Good day, ladies and gentlemen. And welcome to the Third Quarter 2010 Interface Earnings Conference Call. My name is Lacy, and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will facilitate a question-and-answer session. (Operator instructions) As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Ms. Jessica Greenberger of FD. Please proceed.

Thank you, Operator. Good afternoon and welcome to Interface's conference call regarding third quarter 2010 results. Joining us from the company are Dan Hendrix, President and Chief Executive Officer; and Patrick Lynch, Senior Vice President and Chief Financial Officer. Dan will review highlights from the quarter as well as Interface's business outlook. Patrick will then review the company's key performance metrics and financial results. We will then open the call for Q&A. If you have not yet received a copy of the results release which was issued after the close of market today, please call Financial Dynamics at 212-850-5600. Or you can get a copy off the Investor Relations section of Interface's website. An archive version of this conference call will also be available through that website. Before we begin the formal remarks please note that during today's conference call management's comments regarding Interface's business which are not historical information are forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from any such statements, including risks and uncertainties associated with the economic conditions in the commercial interiors industry, as well as risks and uncertainties discussed under the heading Risk Factors in Item 1A of the company's annual report on Form 10-K for the fiscal year ended January 3, 2010, which has been filed with the Securities and Exchange Commission. We direct all listeners to that document. Any such forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. The company assumes no responsibility to update or revise forward-looking statements made during this call and cautions listeners not to place undue reliance on any such forward-looking statements. Management's remarks during this call may refer to certain non-GAAP measures. A reconciliation of these non-GAAP measures to the most comparable GAAP measures are contained in the company's results release and Form 8-K filed with the SEC today, each of which can be found on the Investor Relations portion of the company's website, www.interfaceglobal.com. Lastly, please note that this call is being recorded and broadcasted for Interface. It contains copyrighted material. It may not be rerecorded or rebroadcast without Interface's express permission. Your participation on the call confirms your consent to the company's taping and broadcasting of it. With these formalities out of the way, I'd like to turn the call over to Dan Hendrix. Dan. Please go ahead, sir.

Thank you, and good afternoon to everyone. We're very pleased with our third quarter results. We turned in another strong performance as momentum continues in our business as we once again saw significant year-over-year increases in overall sales, margins and earnings. We continue to benefit from the ongoing secular shift toward carpet tile and growing our market share. Our sales increase in the third quarter was largely due to two factors. First from the continuing release of pent-up demand from the corporate office market globally, with a focus on office refurbishment and second, from the emerging markets, particularly in India and China. The investments we made in our end market diversification strategy also continued positively impact our sales as non-office segments such as hospitality, education and government grew nicely compared with last year. This revenue growth drove gross margin expansion both year-over-year and sequentially. The combination of increased sales, enhanced manufacturing efficiencies and cost reduction initiatives led to a 48% increase in operating income on a 16% increase in revenues year-over-year. Looking regionally, our Asia-Pacific division once again delivered excellent results and Australia, which is now our second largest market continues to be a key driver in the region. The sales environment in emerging markets was increasingly robust, particularly in India, China and Brazil, with demand for our products coming from the investments being made by both local and multinational companies. I'm really pleased with our progress in China. Over the past several years, we've invested in building our sales presence there with carpet source from our plant in Thailand. After establishing a, excuse me, sufficient sales presence, we made a decision to development our infrastructure with a new plant, which is scheduled to be fully operational in about a month. With a new plant we'll serve the Greater China…

Thank you, and good afternoon, everyone. I'll now take a few minutes to talk through the financial highlights from the third quarter. Sales for the third quarter of 2010 were $252.7 million, compared with sales of $218.4 million in the third quarter of 2009, an increase of 15.7%. Currency was essentially neutral year-over-year, as the weakness in the euro was offset by the strengthening of other currencies such as the Australian dollar and the Canadian dollar. As Dan mentioned, our sales performance was driven by the improved demand in the corporate office sector globally, as well as hospitality, education and government sectors and growing demand in the emerging markets. Gross profit margin was 35.4%, compared with 33.2% in the third quarter of 2009, reflecting the benefits of our restructuring initiatives and increased absorption of fixed manufacturing costs due to higher sales volumes. SG&A expense in the third quarter of 2010 increased to $61.4 million from $53.5 million last year, but declined slightly as a percentage of sales to 24.3%, compared with 24.5% a year ago, reflecting our ability to leverage our ongoing investments in our end market diversification strategy over increased sales. Our operating income performance also continued to demonstrate the leverage in our business model. On a 15.7% increase in sales, operating income in the third quarter of 2010 improved by 48.2% to $28 million, compared with operating income of $18.9 million in the third quarter of 2009, as a percentage of sales, 2010 third quarter operating income was 11.1%, compared with 8.7% in third quarter 2009. Interest expense in the third quarter of 2010 was $8.4 million, compared with $9.5 million in the third quarter of 2009, as anticipated during the third quarter we continue to realize interest expense savings of $4 million annually as a result of…

