Gross profit percentage declined to 19.2 percent of net sales during 2011, compared with 21.8 percent of net sales in 2010. The decline was primarily driven by reduced sales of high-margin electronic materials products, particularly conductive pastes used in solar applications. During 2011, gross profit was reduced by special charges of $4.8 million, primarily related to residual costs at manufacturing locations that were closed as a result of prior-period restructuring actions. In 2010, gross profit was reduced by special charges of $9.0 million, primarily the result of a multi-year settlement of taxes owed on certain raw materials and costs associated with manufacturing rationalization activities.

SG&A expenses were nearly unchanged at $294.8 million during 2011. SG&A expenses as a percent of net sales declined to 13.6 percent in 2011, from 14.0 percent during 2010. Reduced incentive compensation, lower special charges and less pension expense contributed to the reduced SG&A expense. These declines were offset by increased spending for an initiative to streamline and standardize business processes and improve management information systems tools, increased SG&A expenses in the Company’s non-U.S. operations resulting from changes in foreign currency exchange rates, and the cost of annual salary adjustments. SG&A during 2011 included special charges of $4.1 million, primarily related to expenses at closed sites that were part of prior-period restructuring actions. During 2010, SG&A expenses included charges of $18.1 million, primarily related to manufacturing rationalization actions, employee severance and corporate development activities.

Restructuring and impairment charges declined to $17.0 million, down from $63.7 million in the prior year. The lower charges reflected the reduction in restructuring activities as the Company completes the final actions related to its multi-year manufacturing rationalization efforts. Included in the 2011 restructuring and impairment charges were fixed asset impairment charges of $8.2 million and a $3.9 million impairment of goodwill in the Performance Coatings segment.

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