Before beginning the review, I want to remind you that today's comments include forward-looking statements about future activities and our expectations for sales, earnings, cash flow and other possible future results. While we believe these expectations are based on reasonable assumptions, actual results may differ materially due to any number of factors, including the risk factors listed in our annual report on Form 10-K for the year ended December 31, 2010, and in the cautionary statement that is in today's release and in our slides. We have no plans to update these forward-looking statements after this conference.Also in today's conference call, we are providing information on non-GAAP financial measures. That information, which consists of currency and acquisition-adjusted sales growth, operating income and related margins, net income and EPS results on both an adjusted and reported basis and free cash flow reconciled to net cash provided by operating activities, is also contained in today's earnings release, which is posted on our website and in the appendix to today's presentation that begins on Slide 18. With that, I'll ask Kirk to start with the summary of our results compared to our prior guidance and then onto fourth quarter results. Kirk? Kirk A. Richter Thank you, Sondra, and good morning. To begin, let me review our actual 2011 Q4 and full year results compared to the guidance we provided in our last conference call. Starting with sales, we had 3% organic growth in Q4 compared to guidance that we expected to be in a low- to mid-single digit range. Our Q4 diluted adjusted EPS was $0.91 after adding back a onetime $0.02 tax item, above the midpoint of our guidance range of $0.85 to $0.93. For the full year 2011, we had indicated that we expected to achieve mid-single-digit organic sales growth, and we did that with 5% organic growth.
Our guidance for diluted adjusted EPS was a range from $3.73 to $3.81, and we delivered $3.76 excluding restructuring but including net Q4 tax increase of $0.02 a share. We increased our guidance range twice during 2011 to reflect the improved operating performance, favorable foreign exchange rates and tax benefits.Free cash flow was $391 million compared to guidance of about $400 million. We delivered solid achievement against our guidance for both Q4 in the full year of 2011. Our Q4 sales were $610 million, a reported increase of 5% over last year's fourth quarter. In our last call, we indicated that we expected some market challenges in Q4 but fully expected to deliver full year organic sales growth in the mid-single-digit range. Our organic sales growth for the quarter, which excludes the impact of changes in foreign currency exchange rates and acquisitions, was 3%. After achieving 4% organic growth in research sales in each of 2011's first 3 quarters, our Research business grew 1% organically in Q4. Our SAFC business had its highest quarterly sales in Q4 2011 with organic growth of 7%. I'll have more comments on those increases shortly. Acquisitions added 2%, while changes in foreign currency exchange rates had no impact on sales growth in the quarter compared to 2010's Q4. Our fourth quarter reported operating income was $160 million, a healthy 14% increase over 2010's adjusted Q4. Net income of $108 million was a 6% increase over last year's adjusted fourth quarter. Reported diluted EPS was $0.89, an adjusted gain of 7% over the prior year. Our Q4 free cash flow of $91 million was consistent with the amounts generated in both the fourth quarter of 2010 and in Q3 2011. Higher net income was largely offset by a higher level of working capital primarily due to planned inventory increases, which improved service levels to our customers in select market and slightly higher capital expenditures to support planned strategic growth initiatives.
Looking now at our results for the full year of 2011, our sales grew organically by 5%, with the $2.5 billion in sales setting a new annual high. Both net income and diluted EPS grew 19%. Our adjusted net income of $462 million and adjusted diluted EPS of $3.76 for the year achieved 13% and 14% growth, respectively, excluding restructuring charges in 2011 and 2010 and an impairment charge in 2010. Our adjusted operating income increased by 13% over 2010, consistent with the increase in adjusted diluted EPS. Free cash flow was $391 million for all of 2011, a strong result given the increase in strategic investments.Read the rest of this transcript for free on seekingalpha.com