I’ll now turn the call over to Rich Riley.Richard Riley Thank you, Jeremy. Good morning, everyone. Thanks for joining us on the call this morning. I’ll begin the call today with a brief overview of our business results for the second quarter along with a few observations on the recent trends impacting our domestic and international businesses, in order to provide some background for our later comments. I’ll then turn the call over to John Barrett, our Interim CFO, who will take us through a more detailed financial review of our performance for the quarter. Finally, after I provide our perspective on the LoJack business for the second half of the year, we will open the call for your questions. We’re once again pleased with our year-over-year growth in net income in the second quarter of 2011, particularly as it represents the fourth consecutive quarter of improving profitability. This improvement helped to generate a strong cash balance of almost $54 million as we enter the third quarter. Net income for the second quarter of 2011 was $200,000, up from a net loss of $18.2 million in the same quarter of the prior year. I do want to remind everyone that the net loss of $18.2 million in the second quarter of the prior year included a non-cash charge of $15.1 million for the establishment of a valuation allowance against U.S. deferred taxes. If we adjust for this item on a pro forma basis the loss in the second quarter of 2010 would have been approximately $3.1 million. We continue to demonstrate the strong cost controls and financial discipline that have been our core focus since the end of the second quarter of 2010. Operating expenses in the second quarter of 2011 declined approximately $4 million from prior year levels at significant savings and almost every expense category more than offset a year-over-year increase in legal expenses of $1.2 million. This discipline over the last four quarters has helped improve our net cash position by almost $21 million over the last 12 months.
Our strong overall financial discipline and resulting savings enabled us to make incremental investments on our business in Italy and in a series of sales and promotional programs designed to address recent trends in the domestic auto business.While we are pleased with our bottom line performance, we were disappointed with our topline revenue results. Consolidated revenue for the second quarter was down 10% on the same quarter to prior year, as we experienced a year-over-year decline in both our domestic and international businesses. Revenue for the second quarter in North American segment was down 8% from prior year levels, despite a broader U.S retail auto market experiencing 11% improvement over the prior year. While the overall retail auto market experienced solid year-over-year growth in a quarter. It is important to note that the sales performance by auto manufacturer varied widely as a supply from the Japan had most significant impact on manufacturer such as Lexus, Toyota and Honda. Resulting inventory shortages in the second quarter of 2011 caused by the tsunami in Japan or far more serious then originally forecasted in the first quarter and had a dramatic impact on a number of the manufacturers in the second quarter. We were negatively impacted by the significant shift in brand mix during the second quarter, as well as by the continued shift in model mix as consumers purchased smaller cars in response to higher gas prices. Additionally, the shortage of vehicle inventories to dealers that do temporary reduction in a number of dealers willing to participate in our both installation program during the second quarter. While we developed a number of sales and deal promotional programs to specifically address this current type of dynamics. The new programs did not gain traction quick enough to have a positive impact in the second quarter. We anticipate that will begin to see the positive effect of these programs in the second half of the year.
I do want to point out positive notes and that is related to our commercial business in U.S. The step decline in residential and commercial building over the last two years in U.S. had negative impact on our commercial business during that same period. We saw some improvement in our commercial business in a first quarter of 2011 and I’m pleased to report that we saw continue sign of the turnaround in the second quarter.Read the rest of this transcript for free on seekingalpha.com