Thank you. (Operator Instructions) And our first question will come from the line of Sam Darkatsh with Raymond James. Please proceed. Josh – Raymond James: This is actually [Josh] filling into for Sam. Congratulations on a great quarter.

Thank you. Josh – Raymond James: Just want to drill down a little bit more on the growth that you had in the quarter. You grew well ahead of the industry. Could you maybe breakdown or give us a sense of how much of that was due to carpet tile gains versus broadloom, versus what would be sort of true share gains on your part?

Well, that's very difficult to say, actually figure out how much is carpet tile versus broadloom and the share carpet tile is taking, because as you know, the carpet tile doesn't report that and information coming out of Asia-Pacific is really -- is not that granular that to report on that. But I’ll tell you that that from an industry standpoint, the commercial market in the U.S. was up mid single digits and our U.S. business was up, as you heard, 30%. So, obviously, we're taking share in that marketplace. How much of sector that we're driving that, particularly in non-office segments there, Asia-Pacific secular shift toward carpet tile is real and we'll leading that as well, but to quantify it would be very difficult. Josh – Raymond James: Okay. And just to get a little bit of a better sense of how sales went during the quarter, I notice that you're receivables didn't grow quite as fast as sales, it looks like book-to-bill was pretty good. Was demand a little bit choppy or did you make an improvement in collection or could you give a little more color on that?

I would say that the quarter was pretty consistent. We billed a lot in the last five weeks, but if you look at the trends, they were pretty consistent, 16% growth in sales and 20% growth in orders throughout the whole quarter. Josh – Raymond James: Okay. That's very helpful. Congratulations again. Thank you.

Thank you.

And our next question will come from the line of David MacGregor with Longbow Research. Please proceed. David MacGregor – Longbow Research: Hi, Dan. Hi, Patrick. Nice quarter.

Hi, David.

Hi, David. David MacGregor – Longbow Research: Could you, maybe just talk a little bit Dan about the mix and if you would think, I’ll let you define the bucket, but sort of a good, better, best collection of buckets, just how the mix played out? And also if you can talk a little bit about how that might be impacting your contribution margin?

If you look at the buckets, we try and make each bucket very similar contribution margins. That's how we run our business. If you look at where the buckets are coming from, the corporate office market globally has clearly got some pent-up demand that's starting to come through. So from an actual absolute amount of dollars, the biggest gains were coming out of corporate office, percentage gains is coming out of India and China in our emerging markets, which would be the second biggest bucket. And the third bucket obviously is the non-office segment, which is starting -- it's growing at double-digit, but it’s not quite as strong as 20% in orders. David MacGregor – Longbow Research: Okay. Thank you. The other question I had for you, just was with respect to Bravo, if you could just give us an update on how that is going?

Going well. We had our first stocking order and we had restocking in two of the 13 regions. We're very optimistic about what's happening within the Bravo Network and I think we're going to have a lot of success in main street through that. David MacGregor – Longbow Research: Okay. Last question was just on China and as you prepare to ramp that plant, wonder if you could just talk about what's the greatest risk in your Chinese business plan as of today and if you could just give us a sense of what some of the competitive issues you're going to have to deal with there might be, that would be helpful?

