to Restated Articles of Incorporation does not require the approval by the shareholders of the Company.

IN WITNESS WHEREOF , this Clarification Certificate to Restated Articles of Incorporation is executed on behalf of the Company by its duly authorized officer this 25 ^th day of April, 2012.


INTERFACE, INC.

By:		/s/ Daniel T. Hendrix
		Daniel T. Hendrix
		President and Chief Executive Officer

Exhibit A

CERTIFICATE TO CLARIFY

REFERENCES TO COMMON STOCK

The Board of Directors of Interface, Inc. (the “ Company ”) has approved and adopted this Certificate to Clarify References to Common Stock to be filed and/or published with the Secretary of State of the State of Georgia as a part of the Company’s Restated Articles of Incorporation in order to facilitate the understanding by persons who may have occasion to refer to the Company’s Restated Articles of Incorporation about the Company’s simplifying future references to all of its shares of Common Stock, $0.10 par value per share (“ Common Stock ”), as simply “Common Stock” without the use of the now irrelevant prefixes of “Class A” and “Class B”.

A.	Pre-Existing Terms of Class A and Class B Common Stock

1. The Company’s Restated Articles of Incorporation provide that the total number of authorized shares of Common Stock of the Company include 80,000,000 shares of Class A Common Stock, $0.10 par value per share (“ Class A Common Stock ”), and 40,000,000 shares of Class B Common Stock, $0.10 par value per share (“ Class B Common Stock ”).

2. The Company’s Restated Articles of Incorporation provide that the Class A Common Stock and the Class B Common Stock shall be identical in all respects and the holders thereof shall have equal rights and privileges, except with respect to certain voting rights as described in Article V of the Company’s Restated Articles of Incorporation or as otherwise provided by applicable law, and that shares of Class B Common Stock may be converted at any time by a holder thereof into an equal number of shares of Class A Common Stock.

3. The Company’s Restated Articles of Incorporation further provide that, from and after the first date on which the number of issued and outstanding shares of Class B Common Stock constitutes less than 10% of the aggregate number of issued and outstanding shares of Common Stock (herein called the “ Triggering Event ”), the Class A Common Stock and the Class B Common Stock shall be deemed to be in all respects a single class of Common Stock, and no distinction whatsoever shall exist thereafter between the voting rights or any other rights or privileges of the holders of Class A Common Stock and Class B Common Stock.

B.	Occurrence of Triggering Event; Unification of Common Stock

1. On March 5, 2012, the Triggering Event occurred, as the cumulative result of a series of transactions that resulted in the conversion of some shares of Class B Common Stock into shares of Class A Common Stock such that, on that date, the number of issued and outstanding shares of Class B Common Stock constituted less than 10% of the aggregate number of issued and outstanding shares of Common Stock.

2. As a result of the Triggering Event, without the need for any further action by the Company or any other person, and without the provision for any action to revoke, suspend or otherwise counter the effect of the Triggering Event under Article V of the Company’s Restated Articles of Incorporation, the Class A Common Stock and Class B Common Stock irrevocably became, on March 5, 2012, a single class of Common Stock in all respects, with no distinction whatsoever between the voting rights or any other rights and privileges of the holders of Class A Common Stock and the holders of Class B Common Stock (the “ Unification of the Common Stock ”).

3. Because of the above irrevocable Unification of the Common Stock, any reference to “Class A Common Stock” or “Class B Common Stock” with respect to matters from and after March 5, 2012 would no longer refer to any difference among the subject shares or the rights or privileges of the respective holders thereof, and would be cumbersome and awkward and potentially confusing or misleading.

C.	Elimination of References to “Class A” and “Class B” Common Stock

1. To better reflect the Unification of the Common Stock, and to avoid awkwardness and possible confusion in referring to its Common Stock, the Company is eliminating, to the maximum extent possible, future uses of (or references to) the prefixes “Class A” and “Class B” in connection with the Common Stock, except that the Company may continue some such uses or references for purposes of clarity with respect to historical matters or to facilitate transition by certain stock listing or administrative services organizations whose systems or protocols may be based on the old designations for the Common Stock.

2. Consistent with the foregoing, the Company will coordinate with the NASDAQ Global Select Market, CUSIP Global Services and other relevant third party administrative services organizations to implement the elimination of uses of the prefixes “Class A” and “Class B” in connection with the shares of Common Stock as promptly and completely as practicable.

D.	Status of Existing Stock Certificates

For the removal of any doubt, and without limitation of the foregoing, all certificates that previously represented shares of Class A Common Stock or shares of Class B Common Stock represent, from and after March 5, 2012, simply shares of Common Stock in an equal number to the former shares of Class A Common Stock or Class B Common Stock, as the case may be, and there is no requirement to exchange any such certificate for a new certificate without the prefix “Class A” or “Class B”.

As adopted by resolution of the Board of Directors,

April 25, 2012.

RESTATED ARTICLES OF INCORPORATION

INTERFACE, INC.

