This conference call is also webcasted. It can be accessed at www.ametek.com and at www.streetevents.com. The conference call will be archived on both of these websites.I will remind you that any statements made by AMETEK during the call that are not historical in nature are to be considered forward-looking statements. As such, these statements are subject to change based on various risk factors and uncertainties that may cause actual results to differ significantly from expectations. A detailed discussion of the risks and uncertainties that may affect our future results is contained in AMETEK's filings with the Securities and Exchange Commission. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements. I will also refer you to the Investors section of www.ametek.com for reconciliation of any non-GAAP financial measures used during this conference call. We will begin today with some prepared remarks, and then we will take your questions. I will now turn the meeting over to Frank. Frank S. Hermance Thank you, Kevin, and good morning, everyone. AMETEK had an excellent first quarter. We established quarterly records for orders, sales, operating income -- operating margins, net income and diluted earnings per share. Sales in the first quarter were up 15% to $827.2 million. Internal growth was strong at 6%, while acquisitions added 10% and currency was a 1% headwind. Operating income for the first quarter was superb. It increased 20% to $182.8 million from $152 million last year, reflecting the impact of the higher sales and our Operational Excellence initiatives. Operating income margin in the quarter was a record at 22.1%, a 90-basis-point improvement over the first quarter of 2011. Net income was up 22% to $110.2 million and diluted earnings per share of $0.68 were up 21% over last year's first quarter. Orders in the first quarter were a record $863 million, up 8% overall from the prior year. Sequentially, orders were up 15%. The book-to-bill ratio in the quarter was 1.04.
Cash flow was very strong. Operating cash flow was $141 million, up 36% over last year's first quarter. Free cash flow was $132 million, or 120% of net income. Working capital management was excellent. Operating working capital was 17.2% of sales.Turning our attention to the individual operating groups. The Electronic Instruments Group had a great first quarter. Sales were up 21% to a record $468.8 million on strength in our Aerospace and Process businesses. In addition, we had strong contributions from the 4 acquisitions that we completed in the fourth quarter of 2011 and in January of 2012. Internal growth was strong at 9%, while currency reduced sales by 1%. EIG's operating income increased 23% to a record $123 million, and operating margin were a very strong at 26.2%, up 50 basis points over last year's first quarter. The Electromechanical Group also had a very good quarter. Sales were up 9% to $358.3 million on strength in our differentiated businesses and the contributions from the acquisitions of Avicenna and Coining. Internal growth was 3%. Acquisitions added 7%, and foreign currency reduced sales by 1%. EMG's operating income increased 13% to $70.9 million, a record level, and operating margins increased 70 basis points to 19.8%. Focusing now on our 4 growth strategies of Operational Excellence, global and market expansion, new product development and acquisitions. Operational Excellence is the cornerstone strategy for the company, and our focus on costs and asset management has been a key driver to both our competitive and financial success. Operational Excellence has many facets within our company, including lean manufacturing, Six Sigma in our factories and back office operations, design for Six Sigma in our new product development efforts and a movement of production to low-cost locales. We also continued to drive lower costs through our global sourcing office and strategic procurement initiatives. From these sourcing activities, we recognized approximately $10 million in savings in the first quarter and are conservatively estimating $40 million in savings for all of 2012. Our continued focus on these Operational Excellence efforts were key drivers in achieving the record operating margin of 22.1% in the first quarter. Read the rest of this transcript for free on seekingalpha.com