Our Hearth business continues to deliver outstanding performance. Remodel-retrofit sales increased 22% as strong demand for our alternative fuel products was driven by higher energy prices. The new construction channel was up 4%, the overall business of housing conditions remained weak. Profit more than doubled year-over-year, a strong operational execution in cost containment drove excellent operating leverage.
I will now turn the call over to Kurt to review this specific financial data for the third quarter. Kurt?
Thank you, Stan. So for the third quarter 2011, consolidated net sales increased 9.9% to $504 million. Sales for the Office Furniture segment increased 8.9% to $422 million, while net sales for the Hearth Products segment increased 15.2% to $82 million.Consolidated gross margins increased to 35.6% compared to 35.1% in the prior year quarter due to higher volume and improved price realization which was partially offset by increased material cost. As a percent of net sales, total selling and administrative expenses improved 0.8 percentage point due to higher volume, which was partially offset by increased fuel costs and higher incentive-based compensation. We ended the quarter with $102 million of cash. Operating activities generated $67 million of cash during the first nine months of 2011, which is up 36% from the same period last year. We recently amended and restated our credit facility with strong support from our lender group. Borrowing capacity was increased by $100 million to support our future business objectives while also lowering costs and increasing flexibility. I will now turn the call back to Stan. Stan Askren Thank you, Kurt. We entered the fourth quarter with strong momentum and we are on track to deliver profit improvement in sales growth for the full year 2011. Our contract brands continued to compete well in their markets. Year-over-year growth rates within the contract channel are expected to moderate in the fourth quarter against strong prior year comparisons.
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