Fourth Quarter and Full Year Results
Fourth quarter 2011 sales increased 6% over the prior year period to $141.7 million, led by 28% Vascular Access and 44% Electrochem growth. Fourth quarter results included the benefit of approximately $3 million of medical device sales and $2.5 million of revenue from the acquisition of Micro Power Electronics (“Micro Power”) in December 2011. Excluding the impact of the Micro Power acquisition, organic revenue growth for the 2011 fourth quarter was 5% led by Vascular Access growth of 28%, and Electrochem revenue growth of 27%. For the year, sales increased 7% to $568.8 million and included the favorable impact of approximately $8 million from foreign currency exchange rate fluctuations. Excluding the impact of these exchange rate fluctuations, as well as the Micro Power acquisition, organic revenue growth for 2011 was 5%, which was led by Vascular Access growth of 19%, Orthopaedic revenue growth of 11% and Electrochem revenue growth of 6%. Sales for 2011 benefitted from the first sales of medical devices developed under the Greatbatch name, which totaled $5 million for the year.
Gross profit of $44.7 million for the fourth quarter of 2011 was consistent with the comparable 2010 period. For the full year, gross profit increased $6.8 million to $180.4 million. Fourth quarter 2011 cost of sales includes $0.2 million of acquisition related inventory step-up amortization. Excluding this amortization, gross profit as a percentage of sales was 31.7% for the fourth quarter of 2011 and 31.7% for the full year 2011 compared to 33.4% and 32.5% for the same periods of 2010, respectively. The decrease in gross profit margin for the fourth quarter and full year 2011 was due to price concessions given to our larger OEM customers near the end of 2010, an increase in performance-based compensation, and a lower mix of higher margin CRM/Neuromodulation revenue partially offset by higher production volume and productivity initiatives.