Results in the first quarter of 2008 also included a one-time foreign exchange benefit of approximately $300,000, or $0.02 per share, related to the repayment of debt from the company’s Irish subsidiary.
Continuing a trend over the past several quarters, demand for our consumable products remained solid in the first quarter despite the economic downturn but was offset by continued weakness in our diagnostic product line. Sales of our consumable products, which include our preventive, infection control, endodontic, micro-applicator and home care product lines, remained essentially flat over the prior year quarter. We believe the weak economic climate contributed to disappointing results in our diagnostic product line, which posted results $530,000 below that of the first quarter of 2008. Sales were also negatively impacted by approximately $264,000 as the US dollar continued to strengthen in the first quarter. Increased gross and operating margins were driven primarily by shifting product mix, price increases introduced in the second half of 2008 and the benefits of operating efficiencies implemented in 2008, including facility consolidations and adjusted staff levels.
Despite the challenges of the current environment, we have remained committed to our core operating strategies of enhancing and expanding customer relationships, improving operating efficiencies and expanding our product offering through internal development and acquisitions. In the first quarter, we made continued progress on enhancing the effectiveness of our sales and marketing organization, implemented incremental operating efficiency improvements in a number of our facilities and expanded our preventive and infection control product offerings with the addition of a new hand-piece and new surface disinfectant.