Forward-looking statements reflect management’s current views and speak only as of the time they are made. The company undertakes no obligation to update these statements in light of new information or future events.[Operator Instructions] I would now turn the conference over to Caroline Chambers, Vice President and Controller. Caroline M. Chambers Good morning, everyone. I'm here this morning with Pat McHale, Jim Graner and Christian Rothe. I will first provide comments on our first quarter financial results and then follow with a brief discussion about the acquisition of the ITW Finishing businesses. Slides are available to accompany our call and can be access on our website. The slides include information of our consolidated financial results from the first quarter in our usual format. We have also included several additional slides about the acquisition in the new Finishing businesses, including some historical financial information for the powder and liquid finishing pieces of the business for the first quarter last year based on management account provided by the seller. Although we are providing some top-level information about the liquid finishing results in the slides, access to detailed operating information for the liquid finishing businesses is limited as a result of the hold separate agreement with the FTC, and we do not have detailed information on current liquid finishing operation. Graco sales of $234 million for the quarter were 8% higher than the strong first quarter last year, with growth in all segments and geographic regions. Changes in currency translation rates did not have a significant impact for the quarter. Net earnings totaled $35 million or $0.58 per diluted share for the quarter. Earnings were 5% lower than last year. Higher cost and expenses this quarter, particularly for product development of about $2 million, pension of $1 million, acquisition-transaction costs of $4 million and additional interest of $3 million more than offset the growth in sales and the strong gross margin.
Gross profit margins as a percent of sales were 56.5% for the quarter, slightly lower than last year. The effect of higher material costs was partially offset as we begin to see realized price increases and improved factory efficiencies. We expect that both realized pricing and factory efficiencies will continue to improve going forward in 2012. As noted earlier, product development expense increase by $2 million in the quarter as compared to last year, mainly due to increased headcount and project expenses. About half of the increase is in the Industrial segment. General and administrative costs increased by $5 million from the prior year, including $4 million of acquisition-related cost. We expect transaction and related legal cost of approximately $8 million in the second quarter of this year.Operating earnings were also affected by an additional $1 million of pension cost as compared to the prior year. For the full year 2012, we expect pension costs to increase by approximately $5 million from the prior year. We also expect to make a voluntary contribution to the U.S. funded pension plan of approximately $5 million later this year. Interest cost increased by $3 million compared to last year with a full $300 million of private placement debt in place for the first quarter of this year. We expect interest expense to be approximately $6 million in the second quarter. The effective tax rate of 34.5% for the quarter is higher than the rate of the first quarter last year due to the expiration of the federal R&D credit. Net cash provided by operating activities was $23 million for the first quarter as compared to $14 million for the first quarter last year. Although inventories increased by $5 million and accounts receivable increased by $21 million from year end due to higher sales, asset performance metrics improve. Capital expenditures were $8 million for the quarter and we paid dividends of $13 million. Read the rest of this transcript for free on seekingalpha.com