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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 2, 2022

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-33994
INTERFACE INC
(Exact name of registrant as specified in its charter)
Georgia58-1451243
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1280 West Peachtree StreetAtlantaGeorgia30309
(Address of principal executive offices)(zip code)
Registrant’s telephone number, including area code:           (770) 437-6800          
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.10 Par Value Per ShareTILENasdaq Global Select Market
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 þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted 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 such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated filer¨Non-accelerated filer¨Smaller reporting companyEmerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No þ
Number of shares outstanding of each of the registrant’s classes of common stock, as of November 3, 2022:
ClassNumber of Shares
Common Stock, $0.10 par value per share58,169,803



TABLE OF CONTENTS
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except par values)
OCTOBER 2, 2022JANUARY 2, 2022
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents$79,449 $97,252 
Accounts receivable, net170,436 171,676 
Inventories, net319,074 265,092 
Prepaid expenses and other current assets34,133 38,320 
Total current assets603,092 572,340 
Property, plant and equipment, net292,059 329,801 
Operating lease right-of-use assets77,447 90,561 
Deferred tax asset22,792 23,994 
Goodwill and intangibles, net174,149 223,204 
Other assets71,094 90,157 
 
Total assets$1,240,633 $1,330,057 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable$83,617 $85,924 
Accrued expenses127,483 146,298 
Current portion of operating lease liabilities12,400 14,588 
Current portion of long-term debt14,400 15,002 
Total current liabilities237,900 261,812 
Long-term debt507,094 503,056 
Operating lease liabilities67,021 77,905 
Deferred income taxes29,743 36,723 
Other long-term liabilities77,452 87,163 
 
Total liabilities919,210 966,659 
 
Commitments and contingencies
 
Shareholders’ equity
Preferred stock, par value $1.00 per share; 5,000 shares authorized; none issued or outstanding at October 2, 2022 and January 2, 2022
  
Common stock, par value $0.10 per share; 120,000 shares authorized; 58,370 and 59,055 shares issued and outstanding at October 2, 2022 and January 2, 2022, respectively
5,837 5,905 
Additional paid-in capital245,007 253,110 
Retained earnings303,837 261,434 
Accumulated other comprehensive loss – foreign currency translation(187,095)(100,441)
Accumulated other comprehensive loss – cash flow hedge(1,049)(2,722)
Accumulated other comprehensive loss – pension liability(45,114)(53,888)
 
Total shareholders’ equity321,423 363,398 
 
Total liabilities and shareholders’ equity$1,240,633 $1,330,057 
See accompanying notes to consolidated condensed financial statements.
3

INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
THREE MONTHS ENDEDNINE MONTHS ENDED
OCTOBER 2, 2022OCTOBER 3, 2021OCTOBER 2, 2022OCTOBER 3, 2021
Net sales$327,757 $312,707 $962,364 $860,752 
Cost of sales218,972 206,382 630,074 549,397 
Gross profit108,785 106,325 332,290 311,355 
 
Selling, general and administrative expenses80,848 77,735 240,711 236,867 
Restructuring, asset impairment and other charges(105)3,813 1,592 3,621 
Operating income28,042 24,777 89,987 70,867 
 
Interest expense7,747 7,727 21,787 22,272 
Other expense, net124 887 1,688 2,219 
 
Income before income tax expense20,171 16,163 66,512 46,376 
Income tax expense6,106 5,204 22,336 12,968 
 
Net income$14,065 $10,959 $44,176 $33,408 
 
Earnings per share – basic$0.24 $0.19 $0.75 $0.57 
Earnings per share – diluted$0.24 $0.19 $0.75 $0.57 
 
Common shares outstanding – basic58,681 59,057 59,099 58,942 
Common shares outstanding – diluted58,681 59,057 59,099 58,942 
See accompanying notes to consolidated condensed financial statements.
4

INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in thousands)
THREE MONTHS ENDEDNINE MONTHS ENDED
OCTOBER 2, 2022OCTOBER 3, 2021OCTOBER 2, 2022OCTOBER 3, 2021
Net income$14,065 $10,959 $44,176 $33,408 
Other comprehensive loss, after tax:
Foreign currency translation adjustment(36,800)(14,553)(86,654)(30,695)
Reclassification from accumulated other comprehensive loss – discontinued cash flow hedge492 1,323 1,673 2,817 
Pension liability adjustment3,393 2,377 8,774 2,566 
Other comprehensive loss(32,915)(10,853)(76,207)(25,312)
 
Comprehensive income (loss)$(18,850)$106 $(32,031)$8,096 
See accompanying notes to consolidated condensed financial statements.
5

INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
NINE MONTHS ENDED
OCTOBER 2, 2022OCTOBER 3, 2021
OPERATING ACTIVITIES:
Net income$44,176 $33,408 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization30,661 35,087 
Stock compensation amortization expense6,679 4,150 
Deferred income taxes and other13,616 2,564 
Amortization of acquired intangible assets3,817 4,269 
Working capital changes:
Accounts receivable(8,860)(17,061)
Inventories(71,487)(36,230)
Prepaid expenses and other current assets2,321 (7,022)
Accounts payable and accrued expenses(6,040)44,891 
 
Cash provided by operating activities14,883 64,056 
 
INVESTING ACTIVITIES:
Capital expenditures(13,314)(17,406)
 
Cash used in investing activities(13,314)(17,406)
 
FINANCING ACTIVITIES:
Repayments of long-term debt(151,662)(106,283)
Borrowing of long-term debt159,363 57,000 
Tax withholding payments for share-based compensation(398)(193)
Repurchase of common stock(14,451) 
Dividends paid(1,773)(1,771)
Debt issuance costs (36)
Finance lease payments(1,535)(1,796)
 
Cash used in financing activities(10,456)(53,079)
 
Net cash used in operating, investing and financing activities(8,887)(6,429)
Effect of exchange rate changes on cash(8,916)(3,815)
 
CASH AND CASH EQUIVALENTS:
Net decrease(17,803)(10,244)
Balance, beginning of period97,252 103,053 
 
Balance, end of period$79,449 $92,809 
See accompanying notes to consolidated condensed financial statements.
6

INTERFACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
References in this Quarterly Report on Form 10-Q to “Interface,” “the Company,” “we,” “our,” “ours” and “us” refer to Interface, Inc. and its subsidiaries or any of them, unless the context requires otherwise.
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 2, 2022, 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 necessary for a fair presentation of the results for the interim periods. All such adjustments are of a normal recurring nature unless otherwise disclosed. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The January 2, 2022, 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 (“GAAP”).
The nine-month periods ended October 2, 2022 and October 3, 2021 both include 39 weeks. The three-month periods ended October 2, 2022 and October 3, 2021 both include 13 weeks.
Risks and Uncertainties
Global economic challenges, including the impact of the COVID-19 pandemic, the war in Ukraine, rising inflation and supply chain disruptions could cause economic uncertainty and volatility. The Company considered these impacts and subsequent general uncertainties and volatility in the global economy on the assumptions and estimates used herein. The Company determined that except for the continued impacts to our global supply chain, production volume, raw material shortages, raw material cost increases, higher freight costs, shipping delays, gross profit margins, operating income, net income, cash flows, and order rates, there were no other material adverse impacts on the Company’s results of operations and financial position at October 2, 2022. During the third quarter of 2022, the Company permanently closed its operations in Russia, and we are currently in the process of liquidating our legal entity and branch office in the country. While our business activities in Russia and Ukraine were not material, we had approximately $3.0 million of total assets, including $2.6 million of cash, in Russia at October 2, 2022. The Company’s primary credit facility has various financial and other covenants including, but not limited to, a covenant to not exceed a maximum secured net debt to EBITDA ratio, as defined by the credit facility agreement. The Company is in compliance with all covenants under the credit facility agreement and anticipates that it will remain in compliance with the covenants for the foreseeable future.
In accordance with applicable accounting standards, the Company tests goodwill for impairment annually in the fourth quarter and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. During fiscal year 2022, the Company has experienced significant cost inflation along with volatility in the Company stock price. Such circumstances, as well as a negative geopolitical climate in Europe, may warrant the need to write down the value of goodwill associated with our EMEA reporting unit if a future test indicates that its fair value is less than its carrying value.
The fair value of the EMEA reporting unit exceeded its carrying value by approximately 20% at the most recent goodwill test date performed in the fourth quarter of 2021. The goodwill allocated to the EMEA reporting unit as of October 2, 2022 was $29.4 million. The amount of any potential future goodwill impairment charge is uncertain as the impairment test involves a significant amount of risk, uncertainty and judgment.
7

