Net sales for our market pulp segment decreased 3.2% in the fourth quarter of 2012 to $36.6 million from $37.8 million for the same period in 2011. The average sales price per ton decreased 5.5% while sales volume increased 2.4% compared to the fourth quarter of 2011.
Net sales for our other segment decreased 10.1% to $36.4 million in the fourth quarter of 2012 from $40.6 million in the fourth quarter of 2011. This decrease was due to a 10.3% decrease in sales volume, while the sales price per ton remained flat.
Cost of sales. Cost of sales, including depreciation, amortization, and depletion, was $337.1 million in the fourth quarter of 2012 compared to $424.9 million in 2011, reflecting realized cost reductions from the shutdown of three paper machines late last year and the closure of the Sartell mill in the third quarter of this year. Our gross margin, excluding depreciation, amortization, and depletion, was 14.0% for the fourth quarter of 2012 compared to 12.6% for the fourth quarter of 2011. Depreciation, amortization, and depletion expenses were $26.9 million for the fourth quarter of 2012 compared to $31.1 million for the fourth quarter of 2011.
Selling, general, and administrative. Selling, general, and administrative expenses were $18.2 million in both the fourth quarter of 2012 and 2011.Restructuring charges. Restructuring charges for the fourth quarter of 2012 were $5.4 million related to on-going closure costs of the Sartell mill, compared to $24.5 million in 2011. In the fourth quarter of 2011, restructuring charges reflected the permanent shutdown of three paper machines. Other operating income. Other operating income in the fourth quarter of 2012 reflected insurance proceeds in excess of costs and property damages incurred of $60.6 million, as we reached a final settlement agreement with our insurance provider for property and business losses resulting from the fire and explosion at our Sartell mill. Interest expense. Interest expense for the fourth quarter of 2012 was $36.8 million compared to $31.8 million for the same period in 2011. Income tax (benefit) expense. Income tax benefit for the fourth quarter of 2012 of $1.3 million resulted from a reduction in the deferred tax liability related to the non-cash trademark impairment charge that was taken as a result of a reduction in production capacity from the closure of the Sartell mill.
|Results of Operations – Comparison of 2012 to 2011|
|Year Ended December 31,|
|(Dollars in thousands)||2012||2011|
|Costs and expenses:|
|Cost of products sold - (exclusive of depreciation, amortization, and depletion)||1,272,630||1,460,290|
|Depreciation, amortization, and depletion||118,178||125,295|
|Selling, general, and administrative expenses||74,415||78,059|
|Total operating expenses||1,567,627||1,706,803|
|Other operating income||(60,594||)||-|
|Operating (loss) income||(32,421||)||15,686|
|Other loss, net||7,379||26,042|
|Loss before income taxes||(175,253||)||(136,864||)|
|Income tax (benefit) expense||(1,424||)||197|
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