(March 17, 2008)

The name of the Corporation is:

INTERFACE, INC.

II.

The Corporation is organized pursuant to the provisions of the Georgia Business Corporation Code.

III.

The Corporation shall have perpetual duration.

IV.

The Corporation is organized for the following purposes:

To manufacture, produce, assemble, fabricate, import, purchase or otherwise acquire, invest in, own, hold, use, maintain, service or repair, sell, rent, lease, pledge, mortgage, exchange, export, distribute, assign and otherwise dispose of, and to trade and deal in and with, at wholesale or retail, goods, wares, merchandise, commodities, articles of commerce and property of every kind and description, including, but not by way of limitation, carpet; and to engage in, conduct and carry on a general manufacturing, importing and exporting, merchandising, leasing, mercantile and trading business in any and all branches thereof.

To do each and every thing necessary, suitable or proper for the accomplishment of any of the purposes or the attainment of any one or more of the objects herein enumerated, or which shall at any time appear conducive to or expedient for the protection or benefit of the Corporation.

IN FURTHERANCE OF AND NOT IN LIMITATION of the general powers conferred by the laws of the State of Georgia and the objects and purposes herein set forth, it is expressly provided that to such extent as a corporation organized under the Georgia Business Corporation Code may now or hereafter lawfully do, the Corporation shall have the power to do, either as principal or agent and either alone or in connection with other corporations, firms or individuals, all and everything necessary, suitable, convenient or proper for, or in connection with, or incident to, the accomplishment of any of the purposes or the attainment of any one or more of the objects herein enumerated, or designed directly or indirectly to promote the interests of the Corporation or to enhance the value of its properties; and in general to do any and all things and exercise any and all powers, rights and privileges which a corporation may now or hereafter be authorized to do or to exercise under the Georgia Business Corporation Code or under any act amendatory thereof, supplemental thereto or substituted therefor.

The foregoing provisions of this Article IV shall be construed both as purposes and powers and each as an independent purpose and power. The foregoing enumeration of specific purposes and powers herein specified shall, except when otherwise provided in this Article IV, be in no wise limited or restricted by reference to, or inference from, the terms of any provision of this or any other Article of these Articles of Incorporation.

A. The total number of shares of capital stock which the Corporation shall have authority to issue is 125,000,000 shares, consisting of 80,000,000 shares of Class A Common Stock of $0.10 par value per share, 40,000,000 shares of Class B Common Stock of $0.10 par value per share (the Class A Common Stock and the Class B Common Stock hereinafter sometimes referred to collectively as the “Common Stock”), and 5,000,000 shares of Preferred Stock of $1.00 par value per share.

B. The Corporation may purchase its own shares of capital stock out of unreserved and unrestricted earned surplus and capital surplus available therefor and as otherwise provided by law.

C. The voting powers, designations, preferences and relative rights of the classes of Common Stock and Preferred Stock of the Corporation which are fixed by these Articles of Incorporation, and the authority expressly vested in the Board of Directors to fix by resolution or resolutions providing for the issue of Preferred Stock the voting power (if any), designations, preferences and relatives rights of the shares of Preferred Stock which are not fixed by these Articles of Incorporation, are as follows:

(1) The Class A Common Stock and the Class B Common Stock shall be identical in all respects and the holders thereof shall have equal rights and privileges, except as otherwise provided in this Article V or required by law.

(2) Subject to the provisions of any applicable law, or of the By-Laws of the Corporation as from time to time amended, with respect to the fixing of a record date for the determination of shareholders entitled to vote and except as otherwise provided by any applicable law or by the resolution or resolutions of the Board of Directors providing for the issue of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall have and possess exclusive voting power and rights for the election of directors and for all other purposes. The holders of outstanding shares of Common Stock shall be entitled to vote as follows:

(a) With respect to the election of directors, holders of Class A Common Stock voting as a separate class shall be entitled to elect the largest number of directors that constitutes a minority of the Board of Directors and holders of Class B Common Stock voting as a separate class shall be entitled to elect the smallest number of directors that constitutes a majority of the Board of Directors.

(b) The holders of Class A Common Stock as a separate class shall be entitled by majority vote to remove, with or without cause, any director elected by the holders of Class A Common Stock and the holders of Class B Common Stock as a separate class shall be entitled by majority vote to remove, with or without cause, any director elected by the holders of Class B Common Stock.

(c) Any director elected by the Board of Directors to fill a vacancy shall serve until the next Annual Meeting of Shareholders and until his or her successor has been elected and qualified. Any vacancy in the office of a director elected by the holders of Class A Common Stock may be filled by majority vote of such holders voting as a separate class and any vacancy in the office of a director elected by the holders of Class B Common Stock may be filled by majority vote of such holders voting as a separate class or, in the absence of a shareholder vote, in either case by majority vote of the remaining directors elected by holders of the same class. Any vacancy created by increasing the number of directors may be filled by majority vote of the holders of Class A Common Stock voting as a separate class or of the holders of Class B Common Stock voting as a separate class or, in the absence of a shareholder vote, in either case by majority vote of the directors of such class, whichever is necessary in order to insure that holders of Class B Common Stock (or directors elected by them) shall have elected the smallest number of directors constituting a majority of Board of Directors, and that holders of Class A Common Stock (or directors elected by them) shall have elected the other members of the Board of Directors.