COVID-19 Impact
We continue to monitor our operations and have implemented various programs to mitigate the effects of COVID-19 on our business. Our global supply chain and manufacturing operations continue to experience increased impacts of COVID-19 including raw material shortages, raw material cost increases, higher freight costs, and shipping delays. During the first nine months of 2022, new government imposed COVID-19 lockdowns and restrictions in parts of China adversely impacted sales in that region.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” This ASU clarifies that a contractual restriction on the sale of an equity security is not considered in measuring fair value. The ASU also requires certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this standard.
8

NOTE 2 – REVENUE RECOGNITION
Revenue from sales of carpet, modular resilient flooring, rubber flooring, and other flooring-related material was approximately 97% and 98% of total revenue for the nine-month periods ended October 2, 2022 and October 3, 2021, respectively. The remaining 3% and 2% of revenue was generated from the installation of carpet and other flooring-related material for the 2022 and 2021 nine-month periods, respectively.
Disaggregation of Revenue
For the nine months ended October 2, 2022 and October 3, 2021, revenue from the Company’s customers is broken down by geography as follows:
Nine Months Ended
GeographyOctober 2, 2022October 3, 2021
Americas57.9%53.5%
Europe29.3%32.6%
Asia-Pacific12.8%13.9%
Revenue from the Company’s customers in the Americas corresponds to the AMS operating segment, and the EAAA operating segment includes revenue from the Europe and Asia-Pacific geographies. See Note 11 entitled “Segment Information” for additional information.
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NOTE 3 – INVENTORIES
Inventories are summarized as follows:
October 2, 2022January 2, 2022
(in thousands)
Finished goods$224,368 $182,896 
Work-in-process18,955 15,185 
Raw materials75,751 67,011 
Inventories, net$319,074 $265,092 

10

NOTE 4 – EARNINGS PER SHARE
The Company computes basic earnings per share (“EPS”) by dividing net income by the weighted average common shares outstanding, including participating securities outstanding, during the period as discussed below. Diluted EPS reflects the potential dilution beyond shares for basic EPS that could occur if securities or other contracts to issue common stock were exercised, converted into common stock or resulted in the issuance of common stock that would have shared in the Company’s earnings.
The Company includes all unvested stock awards which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in the basic and diluted EPS calculations when the inclusion of these shares would be dilutive. Unvested share-based awards of restricted stock are paid dividends equally with all other shares of common stock. As a result, the Company includes all outstanding restricted stock awards in the calculation of basic and diluted EPS. Distributed earnings include common stock dividends and dividends earned on unvested share-based payment awards. Undistributed earnings represent earnings that were available for distribution but were not distributed. The following table shows the computation of basic and diluted EPS:
Three Months EndedNine Months Ended
October 2, 2022October 3, 2021October 2, 2022October 3, 2021
(in thousands, except per share data)
Numerator:
Net income$14,065 $10,959 $44,176 $33,408 
Less: distributed and undistributed earnings available to participating securities(246)(127)(716)(358)
Distributed and undistributed earnings available to common shareholders$13,819 $10,832 $43,460 $33,050 
 
Denominator:
Weighted average shares outstanding57,656 58,371 58,139 58,312 
Participating securities1,025 686 960 630 
Shares for basic EPS58,681 59,057 59,099 58,942 
Shares for diluted EPS58,681 59,057 59,099 58,942 
 
