The increase in gross profit was a direct result of the increased sales. Negatively impacting the gross margin was the mix of segment sales, with the increase in the Thermal/Acoustical segment outweighing the increase in the Performance Materials segment, and the dilutive impact of the fiber product line at North American automotive, which incurred an estimated negative gross profit of $(0.4) million on $19.3 million of net sales in the first quarter of 2011, but had positive gross profit in the first quarter of 2010. The Thermal/Acoustical segment was also negatively impacted in the first quarter of 2011 by the rising cost of both aluminum and fiber raw materials.

The Performance Materials segment reported an increase in operating income of $4.3 million. In addition, the segment recorded $0.4 million of operating income in the first quarter of 2011 related to ongoing services resulting from the sale of a product line in June 2010. The Thermal/ Acoustical segment reported an increase in operating income of $0.8 million. The positive impact of the added volume in this segment was diluted by the negative gross profit of the fiber product line, which had positive gross profit in the first quarter of 2010.

The company has been monitoring the impact of the Japanese natural disaster on its customers and the company’s supply chain. The company has not been materially impacted by a reduction or delay in orders from customers or disruptions in its ability to procure raw materials, but there is no assurance that a broader supply chain disruption would not negatively impact the Company’s future financial results.