(d) Except as otherwise provided herein or in the By-Laws of the Corporation or otherwise required by law, the holders of Class A and Class B Common Stock shall vote together as a single class on all matters submitted for vote of the shareholders, with each share being entitled to one vote.

(e) Anything in this paragraph C to the contrary notwithstanding, Class A and Class B Common Stock shall be deemed to be in all respects a single class of Common Stock, and no distinction whatsoever shall exist between the voting rights or any other rights and privileges of the holders of Class A and Class B Common Stock from and after the earlier of the following:

(i) the first date (after the effective date of these Amended and Restated Articles of Incorporation) on which the number of issued and outstanding shares of Class B Common Stock shall constitute less than 10% of the aggregate number of issued and outstanding shares of Class A and Class B Common Stock; or

(ii) June 30, 1983, unless the Corporation has theretofore completed the issuance and sale of shares of Class A Common Stock to underwriters in connection with a public offering thereof registered on a Registration Statement on Form S-1 filed with the Securities and Exchange Commission.

(f) Anything in this subparagraph (2) to the contrary notwithstanding: (i) At any time when no shares of Class B Common Stock are issued and outstanding the holders of Class A Common Stock shall have exclusive voting power on all matters, and (ii) at any time when no shares of Class A Common Stock are outstanding the holders of Class B Common Stock shall have exclusive voting power on all matters.

(3) Each holder of record of Class B Common Stock may at any time or from time to time, in such holder’s sole discretion, elect to convert any whole number of such holder’s Class B Common Stock into fully paid and nonassessable Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock converted. Any such conversion may be effected by the holder surrendering the certificate or certificates evidencing the Class B Common Stock to be converted, duly endorsed, at the office of any transfer agent for the Class B Common Stock, together with a written notice (in form satisfactory to the Corporation) that the holder elects to convert all or a specified number of shares of Class B Common Stock and stating the name or names in which such holder desires the certificate or certificates for such shares of Class A Common Stock to be issued. Promptly thereafter, the Corporation shall issue and deliver to such holder or such holder’s nominee or nominees a certificate or certificates for the number of shares of Class A Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made at the close of business at the date of such surrender and the person or persons in whose names the certificates of Class A Common Stock are to be issued on such conversion shall be treated for all purposes as the holder or holders of such Class A Common Stock at such time. Authorized shares of Class A Common Stock, to the extent that such shares shall be subject to issuance or reissuance upon conversion of shares of issued and outstanding Class B Common Stock as aforesaid, shall be held in reserve by the Corporation, without the necessity of a further declaration by the Board of Directors, to be issued or reissued only upon conversion of shares of issued and outstanding Class B Common Stock. No Class B Common Stock may be issued unless the reserved shares of Class A Common Stock are sufficient to satisfy the conversion privilege that will then exist with respect to such Class B Common Stock when issued.

(4) Any transfer of record of shares of Class B Common Stock other than to a Qualified Transferee (as herein defined) shall be conclusively deemed to constitute an election by the holder of record thereof to convert the said shares of Class B Common Stock into an equal number of shares of Class A Common Stock. As used herein, Qualified Transferee means any one or more of (i) the transferor’s spouse, issue, parents or siblings, or a trust for the benefit of the transferor or any of such persons, (ii) in the event of the transferor’s death or legal disability, the transferor’s executor, administrator or personal representative, (iii) any transferee receiving the shares as a gift, legacy or inheritance, or as a distribution from a corporation or partnership in respect of the transferee’s ownership interest therein, or (iv) any other person approved by the Board of Directors or its designee upon written application submitted to the Secretary of the Corporation at least five business days prior to the date of the transfer. Any shares of Class B Common Stock transferred beneficially but not of record may upon application by any record holder of Class B Common Stock be denied the right to vote and receive payment of dividends until the shares have been transferred of record.

(5) Shares of Class B Common Stock (in addition to those issued in connection with the reclassification of the Corporation’s Common Stock effected on March 2, 1983) may be issued only (i) in connection with an acquisition by the Corporation or any of its subsidiaries of any other firm, corporation or business enterprise, (ii) pursuant to any employee benefit plan now in effect or hereafter adopted, (iii) in exchange for Class A Common Stock held by officers, directors or employees of the Corporation, or (iv) to effect a subdivision of such shares in the form of a stock split, stock dividend or other distribution in respect of such shares; provided, however, that at no time shall the number of shares; provided, however, that at no time shall the number of shares of Class B Common Stock issued and outstanding exceed 6,000,000 (as adjusted to reflect any subdivision, split, stock dividend, recapitalization, reclassification or consolidation of such shares).