Basic EPS$0.24 $0.19 $0.75 $0.57 
Diluted EPS$0.24 $0.19 $0.75 $0.57 

11

NOTE 5 – LONG-TERM DEBT
Long-term debt consisted of the following:
October 2, 2022January 2, 2022
Outstanding Principal
Interest Rate(1)
Outstanding Principal
Interest Rate(1)
(in thousands)(in thousands)
Syndicated Credit Facility:
Revolving loan borrowings$26,001 4.90 %$7,500 4.00 %
Term loan borrowings201,614 4.39 %217,631 1.84 %
Total borrowings under Syndicated Credit Facility227,615 4.45 %225,131 1.91 %
5.50% Senior Notes due 2028300,000 5.50 %300,000 5.50 %
 
Total debt527,615 525,131 
Less: Unamortized debt issuance costs(6,121)(7,073)
 
Total debt, net521,494 518,058 
Less: Current portion of long-term debt(14,400)(15,002)
 
Total long-term debt, net$507,094 $503,056 
(1) Represents the stated rate of interest, without the effect of debt issuance costs.
Syndicated Credit Facility
The Company’s Syndicated Credit Facility (the “Facility”) provides to the Company U.S. denominated and multicurrency term loans and provides to the Company and certain of its subsidiaries a multicurrency revolving credit facility. Interest on base rate loans is charged at varying rates computed by applying a margin depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. Interest on Eurocurrency-based loans and fees for letters of credit are charged at varying rates computed by applying a margin over the applicable Eurocurrency rate, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. In addition, the Company pays a commitment fee per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility.
As of both October 2, 2022 and January 2, 2022, the Company had $1.6 million in letters of credit outstanding under the Facility.
As of both October 2, 2022 and January 2, 2022, the carrying value of the Company’s borrowings under the Facility approximated its fair value as the Facility bears interest rates that are similar to existing market rates.
Under the Facility, the Company is required to make quarterly amortization payments of the term loan borrowings, which are due on the last day of the calendar quarter.
The Company is in compliance with all covenants under the Facility and anticipates that it will remain in compliance with the covenants for the foreseeable future.
On October 14, 2022, the Facility was amended to, among other changes, extend the maturity date to October 2027. See Note 16 entitled “Subsequent Events” for additional information.
5.50% Senior Notes due 2028
The 5.50% Senior Notes due 2028 (the “Senior Notes”) bear an interest rate at 5.50% per annum and mature on December 1, 2028. Interest is paid semi-annually on June 1 and December 1 of each year. The Senior Notes are unsecured and are guaranteed, jointly and severally, by each of the Company’s material domestic subsidiaries, all of which also guarantee the obligations of the Company under its existing Facility.
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As of October 2, 2022, the estimated fair value of the Senior Notes was $255.2 million, compared with a carrying value recorded in the Company’s consolidated condensed balance sheet of $300.0 million, excluding unamortized debt issuance costs. The fair value of the Senior Notes is derived using quoted prices for similar instruments and is considered Level 2 within the fair value hierarchy.
Other Lines of Credit
The Company has other lines of credit available to certain non-U.S. subsidiaries. The availability under these other lines of credit was the equivalent of $2.0 million at an interest rate of 6.25% as of October 2, 2022 and $6.0 million at interest rates ranging from 3.50% to 6.00% as of January 2, 2022. As of both October 2, 2022 and January 2, 2022, there were no borrowings outstanding under these lines of credit.
Borrowing Costs
Debt issuance costs associated with the Company’s Senior Notes and term loans under the Facility are reflected as a reduction of long-term debt in accordance with applicable accounting standards. As these fees are expensed over the life of the outstanding borrowing, the debt balance will increase by the same amount as the fees that are expensed. As of October 2, 2022 and January 2, 2022, the unamortized debt issuance costs recorded as a reduction of long-term debt were $6.1 million and $7.1 million, respectively.
Other deferred borrowing costs, which include underwriting, legal and other direct costs related to the issuance of revolving debt, net of accumulated amortization, were $1.3 million and $1.6 million as of October 2, 2022 and January 2, 2022, respectively. These amounts are included in other assets in the Company’s consolidated condensed balance sheets. The Company amortizes these costs over the life of the related debt.
