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I will now turn the call over to Dino Rossi, our Chairman, President and CEO.Dino Rossi Thanks, Frank. Good morning, ladies and gentlemen and welcome to our conference call. We’re pleased to report second quarter net earnings of 10 million on record consolidated sales of 79 million for the quarter ended June 30, 2012. These second quarter sales of $79 million were approximately 5.8% greater than the $74.7 million result of the prior year comparable quarter. In the quarter, ARC Specialty Products segment generated record quarterly sales of 12.5 million, a 3.6% improvement over the prior year quarter, a confined result of increased sales volumes and modestly higher selling prices of packaged ethylene oxide and propylene oxide in the quarter. Animal Nutrition & Health at 54.8 million set a new quarterly record, up 5.8% over the prior year comparable quarter, as we realized another very strong quarter for our AN&H sales, which were up 36%. This strong performance recognizes the offset by the company decision to suspend sales of the AMINOSHURE-L, 52% Lysine product. As previously reported, there were no safety concerns relating to this product, however, research indicated that the Lysine bioavailability of the product was lower than originally designed and projected, hence found to not meet our internal expectations. The sales and earnings from operations impact of suspending this product was approximately $1 million in the quarter. Sales of our basic choline and industrial products were up approximately 1% in the quarter. Food, Pharma & Nutrition at $11.8 million also set a new quarterly record, up 8.1% over the prior year comparable quarter, where strength in the human grade choline and Nitroshure products, which was up 34%, was partially offset by lower quarterly sales of the encapsulated products sold in to the food market. As previously noted, consolidated net income closed the quarter at $10 million, up from approximately $9.6 million in the prior year quarter or an increase of approximately 4.2%, again net of the AminoShure-L product suspension decision. This quarterly net income translated in to diluted earnings per share of $0.33, a new second quarter record as compared to the $0.32 we’ve posted in the comparable quarter of 2011.
Looking between the top and bottom line, you will see that our consolidated gross profits of $22.6 million were equal to 28.6% of sales in the quarter. This level although a modest decline as a percent of sales in the prior year quarter, does reflect slight gross margin improvement in the Food, Pharma & Nutrition and our Specialty Products segment. These improvements were however offset by approximately 800,000 in the Animal Nutrition and Health segment due to the aforementioned product sales suspension and related inventory reserves.Gross margins in the Animal Nutrition and Health segment were also impacted again by higher costs for certain key raw materials. These raw material increases largely (inaudible) derivatives continue to affect unfavorably our ANH choline sales. Raw material price escalation did however begin to subside, but not until very late in the quarter. We continue to work on and achieve operational efficiencies, however they were again more than offset by the noted raw material cost increases. At the consolidated operating expense level, you will note expenses totaling $7.8 million for the quarter, which equaled 9.8% of sales versus the same spend in the prior year, but at the 10.3% level. This spending level reflects expenses incurred due to the product expansion – suspension issue, but otherwise represents normalized levels as we continue to leverage up of our existing SG&A infrastructure and exercise, take control over all controllable operating expenses. Read the rest of this transcript for free on seekingalpha.com