Third Quarter 2012 Results Compared to Third Quarter 2011 Results
Third quarter 2012 net sales were $205.1 million compared to $220.5 million for the third quarter 2011. Income from operations for the third quarter 2012 was $6.5 million compared to $12.7 million for the third quarter 2011. Net income for the third quarter 2012 was $3.1 million, or $0.30 per diluted share, compared to $8.3 million, or $0.80 per diluted share, for the third quarter 2011.
For the third quarter 2012, the Company reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $8.3 million compared to EBITDA of $15.3 million for the third quarter 2011. Results include the impact of certain restructuring and other highlighted charges discussed below.
Excluding these highlighted charges, EBITDA was $10.0 million for the third quarter 2012 compared to $15.2 million for the third quarter 2011. The year-over-year reduction in EBITDA of $5.2 million was driven by lower gross profit. A reconciliation of EBITDA to net income is set forth at the end of this earnings release.
Third quarter 2012 gross profit was $34.7 million compared to $39.8 million for the third quarter 2011. Third quarter 2012 gross margin was 16.9% compared to 18.0% one year prior. The decrease in gross margin was due to lower gross profit per unit. The Company's unit volume declined by 6% compared to the third quarter 2011 on a 2% reduction in average selling prices.
Effective from the month of July 2012, data from CREST reports is no longer available to the Company.
The other highlighted charges in the third quarter 2012 and for the nine months ended September 29, 2012 consisted of employee separation costs combined with certain charges incurred in connection with refinancing the Company's $118 million aggregate principal amount of 12%/15% Senior Payment-In-Kind Toggle Notes due 2013.
The credit to restructuring charges recorded in the third quarter 2011 consisted of a $0.2 million credit resulting from an amendment to a sublease at our former Philadelphia, PA distribution center partially offset by $0.1 million in interest accretion on restructuring charges for closed facilities. The credit to restructuring charges during the nine months ended September 2011 was due to a gain of approximately $2.2 million on the purchase of a leased facility in Wadesboro, NC. The net purchase price of the facility was less than the present value of the remaining lease payments due under the lease, which was set to expire in March 2014.
The Company relies primarily upon cash flow from operations and borrowings under its revolving credit facility to finance operations, capital expenditures and debt service requirements. Borrowings and availability under the revolving credit facility fluctuate due to seasonal demands.
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