(6) Upon any stock dividend or other distribution in the form of Common Stock of the Corporation, only Class A Common Stock may be distributed in respect of Class A Common Stock and only Class B Common Stock may be distributed in respect of Class B Common Stock. Whenever any such distribution is made, the same number of shares shall be distributed in respect of each outstanding share of Class A and Class B Common Stock. The Corporation shall not combine or subdivide shares of either of such classes without at the same time making a proportionate combination or subdivision of shares of the other class.

(7) Except as otherwise provided by applicable law, or by the resolution or resolutions of the Board of Directors providing for the issuance of any series of Preferred Stock, the holders of shares of Preferred Stock shall not, by reason of such holding, (i) have any right to vote in the election of directors or for any other purpose, nor (ii) be entitled to notice of any meeting of shareholders.

(8) Before any sum or sums shall be set aside or applied to the purchase of any outstanding shares of Common Stock, and before any dividend shall be declared or paid or any distribution ordered or made upon the Common Stock (other than a dividend payable in shares of Common Stock), the Corporation shall have complied with the dividend and sinking fund requirements (if any) set forth in any resolution or resolutions of the Board of Directors with respect to the issue of any series of Preferred Stock of which any shares shall at the time be outstanding.

(9) Subject to the provisions of Paragraph C(8) of this Article V, and to such other limitations as may be specified in any resolution or resolutions of the Board of Directors providing for the issue of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall be entitled, to the exclusion of the holders of shares of Preferred Stock of any and all series, to receive such dividends payable with respect to the Common Stock as may be declared by the Board of Directors from time to time.

(10) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment shall have been made to the holders of shares of Preferred Stock of the full amount to which any series of the Preferred Stock is entitled as set forth in the resolution or resolutions of the Board of Directors providing for the issue thereof, the holders of outstanding shares of Common Stock shall be entitled, to the exclusion of the holders of shares of Preferred Stock of any and all series, to share in all remaining assets of the Corporation available for distribution to its shareholders ratably according to the number of shares of Common Stock held by them. Neither the merger nor consolidation of the Corporation with or into any other corporation or corporations, nor the merger or consolidation of any other corporation or corporations into or with the Corporation, nor the sale, transfer, mortgage, pledge or lease by the Corporation of all or any part of its assets shall be deemed to be a liquidation, dissolution or winding up of the Corporation.

(11) The Preferred Stock may be issued from time to time in one or more series of any number of shares, except that the aggregate number of shares issued and not cancelled of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized. Each series of Preferred Stock shall be distinctively designated by number, letter or descriptive words.

(12) Authority is hereby expressly granted to and vested in the Board of Directors to issue the Preferred Stock at any time, or from time to time, as Preferred Stock of any one or more series, and, in connection with the establishment of each such series, to fix by resolution or resolutions providing for the issue of the shares thereof the voting powers, if any, and the designation, preferences and relative rights of each such series of Preferred Stock to the full extent now or hereafter permitted by these Articles of Incorporation and the laws of the State of Georgia, including, without limiting the generality of the foregoing, all of the following matters which may vary between each series:

(a) The distinctive designation of such series and the number of shares which constitute such series, which number may be increased or decreased either before or subsequent to the issuance of any shares of such series (but not below the number of shares of such series then outstanding), from time to time by action of the Board of Directors;

(b) The dividend rate of such series, the dates of payment thereof, and any limitations, restrictions or conditions on the payment of dividends, including whether dividends shall be cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on the shares of each series;

(c) The price or prices at which, and the terms, times and conditions on which, the shares of such series may be redeemed at the option of the Corporation or at the option of the holders of such shares;

(d) The amount or amounts payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment to the holders of shares of each series;

(e) Whether the shares of such series shall be entitled to the benefit of a purchase, retirement or sinking fund to be applied to the redemption or purchase of such series, and if so entitled, the amount of such fund and the manner of its application, including the price or prices at which the shares of such series may be redeemed or purchased through the application of such fund;

(f) Whether the shares of such series shall be made convertible into, or exchangeable for, shares of any other class or classes of stock of the Corporation, or the shares of any other series of Preferred Stock, and, if made so convertible or exchangeable, the conversion price or prices, or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;

(g) Whether the shares of such series shall have any voting rights, and, if voting rights are so granted, the extent of such voting rights and the terms and conditions under which such voting rights may be exercised;

(h) Whether the issue of any additional shares of such series or of any future series in addition to such series shall be subject to restrictions in addition to the restrictions, if any, on the issue of additional shares imposed in the resolution or resolutions fixing the terms of any outstanding series of Preferred Stock theretofore issued pursuant to this subparagraph (12), and, if subject to additional restrictions, the extent of such additional restrictions; and

(i) Whether the shares of such series shall be entitled to the benefit of limitations restricting the purchase of, the payment of dividends on, or the making of other distributions in respect of stock of any class of the Corporation, and the terms of any such restrictions; provided, however, that such restrictions shall not include any prohibition on the payment of dividends or with respect to distributions in the event of voluntary or involuntary liquidation established for any outstanding series of Preferred Stock theretofore issued.

