Interface reports solid operating performance in Q3

Year to Date 2012 Financial Results

• Sales:  For the first nine months of 2012, sales were $682.4 million, compared with $708.6 million for the same period a year ago, a decrease of 3.7%.  Fluctuations in currency exchange rates negatively impacted 2012 year to date sales by approximately 2% (approximately $16 million) relative to the year ago period.
• Operating Income:  Operating income for the 2012 nine-month period was $45.9 million (or 6.7% of sales).  Excluding a previously-announced $16.3 million restructuring and asset impairment charge in the first quarter of 2012 and the above-mentioned charges in the 2012 third quarter, operating income for the 2012 nine-month period was $63.9 million (or 9.4% of sales).  This compares with operating income for the 2011 nine-month period of $70.8 million (or 10.0% of sales).
• Income from Continuing Operations:  After the restructuring charge and Picton fire expenses in the 2012 third quarter, as well as the $16.3 million restructuring and asset impairment charge in the 2012 first quarter, the Company reported year to date income from continuing operations of $15.5 million (or $0.24 per diluted share).  Excluding these items, income from continuing operations was $28.9 million (or $0.44 per diluted share) for the 2012 nine-month period, compared with income from continuing operations of $33.3 million (or $0.51 per diluted share) in the same period a year ago.
• Net Income (Loss):  Including all items, as well as a loss from discontinued operations of $17.0 million, the Company reported a net loss for the 2012 nine-month period of $1.4 million (or $0.02 per diluted share).  In the prior year period, net income was $34.8 million (or $0.53 per diluted share).

"SG&A expenses as a percentage of sales have steadily declined throughout the year, reaching 23.9% in the quarter and representing a strong improvement relative to both the prior year period and the 2012 second quarter," said Patrick C. Lynch, Senior Vice President and Chief Financial Officer.  "Our restructuring and other cost reduction efforts continued to flow through the quarter, and the result was an operating margin that exceeded year-ago results on a comparable basis despite a 2.4% decrease in sales.  The quarter also saw us continue to strengthen our financial position as we generated solid cash from operations and the sale of Bentley Prince Street, and ended the period with a strong cash balance."

Mr. Hendrix concluded, "We are encouraged by the prospects in many of our markets, and continue to see good order activity driven by the U.S. and emerging markets.  The U.S. represents almost half of our revenue, so positive dynamics in this market should lead to continued growth and margin expansion.  European markets are now showing signs of increased stability, and demand trends in Asian markets continue to be promising.  We expect a strong finish to the year."

Interface Inc.