Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Our first question will come from Fred Buonocore with CJS Securities.
Fred Buonocore – CJS Securities
Hi gentlemen. I’m just calling in on behalf of Charlie Strauzer. How are you today?
John Marr
Doing well.
Fred Buonocore – CJS Securities
Great. So you’re SG&A declined as a percentage of sales but it had a fairly significant dollar increase. Can you talk about the actual dollar increase there I’d assume largely related to acquisitions. But can you dissect that a little bit for us?
Brian Miller
Sure. Of the SG&A increase a fair amount of it did come from acquisitions. The acquisition impact is at about $1.6 million of SG&A expense. And we also have modestly higher SG&A expense related to stock compensation. That would be the other major impact there.
Fred Buonocore – CJS Securities
Got it. And then on gross margins in this seasonally weak quarter, would you say that this – that your performance actually exceeded what you’d expected? And can you kind of just talk a little bit more about the 90 basis point year-over-year improvement that you touched on in your prepared remarks?
Brian Miller
Well the improvement that I think we mentioned in the remarks is pretty much in line with our expectations for the quarter. So generally not a big surprise there. We’ve expected modest improvement in the first quarter and as John mentioned as revenues – particularly license revenues grow through the year, we expect to see margins continue to improve throughout the year.
Fred Buonocore – CJS Securities
Excellent, thank you.
Operator
Thank you. We’ll now go to Kirk Materne with Banc of America Securities.
Kirk Materne – Banc of America Securities
Yes, thanks very much. Brian, I guess R&D obviously ramped up year-over-year as you guys brought on guys to work on the Microsoft dynamics project. Do you still have further people to bring on or is that going to grow sort of in line with revenues or is that going to be growing at a slower rate I guess in terms of absolute dollars?
Brian Miller
I think in terms of staffing we’re generally staffed at – in the range of the level we expect to be throughout 2008. There could be modest changes in it but we’re generally ramped up to the point where we’d be throughout the year.
The bigger impact on the net R&D expenses as we’ve talked about last quarter, last couple of quarters we are receiving some reimbursement from Microsoft for part of the development expenses to the extent that they arrange with us to use some of the features that we’re developing in their broader commercial product.
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