In Canada, net sales in the fourth quarter of 2011 were $20.2 million, a decrease of $0.6 million, or 2.9%, compared to $20.8 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales decreased $0.4 million, or 1.9%. Lower net sales of beauty tools and other beauty care products were partially offset by higher net sales of Almay color cosmetics.
Operating income in the fourth quarter of 2011 was $66.0 million, compared to $67.8 million in the same period last year. Adjusted EBITDA in the fourth quarter of 2011 was $81.7 million, compared to $83.3 million in the same period last year. Operating income and Adjusted EBITDA in the fourth quarter of 2011 were negatively impacted by lower gross profit, as a result of lower net sales and higher cost of sales, partially offset by lower SG&A. SG&A expenses decreased versus the prior year primarily due to lower advertising expenses and the benefit of business interruption insurance recoveries related to the fire in Venezuela, discussed above.
Interest expense, including preferred stock dividends, decreased $2.9 million to $21.8 million in the fourth quarter of 2011 primarily due to refinancing the Company’s term loan credit facility in May 2011 at lower interest rates.
Income from continuing operations before income taxes was $40.8 million in the fourth quarter of 2011 as compared to $39.8 million in the fourth quarter of 2010.The provision for income taxes was an expense of $4.4 million in the fourth quarter of 2011 as compared to a benefit of $256.4 million in the same period last year. Excluding the non-cash tax benefit of $16.9 million and $260.6 million, respectively, the provision for income taxes in the fourth quarter of 2011 was an expense of $21.3 million c as compared to an expense of $4.2 million c in 2010. The increase in the provision for income taxes was primarily due to higher deferred tax expense in the U.S. as a result of the reduction in the Company’s U.S. deferred tax valuation allowance at the end of 2010, as well as higher pre-tax income in the U.S. The increase in the provision for income taxes resulting from the higher deferred tax expense in the U.S. did not affect the Company’s cash taxes paid in 2011. Net income in the fourth quarter of 2011 was $36.4 million or $0.70 per diluted share, compared to $296.2 million, or $5.66 per diluted share, in the same period last year. Net income included a non-cash tax benefit of $16.9 million in the fourth quarter of 2011 and $260.6 million in the fourth quarter of 2010.
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