D. The Board of Directors may from time to time distribute to shareholders out of capital surplus of the Corporation a portion of its assets, in cash or in property.

VI.

None of the holders of any capital stock of the Corporation of any kind, class or series now or hereafter authorized shall have preemptive rights with respect to any shares of capital stock of the Corporation of any kind, class or series now or hereafter authorized.

VII.

No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for breach of his duty of care or other duty as a director; provided, that this provision shall eliminate or limit the liability of a director only to the extent permitted from time to time by the Georgia Business Corporation Code or any successor laws or laws.

VIII.

A. Designation of Series B Preferred Stock . There is hereby established a series of Preferred Stock of the Corporation that shall be designated as “Series B Participating Cumulative Preferred Stock” (the “ Series B Preferred Stock ”), and the number of shares constituting such series shall be 1,000,000 The par value of each share of Series B Preferred Stock shall be $1.00. If more than a total of 1,000,000 shares of Series B Preferred Stock shall be issuable upon the exercise of rights (the “ Rights ”) issued pursuant to the Rights Agreement dated March 7, 2008 and effective as of March 17, 2008, between the Corporation and Computershare Trust Company, N.A., as rights agent (as such agreement may be amended from time to time, the “ Rights Agreement ”), the Board of Directors of the Corporation, pursuant to Section 14-2-602 of the Georgia Business Corporation Code, as amended, and in accordance with the provisions of the Articles of Incorporation, shall adopt a resolution or resolutions increasing the previously determined total number of shares of Series B Preferred Stock authorized to be issued (to the extent that the Articles of Incorporation then permit) to the largest number of whole shares (rounded to the nearest whole number) issuable upon exercise of the Rights and directing that a statement of Articles of Amendment with respect to such increase in authorized shares of the Series B Preferred Stock be executed and filed with the Secretary of State of the State of Georgia. The number of shares of the Series B Preferred Stock may be increased or decreased by resolution of the Board of Directors; provided , however , that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares issuable upon exercise of the outstanding Rights.

B. Dividends and Distributions .

(1) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series B Preferred Stock with respect to dividends, if any, the holders of shares of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable on the last day of March, June, September and December of each year (each such date being referred to herein as a “ Quarterly Dividend Payment Date ”), commencing on the first Quarterly Dividend Payment Date after the first issuance of any share or fraction of a share of Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 and (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount (payable in kind) of all cash dividends or other distributions and 100 times the aggregate per share amount of all non-cash dividends or other distributions (other than (i) a dividend payable in shares of Common Stock (as defined below) of the Corporation or (ii) a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise)), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series B Preferred Stock. The multiple of such cash and non-cash dividends and distributions on the Common Stock applicable to the determination of the dividends to be paid on the Series B Preferred Stock, which shall initially be 100, but which shall be adjusted from time to time as provided herein, is referred to herein as the “ Dividend Multiple .” If the Corporation shall at any time after March 17, 2008 (the “ Rights Declaration Date ”), declare or pay any dividend or make any distribution on Common Stock payable in shares of Common Stock or effect a subdivision or split or combination, consolidation or reverse stock split of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the Dividend Multiple thereafter applicable to the determination of the amount which holders of shares of Series B Preferred Stock shall be entitled to receive shall be the Dividend Multiple applicable immediately prior to such event multiplied by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. For purposes hereof, “ Common Stock ” means the Corporation’s Class A Common Stock, par value $0.10 per share, and Class B Common Stock, par value $0.10 per share.

(2) The Corporation shall declare a dividend or distribution on the Series B Preferred Stock as provided in Paragraph B(1) of this Article VIII immediately after it declares a dividend or distribution on the Common Stock (other than (a) a dividend payable in shares of Common Stock of the Corporation or (b) a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise)); provided , however , that if no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date (or, with respect to the first Quarterly Dividend Payment Date, the period between the first issuance of any share or fraction of a share of Series B Preferred Stock and such first Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(3) Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series B Preferred Stock, unless the date of issue of such shares is on or before the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue and be cumulative from the date of issue of such shares, or unless the date of issue is a date after the record date for the determination of holders of shares of Series B Preferred Stock entitled to receive a quarterly dividend and on or before such Quarterly Dividend Payment Date, in which case dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on shares of Series B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall not be more than 60 days prior to the date fixed for the payment thereof.

C. Voting Rights . In addition to any other voting rights required by law, the holders of shares of Series B Preferred Stock shall have the following voting rights:

(1) Subject to the provision for adjustment hereinafter set forth, each share of Series B Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of shareholders of the Corporation. The number of votes which a holder of a share of Series B Preferred Stock is entitled to cast, as the same may be adjusted from time to time, is hereinafter referred to as the “ Vote Multiple .” If the Corporation shall at any time after the Rights Declaration Date declare or pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision or split or combination, consolidation of reverse stock split of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case, the Vote Multiple thereafter applicable to the determination of the number of votes per share to which holders of shares of Series B Preferred Stock shall be entitled after such event shall be the Vote Multiple applicable immediately prior to such event multiplied by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(2) Except as otherwise provided herein or by law, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stock shall vote together as a single class on all matters submitted to a vote of shareholders of the Corporation; provided , however , that, except as set forth in Paragraph C(3) of this Article VIII, the holders of shares of Series B Preferred Stock shall vote with the holders of the Class A Common Stock in the election of directors.

