Good day ladies and gentlemen and welcome to the Investor conference call. (Operator Instructions I would now like to turn the presentation over to your host for today’s’ conference Mr. Bob Joyce from SD.

Good morning and welcome to Interfaces conference call regarding third quarter regarding 2008 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 Interfaces business outlook. Patrick will then review the company’s key performance metrics and financial results. We’ll then have time for any questions that you may have. If you have not yet received a copy of the result release that was distributed yesterday after the close of the market. Please call SD at 212-850-5600. Or you can get a copy off of the Investor Relations section of Interfaces website. An archive version of this conference call will also be available through that website. Before we begin, on my remarks, please note that during today's conference call, management 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 certainties associated with the economic conditions and commercial [inaudible] industry, as well as risks and uncertainties discussed under the heading risk factors in Item 1-A of the company's most recent annual report on Form 10-K 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. Lastly, please note that this call is being recorded and broadcast for Interface, and contains copyrighted material, and is not to be re-recorded or rebroadcast without Interface's express permission. Your participation on this 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. Please go ahead, Dan.

Overall our third quarter results reflected the prevailing market's conditions. Not surprising the macro environment has impacted almost every market, including the market for modular carpet. Despite this, we were able to create opportunities and hold sales even versus a strong third quarter comparison last year. Our modular carpet business benefited from the continued sector shifts toward carpet tile, as well as diversification across market segments and geographies. The effects of the global slowdown in the corporate office market, particularly in Western Europe and the United States were off set by continued solid demand for modular carpet in non-office segments, such as government, education, health care, and retail, as well as growth in emerging geographic markets such as Eastern Europe, Latin America, and the Middle East. During the quarter, modular sales, in both non-office segments and emerging markets, were up several digit percentages, which offset declines in the more mature office markets. We also continue to invest in the implementation of our market diversification strategy in Europe, which has been a key driver for our success in the U.S. market. While these investments have affected our profitability in the near term, we believe we are well positioned in Europe to achieve a first mover advantage in the non-office European market place, which is experiencing significant growth on a much smaller base in the United States. We also saw strong growth in Asia Pacific, due to its relatively good economic climate, although it is beginning to feel the ripple effect from anxieties in other parts of the world. Bentley Prince Street had a modest decline in sales, however, modular sales within the business continue to grow in the third quarter, and reaffirm the broader shift we're seeing in carpet tile. We made progress in addressing the operational issues related to the…

I will now take a few minutes and outline some of the financial highlights from the quarter. Sales for the third quarter of 2008 were $278.4 million, compared with sales of $279.5 million in the year ago period. As previously announced, the company sold it's fabrics division in July, 2007, and therefore the financial statements for the third quarter of 2008 and all other periods presented now reflect the fabrics division as discontinued operations. Fluctuations in currency positively impacted sales by approximately 3% in the third quarter of 2008, compared with the third quarter of 2007. Gross profit margin in the third quarter of 2008 was 34.1% compared with 35% in the third quarter of last year. The lower growth margin was due to under absorbed fixed overhead, as a result of lower volumes, principally in our European modular business, and additional fixed costs as a result of our plant expansion in our Asia Pacific modular business. SG&A expenses in the third quarter of 2008 was $63.9 million, or 22.9% of sales, versus $63.2 million or 22.6% of sales a year ago. While SG&A levels were nearly flat year over year, we've continued to invest in our market diversification strategy in Europe, which should open up new sales opportunities. Operating income in the third quarter was $31 million compared with operating income of $34.8 million in the third quarter of 2007, as a percentage of sales operating income decreased to 11.1% from 12.4% the third quarter of last year. Interest expense for the third quarter of 2008 was $8.2 million versus $8.6 million last year, reflecting our debt reduction effort. In the 2008 third quarter income from continuing operations were $13.6 million or $0.22 per diluted share compared with income from continuing operations of $15.2 million or $0.25 per diluted…

(Operator instructions) Your first question is from Sam Darkatsh – Raymond James Sam Darkatsh – Raymond James: Couple of questions, first off Dan, if things get, you know, much softer, what would your, inclination be in terms of paring back discretionary costs and what costs would you look at if you’re trying to conserve cash and profitability?