First of all, I don't want to give out a lot of competitive data. David MacGregor – Longbow Research: Yeah. Just more qualitative assessment of…

I would say that there's not a lot of lot of risk to China becoming a major carpet tile market. I think in China, they have adopted carpet tile as the floor covering, particularly in the office market. We need to see a refurbishment market in China, not just a new construction market. So I it would say if you talk about short-term risk, it's that new construction that you see that being a little choppy. But there is going to be a refurbish market that comes behind that. We have to be different in China. There's a lot of Chinese manufacturers that are local today and we have to lead with design, we have to lead with custom capabilities and a make to order model, which is what we run our whole business globally by. You know, we’ve a great brand in China and we just have to execute to the market is going and I think it’s going to be there. David MacGregor – Longbow Research: Are you going to have many competitors that have that kind of low velocity made to order manufacturing model?

No, most of that is not a made to order model that has custom capabilities. Most of it is the real low end when you talk about the local Chinese manufacturers. We do have two people that have plants in China locked in, which they do, somewhat have a make-to-order model from a print standpoint and you got Candice that there as well. David MacGregor – Longbow Research: Okay. Thanks a lot, guys and again great quarter.

Thank you.

And our next question will come from the line of Keith Hughes with SunTrust. Please proceed. Keith Hughes – SunTrust: Yeah. Could you give us, sort of, a little bit more detail on how orders broke down by geography in the quarter?

I’m going to give all that data. I would say that the European from the local currency standpoint, it was 20% in Europe, 22%. If you lock at the U.S. business, it was approaching between 15% and 20% and then Asia was 24%. Keith Hughes – SunTrust: Pretty uniform across and I think from your previous question, you were saying among the end user markets, corporate office was the strongest. Is that the case both in U.S. and …

Not a percentage basis, emerging markets was the strongest but has a lower base that you're comparing to it. So from an absolute dollar standpoint, the corporate office was the biggest contributor. Keith Hughes – SunTrust: Corporate office, okay. And as you, kind of, ramp up in here in Asia, can you just give us a reminder of how much business you are doing in Asia right now as a percentage of a whole tile pie?

Asia Pacific will be about 15% of the pie and that doesn't include India. If you’re Indian, you know you are probably talking closer to 17, 18. Keith Hughes – SunTrust: Okay. And final question, was currency a hit in the quarter, Patrick?

It was neutral, Keith. We had some drag from the euro but benefited from the Australian dollar and a little bit from the Canadian dollar, so overall neutral. Keith Hughes – SunTrust: And are you seeing any kind of potential raw material inflation in the near-term?

No. Keith Hughes – SunTrust: All right. Thank you.

Seems rather stable.

And our next question will come from the line of Matt McCall with BB&T Capital Markets. Please proceed. Matt McCall – BB&T Capital Markets: Thanks. Good afternoon, guys.

Hello, Matt.

Hello, Matt Matt McCall – BB&T Capital Markets: I want to follow up on that, so no price or cost concerns, I think, the last quarter or so, you talked about some supply chain issues, Dan and I had a note in my model that there were some expectations that did remain in this 35.5% range on the gross margin front because of that, was that the reason you didn't see much gross margin expansion sequentially?

I would say that -- no, I don't think that the supply has to do with the cost side of it. I think fixing in the supply part of the yarn, ramping up and getting supply of yarn. It's still somewhat inhibitive, but it's getting better. We've got cost associated with China that are in the numbers that the plant has not started up yet, but we have got a hundred people in China, who are absorbing the start-up cost, that's part of it. But, no, I would say we haven't seen any raw material price increases. We raised prices when we saw that. And it's a little bit of supply chain issue with one of our suppliers, but it's getting a lot better. Matt McCall – BB&T Capital Markets: Did you say you did…

35.5 to 36 is where you're going to see it, unless we continue to see topline growth double digit and then it will go up. Matt McCall – BB&T Capital Markets: Okay. And did you say you did raise prices or you would raise prices?

No. We would raise prices if we had a raw material pricing good. Matt McCall – BB&T Capital Markets: Got it, got it. Okay. And you mentioned the costs in China, have you quantified what that pressure was in the corner?

About $700,000 in that Q3. Matt McCall – BB&T Capital Markets: Q3? And then what was that, do you remember Patrick, what that was in Q2?

About 500 to 600,000. Matt McCall – BB&T Capital Markets: Okay.

Stepped up a little bit. Matt McCall – BB&T Capital Markets: Okay. And then on the residential side, any update on the profitability there, Dan?

