The company closed Q2, achieving new records in sales and earnings per share. Sales were $1,061,000,000 and EPS was $0.86, both beating the high end of the company's guidance. Sales were up 4% in U.S. dollars and 6% in local currencies compared to Q2 of 2011. From an organic standpoint, excluding both acquisitions and currency impacts, sales in Q2 2012 were up 2% versus last year. From a sequential perspective, sales were up 8% in U.S. dollars and a strong 7% organically from Q1 of 2012.Breaking down sales into our 2 major components, our cable business, which comprised 7% of our sales, was up 2% from last year and up 3% from last quarter. The interconnect business, which comprised 93% of our sales, was up 4% from last year and 9%, sequentially. Adam will comment further on trends by market in a few minutes. Operating income for the quarter was $206 million compared to a prior year income number of $215 million as reported, and $197 million excluding one-time items. Operating income in 2011 included income of approximately $18 million relating to an adjustment to reduce a previously recorded contingent payment obligation for 2010 U.S.-based acquisition. Operating margin was 19.4% in Q2, which is up from 18.9% in Q1, a strong sequential conversion margin of approximately 26% from Q1. The Q2 ROS level of 19.4% is equal to the Q2 2011 ROS, excluding the impact of one-time items. Operating income in both years is net of stock option expense of $8 million in the 2012 quarter and $7 million in the 2011 quarter, about 0.7% of sales for both time periods. From a segment perspective, in the cable business, margins were 13.8%, up from 12.8% last year. The margin improvement relates primarily to lower relative material cost. From a sequential standpoint, cable margins declined from 14.5% in Q1, primarily as a result of a less favorable pricing environment and product mix. In the interconnect business, margins were 21.6%, equal to last year, and up from 21% last quarter. The interconnect operating margin improvement from last quarter primarily reflects the positive impacts of higher volume and cost reduction actions. We are very pleased with the company's operating margin achievement in the quarter.
2012 continues to be a more balanced operating environment from a cost inflation and demand perspective. And in that environment, the management team has achieved strong sequential improvement in operating margins, both in Q1 and Q2, and remains fully committed for margin expansion as business volumes grow. We continue to believe that the company's entrepreneurial operating structure and culture of cost control allows us to react in a fast and flexible manner, thereby constantly adjusting the business to maximize profitability in what clearly continues to be a very dynamic environment.Interest expense for the quarter was $15.1 million compared to $11.4 million last year, reflecting higher average debt levels from the company stock buyback program and the higher interest expense associated with the company's January senior note offering. Other income was $2.6 million, up from $2.1 million, primarily as a result of higher interest income and higher levels of cash and short-term cash investments. Our effective tax rate in the quarter was 26.8%, compared to approximately the same rate in the second quarter of last year, excluding the impact of one-time items. For the full year 2011, excluding the one-time items, the company's effective tax rate was also 26.8%, and we currently expect a similar rate in 2012. Net income was approximately 13% of sales in Q2, and EPS grew 9% over last year, excluding one-time items, a very strong performance. Orders in the quarter were $1,052,000,000 resulting in a book-to-bill ratio of approximately 0.99:1. In addition, in the second quarter, the company completed the acquisition of Deutgen Group, a German manufacturer of high-technology, precision injection molded components primarily for automotive applications with annual sales of about $25 million. The company continues to be an excellent generator of cash. Cash flow from operations in the quarter was $127 million. For the 6 months, operating cash flow was $292 million or 109% of net income. The company continues to target cash flow from operations in excess of net income.
From a working capital standpoint, inventory was $675 million at the end of June, up 3% over the March quarter. Inventory days declined 5 days to 83 days and are now comparable with prior year levels and back to the low end of the company's historical range. We're very pleased with the reduction in inventory days in the quarter. Accounts receivable was $840 million and days sales outstanding increased 1 day to 71 days at the end of the quarter. Accounts payable was $432 million and, from a days perspective, was down 1 day at 53 days from March. Overall, we're very pleased with the company's working capital achievement in the quarter.The cash flow from operations of $127 million, along with borrowings under the company's revolving credit and receivables facilities of $149 million and proceeds and related tax benefits from option exercises of $18 million, were used primarily for capital expenditures of $32 million, the purchase of 2.1 million shares of the company's stock for $119 million, payments of $82 million related -- relating to acquisitions, including the acquisitions of Nelson-Dunn and Deutgen, dividend payments of $17 million and an increase in cash and cash investments of $37 million in the quarter. Read the rest of this transcript for free on seekingalpha.com