As I said in the call, Sam, we’re going to protect the profitability, you know, there’s a lot of discretionary sped obviously within our P&L. I would not cut discretionary spends around the sales and marketing group. But we will look at every cost that doesn’t really increase growth, and take a hard look at that. Sam Darkatsh – Raymond James: So would you expect outside of, of an off the table sort of drop, would you expect that SG&A as a percent of sales would fall, if you get some favorable leverage even in a downturn?

I would say in a downturn we would keep SG&A levels where they are, percentage wise. Sam Darkatsh – Raymond James: Give us a little bit of color as to how do you see October orders looking at this point?

October orders still a lot like they did in July about the same rate. Interestingly enough our U.S. business is up 12%. Our American business is up 12% our U.S. modular business is actually up more like 15% to 20%. The weakness is in Europe we’ve been highlighting that for a while. That’s the biggest concern that I have. I’m not very concerned about the U.S. business at all. That’s a very segmented business and we’re seeing a lot of good growth coming out of the non-office piece. Sam Darkatsh – Raymond James: Any chatter with respect to fiber costs coming off as of yet with oil prices where they are and demand slipping?

Not yet, not yet. Sam Darkatsh – Raymond James: Would you anticipate with [inaudible] coming off would you anticipate something?

We anticipate supply and demand issues and we’ll have a lot of leverage with our yarn suppliers. Sam Darkatsh – Raymond James: Two more quickies then I’ll defer to others. Are there, with the bonds trading underneath par, are you active in the market in terms of buying those bonds back, or what are your thoughts there, Patrick?

We are and we’ve repurchased $19.4 million since the end of the quarter. Sam Darkatsh – Raymond James: And any thoughts on the, on the Chinese capacity that, that you were looking to add, in —

Well we’ll continue to look at that, and we’ve got our business license, we’ve got our land identified and a lot of those expenditures will occur after 2010. Sam Darkatsh – Raymond James: So we should look at CapEx next year as being closer to depreciation perhaps?

Right, depreciation and amortization correct.

Your next question is from Keith Hughes – Suntrust Keith Hughes – Suntrust : On the CapEx number, why are all the expenditures coming in 2010 Dan, I thought that was coming a little faster?

We’re taking a little longer to get the building specified and go through the whole process in China. Keith Hughes – Suntrust: And if you look at your order patterns in non-office, are any of the pieces of non-office have they shown any deceleration whether it’s hospitality, education , healthcare things like that?

Not yet, the non-office, particularly the U.S. is very strong. They've not seeing that. You know, where we play the $13 to $25 space in the specified market. You know I think we’re doing very well in that part of the market. Keith Hughes – Suntrust: And finally, in Bentley Prince Street the, where are you in terms of the process of getting carpet tile capacity in and how much of the unit sales is now in carpet tile?

Well the carpet tile line is in and we, we went in, in a very conservative manner. You know, the speeds of the line were slower than, you know, what we originally designed it to do. We added some of the excess weight to the back just from a belt and suspenders perspective, on a quality perspective. And you know, we did that initially and we’re ramping up to faster speeds in reducing some of the material on the back. So we're a good way towards where we have designed the product. We're probably 75%, 80% there in terms of being finalized

The modular piece, Keith, one year about 30% modular and 70% [inaudible].

Your next question comes from John Baugh – Stifel Nicolaus & Company, Inc. John Baugh – John Baugh – Stifel Nicolaus & Company, Inc.: Patrick, currency, can you tell us year-to-date now what –

I know there's about $10 million in the quarter. I don't have the year-to-date figure off the top of my head. I have to come back to you on what the year-to-date impact is. John Baugh – Stifel Nicolaus & Company, Inc.: Do you have a guess on EBIT impact year-to-date, and with Euro now weakening dramatically any guidance going into '09? Obviously revenue is going to go the other way. I'm wondering what EBIT does in a –

I would say order of magnitudes from year-to-date was probably $2 million or so year-to-date. John Baugh – Stifel Nicolaus & Company, Inc.: The benefit?

