Gross margin in 2012 was 38.2% compared to 38.7% in 2011. Gross margin in 2012 included $2.3 million for the previously mentioned inventory fair value of purchase accounting adjustments. Excluding this amount, adjusted gross margin in 2012 was 39.5%, an 80 basis point improvement from 2011 due to a shift in mix toward higher margin products as well as the inclusion of both POC and PIEPS.
Net income in 2012 was $2.0 million or $0.06 per diluted share, which included $8.2 million of non-cash items, $2.0 million in transaction-related costs, $0.2 million in restructuring costs, and $0.2 million in merger and integration costs.
Excluding these items, adjusted net income before non-cash items in 2012 increased to $12.6 million compared to $11.9 million in 2011. On a per share basis, adjusted net income before non-cash items was $0.42 per diluted share compared to $0.54 per diluted share in 2011, reflecting the shares issued in previously mentioned 2012 public offering.
Adjusted EBITDA in 2012 increased 8% to $14.7 million compared to $13.6 million in 2011. Adjusted EBITDA in 2012 excluded $1.8 million of stock-based compensation, $2.3 million of inventory fair value of purchase accounting adjustments, and the aforementioned $2.0 million in transaction-related costs, $0.2 million in restructuring costs, and $0.2 million in merger and integration costs.Management Commentary "2012 was a transformational year for Black Diamond, filled with a number of significant achievements," said Peter Metcalf, president and CEO of Black Diamond. "Not only did we achieve record revenue and continue to grow organically, but we executed against our strategic objectives. This includes the introduction of our fall 2013 apparel line to the trade and the establishment of our own ski manufacturing operation. We also agreed to acquire the Japanese distribution assets of Gregory, established our own distribution in Japan, and entered one new primary product category and six new product niches with the acquisitions of POC and PIEPS.