Gross margin on new equipment sales was 11.5% compared to 11.6% in the third quarter a year ago. Gross margin on used equipment sales was 26.4% compared to 23.4% a year ago. Gross margin on parts sales was 26.7% in this quarter and a year ago. Gross margin on service revenues was 61.1% compared to 61.6% in the prior year.
At the end of the third quarter of 2012, the original acquisition cost of the Company’s rental fleet was $871.0 million, an increase of $144.9 million from $726.1 million at the end of the third quarter of 2011 and an increase of $134.4 million from $736.6 million at the end of 2011. Dollar utilization was 36.7% compared to 33.7% for the third quarter of 2011. Dollar returns increased reflecting higher year-over-year average rental rates and improved time utilization.
Selling, General and Administrative Expenses
SG&A expenses for the third quarter of 2012 were $42.4 million compared with $39.0 million last year, a $3.4 million, or 8.6%, increase. The net increase in SG&A expenses is largely a result of increased commission and incentive pay that resulted from higher rental and sales revenues. For the third quarter of 2012, SG&A expenses as a percentage of total revenues were 20.7% compared to 21.2% a year ago.
Income from Operations
Income from operations for the third quarter of 2012 was $25.0 million, or 12.2% of revenues, compared with $15.1 million, or 8.2% of revenues, a year ago.
Interest expense for the third quarter of 2012 was $9.8 million compared to $7.2 million in the third quarter of 2011.
Net Income and Adjusted Net Income
Net income was 3.7 million, or $0.11 per diluted share, compared to net income of $4.8 million, or $0.14 per diluted share, a year ago. Adjusted Net Income was $10.9 million, or $0.31 per diluted share. The effective income tax rate was 29.7% compared to 39.1% a year ago.