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Now, let me touch on our sales performance by category for the quarter. Video comp sales increased 6%. Video represented 43% of our business during the quarter versus 42% last year. The comp sales increased for the quarter was driven by the release of Breaking Dawn and strong performance in our catalog business.Music comp sales declined 9%. The music category represented 33% of our business for the quarter, compared to 37% last year. Electronics comps sales increased 19%, electronics sales represented 11% of our business for the quarter compared to 9% last year. Trend comp sales increased 15%. Trend sales represented 8% of our business for the quarter, compared to 7% last year. Video games, comps sales were down 10%, game sales represented 5% of our business for the quarter, the same level as last year. Now, Tom will take you through financial highlights for the quarter. Tom? Tom Seaver Thanks Bob. Good morning. As Bob mentioned, our net income for the quarter improved $5.3 million to $2.8 million, or $0.09 per diluted share, as compared to last year’s net loss of $2.5 million or a loss of $0.08 per share. EBITDA improved $4.6 million for the quarter to $4.6 million from last year’s EBITDA of $36,000. Our gross margin rate for the quarter increased 50 basis points to 37.2% of sales from 36.7% last year. The increase in gross profit as a percentage of sales was due to higher margin rates across all product categories. SG&A expenses were $37.3 million, a reduction of 23% and a total sales decline of 15%. SG&A as a percentage of sales was 33.2%, compared to 36.7% last year, a 350-basis point improvement. The decrease in SG&A expenses was driven by the closing of underperforming stores, and continued focus on effective expense management. Net interest expense was $770,000 in the quarter versus $832,000 last year.
We ended the quarter with cash of $62.3 million, compared to $29.7 million last year and did not require any borrowings under our line of credit at any point during the quarter. Year-over-year, we have lowered our inventory by $42 million and finished the quarter with $176 million in inventory, 19% below last year’s $218 million. On a per-square-foot basis, this is $74, the same level as last year.We ended the quarter with 379 stores and 2.4 million square feet in operation, versus last year’s 444 stores and 3 million square feet. During the quarter, the company operated an average of 383 stores, compared to an average of 451 stores last year. As reported on May 7th in an 8-K filing, we amended our revolving credit agreement. We are pleased that Wells Fargo has expanded their role to be our new lead bank. The amended agreement provides for a five-year $75 million revolving credit facility. The amendment provides for longer term, lower interest rates, lower costs and other favorable terms suitable to our business, which will support our strategic initiatives and growth. The facility underscores our financial strength and provides a strong financial foundation for our company for the foreseeable future. In addition, during the first quarter, we eliminated our long-term debt by paying off the mortgage we held on our Florida property. This reduced our long-term debt by $1.7 million. Now, I will turn it back over to Bob. Bob Higgins Thanks, Tom. 2011 marked our return to profitability for the first quarter of 2012 demonstrates continued improvement in our financial results. We continue to make significant progress and our results reflect that. Our positive comp sales was driven by a strong performance in video and continued strength in our electronics and trend categories. For the first quarter, these two categories combined, represented 19% of our business versus 16% last year and has a 17% comp increase, as we continue to strengthen the product mix in these categories. The improvement in our operating results has been driven by continued higher gross margin rates in all of our merchandise categories and reductions in operating expenses. Read the rest of this transcript for free on seekingalpha.com