ABSTRACT
Interface is the world’s largest producer of carpets for the commercial sector. Tables 13-1 to 13-3 present recent fi nancial data: profi t and loss, balance sheet, and cash fl ow statements, while Figures 13-1 to 13-2 present key historical data: stock price, sales, and net income. The critical individual in Interface was the late Ray Anderson who founded the company in 1973. Anderson has written several books and articles (Anderson, 1999, 2007; Anderson and White 2009) explaining his radical conversion to the cause of sustainability when he realized that he and his company were a “plunderer of the earth.” They “were part of the endemic process that is going on at a frightening, accelerating rate worldwide to rob our children and all their descendents of their futures.” Anderson described this revelation as tantamount to a “spear through the heart,” and he undertook to convert his company into the world’s most sustainable enterprise. Figure 13-3 depicts Anderson’s view of the typical company of the 20th century. Figure 13-4 shows his view of how modern corporations must be redesigned to achieve sustainability, and Figure 13-5 is the fi nal idealized output of this radical redesign. Anderson has identifi ed seven fronts on which serious change must be achieved for sustainability: Link #1-zero waste; Link #2-benign emissions; Link #3-renewable energy; Link #4-closed loop recycling; Link #5-resource effi cient transportation; Link #6-a “sensitivity hookup,” which includes service to the community and closer relations with employees, suppliers, and customers; and Link #7-a redesign of commerce itself that entails “the acceptance of entirely new notions of economics, especially prices that refl ect full costs. To us, it means shifting emphasis from simply selling products to providing services; thus, our commitment to downstream distribution, installation, maintenance and recycling. These are all aimed at forming cradle-to-cradle relationships with customers and suppliers, relationships based on delivering, via the Evergreen Service Agreement™, the services our products provide, in lieu of the products themselves” (2007, pp. 104-105). In sum, Anderson’s conceptualization of the prototypical company of the 21st century is one that is “strongly service-oriented, resource-effi cient, wasting nothing, solardriven, cyclical (no longer take-make-waste linear), and strongly connected to our
Fiscal Year 2010 2009 2008
(In thousands, except per share data)
Net sales $ 961,827 $ 859,888 $ 10,82,344
Cost of sales 625,066 576,871 710,299
Gross profi t on sales 336,761 283,017 372,045
Selling, general and administrative expenses 240,901 218,322 258,198
Impairment of goodwill — — 61,213
Restructuring charges 3,131 7,627 10,975
Income from litigation settlements — (5,926) —
Operating income 92,729 62,994 41,659
Interest expense 33,129 34,297 31,480
Bond retirement expenses 44,379 6,096 —
Other expense 657 576 1,652
Income from continuing operations before tax expense
14,564 22,025 8,527
Income tax expense 4,494 9,352 43,040
Income (loss) from continuing operations 10,070 12,673 (34,513)
Loss from discontinued operations, net of tax (736) (909) (5,154)
Net income (loss) 9,334 11,764 (39,667)
Net income attributable to noncontrolling interest in subsidiary (1,051) (846) (1,206)
Net income (loss) attributable to Interface, Inc. $ 8,283 $ 10,918 $ (40,873)
Income (loss) per share attributable to Interface, Inc. common shareholders — basic
Continuing operations $ 0.14 $ 0.19 $ (0.58)
Discontinued operations (0.01) (0.01) (0.08)
Net income (loss) per share attributable to Interface, Inc. common shareholders — basic $ 0.13 $ 0.17 $ (0.67)
Income (loss) per share attributable to Interface, Inc. common shareholders — diluted
Continuing operations $ 0.14 $ 0.19 $ (0.58)
Discontinued operations (0.01) (0.01) (0.08)
TA B L E 1 3 . 1
2010 2009 (In thousands)
ASSETS
Current
Cash and cash equivalents $69,236 $115,363
Accounts receivable, net 151,463 129,833
Inventories 136,766 112,249
Prepaid expenses and other current assets 24,362 19,649
Deferred income taxes 10,062 9,379
Assets of businesses held for sale 1,200 1,500
Total current assets 393,089 387,973
Property and equipment, net 177,792 162,269
Deferred tax asset 53,022 44,210
Goodwill 75,239 80,519
Other assets 56,291 52,268
$755,4333 $727,239
TA B L E 1 3 . 2
Net income (loss) per share attributable to Interface, Inc. common shareholders — diluted $ 0.13 $ 0.17 $ (0.67)
Basic weighted average shares outstanding 63,794 63,213 61,439
Diluted weighted average shares outstanding 64,262 63,308 61,439
TA B L E 1 3 . 1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 55,859 $ 35,614
Accrued expenses 112,657 101,143
Current portion of long-term debt — 14,586
Total current liabilities 168,516 151,343
Senior notes 282,951 145,184
Senior subordinated notes 11,477 135,000
Deferred income taxes 7,563 7,029
Other 36,054 42,502
Total liabilities 506,561 481,058
Commitments and contingencies
Shareholders’ equity
Preferred stock — —
Common stock 6,445 6,328
Additional paid-in capital 349,662 343,348
Retained defi cit (49,770) (55,332)
Accumulated other comprehensive loss — foreign currency translation (26,269) (24,057)
Accumulated other comprehensive loss — pension liability (31,196) (33,186)
Total shareholders’ equity — Interface, Inc 248,872 237,101
Noncontrolling interest in subsidiary — 9,080
Total shareholders’ equity 248,872 246,181
$ 755,4333 $ 727,239
TA B L E 1 3 . 2
constituencies-our communities (building social equity), our customers, and our suppliers-and to one other (p. 105).”
