Income Taxes and Other Income
The 3.3 percentage point increase in our effective tax rate to 32.8% in the first quarter of 2012 from 29.5% in the first quarter of 2011 was primarily due to a significant benefit recognized in the first quarter of 2011 related to the extension of the research and experimentation tax credit in December 2010 in addition to the non-renewal of this same credit for 2012. Other income (expense) in the first quarter of 2012 included the receipt of a one-time $1.2 million dividend pursuant to our investment in BioProcess Algae LLC and a $0.5 million foreign currency loss in the first quarter of 2012 primarily from the translation of cash accounts at certain foreign subsidiaries denominated in currencies other than their functional currencies.
Chris Conway commented on 2012 guidance: “The strength of our filtration business was evident from our strong first quarter growth and operating results. We expect these results to continue as a result of the many growth opportunities we are pursuing in the broad filtration markets we serve. We believe we are strongly positioned to participate in the expected growth in the natural gas market—a market we believe has as much long-term potential as any other filtration market. We continue to develop innovative air filtration products for non-traditional filtration markets including animal confinement and outdoor electronic kiosks, and we continue to drive international expansion as evidenced by our significant growth in Brazil in the first quarter. We experienced some headwinds in the first quarter from our Packaging segment and from foreign markets in Europe and China. Although we now expect flat sales in China for 2012, it remains a market with excellent long-term growth potential. In addition, we expect recovery in our Packaging segment and our European sales as the year progresses. Accordingly, we confirm our guidance for 2012 diluted earnings per share of $2.55 to $2.70.”