The pieces, the currency impact, the benefit that we've gotten on a year-over-year basis.

It's a straight translation, John. There's not any leverage that you get out of the countries on either way. John Baugh – Stifel Nicolaus & Company, Inc.: So if we saw a similar move to the negative next year, a similar move?

Negative $2 to $3 million again. John Baugh – Stifel Nicolaus & Company, Inc.: Where do you stand today on a run-rate basis in the United States, and then maybe in Europe in office versus non-office mix?

It's 52% corporate, 48% non-corporate. John Baugh – Stifel Nicolaus & Company, Inc.: In the U.S.?

In the U.S., on a global basis, hang on, it's 58% corporate, 42% non-corporate. John Baugh – Stifel Nicolaus & Company, Inc.: Let me just make sure I got that right. The U.S., the office are corporate 52% of the mix, sort of on a run-rate right now, and everywhere else in the world it's 58%?

Globally 58% corporate, 42% in the U.S. Let me check that, I think that's right, yes. Sorry, 44% corporate, 56% non-corporate in the U.S. John Baugh – Stifel Nicolaus & Company, Inc.: In global?

Fifty-eight global corporate office, and in the U.S. its 44% office. John Baugh – Stifel Nicolaus & Company, Inc.: There's been so much concern about the financial markets here, and for that matter in Europe, any way to sort of put that in a box, Dan, in terms of your customer exposure both here and in Europe, and if we were to make assumptions that those markets, the financial piece is off 30% or 40%, any kind of feel for –

Yes, we're actually trying to dig into that. We did a quick look at that and I think we were exposed in our office market globally about 20%, 22% to the financial part. John Baugh – Stifel Nicolaus & Company, Inc.: That's a global number?

Right. John Baugh – Stifel Nicolaus & Company, Inc.: As we look out to next year, obviously we've got to make a lot of net income assumptions. If we saw revenues decline I would assume you'd generate a source from working capital, or would that be wrong? And help me with inventories, how they track Q4 and into next year.

I think inventories in the Q4 would probably be down. We've got a target of $9 million to $10 million. Part of the reason we have an inventory build is our allocated inventory to orders. We're seeing a lot of delays in the order books where they actually don't want the product until the project is ready to be installed. And that's a global thing. That's happening all over the world, and that's one reason we've had this inventory build that hasn't been released to the backlog. But we're talking about a $9 million reduction in inventories in the fourth quarter, and typically we get $0.10 to $0.15 per sales dollar and working capital increases or it declines, but I would expect that with close-year as well. John Baugh – Stifel Nicolaus & Company, Inc.: Whatever free cash flow you model, should we now start assuming you're going to pay off 10.375-interest debt assuming that it stays below par, or is that a bad assumption?

I mean, that's a fair assumption and we'll be opportunistic about repurchases. Obviously the 10.375 is the next maturity that needs to be addressed.

Your next question comes from Jeff Kobylarz – Stone Harbor. Jeff Kobylarz – Stone Harbor: I just had a question about what John asked about the 40% of the global business – I'm sorry, 22% of your business. That's corporate so that's financed, so does that mean out of the 58% of the global business that's corporate that 40% of that roughly is just finance companies?

No, of the %58, I'm sorry, 22% of that would be [inaudible]. I think our corporate exposure is about 22%. Jeff Kobylarz – Stone Harbor: Of total sales?

Right. Jeff Kobylarz – Stone Harbor: So it's total sales, all right, and –

That's Asia, that's Europe, and that's the U.S.

Right.

And Asia is continuing to actually expand there. Jeff Kobylarz – Stone Harbor: And your SG&A was just up $700,000 and you continue to invest in your diversification effort in Europe, and the investment in the second quarter was, I think, around $4 million, so was there a slower pace of –

No, actually if you look at the European business, the volume was down 10% in local currency and normally you would have seen the variable piece of that SG&A decline as well, but on a Euro basis that SG&A investment was actually up slightly, so the variable piece decline was offset by the incremental spend on the segmentation initiative. So it was relatively equivalent to the pace that we've been spending in the second quarter; whereas in the second quarter the Euro on a year-over-year basis, it was flat in Euro terms. That incremental piece stood out more. Jeff Kobylarz – Stone Harbor: All right, and then could you comment about your third quarter U.S. volume? Do you think you were in line with the industry trends or how would you shake out?