(3) Dividend Defaults on Series B Preferred Stock .

(a) If at any time dividends on any Series B Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon (whether or not consecutive), the occurrence of such contingency shall mark the beginning of a period (herein called a “ default period ”) which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series B Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Series B Preferred Stock and any other series of Preferred Stock then entitled as a class to elect directors, voting together as a single class, irrespective of series, shall have the right to elect one Director.

(b) During any default period, such voting right of the holders of Series B Preferred Stock may be exercised initially at a special meeting called pursuant to Paragraph C(3)(c) of this Article VIII or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders; provided , however , that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of 10% in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of holders of Common Stock shall not affect the exercise by holders of Preferred Stock of such voting right. At any meeting at which holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancy, if any, in the Board of Directors as may then exist up to one Director or, if such right is exercised at an annual meeting, to elect one Director. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series B Preferred Stock.

(c) Notwithstanding anything to the contrary contained in the Corporation’s Articles of Incorporation or Bylaws, unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any shareholder(s) owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this Paragraph C(3)(c) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 10 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request. Such meeting may be called on similar notice by any shareholder(s) owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series. Notwithstanding the provisions of this Paragraph C(3)(c), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of shareholders.

(d) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect one Director voting as a class, after the exercise of which right (i) the Director so elected by the holders of Preferred Stock shall continue in office until his or her successor shall have been elected by such holders or until the expiration of the default period, and (ii) any vacancy in the Board of Directors may (except as provided in Paragraph C(3)(b) of this Article VIII) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this Paragraph C(3) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (ii) of the foregoing sentence.

(e) Immediately upon the expiration of a default period, (i) the right of the holders of Preferred Stock, voting as a separate class, to elect Directors shall cease, (ii) the term of any Director elected by the holders of Preferred Stock, voting as a separate class, shall terminate, and (iii) the number of Directors shall be such number as may be provided for in the Articles of Incorporation or Bylaws irrespective of any increase made pursuant to the provisions of Paragraph C(3)(b) of this Article VIII (such number being subject, however, to change thereafter in any manner provided by law or in the Articles of Incorporation or Bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (ii) and (iii) in the preceding sentence may be filled in any manner provided for in the Articles of Incorporation or Bylaws.

(4) Except as otherwise provided herein, holders of Series B Preferred Stock shall have no special voting rights, and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

D. Certain Restrictions .

(1) Whenever quarterly dividends or other dividends or distributions payable on the Series B Preferred Stock as provided in Paragraph B of this Article VIII are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on outstanding shares of Series B Preferred Stock shall have been paid in full, the Corporation shall not:

(a) declare or pay dividends on, or make any other distributions on, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock;

(b) declare or pay dividends on, or make any other distributions on, any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all such other parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(c) redeem, purchase or otherwise acquire for value any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock; provided , however , that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of stock of the Corporation ranking junior (as to dividends and upon dissolution, liquidation or winding up) to the Series B Preferred Stock; or

(d) redeem, purchase or otherwise acquire for value any shares of Series B Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of Series B Preferred Stock and all such other parity stock upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(2) The Corporation shall not permit any Subsidiary (as defined below) of the Corporation to purchase or otherwise acquire for value any shares of stock of the Corporation unless the Corporation could, under Paragraph D(1) of this Article VIII, purchase or otherwise acquire such shares at such time and in such manner.

(3) A “ Subsidiary ” of Corporation shall mean any corporation or other entity of which securities or other ownership interests entitled to cast as least a majority of the votes that would be entitled to be cast in an election of the Board of Directors of such corporation or other entity or other persons performing similar functions are beneficially owned, directly or indirectly, by the Corporation or by any corporation or other entity that is otherwise controlled by the Corporation.

(4) The Corporation shall not issue any shares of Series B Preferred Stock except upon exercise of Rights issued pursuant to the Rights Agreement.

E. Reacquired Shares . Any shares of Series B Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock without designation as to series and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors as permitted by the Articles of Incorporation or as otherwise permitted under Georgia law.

