We are pleased to report strong earnings for the quarter driven by record product sales and record total revenue. Total revenue increased 13% to $8.21 million with a 13% increase in product sales and a 14% increase in contract research and development revenue. Net income increased 11% to $0.70 per diluted share compared to the $0.64 for the prior year quarter.Now I’ll turn the call over to Curt for details of our financial results. Curt Reynders Thanks Dan. As Dan mentioned total revenue for the first quarter of fiscal 2012 increased 13% to $8.21 million due to a 13% increase in product sales and a 14% increase in contract, research and development revenue. Product sales were a record $7.02 million with strong sales into both industrial and medical device markets. Contract R&D revenue increased 14% to $1.19 million due to new contracts and increased activity on certain contracts. Gross margin remained strong although it decreased to 68% of revenue compared to 71% last year due to a less favorable product mix and increased labor cost. The increased labor costs were from adding production personnel needed to support the ramp up of future products. Total expenses increased 14% for the first quarter of fiscal 2012 compared to the first quarter of fiscal 2011 due to a 45% increase in research and development expense. The increase in research and development expense was due to increased product development activities. We believe the investment in R&D will pay off in future revenues. Dan will highlight our R&D efforts in a few minutes. Interest income increased 19% due to an increase in interest bearing marketable securities. Income before taxes for the quarter increased 9% compared to the first quarter of fiscal 2011 to $5.07 million and pre-tax margin was 62%. The provision for income taxes was a lower percentage from the prior year quarter 32% of income before taxes compared to 34% last year because of slightly lower state and federal effective tax rates.
Net income for the first quarter increased 11% to $3.44 million or $0.70 per diluted share compared to $0.64 last year and net margin was 42%.Cash flow strengthened our balance sheet considerably and a strong balance sheet allows us to defend our intellectual property of necessary and allows for contingencies. Operating cash flow was $5.07 million for the quarter. As of June 30th, cash plus marketable securities was $67.2 million an increase of $5.04 million in the quarter. Income taxes payable increased $1.37 million because we have now estimated income taxes payments due in the most recent quarters. We have two payments due in the quarter ending September 30th. Purchases of fixed assets were just under $200,000 for the quarter primarily for a production equivalent. In addition to equipment purchases we are looking at optimizing our facilities. We are exploring the possibility of either extending our building lease or expanding to another building as part of our long-term expansion strategy. We have the right to opt out of our lease at the end of 2012. Possible capacity investments include a larger production clean room which we could start as soon as next month. Now I will turn it over to Dan for his perspective on our business. Dan? Daniel Baker Thanks Curt. I will cover research and development, patents and governance. As Curt said, we have significantly increased our R&D investments over the past year. Three research areas we have highlighted include biosensors, consumer electronics and MRAM memory. Read the rest of this transcript for free on seekingalpha.com