Cash flow from operations was $70.6 million during the fourth quarter of 2011, compared with $18.4 million in the prior-year quarter. The cash flow from operations in the final three months of 2011 was driven by a $62.8 million reduction in working capital.
2011 Full-Year Results
Net sales for the year ended December 31, 2011 increased to $2.2 billion, an increase of 2.6 percent compared with 2010. Sales increased in all segments except Electronic Materials where reduced demand and excess inventories of solar power modules resulted in decreased demand for the Company’s conductive metal pastes. Excluding the Electronic Materials segment, sales increased by 7.5 percent compared with 2010. Sales of precious metals increased, primarily in the first half of the year when demand for conductive pastes was stronger and silver prices were higher. During 2011, changes in product pricing and mix were the primary drivers of increased sales, accounting for 10 percentage points of sales growth. Changes in foreign currency exchange rates contributed an additional 2 percentage points of sales growth. Lower sales volume reduced growth by 9 percentage points.
Net income attributable to Ferro Corporation common shareholders was $31.5 million, or $0.36 per diluted share in 2011, compared with $5.0 million, or $0.06 per diluted share, in 2010. The improvement was driven by significantly lower restructuring and impairment charges, reduced losses on extinguishment of debt and lower interest expense. These profitability improvements were partially offset by reduced gross profit and higher income tax expense.
Adjusted net income attributable to Ferro Corporation common shareholders for 2011, excluding special charges, was $61.8 million, or $0.71 per diluted share. The adjusted earnings exclude special charges of $26.3 million, consisting of $17.0 million of restructuring and impairment charges, and other charges of $9.3 million primarily related to residual costs at closed manufacturing sites that were involved in restructuring initiatives in prior periods. The adjusted net income attributable to Ferro Corporation common shareholders in 2010, excluding special charges, was $93.2 million, or $1.08 per diluted share. The 2010 adjusted net income excluded charges of $125.4 million, consisting of $63.7 million of restructuring and impairment charges, losses on extinguishment of debt of $23.0 million, and other charges of $38.6 million primarily related to manufacturing rationalization, the refinancing of debt and other expense reduction activities.