F. Liquidation, Dissolution or Winding Up .

(1) Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made:

(a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received $1.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment; provided , however , that the holders of shares of Series B Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock, or

(b) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except distributions made ratably on the Series B Preferred Stock and all such other parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. The amount to which holders of Series B Preferred Stock may be entitled upon liquidation, dissolution or winding up of the Corporation pursuant to the proviso to Paragraph F(1) of this Article VIII above is hereinafter referred to as the “ Participating Liquidation Amount ,” and the multiple of the amount to be distributed to holders of Common Stock upon the liquidation, dissolution or winding up of the Corporation applicable pursuant to said proviso, as such multiple may be adjusted from time to time as hereinafter provided, is hereinafter referred to as the “ Liquidation Multiple .” If the Corporation shall at any time after the Rights Declaration Date pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision or split or combination, consolidation or reverse stock split of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the Liquidation Multiple thereafter applicable to the determination of the amount to which holders of shares of Series B Preferred Stock shall be entitled to receive after such event shall be the Liquidation Multiple immediately prior to such event multiplied by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(2) For purposes of this Paragraph F, none of the following events shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation: (a) the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation; (b) the combination, consolidation or merger of the Corporation with or into one or more other corporations or other associations; (c) the consolidation or merger of one or more corporations or other associations with or into the Corporation; or (d) participation by the Corporation in a share exchange.

G. Certain Reclassification And Other Events .

(1) If, after the Rights Declaration Date, holders of shares of Common Stock receive in respect of their shares of Common Stock any share of capital stock of the Corporation (other than any share of Common Stock of the Corporation), whether by way of reclassification, recapitalization, reorganization, dividend or other distribution or otherwise (a “ Transaction ”), then, and in each such event, the dividend rights, voting rights and rights upon the liquidation, dissolution or winding up of the Corporation of the shares of Series B Preferred Stock shall be adjusted so that after such event the holders of Series B Preferred Stock shall be entitled, in respect of each share of Series B Preferred Stock held, in addition to such rights in respect thereof to which such holder was entitled immediately prior to such adjustment, to

(a) such additional dividends as equal the Dividend Multiple in effect immediately prior to such Transaction multiplied by the additional dividends which the holder of a share of Common Stock shall be entitled to receive by virtue of the receipt in the Transaction of such capital stock,

(b) such additional voting rights as equal the Vote Multiple in effect immediately prior to such Transaction multiplied by the additional voting rights to which the holder of a share of Common Stock shall be entitled by virtue of the receipt in the Transaction of such capital stock, and

(c) such additional distributions upon liquidation, dissolution or winding up of the Corporation as equal the Liquidation Multiple in effect immediately prior to such Transaction multiplied by the additional amount which the holder of a share of Common Stock shall be entitled to receive upon liquidation, dissolution or winding up of the Corporation by virtue of the receipt in the Transaction of such capital stock, as the case may be, all as provided by the terms of such capital stock.

(2) If, after the Rights Declaration Date, holders of shares of Common Stock receive in respect of their shares of Common Stock any right or warrant to purchase Common Stock (including as such a right, for all purposes of this Paragraph G(2), any security convertible into or exchangeable for Common Stock) at a purchase price per share less than the Fair Market Value (as defined below) of a share of Common Stock on the date of issuance of such right or warrant, then, and in each such event, the dividend rights, voting rights and rights upon the liquidation dissolution or winding up of the Corporation of the shares of Series B Preferred Stock shall each be adjusted so that after such event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple shall each be the product of the Dividend Multiple, the Vote Multiple and the Liquidation Multiple, as the case may be, in effect immediately prior to such event multiplied by a fraction the numerator of which shall be the number of shares of Common Stock outstanding immediately before such issuance of rights or warrants plus the maximum number of shares of Common Stock which could be acquired upon exercise in full of all such rights or warrants and the denominator of which shall be the number of shares of Common Stock outstanding immediately before such issuance of rights or warrants plus the number of shares of Common Stock which could be purchased, at the Fair Market Value of the Common Stock at the time of such issuance, by the maximum aggregate consideration payable upon exercise in full of all such rights or warrants.

(3) If, after the Rights Declaration Date, holders of shares of Common Stock receive in respect of their shares of Common Stock any right or warrant to purchase capital stock (other than shares of Common Stock), including as such a right, for all purposes of this Paragraph G(3), any security convertible into or exchangeable for capital stock of the Company (other than Common Stock), at a purchase price per share less than the Fair Market Value of a share of such capital stock on the date of issuance of such rights or warrant, then, and in each such event, the dividend rights, voting rights and rights upon the liquidation, dissolution or winding up of the Corporation of the shares of Series B Preferred Stock shall each be adjusted so that after such event holders of Series B Preferred Stock shall be entitled, in respect of each share of Series B Preferred Stock held, in addition to such rights in respect thereof to which such holder was entitled immediately prior to such event, to receive (a) such additional dividends as equal the Dividend Multiple in effect immediately prior to such event multiplied, first, by the additional dividends to which the holder of a share of Common Stock shall be entitled upon exercise of such right or warrant by virtue of the capital stock which could be acquired upon such exercise, and multiplied again by the Discount Fraction (as defined below), (b) such additional voting rights as equal the Vote Multiple in effect immediately prior to such event multiplied, first, by the additional voting rights to which the holder of a share of Common Stock shall be entitled upon exercise of such right or warrant by virtue of the capital stock which could be acquired upon such exercise, and multiplied again by the Discount Fraction, and (c) such additional distributions upon liquidation, dissolution or winding up of the Corporation as equal the Liquidation Multiple in effect immediately prior to such event multiplied, first, by the additional amount which the holder of a share of Common Stock shall be entitled to receive upon liquidation, dissolution or winding up of the Corporation upon exercise of such right or warrant by virtue of the capital stock which could be acquired upon such exercise, and multiplied again by the Discount Fraction. For purposes of this Paragraph G(3), the “ Discount Fraction ” shall be a fraction the numerator of which shall be the difference between (x) the Fair Market Value of a share of the capital stock subject to a right or warrant distributed to holders of shares of Common Stock of the Corporation as contemplated by this Paragraph G(3) immediately after the distribution thereof and (y) the purchase price per share for such share of capital stock pursuant to such right or warrant, and the denominator of which shall be the Fair Market Value of a share of such capital stock immediately after the distribution of such right or warrant.