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NOTE 6 – DERIVATIVE INSTRUMENTS
Interest Rate Risk Management
From time to time, the Company enters into interest rate swap transactions to fix the variable interest rate on a portion of its term loan borrowing in order to manage a portion of its exposure to interest rate fluctuations. The Company’s objective and strategy with respect to these interest rate swaps is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability to cash flows relating to interest payments on a portion of its outstanding debt.
Cash Flow Interest Rate Swaps
In the fourth quarter of 2020, the Company terminated its designated interest rate swap transactions with a total notional value of $250 million. Hedge accounting was also discontinued at that time. Losses recorded in accumulated other comprehensive loss for these terminated interest rate swaps are reclassified and recorded in the consolidated condensed statements of operations to the extent it is probable that a portion of the original forecasted transactions related to the portion of the hedged debt repaid will not occur by the end of the originally specified time period. See Note 14 entitled “Items Reclassified From Accumulated Other Comprehensive Loss” for additional information.
As of October 2, 2022 and January 2, 2022, the remaining accumulated other comprehensive loss associated with the terminated interest rate swaps was $1.4 million and $3.8 million, respectively, and will be amortized to earnings over the remaining term of the interest rate swaps prior to termination. We expect that approximately $1.4 million, before tax, related to the terminated interest rate swaps will be reclassified from accumulated other comprehensive loss as an increase to interest expense in the next 12 months.
Derivative Transactions Not Designated as Hedging Instruments
Our EAAA segment, from time to time, purchases foreign currency options to economically hedge inventory purchases denominated in foreign currencies other than their functional currency. The Company’s objective with respect to these foreign currency options is to protect the Company against adverse fluctuations in currency rates by reducing its exposure to variability in cash flows related to payment on inventory purchases. These options are classified as non-designated derivative instruments. Gains and losses on the changes in fair value of these foreign currency options are recognized in earnings each period. As of October 2, 2022 and January 2, 2022, the Company had no outstanding foreign currency options.
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NOTE 7 – SHAREHOLDERS’ EQUITY
The following tables depict the activity in the accounts which make up shareholders’ equity for the nine months ended October 2, 2022 and October 3, 2021:
SHARESCOMMON STOCKADDITIONAL PAID-IN CAPITALRETAINED
EARNINGS
PENSION LIABILITYFOREIGN CURRENCY TRANSLATION ADJUSTMENTCASH FLOW
HEDGE
(in thousands)
Balance, at January 2, 202259,055 $5,905 $253,110 $261,434 $(53,888)$(100,441)$(2,722)
Net income— — — 13,293 — — — 
Restricted stock issuances303 30 3,966 — — — — 
Unamortized compensation expense related to restricted stock awards— — (3,996)— — — — 
Cash dividends declared, $0.01 per common share
— — — (592)— — — 
Compensation expense related to stock awards, net of shares received for tax withholdings(30)(2)1,787 — — — — 
Pension liability adjustment— — — — 1,539 — — 
Foreign currency translation adjustment— — — — — (13,184)— 
Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge— — — — — — 641 
Balance, at April 3, 202259,328 $5,933 $254,867 $274,135 $(52,349)$(113,625)$(2,081)
Net income— — — 16,818 — — — 
Restricted stock issuances198 20 2,533 — — — — 
Unamortized compensation expense related to restricted stock awards— — (2,553)— — — — 
Cash dividends declared, $0.01 per common share
— — — (595)— — — 
Compensation expense related to stock awards, net of forfeitures(14)(1)2,145 — — — — 
Share repurchases(415)(42)(5,540)— — — — 
Pension liability adjustment— — — — 3,842 — — 
Foreign currency translation adjustment— — — — — (36,670)— 
Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge— — — — — — 540 
Balance, at July 3, 202259,097 $5,910 $251,452 $290,358 $(48,507)$(150,295)$(1,541)
Net income— — — 14,065 — — — 
Cash dividends declared, $0.01 per common share
— — — (586)— — — 
Compensation expense related to stock awards, net of forfeitures(16)(2)2,353 — — — — 
Share repurchases(711)(71)(8,798)— — — — 
Pension liability adjustment— — — — 3,393 — — 
Foreign currency translation adjustment— — — — — (36,800)— 
Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge— — — — — — 492 
Balance, at October 2, 202258,370 $5,837 $245,007 $303,837 $(45,114)$(187,095)$(1,049)
15