Well I still believe we took share in where we play. If you look at some of the comments from the competitors that are talking about the commercial market, they're talking about it being negative. Our suppliers that supplies most of the specified commercial market, data from them is that we're doing better than our competitors in that space. So I feel like when we play it the $13 to $25 that we clearly are not loosing share, and I still believe we're taking share. The average price for the commercial carpet market is $11 a yard and ours is $20, almost $21.

Is there price competition that's going on, or is it more you're winning more on design or what?

I'd say we're winning on design. We've always had price competition. That's nothing different. Jeff Kobylarz – Stone Harbor: It's not heated up or anything?

I wouldn’t say it's intensified.

Your next question comes from Matthew McCall – BB&T Capital Markets. Matthew McCall – BB&T Capital Markets: Let's see, I think the inflation question was asked. Sounds like there might be some benefit there. You talked about in the past on some internal initiatives to control cost. Can you give us an update on where some of those stand and what you expect the benefit is going into '09?

We have a lot of projects, Matt, that we're tracking. It's in about $20 million on an annualized basis, and we're going after those very aggressively. I would say the fact that you've got a sort of a flowing trend we're able to work on a lot of those versus taking capacity, and so I anticipate – not to give you a number on it, because I won't like plug it into the models – but I anticipate we'll get a lot of that $21 million next year. Matthew McCall – BB&T Capital Markets: And have you recognized any of that benefit?

Sure, yes, we recognized it going along, right. Matthew McCall – BB&T Capital Markets: In this quarter you did?

It's an ongoing process just reducing cost in the plant and about dematerializing, checking out the cheaper materials and so forth, and that's an ongoing process in the plant. Matthew McCall – BB&T Capital Markets: So without giving numbers can you tell us about how much has been recognized thus far, about $20 million?

About $5 million to date. You're persistent, Matt. Matthew McCall – BB&T Capital Markets: Well, I'm on it. I didn't want a number, I just asked for an idea. In Bentley Prince Street I think last quarter you said – we're not going to get targets anymore, we're just going to put fix-it – definitely made some progress in the quarter. Any thought on what the progression is going to look like there without trying to put any targets on it? Just how should we look at that business going into '09 from a profitability standpoint?

Yes, I would say that we still have this target of 8%, and if we can hold the top line I think we can get back to 5% to 6% next year. Matthew McCall – BB&T Capital Markets: On holding the top line?

It is currently. Matthew McCall – BB&T Capital Markets: Is that a realistic assumption in this environment you think?

I don't have a crystal ball, Matt, but I think we're going to, we're segmenting that business, the dependency on the office market in Bentley Prince Street is the lowest in all our businesses now. This is more into hospitality, healthcare, and so forth, education. In the modular piece, I think, we'll continue to grow. What happens in the office market piece is anybody's guess right not. Matthew McCall – BB&T Capital Markets: And you said it's more segmented. What's the office penetration there? What's the mix of office?

That's less than 40% now at Bentley Prince Street Matthew McCall – BB&T Capital Markets: And then, Patrick, I think you got a little bit of – or, Dan – update on the residential side and us there an update on the profitability outlook? I know the stance has been in the past you're going to continue to invest –

I would say we're going to change that posture, we're going to break even with it next year, and we're going to do that by focusing on we're having this success on the Web and catalog business. Matthew McCall – BB&T Capital Markets: Web and catalog? And is that focused mostly domestically or are you –

Well the European case as well. We've got a EUR 20 million residential business in Europe as well. And same thing there we’re going to focus on the web and catalog pieces of it. And drive it to break even. Matthew McCall – BB&T Capital Markets: And Patrick remind me– what kind of hit that’s going to be this year. Give me the hit through Q3.

It will be $8 million for the year, to add those two businesses together.

– : Eric Glover – Canaccord Adams: I was just wondering if you could remind what percentage of your sales is coming from Asia at this point. And what is the growth rate you are seeing there.

