Operating income. As a result of the above operating income decreased by $16.2 million, and as a percent of sales, declined from 47% to 44.9%, primarily due to the decrease in sales. 44.9% operating profit is still strong profitability and clearly puts us ahead of our peers in this financial performance measures. Interest income was minor. Consequently, pretax profits approximated operating income. The company’s pretax profits were $158.5 million, down from $174.9 million last quarter. Pretax profits are now 44.9% of sales versus 47.1% last quarter, again with the decrease due to lower sales volume. Our quarterly effective tax rate of 22% decreased from 26% last quarter. The US Congress reinstated the R&D credit for 2014. This resulted in a benefit to the company’s effective tax rate which was reduced this quarter by four percentage points, three of which related to prior quarters. Expect next quarter’s tax rate to be 25.5% before discrete items if any. Resulting net income of $123.6 million was down 5% from $129.5 million reported in the previous quarter, largely due to the decrease in sales partially offset by lower taxes.
Resulting return on sales of 35.1% was similar to the 34.9% reported in the previous quarter. The average shares outstanding used in the calculation of earnings per share decreased by 210,000, shares. Share increases relating to stock-option exercises and employee restricted stock grants were offset by stock purchases in the open market. GAAP earnings per share was $0.51 down from $0.53 in the prior quarter, again due to lower sales. Without the impact of stock-based compensation of $17.9 million, the diluted earnings per share would have been $0.56 per share.
Moving to the balance sheet, cash and short-term investments increased by $45.2 million. For the 115th consecutive quarter, the company had positive cash flow from operations.The company provided $148 million in cash flow from operations of which $65.8 million was employed to pay cash dividends, $34.7 million to purchase common stock and $16.2 million to purchase fixed asset. Our cash and short-term investment balance is now $1.729 billion and represent 62% of total assets. Accounts receivable of $148.6 million decreased by $26.9 million as collections from a higher sales quarter are replaced with receivables from the lower sales quarter. Consequently, our day sales and accounts receivable were 38 days, lower than the 43 days reported in the last quarter. Inventory at $100.1 million increased $2.5 million from last quarter. This increase was in finished goods to build up shippable inventory prior to Chinese New Year, when our Asian factories will be closed for a week.
Raw materials and work-in-process inventory were flat. Our quarterly average inventory turns is 3.5 times, down slightly from 3.8 times in the prior quarter. Deferred taxes and other current assets of $99.7 million increased $12.8 million from the prior quarter. This was largely in prepay taxes partially to recognize the benefit from the reinstatement of the R&D credit. Property, plant and equipment increased by $3.2 million. We had additions of $16,201,000 and depreciation of $13, 05,000 million. Mostly additions were for manufacturing equipment in fabrication, and test and assembly worldwide. We have increased our capital expenditures this year in response to production requirements we anticipate in calendar 2015. We expect additions to be roughly $80 million and depreciation roughly $50 million for fiscal 2015. Identified intangibles decreased by $550,000 as in past quarters, due to quarterly amortization. Goodwill remained unchanged. Finally on the asset side of the balance sheet, our return on assets was 28.9%, similar to last quarter’s 30.9%, slightly impacted by the reduction in sales.
Moving to the liability side of the balance sheet, accounts payable decreased by $7 million, largely due to timing differences on recurring payable items. Accrued income taxes, payroll and other accrued liabilities decreased by $22.7 million, an increase in our profit sharing accrual which is paid out semi-annually, was offset by a decrease in our income tax accrual.
