I’ll now turn the call over to Kurt to provide some specific financial data for the second quarter. Kurt?
Thank you, Stan. For the second quarter 2011, consolidated net sales increased 8.7% to $433 million. Sales for the Office Furniture segment increased 8.7% to $373 million, again, negatively impacted by the $12 million wholesale partner inventory reduction. Net sales for the Hearth Products segment increased 8.4% to $60 million, and consolidated gross margins decreased to 33.9% compared to 35.5% in the prior year quarter due to increased material costs, unfavorable mix of business, and lower price realization.
As a percent of net sales, total selling and administrative expenses improved 0.9 percentage points due to higher volume and lower restructuring charges, which were partially offset by increased fuel costs, investments in strategic growth initiatives and higher incentive-based compensation.
We ended the quarter with $47 million of cash. Operating activities used $8.4 million of cash during the first six months of 2011 compared to generating $1.5 million of cash during the same period last year. Our inventory increased $18 million from the same period last year. This was due to one, the timing of large contract projects that we expect to ship in the third quarter; two, an inventory investment made to level load to our production, which we expect to ship in the balance of 2011; and three, increased volumes and higher material costs.
I’ll now turn back to Stan.
Okay. Thank you, Kurt. Looking forward, we entered the third quarter well positioned to deliver solid sales and proper growth over prior year. Our contract brands are performing well. We anticipate continued double-digit growth in our contract business, driven by strong demand. Year-over-year growth rates within our contract channel are expected to moderate in the second half of the year, again, stronger prior year comparison.