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We are pleased to report increased revenue and earnings for the quarter driven by solid product sales. Product sales increased 12% to $6.19 million. Total revenue increased 6% to $7.24 million and net income increased 6% to $0.64 per diluted share. Now I ’ll turn the call over to Curt to just cover details of our financial results.Curt Reynders Thanks Dan and good afternoon. As Dan mentioned total revenue for the quarter increased 6% to $7.24 million, our 19th consecutive quarterly year-over-year increase in total revenue. The increase was despite a comparison to an extraordinary year ago quarter, its contract research and development revenue more than quadrupled. The revenue increase was due to a 12% increase in product sales to $6.19 million, our 22nd consecutive year-over-year increase in product sales, very robust sales into industrial markets more than offset weakness in medical device markets. The strength of industrial markets was encouraging and we continue to be quite optimistic about the medical device markets long term. Demographics are favorable in health care reform, could make medical devices available to more people. Quarterly contract R&D revenue decreased 20% to $1.05 million due to the successful completion of certain contracts and contract activities. Dan will talk more about contracts in a few minutes. Gross margin remained very strong, although it decreased to 71% of revenue compared to 72% last year due to a slightly less favorable product mix with the particularly strong sales into industrial markets. Total expenses increased 7% for the first quarter of fiscal 2011, compared to the first quarter of fiscal 2010 due to a 28% increase in research and development expense. The increase in research and development expense was due to a decrease in contract research and development activities which caused resources to be reallocated to expense R&D. We also increased product development activities.
Interest income increased 29% to $476,000 for the quarter due to an increase in interest bearing marketable securities. Income before taxes for the quarter increased 6% compared to the first quarter of fiscal 2010 to $4.67 million and pre-tax margin with 65%.The provision for income taxes was a slightly higher percentage than the prior year quarter, 34% of income before taxes compared to 33% last year because of a higher federal effective tax rate. Net income for the first quarter increased 6% to $3.1 million or $0.64 per diluted share compared to $0.61 last year and net margin was 43%. Our exceptional profitability is a credit to our employees ’ productivity and a validation of the value of our products and services. In the past quarter NVE was included in a list on the website of Investor ’s Business Daily of the top five companies in the semi-conductors industry ranked by operating margin. Also in the past quarter, our return on revenue or net margin ranked first among the 100 largest companies in Minnesota according to the Star Tribune. Cash flow strengthened our balance sheet considerably and a strong balance sheet allows us to defend our intellectual property if necessary and allows for contingencies. Operating cash flow was $5.42 million for the quarter, as of June 30th, cash plus marketable securities was $54.7 million, an increase of $5.13 million in the quarter to exceed $50 million for the first time. Income taxes payable increased $1.54 million because we had no estimated income tax payments due in the most recent quarter. Read the rest of this transcript for free on seekingalpha.com