Gross profit in the first quarter of 2008 was $25.9 million, or 42.9% of sales compared to $26.1 million, or 42.3% for the same period last year.
It is important to note that gross profit for the first quarter of last year included a one-time, pre-tax reimbursement of expenses from the military of $0.7 million. Excluding the reimbursement, gross margin was 41.2% in the first quarter of fiscal 2007.
The year-over-year improvement in gross margin was primarily due to an increase in sales price per unit and a decrease in manufacturing costs.
Selling, general and administrative (SG&A) expenses were $23.1 million, or 38.1% of sales, for the first quarter of 2008 compared to $22.3 million, or 36.2% of sales, a year ago. The increase in SG&A expenses was driven by additional selling and distribution expenses to support the growth of the retail division.
Income from operations was $2.9 million, or 4.8% of net sales, for the period compared to $3.8 million, or 6.1% of net sales, in the prior year.
Excluding the aforementioned pre-tax reimbursement of $0.7 million from the military, income from operations a year ago was $3.1 million, or 5.0% of sales.
Funded Debt and Interest Expense: The Company's funded debt at March 31, 2008 was $94.1 million versus $89.9 million at March 31, 2007. Interest expense decreased to $2.4 million for the first quarter of 2008 versus $2.5 million for the same period last year.
Inventory: Inventory increased $8.0 million, or 11.2%, to $79.8 million at March 31, 2008 compared with $71.8 million on the same date a year ago. The increase in inventory is to support the expected growth in the retail division.