10% is coming from Asia. And we were up 20 plus % in the third quarter.

–: [Joe Sparonow] - Goodenow Investments: I may have missed this but Patrick your segmentation, is that costing you guys about $4 million a quarter 1 and 2. Can you guys flesh out sort of what’s behind it and when you might expect how that to play out like in sales. Are you expecting to see some gain this year, next year?

Yes we are already seeing some of the gains in segmentation today. I guess the answer to your first question is yes it’s about 2.5 million Euros or so a quarter. We're starting to see the benefits. The segmentation piece is actually obviously offsetting the corporate decline in Europe. And we’ll continue to see that spend continue through the balance of year and perhaps into even early next year around segmentation. It’s a key initiative for us organizationally. We need to reorient and balance that mix in Europe, comparable to what we’ve done in the U.S.. So yes, we’ll continue you that on.

So that's is about a 50 million Euro business today, the non-office piece in Europe? It has been growing between 15 and 20% the last two years. And we need to accelerate that growth. [Joe Sparonow] - Goodenow Investments: So if these efforts are resulting in sales then probably at some point it’s really a break even effort? I mean if you are spending to get sales right? Are you there yet would you say or no?

Yes we are, obviously. [Joe Sparonow] - Goodenow Investments: So this is just incremental.

Right. I mean this is off setting what is going on and the Western office market is there, in the U.K. and France particularly. [Joe Sparonow] - Goodenow Investments: And then secondly on – when you guys look at the refurbishment market, which I think you guys say may be 80 or 90% of your orders. What drive that’s? Just taking a step back? Is it more the tenant? Or is it the building? You know if a lease is up it’s, you know, a bone that’s building for us for the tenant.

I think it’s both. I think it’s both depending on the tenant. If it’s tenant improvement space and the building is being turned. Then there is obviously an incentive to refurbish the building from that standpoint. But typically if you’ve got, you know, let’s say a fortune thousand companies that have longer leases or own their buildings. They refurbish in cycles. They refurbish usually every eight to nine years. And this kind of cycle they typically push it out, you know 12, 13 years. [Joe Sparonow] - Goodenow : And would you say the U.S. and Europe are similar like that? Same dynamics?

Yes. [Joe Sparonow] - Goodenow Investments: And then lastly, when you look at European maturely softer than the U.S., does it have anything– what is your assessment as to why? Is it just that, you know the commercial market there has just gotten softer earlier? Or are there other dynamics going on?

I would say that there is a lot more discretionary spend that goes through dealers in the European markets particularly in U.K. and in France. And that is dried up there.

–:

I was wondering if you could comment on your gross margin in the fourth quarter and the first quarter, particularly in light of the fact that you’re– you might be slowing production giving the inventory levels are high? To what extent is that going to negatively impact the gross margin?

Well I think, you know. I mean we typically don’t provide guidance around it. But I would say that you know, broadly speaking. You’re going to see gross margin in a very comparable level to where you are in the third quarter. I think we made a few adjustments taking out a couple shifts, one in California, and one in Europe. So we have right sized our manufacturing operations. Around in the third quarter. So you probably won’t see as a big a [inaudible]. And it'll probably be in a broadly speaking in a similar levels where we are in the third in broad stroke.

And just to follow up on the comment that customers are pushing out there, what in fact actually are they doing? They are just taking longer to complete a building or complete a project? Select Equity Group : And just to follow up on the comment that customers are pushing out there, what in fact actually are they doing? They are just taking longer to complete a building or complete a project?

Sometimes the contractors would take the products early. And they would take discounts on the products as well. I think that they are being stretched from a credit standpoint. So they want the product shipped almost the day it gets installed on a project. So a project gets pushed out, they’re pushing out the delivery date with us as well. And some projects are getting delayed as you can imagine.

That concludes the Q&A session. Now I would now like to turn the call back over to management.

Well thank you and nobody is more disappointed about the third quarter than me. And I believe we’re put in a position to do very well in this environment. We’ve been building this business for a down turn if it happens with the segmentation strategy in the emerging market. And the carpet call second shift is real. And I think that we’re in a position to grow this company long term. Thank you.