John Faulkner will review our fourth quarter and annual financial results, after which I will comment further on market conditions and our sales experience so far in the first quarter. Jon?Jon Faulkner - Chief Financial Officer Thank you, Dan. Sales for the quarter were 65.1 million, up 23.4% versus last year. Our sales for the year were 231.3 million, an increase of 13.7% versus the prior year. Historically, the fourth quarter is our best sales quarter. For the quarter in dollars, total carpet sales for Dixie were up 23%, while the industry was up 1.3%. Commercial products were up 22%, while the industry was up 8.6%. Residential products were up 22%, while the industry was down 3.8%. For the year, total carpet sales for Dixie were up 13.8%, while the industry was up 0.5%. Commercial products were up 3.7%, while the industry was up 1.7%. Residential products were up 18.3%, while the industry was actually down two-tenths of a percent. Both residential and commercial sales were seasonally higher, up 15% from the third quarter. We saw barbell recovery in the fourth quarter with our Masland and Fabrica wool lines and our ColorTron and Masland Avenue products continuing to show higher rates of growth at the upper end of the market, while our Dixie Home, Stainmaster and Durasilk polyester products continued strong growth at more moderate price points. This barbell effect mirrors our results for the year. The fourth quarter gross margin was 25.3%, down from 27.6% in the same quarter of the prior year. The year comparison is 24.5% in 2010 versus 25.6% in 2009. Gross margin was positively affected in the quarter as a result of significantly higher manufacturing volumes due to lows and general improvement in the business. Our order activity did not slacking at the end of the year nor in January as is typical. Particularly strong in 2011 has been the increase of commercial business since the 2010 year end.
Carpet production was up 7% versus the third quarter and up 39% versus prior year due to higher sales. For the entire year, production was up 35% over 2009. Inventory turns were 3.30, up from 2.71 in the fourth quarter of 2009. Inventory decreased 1.1 million in the quarter, but is up 3.1 million year-to-date due to higher level of business. Expenses associated with consolidation of our operations were 918,000 during the quarter. We are still attempting to run a fallen facility.The fourth quarter SG&A comparison was a decrease of 1.2 million or 21.3% versus 28.6% for the same period a year ago. The fourth quarter is more represented of 2011 spending levels in the first part of 2010. The 2010 SG&A was 24.8% of sales. Operating income in the quarter of 1.6 million compared to a loss of 4.1 million in 2009. Splitting the effect of facility consolidation, operating income was 2.5 million or 3.3 million improvement over last year’s loss. For the year, our operating loss is 2.6 million and our operating loss included 1.6 million in unusual items 2010 compared to 37 million of facility consolidation, impairment of assets, and goodwill in 2009. Our interest expense decreased 335,000 in the fourth quarter versus prior year due to lower interest rates. For the year, interest was down 1.4 million despite higher debt levels. Our effective income tax benefit rate was 8% in the fourth quarter due to a true up for the year and 37% for the year of 2010. Our normal rate in 2011 at normal levels of profitability will be approximately 38%. Diluted earnings per share from continuing operations was $0.05 in the fourth quarter. Continuing operations in the quarter, when excluding unusual items was $0.09 per share versus $0.11 loss in the same basis for the same quarter of 2009. Read the rest of this transcript for free on seekingalpha.com