Gross profit was $88 million, or 18.9 percent of net sales, during the 2012 first quarter, compared with $120 million, or 21.0 percent of net sales, during the first quarter of 2011. Excluding special charges, gross profit was 21.0 percent of sales excluding precious metals during the quarter, compared with 27.5 percent in the first quarter of 2011. The primary driver of the decline in gross profit dollars was lower sales volume in the Electronic Materials segment, including conductive pastes and powders sold to manufacturers of solar cells and other electronic products. During the 2012 first quarter, gross profit was reduced by charges of $0.7 million, related to residual costs at closed manufacturing sites that were affected by prior-period restructuring actions. In the first quarter of 2011, gross profit was reduced by charges of $1.6 million, primarily as a result of residual costs at closed manufacturing sites.

Selling, general and administrative (“SG&A”) expenses were $78 million during the first quarter compared with $77 million in the prior-year quarter. SG&A expenses were 16.7 percent of net sales during the quarter, compared with 13.4 percent of net sales in the first quarter of 2011. Increased pension expense, salary adjustments and higher expenses related to an initiative to streamline and standardize business processes and improve management information systems tools contributed to higher SG&A expenses for the quarter. These increases were partially offset by lower depreciation expense and cost containment in other discretionary SG&A spending. SG&A expenses during the 2012 first quarter included special charges of $1.8 million, primarily related to expenses at sites that were closed during earlier restructuring actions and severance expenses. During the first quarter of 2011, SG&A expense included $1.1 million in charges, primarily related to residual expenses at closed sites impacted by prior-period restructuring actions.

Restructuring and impairment charges were $0.3 million in the first quarter of 2012, compared with $1.6 million in the prior-year quarter. The decline reflects the continued winding down of the Company’s multi-year manufacturing rationalization activities.

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