SHARESCOMMON STOCKADDITIONAL PAID-IN CAPITALRETAINED
EARNINGS
PENSION LIABILITYFOREIGN CURRENCY TRANSLATION ADJUSTMENTCASH FLOW
HEDGE
(in thousands)
Balance, at January 3, 202158,664 $5,865 $247,920 $208,562 $(69,288)$(60,331)$(6,190)
Net income— — — 6,938 — — — 
Restricted stock issuances376 38 5,277 — — — — 
Unamortized compensation expense related to restricted stock awards— — (5,315)— — — — 
Cash dividends declared, $0.01 per common share
— — — (589)— — — 
Compensation expense related to stock awards, net of forfeitures and shares received for tax withholdings(26)(2)689 — — — — 
Pension liability adjustment— — — — 89 — — 
Foreign currency translation adjustment— — — — — (19,597)— 
Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge— — — — — — 749 
Balance, at April 4, 202159,014 $5,901 $248,571 $214,911 $(69,199)$(79,928)$(5,441)
Net income— — — 15,511 — — — 
Restricted stock issuances52 6 789 — — — — 
Unamortized compensation expense related to restricted stock awards— — (794)— — — — 
Cash dividends declared, $0.01 per common share
— — — (589)— — — 
Compensation expense related to stock awards  1,548 — — — — 
Pension liability adjustment— — — — 100 — — 
Foreign currency translation adjustment— — — — — 3,455 — 
Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge— — — — — — 745 
Balance, at July 4, 202159,066 $5,907 $250,114 $229,833 $(69,099)$(76,473)$(4,696)
Net income— — — 10,959 — — — 
Cash dividends declared, $0.01 per common share
— — — (593)— — — 
Compensation expense related to stock awards, net of forfeitures(11)(2)1,680 — — — — 
Pension liability adjustment— — — — 2,377 — — 
Foreign currency translation adjustment— — — — — (14,553)— 
Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge— — — — — — 1,323 
Balance, at October 3, 202159,055 $5,905 $251,794 $240,199 $(66,722)$(91,026)$(3,373)
Repurchase of Common Stock
In the second quarter of 2022, the Company adopted a new share repurchase program in which the Company is authorized to repurchase up to $100 million of its outstanding shares of common stock. The program has no specific expiration date. During the nine months ended October 2, 2022, the Company repurchased 1,126,176 shares of common stock at a weighted average price of $12.83 per share pursuant to this program.

16

Restricted Stock Awards
During the nine months ended October 2, 2022 and October 3, 2021, the Company granted restricted stock awards for 500,800 and 428,400 shares of common stock, respectively. Awards of restricted stock (or a portion thereof) vest with respect to each recipient over a one to three-year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date. Additionally, certain awards (or a portion thereof) could vest earlier in the event of a change in control of the Company, or upon involuntary termination without cause. For certain restricted stock awards with a graded vesting schedule, the Company has elected to recognize compensation expense on a straight-line basis over the requisite service period for the entire award.
Compensation expense related to restricted stock grants was $4.0 million and $2.8 million for the nine months ended October 2, 2022, and October 3, 2021, respectively. The Company has reduced its expense for any restricted stock forfeited during the period.
The following table summarizes restricted stock outstanding as of October 2, 2022, as well as activity during the nine months then ended:
Restricted SharesWeighted Average
Grant Date
Fair Value
Outstanding at January 2, 2022683,800 $21.06 
Granted500,800 13.08 
Vested(141,900)16.59 
Forfeited or canceled(30,400)14.05 
Outstanding at October 2, 20221,012,300 $13.91 
As of October 2, 2022, the unrecognized total compensation cost related to unvested restricted stock was $7.3 million. That cost is expected to be recognized by the end of 2025.
Performance Share Awards
During the nine months ended October 2, 2022 and October 3, 2021, the Company issued awards of performance shares to certain employees. These awards vest based on the achievement of certain performance-based goals over a performance period of one to three years, subject to (among other things) the employee’s continued employment through the last date of the performance period and will be settled in shares of our common stock or in cash at the Company’s election. The number of shares that may be issued in settlement of the performance shares to the award recipients may be greater (up to 200%) or lesser than the nominal award amount depending on actual performance achieved as compared to the performance targets set forth in the awards. The Company evaluates the probability of achieving the performance-based goals as of the end of each reporting period and adjusts compensation expense based on this assessment.
The following table summarizes the performance shares outstanding as of October 2, 2022, as well as the activity during the nine months then ended:
Performance SharesWeighted Average
Grant Date
Fair Value
Outstanding at January 2, 2022718,100 $14.98 
Granted366,900 13.02 
Vested(200)15.36 
Forfeited or canceled(154,400)16.73 
Outstanding at October 2, 2022930,400 $13.91 

