After the review of third quarter results, we will open the session to questions. I will now turn the call over to Bob Wells.Robert J. Wells Thank you, Claudia. As always, in order to allow more time for questions, we provided balance sheet items and other selected information on our website, at www.sherwin.com, under Investor Relations third quarter press release. Summarizing overall company performance for the third quarter 2011 versus third quarter 2010, consolidated net sales increased $312.7 million or 14.4% to $2.48 billion due primarily to selling price increases, acquisitions and improved organic volume growth by our Paint Stores Group and Global Finishes Group. Acquisitions increased consolidated net sales 4.1% in the quarter, and favorable currency translation rate changes added 1% to net sales. Consolidated gross profit dollars increased $66.7 million to $1.04 billion. Gross margin decreased 290 basis points to 41.8% of sales from 44.7% in the third quarter last year. The decrease in gross margin was primarily due to higher year-over-year raw material costs and the dilutive effect of acquisitions completed during the past 12 months. Selling, general and administrative expenses for the quarter increased 8% to $760.2 million due primarily to incremental SG&A from acquisitions, higher service costs resulting from increased sales and currency translation rate changes. As a percent of sales, SG&A decreased to 30.6% in the third quarter this year from 32.4% last year. Interest expense decreased $858,000 compared to third quarter last year, and consolidated profit before taxes in the quarter increased $4.9 million or 1.9% to $250.3 million. Profit before tax as a percent of sales decreased to 10.5% from 11.8% last year. Our effective tax rate in the third quarter this year was 30.9% compared to 31.4% in the third quarter of 2010. For the full year 2011, we expect our effective tax rate to be in the low 30% range, excluding any impact of the IRS settlement, compared to last year's rate of 31.8%.
Consolidated net income increased $4.6 million to $179.9 million compared to $175.3 million in the third quarter of 2010.Net income as a percent of sales declined to 7.2% from 8.1% in the third quarter last year. Diluted net income per common share for the quarter increased 6.9% to $1.71 per share from $1.60 per share in 2010. Acquisitions and favorable currency translations combined had no significant impact on diluted net income per common share in the quarter. Looking at our results by operating segment, sales for our Paint Stores Group in the third quarter increased 10.2% to $1.42 billion. Selling price increases and improving domestic architectural paint sales volumes across most customer segments accounted for most of the increase in sales. Comparable store sales, that is sales by stores opened more than 12 calendar months, increased 8.2% in the quarter compared to the third quarter last year. Regionally, in the quarter, our Southwest division led the sales performance, followed by Midwest division, Southeast division and Eastern division. Sales by all 4 Paint Stores divisions increased in the third quarter compared to last year. Segment profit for the group increased $11.8 million or 5.2% to $236.9 million in the quarter as sales growth from selling price increases and volume improvement was partially offset by higher year-over-year raw material costs and selling, general and administrative expenses. Operating margin decreased to 16.7% from 17.5% in the third quarter last year. Turning to our Consumer Group, sales in the third quarter increased 3.3% to $351.6 million due primarily to selling price increases that were partially offset by the elimination of a portion of a paint program with a large retail customer. Segment profit for the Consumer Group decreased $18.7 million or 31% in the quarter to $41 million due primarily to higher year-over-year raw material costs that were partially offset by selling price increases and reductions in selling, general and administrative expenses. Read the rest of this transcript for free on seekingalpha.com