(4) For purposes of this Paragraph G, the “ Fair Market Value ” of a share of capital stock of the Corporation (including a share of Common Stock) on any date shall be deemed to be the average of the daily closing price per share thereof over the 30 consecutive Trading Days (as defined below) immediately prior to such date; provided , however , that in the event that such Fair Market Value of any such share of capital stock is determined during a period which includes any date that is within 30 Trading Days after (a) the ex-dividend date for a dividend or distribution on stock payable in shares of such stock or securities convertible into shares of such stock, or (b) the effective date of any subdivision, split, combination, consolidation, reverse stock split or reclassification of such stock, then, and in each such case, the Fair Market Value shall be appropriately adjusted by the Board of Directors of the Corporation to take into account ex-dividend or post-effective date trading. The closing price for any day shall be the last sale price, regular way, or in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way (in either case, as reported in the applicable transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange, or, if the shares are not listed or admitted to trading on the New York Stock Exchange, as reported in the applicable transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares are listed or admitted to trading or, if the shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by such system then in use, or if on any such date the shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the shares selected by the Board of Directors of the Corporation). The term “ Trading Day ” shall mean a day on which the principal national securities exchange on which the shares are listed or admitted to trading is open for the transaction of business or, if the shares are not listed or admitted to trading on any national securities exchange, on which the New York Stock Exchange or such other national securities exchange as may be selected by the Board of Directors of the Corporation is open. If the shares are not publicly held or not so listed or traded on any day within the period of 30 Trading Days applicable to the determination of Fair Market Value, “ Fair Market Value ” shall mean the fair market value thereof per share as determined in good faith by the Board of Directors of the Corporation. In either case referred to in the foregoing sentence, the determination of Fair Market Value shall be described in a statement filed with the Secretary of the Corporation.

H. Consolidation or Merger . If the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash or any other property, then in any such case the shares of Series B Preferred Stock shall at the same time be similarly exchanged for or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash or any other property, as the case may be, into which or for which each share of Common Stock is exchanged or changed. If the Corporation shall at any time after the Rights Declaration Date pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision or split or combination, consolidation or reverse stock split of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series B Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

I. Effective Time of Adjustments .

(1) Adjustments to the Series B Preferred Stock required by the provisions hereof shall be effective as of the time at which the event requiring such adjustments occur.

(2) The Corporation shall give prompt written notice to each holder of a share of outstanding Series B Preferred Stock of the effect of any adjustment to the voting rights, dividend rights or rights upon liquidation, dissolution or winding up of the Corporation of such shares required by the provisions hereof. Notwithstanding the foregoing sentence, the failure of the Corporation to give such notice shall not affect the validity of or the force or effect of or the requirement for such adjustment.

J. No Redemption . The Series B Preferred Stock shall not be redeemable.

K. Rank . The Series B Preferred Stock shall rank junior (as to dividends and upon liquidation, dissolution and winding up) to all other series of the Corporation’s preferred stock, except any series that specifically provides that such series shall rank junior to the Series B Preferred Stock.

L. Fractional Shares . Series B Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series B Preferred Stock.

M. Amendment . The Articles of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series B Preferred Stock, voting separately as a class, or if no shares of Series B Preferred Stock are then outstanding, without the approval of a majority of the Continuing Directors, as such term is defined in the Rights Agreement.

Exhibit 31.1

CERTIFICATION

I, Daniel T. Hendrix, certify that:

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

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

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

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: May 10, 2012

		/s/ Daniel T. Hendrix
		Daniel T. Hendrix
		Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Patrick C. Lynch, certify that:

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

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

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

(a)

(b)

(c)

(d)

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)

(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: May 10, 2012

		/s/ Patrick C. Lynch
		Patrick C. Lynch
		Chief Financial Officer

Exhibit 32.1

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

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

(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended April 1, 2012 (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: May 10, 2012

		/s/ Daniel T. Hendrix
		Daniel T. Hendrix
		Chief Executive Officer

Exhibit 32.2

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

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

(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended April 1, 2012 (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: May 10, 2012

		/s/ Patrick C. Lynch
		Patrick C. Lynch
		Chief Financial Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company