Joining me today on the line for HNI are Kurt Tjaden, Vice President and Chief Financial Officer, and Stan Askren, Chairman, President and CEO. Stan and Kurt will review the results and then open up the call for questions.
Before we begin, please be advised that statements made by the corporation during this call that are not strictly historical facts are forward-looking statements. Forward-looking statements are subject to both known and unknown risks. Actual results could differ materially from expected results. Additional information concerning factors that could affect actual results can be found in the conference call presentation posted to the HNI Corporation website. The corporation assumes no obligation to update any forward-looking statements made during this call.
I now have the pleasure of turning the call over to Stan Askren. Stan?
Stan AskrenThank you, Derek. Good morning everyone. We will share our assessment of the third quarter of 2011 and then provide some thoughts on our outlook for fourth quarter in 2012. We will then open the call up for your question. Strong execution across all of our businesses drove outstanding third quarter results. Sales and profit growth exceeded our expectations. We increased sales 10% and net income in earning per share increased almost 60% versus prior year. We aggressively manage working capital and generated over $70 million of free cash flow. Our performance is a reflection of the power of our split and focus business model and strong returns from strategic investments. Sales in our office furniture contract international businesses remained strong with 15% top line growth. Operating leverage was solid and margins improved. Despite low levels of small business confidence, our supplies-driven business improved 4%, exceeding expectation. Our market leadership position is strong and we continue to leverage the power of our brands to perform well in this challenging environment.