Ernest Duplessis -- VP, IR Bill Chapman -- Director, IR

Hello, this is Ernest Duplessis, Vice President of Investor Relations. Joining me is Bill Chapman, Director of Investor Relations. We are pleased to be sharing with you today Grainger’s fourth quarter and full-year 2009 results via this audio webcast. This recording is intended to provide you with more information related to our recent performance. Please also reference our 2009 fourth quarter and full-year earnings release issued January 26, in addition to other information on our Investor Relations web site to supplement this webcast. Before we begin, please remember that certain statements and projections of future results made in the press release and in this webcast constitute forward-looking information. These statements are based on current market conditions and competitive and regulatory expectations, and involve risk and uncertainty. Please see our Form 10-K for a discussion of factors that relate to forward-looking statements. Let’s begin by summarizing our full-year 2009 results. Sales of $6.2 billion were down 9% versus 2008. Net earnings decreased 9% and earnings per share decreased 6% to $5.62 versus $5.97 in 2008. Over the next 25 minutes, we want to explain in more detail how we achieved these results and give you some idea of what we’re seeing and expecting for 2010. Taking a closer look at the income statement for the year, gross profit margins increased about 80 basis points to 41.8%. Operating margins decreased approximately 70 basis points to 10.7%. The decrease in operating margins for the year were mainly driven by the 9% sales decline for the year and operating expenses, which declined at a slower rate than sales. For comparability, it is important to note that our earnings per share of $5.62 for the year 2009 included a non-cash gain of $0.37 in the third quarter from the step-up of our investment in our…

Thanks, Ernest. Fourth quarter operating earnings for the company decreased by 8% versus the 2008 fourth quarter. This decline was the result of an 80 basis point decrease in gross margins, primarily due to unfavorable mix of lower gross margins from the newly consolidated businesses in Japan and India. Operating expenses increased by 4% for the quarter. This was driven by a number of factors including $9 million in asset write-downs and $7.5 million in severance charges mentioned earlier. Company operating margin was 10.1%. Let’s now take a look at operating performance by segment. Operating earnings in the United States were down by 6% versus the 2008 fourth quarter. Operating margins declined by 60 basis points to 13.1%. Gross profit margins remained unchanged at 42.7%. In Canada, operating earnings were up 59% versus the 2008 fourth quarter. The improvement was the result of increased sales, a 90 basis point improvement in gross profit margins, and operating expenses which increased at a slower rate than sales. The improvement in gross margins was attributable to favorable inventory adjustments. The 2008 fourth quarter included a $2 million charge for the bankruptcy of a provider of freight payment services. Excluding these items, operating earnings were up 6% in U.S. dollars versus 2008. Operating losses for other business were $3 million in both 2009 and 2008 quarters. India, Panama and China were primary drivers of the losses, with Japan reporting net income. Lastly, let’s take a look at our operating cash flow. Operating cash flow for the quarter was $223 million versus $195 million in 2008. The full-year 2009 operating cash flow was $732 million, the strongest in company history. Cash allocated to capital expenditures was $53 million in the quarter and $142 million for the year. For the full year, the company returned $507…