Sales in the fourth quarter of 2012 totaled $40,051,000, an increase of 34% from the same quarter last year. Operating income was $1,780,000 and $1,948,000 for the fourth quarters of 2012 and 2011, respectively. Excluding Palmer results, sales for the fourth quarter 2012 would have been up 6% over the prior year. The sales increase resulted from a 13% increase in unit volumes partially offset by a 7% decrease in average selling prices. In the fourth quarter, the Segment experienced non-commodity unit volumes increasing 32% while commodity unit volume increased 2%. Selling prices for commodity and non-commodity products decreased approximately 19% and 8%, respectively, from the prior year. Fourth quarter 2012 shipments of stainless steel pipe were lower as distributors monitored the falling nickel prices and delayed placing restocking orders. The Segment is focusing on international sales efforts which continue to show year-over-year sales growth. Special alloy bookings, backlog and shipments were strong in the fourth quarter and the entire year of 2012.
Sales for 2012 increased 15% to $146,285,000 and operating income of $6,094,000 was 35% lower compared to the same period of the prior year. Similar to the fourth quarter, the sales increase for the year was comprised of the addition of Palmer for 19 weeks in 2012, plus a 13% increase in unit volumes partially offset by an 8% decrease in average selling price.
Operating income for the fourth quarter and the entire year of 2012 when compared to the same periods of 2011 was impacted by the following four factors:
a) Palmer was acquired August 21, 2012 and accordingly, 13 weeks and 19 weeks of their operations were included in the fourth quarter and 2012, respectively. b) Associated with the acquisition of Palmer, an intangible asset of $9,000,000 was realized, which represents the fair value of the customer base that was acquired by the Company. This intangible asset will be amortized over a 15 year period using an accelerated amortization method. As a result of this transaction, the fourth quarter and entire year of 2012 includes $540,000 of amortization expense. This additional expense reduced earnings per share for the fourth quarter and entire year of 2012 by $0.05 and $0.06, respectively.Stock quotes in this article: SYNL
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