The company closed the first quarter achieving sales of $982 million and EPS of $0.77, hitting the high end of the company's guidance. Sales were up 4% in U.S. dollars and 5% in local currencies compared to Q1 of 2011. From an organic standpoint, excluding both acquisitions and foreign exchange, sales in Q1 2012 were about the same as last year. Sequentially, sales were up 3% in U.S. dollars and 2% organically from Q4.Breaking down sales into our 2 major components, our Cable business which comprised 7% of our sales, was up 17% from last year and 20% from last quarter. The Interconnect business was comprised 93% of our sales, was up 3% from last year and 2% sequentially. Adam will comment further on trends by market in a few minutes. Operating income for the quarter was $185 million compared to $186 million last year. Operating margin was 18.9% in Q1 2012, up from 18.5% in Q4, a strong sequential conversion margin of approximately 30% from Q4. Q1 2012 ROS of 18.9% compares to a very strong Q1 2011 ROS of 19.8%. Year-over-year reduction in Q1 is mainly attributable to lower margins in our Interconnect business which were 21% in the quarter compared to 22.1% last year. This was partially offset by an improvement in the margin in our Cable business from 11.8% last year to 14.5% in the most recent quarter. Reduction in Interconnect margin relates primarily to the impact of increases in material input costs versus the prior year, particularly for precious metals and plastics. These impacts were partially offset by the positive impact of cost reduction. From a sequential standpoint, operating margins improved 40 basis points to 18.9%. This margin improvement relates to good margin expansion on incremental volume in both the Interconnect and Cable businesses with Interconnect margins increasing 20 basis points to 21% and Cable margins increasing 140 basis points to 14.5%. In addition, corporate expenses were essentially flat on higher sales contributing 10 basis points to overall operating margin improvement. We are very pleased with the company's operating margin achievement this quarter. 2012 has began with a more balanced operating environment from a cost inflation and demand perspective, and in that more normal environment, the management team has achieved strong sequential improvement in margins and remains fully committed to further margin expansion as business volumes grow.
Interest expense in the quarter was $13.7 million compared to $10 million last year, reflecting higher average debt levels from the company's stock buyback program and the higher interest expense associated with the company's January senior notes offering. Other income was $2.2 million in the quarter, up from $1.7 million last year, primarily as a result of higher interest income on higher levels of cash and short-term cash investment. The company's effective tax rate in the quarter was 26.8% compared to a rate of 27.5% from the first quarter of last year. For the full year 2011, excluding onetime items, the company's effective tax rate was 26.8%, and we currently expect a similar tax rate for the full year 2012.Net income was approximately 13% of sales in Q1, a very strong performance. Orders in the quarter were $1,028,000,000, up 7% from last year, resulting in the book-to-bill ratio of approximately 1.05:1. In April of this year, the company completed the acquisition of Nelson-Dunn, a U.S. manufacturer of high-technology value-added interconnect assemblies for the oil and gas market with annual sales of approximately $45 million. This acquisition complements and strengthens the company's offering of harsh environment products for the fast-growing energy markets. The company paid approximately $55 million for the company. We continue to be excellent generators of cash. Cash flow from operations was $164 million in the quarter, approximately 130% of net income, and we continue to target cash flow from operations in excess of net income. From a working capital standpoint, inventory was at $659 million at the end of March, up 1% over the December quarter. Inventory days declined 1 day to 88 days. Accounts receivable was $771 million at the end of March, and day sales outstanding fell 2 days at the end of the quarter. Accounts payable was $403 million at the end of March, and from a day’s perspective, improved to 1 day at the end of the quarter.
At the beginning of 2012, the company issued $500 million of senior notes due 2022. Notes were sold at a slight discount and carry a 4% coupon. Proceeds from the notes were used to repay borrowings under the company's revolving credit facility, which matures in 2016. At the end of the quarter, borrowings and availability under the facility were $216 million and $784 million, respectively. The note issuance has a number of benefits for the company including the extension and staggering of the company's debt maturity schedule, the continued expansion of the company's investor base and an increase in the company's availability and liquidity. From the basis of the new debt structure, the company expects Q2 interest expense to be up slightly from Q1 levels.Read the rest of this transcript for free on seekingalpha.com