Mr. Shular commented, “As previously reported, the solar market remains very slow and is not expected to recover until 2013. However, other businesses in our Engineered Solutions segment including advanced consumer electronics, transportation and oil and gas exploration have continued to demonstrate year-over-year growth. We expect this segment to return to profitability in the second quarter.”
Total company overhead expenses were approximately $43 million as compared to $35 million in the first quarter of 2011. The increase was driven by higher incentive compensation, research and development expense and the inclusion of the FMI team.
Other income was $3 million in the first quarter of 2012 versus negligible other expense in the same period of the prior year. The increase was primarily driven by insurance reimbursement for claims made related to flood damages incurred at our Clarksburg, West Virginia facility during 2011. This non-recurring item positively impacted first quarter net income by $0.02 per share.
Interest expense in the quarter was $5 million versus $4 million in the first quarter 2011. The effective income tax rate in the first quarter was 23 percent.
Based on current International Monetary Fund (IMF) projections and other economic forecasts, global GDP growth is projected to expand an average of approximately 3.5 percent in 2012, down from nearly 4.0 percent in 2011. Advanced economies are expected to continue a slow recovery with a very modest growth rate of 1.4 percent in 2012. The outlook for Europe remains particularly weak with economic activity expected to shrink 0.3 percent in the region in 2012. Growth in emerging economies is expected to slow to a more subdued growth rate of 5.7 percent. The IMF highlights that geopolitical uncertainty and the European debt crisis continue to be the largest risk factors to the strength of the global economic recovery.