Sales of our Enterprise Data Storage Solutions products were $272.1 million or 92% of total revenue. This is a decrease of 19% compared to the first quarter of last year and a decrease of 23% compared to our prior fiscal quarter. Sales of our capital equipment products were $23.6 million or 8% of total revenue, down 10% compared to the first quarter of last year and down 33% compared to our prior fiscal quarter.

Gross margin was 17.9% for the quarter compared to 13.7% in the same period a year ago and 17.7% in our prior fiscal quarter. Gross margins were slightly higher than expected due to product mix. The gross margin for our Enterprise Data Storage Solutions products was 17.3% compared to 14.2% last year and 17.7% last quarter. In addition to product mix, the increase from the prior year was impacted by the sale of specific products without hard disk drives, as Steve would explain later.

The gross margin for our capital equipment products was 25.5% compared to 9.7% last year and 18% last quarter. The prior-year margin was impacted by higher fixed cost base and inventory provisions.

Non-GAAP operating expenses in the quarter were $39.6 million compared to $43.5 million in Q1 of last year and $44.3 million last quarter, reflecting the restructuring actions we implemented toward the end of last year and the deferral of some specific product development expense into Q2. On a non-GAAP basis, net income was $11.4 million or $0.40 per diluted share compared to net income of $7.5 million a year ago and net income of $20.8 million in the prior quarter.

Turning our attention now to the balance sheet. Cash and cash equivalents at the end of the quarter was $155.8 million compared to $132.6 million at the end of Q4 and $90.8 million at the end of fiscal year 2010. Cash flow generated from operations was $34.2 million in the quarter.

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