Operating earnings (gross profit less selling, general & administrative expense before stock option expense, amortization and restructuring and other non-recurring charges) for the first quarter were $16.2 million compared to $14.3 million, last year -- a 13% increase.
Net earnings on an ongoing basis were $5.9 million, or $0.23 per diluted share, compared to $3.9 million, or $0.15 per share. The tax rate from ongoing operations was 27.0% compared to 33.5% last year. We continue to believe the 2007 full year effective tax rate will approximate 33%.
The impact of the difference between the tax rate for the first quarter of 27.0% and our expected annual effective tax rate of 33% on net earnings is $0.5 million, or $0.02 per diluted share. The first quarter rate is lower than our expected full year rate primarily due to the reversal of allowances for tax exposures for which the statutes expired during the quarter.
Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes -- An Interpretation of FASB Statement No. 109 (FIN 48) is effective this year and requires that certain tax matters, such as these reversals, be recorded as discrete items in individual quarters.
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