17

Compensation expense related to the performance shares was $2.7 million and $1.4 million for the nine months ended October 2, 2022 and October 3, 2021, respectively. The Company has reduced its expense for any performance shares forfeited during the period. Unrecognized compensation expense related to these performance shares was approximately $8.1 million as of October 2, 2022. Depending on the performance of the Company, any compensation expense related to these outstanding performance shares will be recognized by the end of 2025.
The tax benefit recognized with regard to restricted stock and performance shares was approximately $0.6 million for the nine months ended October 2, 2022.
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NOTE 8 – LEASES
General
The Company has operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. The Company’s leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.
The Company records a right-of-use asset and lease liability for leases extending beyond one year for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.
As of October 2, 2022, there were no significant leases that had not commenced.
The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of October 2, 2022 and January 2, 2022:
October 2, 2022January 2, 2022
Balance Sheet LocationOperating LeasesFinance LeasesOperating LeasesFinance Leases
(in thousands)
Operating lease right-of-use assets$77,447 $90,561 
 
Current portion of operating lease liabilities$12,400 $14,588 
Operating lease liabilities67,021 77,905 
Total operating lease liabilities$79,421 $92,493 
 
Property, plant and equipment, net$5,134 $6,547 
 
Accrued expenses$1,963 $1,837 
Other long-term liabilities3,563 3,201 
Total finance lease liabilities$5,526 $5,038 
Lease Costs
Three Months EndedNine Months Ended
October 2, 2022October 3, 2021October 2, 2022October 3, 2021
(in thousands)
Finance lease cost:
Amortization of right-of-use assets$581 $646 $1,636 $1,230 
Interest on lease liabilities45 37 115 104 
Operating lease cost4,743 5,240 14,310 17,040 
Short-term lease cost204 222 642 864 
Variable lease cost614 730 2,012 2,018 
Total lease cost$6,187 $6,875 $18,715 $21,256 

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Other Supplemental Information
Three Months EndedNine Months Ended
October 2, 2022October 3, 2021October 2, 2022October 3, 2021
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases$35 $16 $88 $83 
Operating cash flows from operating leases4,406 6,677 13,854 17,353 
Financing cash flows from finance leases525 680 1,535 1,796 
Right-of-use assets obtained in exchange for new finance lease liabilities182 67 2,525 2,811 
Right-of-use assets (adjusted) obtained in exchange for (remeasured) new operating lease liabilities(734)6,417 6,089 12,062 
Lease Term and Discount Rate
The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of October 2, 2022 and January 2, 2022:
 October 2, 2022January 2, 2022
Weighted-average remaining lease term – finance leases (in years)3.773.20
Weighted-average remaining lease term – operating leases (in years)9.409.97
Weighted-average discount rate – finance leases3.16 %2.82 %
Weighted-average discount rate – operating leases5.80 %5.87 %
Maturity Analysis
A maturity analysis of lease payments under non-cancellable leases is presented as follows:
Fiscal YearOperating LeasesFinance Leases
(in thousands)
2022 (excluding the nine months ended October 2, 2022)
$4,071 $532 
202313,354 1,918 
202412,413 1,573 
202510,589 855 
202610,864 396 
Thereafter54,382 644 
Total future minimum lease payments (undiscounted)