We're still investing in it. We're going to continue to do that. I'll tell you, I'm very encouraged by that business. We're going to start investing in some TV advertising and so forth locally, which is not that expensive. The floor -- the three-prong approach of the web, the catalog and the floor store, I think is very exciting for us, to really drive this. The floor consumer business and stay tuned. We're going to have some success there. Matt McCall – BB&T Capital Markets: Okay. And then finally, the Germany comment you made and I think my memory is failing me here, you were talking about some success with secular shift there. I thought I remember Germany being more of a mature market from a tile perspective. Am I …

The association in jury Germany is like 7% tile in the commercial market in it's large of the European commercial market and we're going to drive the modular shift there as well. Matt McCall – BB&T Capital Markets: Okay. So may be, it's the lack of penetration.

It's a huge opportunity for us to really drive the business in Europe and have growth. Matt McCall – BB&T Capital Markets: Okay. Okay. Thank you all.

Thank you.

And our next question will come from the line of John Baugh with Stifel Nicolaus. Please proceed. John Baugh – Stifel Nicolaus: Good afternoon. Just a couple of quick ones. When you get this Chinese plan up and running, how much volume are you going to be able to drop in there? What will that be relative to your capacity and then what do you think the best guess is when you break even there?

I think, we'll break even by the end of the second quarter of running this plant, because we've already got the business there. We're going to take to it out of Thailand and put it into China. And we'll be running about 25% of the capacity. Actually 20% of that capacity when we start up. So we have a lot of head room to grow to capacity there. John Baugh – Stifel Nicolaus: So you can break even running at a quarter of the capacity?

Breakeven running the shift, yeah. John Baugh – Stifel Nicolaus: Okay. And then I guess I'm trying to understand better the U.S. office. I know it's coming out of the doldrums. I assume it's almost all remodeling because there's just nothing being built that I know of, or will be for the next few years. You've given us some color, I think you mentioned financial firms and high-tech firms. Just curious in a general sense what you're seeing. Is this all share gain tile versus broadloom, or are you seeing absolute growth in the remodel market or are you just aligned with the right customers? any color there? Thank you.

Well, I think we're aligned with the right customers obviously. Do you think that there is some pent-up demand in the corporate office market that's been there for a while. We talk about recovery typically being seven years and we got interrupted by the financial crisis. A lot of people didn't get to it and you only saw it was two and a half year to gather yourself. So there's a lot of pent-up demand that's starting to come through. And our broadloom business is improving as well. The commercial market was up about almost 8%. So I don't think it's all tile gains, but I think that's part of it. And we're in line with the right offering and the right customers and we're benefiting from that as well. John Baugh – Stifel Nicolaus: And last, I guess the education season is more or less in the books. How did that pan out for you, Dan?

Education business was up globally and into the U.S. and it -- we had a tail-end of it, which he thought might happen in September was sort of a late rush, as people got funding for projects before the schools opened. And now we have an opportunity in obviously December when they -- when they shut down for the holidays, to get some business there, as well. But I'm pretty pleased with education and I think the secular shift in education to tile is real and we're going to benefit from that, also. John Baugh – Stifel Nicolaus: Patrick, any interest expense guidance for ‘11?

No, it should stay right about here, 8.4. John Baugh – Stifel Nicolaus: Okay. Great. Thanks. Good luck.

Thank you.

Thanks.

And our next question will come from the line of Glenn Wortman with Sidoti and Company. Please proceed. Glenn Wortman – Sidoti and Company: Good day. Good evening, everyone. Just kind of talking about this pent-up demand fashion that’s really helping orders and sales. As you work through some of that pent-up demand, I mean, how should we think about to topline growth, for example, in corporate office heading to 2011, do you expect that to decelerate?

I would expect if history plays out and this is not historical times, it is historical times in predicting what mystery says. I'm not quite sure but I know there's a lot of pent-up demand, usually when you see the pent-up demand coming through that last five, six, seven years like I mentioned. I think we're on the very early stages of that Pent-up demand coming through. Your question is that a bubble or not? I know that if it is a bubble then a lot of office won't like to be developed again. And corporations had a lot of cash on their balance sheet and as you see every week, earnings from corporations are pretty good. So I think they're starting to spend money on their offices and we're benefiting from that. That's happening around the world, not just in the United States. But I expect the pent-up demand will last more than, you know, six months. I suspect it will be longer than that. Glenn Wortman – Sidoti and Company: Okay. Just on SG&A front, how should we think about SG&A costs over the next several quarters?

