ATLANTA, Oct. 24 /PRNewswire-FirstCall/ -- Interface, Inc. , a worldwide floorcoverings company, today announced results for the third quarter ended September 30, 2007.

Sales for the third quarter of 2007 increased 19.3% to $279.5 million from sales of $234.2 million in the year ago period. As previously announced, the Company sold its fabrics division in July 2007, and therefore the financial statements for the third quarter of 2007, and all other periods presented, now reflect the fabrics division as discontinued operations.

Operating income for the third quarter of 2007 increased 36.1% to $34.8 million, or 12.4% of sales, which is a record operating margin for the Company. This compares with operating income of $25.5 million, or 10.9% of sales, in the third quarter of last year. Income from continuing operations was $15.2 million in the 2007 third quarter, which also is a record high for the Company, compared with income from continuing operations of $9.5 million in the third quarter of 2006. The results for the third quarter 2007 included expenses on an after-tax basis of $0.7 million, or $0.01 per diluted share, for premiums paid in connection with the previously announced redemption of the Company's 7.3% Senior Notes, versus $0.1 million on an after-tax basis for premiums paid on repurchases of those notes in the prior year period. Including results of discontinued operations, net income was $8.6 million, or $0.14 per diluted share, in the 2007 third quarter, compared with net income of $9.1 million, or $0.17 per diluted share, in the 2006 third quarter.

"We are very pleased with our performance during the third quarter of 2007, in which we saw strong growth in revenue and record levels in operating margin and income from continuing operations," said Daniel T. Hendrix, President and Chief Executive Officer. "Driven by the continuing strength of the corporate office market and our segmentation strategy, our modular business continued its strong performance in the period, as revenues grew more than 20% to record levels across each of our key geographic regions of the Americas, Europe and Asia-Pacific."

Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "We are extremely pleased with the results of the quarter, particularly with respect to our modular carpet segment. Sales in that segment increased 25.5% year-over-year with its operating income increasing 44.9%. In our Bentley Prince Street segment, overall revenues were modestly lower compared with the third quarter of 2006. However, the modular component within the Bentley Prince Street segment had strong sales growth, which was in-line with the demand we are seeing in our modular carpet segment and indicative of the shift we have seen in the broader market to modular solutions. We reported operating income of $1.3 million in the Bentley Prince Street segment, which is down from the prior year period primarily as a result of the investment we are making in the installation of a new carpet tile backing line at the plant. During the quarter, we also continued to improve our balance sheet with the reduction of outstanding debt by $81 million, mostly due to our redemption of the outstanding 7.3% Senior Notes."

For the first nine months of 2007, sales were $787.9 million, compared with $655.5 million for the same period a year ago, an increase of 20.2%. Operating income for the 2007 nine-month period was $90.0 million, versus operating income of $69.7 million for the comparable 2006 nine-month period. Income from continuing operations was $37.6 million, or $0.61 per diluted share, in the 2007 nine-month period, compared with income from continuing operations of $23.4 million, or $0.43 per diluted share, in the same period a year ago. The results for the first nine months of 2007 included expenses on an after-tax basis of $0.9 million, or $0.02 per diluted share, for premiums paid in connection with the redemption of the Company's 7.3% Senior Notes, versus $0.5 million, or $0.01 per diluted share, on an after-tax basis for premiums paid on repurchases of those notes in the first nine months of 2006. Including results of discontinued operations, the Company recorded a net loss for the first nine months of 2007 of $31.1 million, or $0.50 per diluted share, compared with a net loss of $2.1 million, or $0.04 per diluted share, for the 2006 first nine months.

Mr. Hendrix concluded, "As we enter the fourth quarter, which typically is our best quarter of the yearly cycle, I believe the opportunities for our business have never been better. We continued to see solid order growth in the third quarter, with consolidated orders increasing 10% year-over-year and modular carpet segment orders increasing 14% year-over-year. While this is somewhat more moderate growth compared with what we experienced in the second quarter of 2007, we believe the second quarter orders were positively affected by an announced price increase and by our bigger presence in the institutional marketplace which has a busy buying season during that time of the year. In the first few weeks of the fourth quarter, consolidated order growth rates have climbed back over the 15% level. Overall, we are growing our share in an expanding market, we continue to benefit from the secular shift toward modular applications through our segmentation strategy and from the penetration of carpet tile in emerging geographic markets, and we have a healthy backlog of orders. With this momentum, we are looking forward to a great finish on the year."

The Company will host a conference call tomorrow, October 25, 2007, at 9:00 a.m. Eastern Time, to discuss its third quarter 2007 results. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the conference call live over the Internet at http://phx.corporate-ir.net/phoenix.zhtml?p=irol- eventDetails&c=112931&eventID=1669286 (Due to length of URL, please copy and paste into browser.) or through the Company's website at http://www.interfaceinc.com/results/investor/. The archived version of the webcast will be available at these sites for one year beginning approximately 1 hour after the call ends.

Interface, Inc. is the world's largest manufacturer of modular carpet, which it markets under the InterfaceFLOR, FLOR, Heuga and Bentley Prince Street brands, and, through its Bentley Prince Street brand, enjoys a leading position in the designer quality segment of the broadloom carpet market. The Company is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value.