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However, management undertakes no obligation to update these or any forward-looking statements, whether as a result of new information, future events, or otherwise. If an update to our business outlook is provided, the information will be in the form of a news release. We wish to caution you that all of our statements, except the company's past financial results are just our current opinions, predictions and expectations.Actual future events or results may differ materially. For a review of risk factors, please refer to Microsemi's report on Form 10-K for the fiscal year ended October 03, 2010, which was filed with the SEC on November 23, 2010. That said, I'm going to turn the call over to John to discuss our financial results, and then Jim will address our end markets and overall business strategy. Here is John Hohener. John Hohener Thank you, Terri. Net sales for the quarter ending January 2, 201 were a record $184.4 million, up 21.9% from the $151.2 million in the fourth quarter of 2010, and up 63.4% from the $112.8 million reported in the year-ago first quarter. GAAP gross margin in the first quarter was a record 51.5%, and despite including the negative impact of non-cash purchase accounting adjustments related to acquired profit and inventory from our Actel acquisition, it increased 240 basis points from the 49.1 in the fourth quarter of 2010, and 520 basis points from the 46.3% in the year-ago first quarter. Excluding this non-cash item, our non-GAAP gross margin for the first quarter was 53.6%, up 440 basis points from 49.2% in the fourth quarter of 2010 and up 730 basis points from the 46.3% gross margin we reported in the year-ago first quarter. Approximately 90 basis points or $1.1 million of the sequential improvement is related to cost savings associated with our Scottsdale transition.
Our non-GAAP gross margin forecast for next quarter is expected to be in the range of 56% to 58%. We are still on track to cease operations of our Scottsdale facility by the end of February. Total annualized savings, when complete will equal $24 million, which is at the high end of our original goal.This quarter, non-GAAP selling, general and administrative expenses were $32.5 million or 17.6% of sales compared to $24.2 million or 16% of sales in the fourth quarter of 2010, and compared to $18.2 million or 16.2% of sales in the first quarter of last year. The increase is primarily due to the acquisition of Actel. SG&A will be up next quarter $3.5 million to $4.5 million primarily due to the addition of Actel for the third month in the quarter, as well as some additional cost to support our continued growth prospects for the coming year. Research and development costs were $24 million or 13% of sales compared to $16.7 million or 11% of sales in the fourth quarter of 2010, and compared to $11.8 million or 10.5% of sales in the year-ago first quarter. This increase was again due primarily to the acquisition of Actel. R&D will be up in the next quarter $3.5 million to $4.5 million, primarily due to the addition of Actel along with some additional costs, our product development efforts as we intend to continue to make prudent investments that will deliver continued organic growth. Our non-GAAP operating income was $42.4 million or 23% compared to $33.5 million or 22.1% in the fourth quarter of 2010, and $22.2 million or 19.7% in the prior year first quarter. We recorded $3.2 million in non-GAAP interest and other expense, primarily due to the interest expense on our term loan. This is for two months. We expect this expense to increase to approximately $5 million next quarter.
We account for our term loan under the fair value option and record charges to the fair value through other income or expense. Changes in the fair value of term loan balances outstanding did not result in a change to the principal we owe and our non-cash amounts that we exclude from internal measurements and from forecasting future non-GAAP results.Read the rest of this transcript for free on seekingalpha.com