We're going to invest in the growth. We had orders of 20%. I mentioned 61 million was a target. We might move to 62, 63, but we're going to invest as long as we see growth opportunities around the world. I'm going to invest in the consumer business. We're going to invest in emerging markets, but you can expect to it be driven down from hopefully the 24%. We'll get into the 23s, but it won't go much lower than that. Glenn Wortman – Sidoti and Company: Okay. And then finally on residential, do you have an estimate where you think sales will shake out in 2010 and maybe some goals for 2011?

Well, my goals as I mentioned more than once is to have a $100 million business in five years and that's still my goal. We haven't had a breakout sales yet through this business. We just now started to invest in it. We cut the budget in 2009 to get profitable in half. We're going to be up maybe 10% of that business this year, but that's not a breakout sales rate. I expect in 2011, we'll have a breakout sales. Glenn Wortman – Sidoti and Company: Okay. All right. Thank you very much.

Thank you.

And our next question will come from the line of Carl Reichardt with Wells Fargo Securities. Please proceed. Carl Reichardt – Wells Fargo Securities: Hi, guys. I'm sorry guys if I missed this before. Do you have -- in Bentley Prince Street, do you have the mix between carpet tile and broadloom for me?

40% carpet tile and 60% is broadloom. Carl Reichardt – Wells Fargo Securities: Okay. Thank you. And then, Dan, can you talk in term of Chinese usage now of carpet tile, What's your guess as to the percentage of internally consumed product that is manufactured there versus imported?

I do not have. That would be -- that's a datapoint, I don’t have. I would say that if you're talking about class one space. Carl Reichardt – Wells Fargo Securities: Yeah.

There's been a new launch in China that requires a class one rating as well. And so now on nylon yarn, I guess, I have to use a nylon yarn today to get a class one rating. And so that part of the business is probably -- is probably over 50 percentile, class one space. That's -- that's just a pure guess. Carl Reichardt – Wells Fargo Securities: Okay. Thanks so much.

Thank you Carl at least for the question you’re asking. Carl Reichardt – Wells Fargo Securities: All right. Thanks.

And our next question will come from the line of Eric Glover with Canaccord. Please proceed. Eric Glover – Canaccord: Hi. Good afternoon. I was wondering if you could talk about the improvement at Bentley Prince Street in terms of profitability. What do you think you have really turned the corner with this business now and when can we expect possibly to see some fairly significant operating income out of the business?

I would say that we've always said that if we could get it over 25 million, we could turn profitable in this business. And I'm happy to say that that happened. You know, our goal is to continue to grow this business. We're going to grow the time part of it faster than the broad loom piece of it. It has got some pretty good contribution margins. If we can grow the topline to 30 million, you'll see some more contribution stronger. To give you a data on that, I know what contribution levels, I just don't want to tell you, sorry. But it's -- okay, kind of, significant. That business used to be a $150 million business and it got down to about a $90 million business. If you get back to $130 million, it will return it's cost to capital. Eric Glover – Canaccord: Okay. Just a follow on one of the previous questions. Where do you think the overall market is in terms of carpet tile adoption, just maybe touch on some of the specific geographies, like U.S., Europe and Asia?

That's a big question around the world. I would say that the adoption in the U.S. in the office market, we think it's a little over 50%. In the non-office commercial, we think it's approaching 20%, 25%. If you go to Europe, it's in our presentation, we actually have the by almost market what we think the penetration is, but the U.K. is closer to 50%, Germany is 8% and Asia, the data doesn't really exist to figure out what covers our penetration? In Australia, it didn’t cover our penetration money for achieving 50%. Eric Glover – Canaccord: Okay. Thank you.

Thank you.

Ladies and gentlemen, this concludes the question-and-answer portion of today's call. I will now turn the call back over to management for any closing remarks.

Well, thank you for listening in. I hope to report a great fourth quarter. And you guys have a great finish to your earnings as well. Thanks.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day, everyone.