Operating income amounted to $109.6 million, or 15.3% of sales, versus $88.0 million, or 13.7% of sales a year earlier. The increase in absolute dollars reflects higher business activity and acquisitions, while the increase as a percentage of sales is due to a better absorption of fixed costs from increased volume and greater efficiencies throughout Stella-Jones' network. Results for 2012 include approximately $4.1 million in acquisition costs, of which $3.0 million are related to the McFarland transaction. Last year's results included an asset impairment charge of $2.2 million and acquisition costs of $423,000 related to the purchase of the Russellville facility.
Net income for 2012 totalled $73.1 million, or $4.53 per share, fully diluted, versus $55.7 million, or $3.48 per share, fully diluted, in 2011, representing a year-over-year increase of 31.2%. Cash flow from operating activities before changes in non-cash working capital components and interest and income tax paid rose 21.2% to $120.8 million.
FOURTH QUARTER RESULTS
Sales totalled $159.3 million, up 8.0% from last year's fourth-quarter sales of $147.5 million. This increase is attributable to a $15.9 million contribution from the McFarland operations and to an additional contribution of $12.0 million from the Russellville facility. The conversion effect from year-over-year fluctuations in the value of the Canadian dollar, versus the U.S. dollar, reduce the value of U.S. dollar denominated sales by $2.5 million. Excluding these factors, sales decreased approximately $13.6 million due to lower advanced railway tie deliveries in the fourth quarter of 2012, compared with last year, and to a reduction in the tie recycling business.
Fourth quarter sales of railway ties reached $73.7 million in 2012, versus $74.4 million in 2011. This slight decrease reflects lower year-over-year advanced deliveries, partially offset by the additional contribution from the Russellville facility. Utility pole sales rose $18.9 million to $70.2 million due to a $13.6 million contribution from the McFarland operations and higher sales of distribution poles. Industrial product sales were $10.4 million, versus $19.9 million a year ago, as a result of a planned reduction in the tie recycling business. Residential lumber sales reached $5.1 million, up from $2.0 million last year, mainly due to additional sales of $2.3 million from the McFarland operations.
Operating income was $21.1 million, or 13.3% of sales, compared with $20.4 million, or 13.8% of sales, last year. Results for the fourth quarter of 2012 include acquisition costs of $2.4 million related to the McFarland transaction, while results for the fourth quarter of 2011 included an asset impairment charge of $2.2 million and acquisition costs of $423,000 related to the purchase of the Russellville facility. Excluding these elements, operating income for the fourth quarter of 2012 was $23.5 million, or 14.8% of sales, compared with $23.0 million, or 15.6% of sales, a year earlier. The reduction as a percentage of sales mainly stems from lower margins at the McFarland operations.
Net income for the period reached $16.5 million, or $1.00 per share, fully diluted, up from $13.4 million, or $0.83 per share, fully diluted, last year. The Company's effective tax rate for the fourth quarter of 2012 was reduced by tax benefits resulting from the donation to local economic development authorities of land located in Stanton, Kentucky and by the deductibility of acquisition costs related to the McFarland transaction. Cash flow from operating activities before changes in non-cash working capital components and interest and income tax paid was $22.4 million, compared with $24.8 million a year ago.
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