Selling, general and administrative ("SG&A") expenses for the fourth quarter of 2010 increased $3.9 million to $29.3 million, or 18% of sales compared with the same period in 2009. This was primarily due to acquisition and employee-related costs, as we continue to grow the business and target additional LNG growth opportunities.     

Income tax expense was $4.3 million for the fourth quarter and represented an effective tax rate of 30% compared with $2.1 million for the prior year's fourth quarter, or an effective tax rate of 12%. The full year effective tax rate for 2010 was 28%, the same as for 2009. The fourth quarter 2009 effective tax rate was lower primarily due to a permanent tax difference on the bargain purchase gain associated with the November 2009 Covidien acquisition. The 2009 effective tax rate, excluding the bargain purchase gain, would have been approximately 31% for the full year.

Cash and short-term investments were $165.1 million and net debt was $60 million at December 31, 2010. Major uses of cash during the quarter included $39 million for the acquisition of SeQual, which closed in late December 2010, and $5 million for capital expenditures, largely for the new BioMedical facility in Canton, Georgia.

SEGMENT HIGHLIGHTS

E&C segment sales declined 5% to $42.1 million for the fourth quarter of 2010, compared with $44.1 million for the same quarter in the prior year. Although fourth quarter orders in E&C were the strongest since the second quarter of 2008, given the longer term nature of its projects revenue recognition is delayed under percentage of completion accounting. E&C gross profit margin declined to 27% in the 2010 quarter compared with 37% in the same quarter in 2009. Improvements in Brazed Aluminum Heat Exchanger margins were more than offset by lower Systems margins due to project mix and successful completion of several large projects in the prior year quarter.  However, E&C's gross profit margin of 27% for fourth quarter 2010 was an improvement over the profit margin in all prior quarters in 2010.

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