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We’re pleased to report strong earnings for the quarter and our highest first-quarter product sales ever. Product sales were $7.03 million, a slight increase over our record quarter a year ago. We had record gross pre-tax and net margins. Gross margin was a record 76% and net income was $0.69 per diluted share.Now I’ll turn the call over to Curt for details of our financial results. Curt Reynders Thanks Dan. Total revenue for the first quarter of fiscal 2013 decreased 9% to $7.46 million due to a 64% decrease in contract research and development revenue, partially offset by a slight increase in product sales. Product sales increased a 10th of a percent from a record quarter a year ago to $7.03 million. The increase was due to increased sales into medical device markets, partially offset by decreased sales into industrial markets. Industrial markets may have been impacted by a sluggish global economy. Growth in the medical device markets may have been tempered by softness of pacemakers and ICDs. The large percentage decrease in contract R&D was due to the completion of certain contracts and contract activities and the challenging government funding environment. Contract R&D was 6% of total revenue and it is not a major part of our growth vision. Gross margin increased to a record 76% of revenue compared to 68% last year due to a more favorable revenue mix and more efficient product manufacturing. The more favorable revenue mix was a higher percentage of revenue from product sales compared to contract R&D and a more favorable product mix. The more efficient product manufacturing included manufacturing processes deployed late in the calendar year which we discussed in previous calls. Total expenses increased 10% for the first quarter of fiscal 2013 compared to the prior year quarter due to a 39% increase in R&D expenditures partially offset by a 13% decrease in selling, general and administrative expense. The decrease in selling, general and administrative expense was due to a decrease in legal expenses. The first increase in research and development expense was due to increased product development activities. We believe the investment in R&D will pay off in future revenues. Dan will highlight R&D in a few minutes.
Income before taxes for the quarter was $5 million. Net income for the first quarter was $3.38 million or $0.69 per diluted share compared to $0.70 last year. Pre-tax and net margins were records. Pre-tax margin was 67% and net margin was 45%.NVE ranked third in return on revenue or net margin in the Star Tribune's list of the 100 largest companies in Minnesota published in the past quarter. Operating cash flow was $4.1 million for the quarter, which strengthened our balance sheet. As of June 30, cash plus marketable securities was $77.1 million, an increase of $3.52 million in the quarter. Despite widely publicized bond downgrades in the past quarter, our bond portfolio has performed well with a net unrealized gain on our marketable securities $1.57 million as of June 30, which is the difference between the fair market value of our portfolio and its adjusted cost. There are details in our recently filed 10-Q. Income taxes payable increased $1.4 million, because we had no estimated income tax payments due in the most recent quarter. There are two payments due in the quarter ending September 30. Purchases of fixed assets were $445,000 for the quarter compared to $199,000 for the prior year quarter. Capital investments were primarily for production equipment as we continued to expand and upgrade our production capabilities to support potential new products and growth. We are planning additional facilities investments this quarter and in the remainder of the fiscal year. Read the rest of this transcript for free on seekingalpha.com