| | U.
S. Sales. Our direct sales force currently consists of a Vice President
of Sales, eight regional sales managers and 63 direct sales representatives and
clinical specialists located in major metropolitan areas throughout the United
States. Our sales people are trained by personnel at our facilities, by a senior
sales person in their respective territories, at regular national and regional
sales meetings, by consulting cardiologists and employees of the Company, and
by observation of procedures in catheterization laboratories. International
Sales. Approximately 100 independent dealer organizations distribute our
products worldwide, including territories in Europe, Asia, South and Central America,
and Canada. We have appointed a Vice President for International Sales outside
Europe and the United States. We also have a Vice President of European Sales
and an international sales and distribution office in Maastricht, The Netherlands.
Approximately 18 direct sales representatives presently sell our products in Germany,
France, the United Kingdom, Belgium, The Netherlands, and Ireland. In 2005, our
international sales grew by 21% and accounted for approximately 27% of total sales.
With the recent and planned additions to its product lines, we believe that our
international sales will continue to increase. We
generally require our international dealers to inventory products and sell directly
to customers within defined sales territories. Each of our products must be approved
for sale under the laws of the country in which it is sold. International dealers
are responsible for compliance with all applicable laws and regulations in their
respective countries. OEM
Sales. We currently have an OEM division that sells molded components,
sub-assembled goods, and bulk non-sterile goods, which may be combined with other
components and/or goods from other companies and then sold under a Merit or non-Merit
label. We engage in both international and domestic OEM sales. CUSTOMERS
We serve hospital-based cardiologists, radiologists,
anesthesiologists, physiatrists (pain management physicians), neurologists, technicians,
and nurses, all of whom influence the purchasing decisions for our products. Hospitals
and acute care facilities in the United States purchase our products through our
direct sales force, distributors, OEM relationships, custom packagers and packers
who assemble and combine products in custom kits and packs. Outside the United
States, hospitals and acute care facilities purchase through our direct sales
force, or in the absence of a sales force, through independent distributors or
OEM relationships. In 2005, approximately 48% of
our sales were made directly to domestic hospitals, approximately 24% to custom
tray manufacturers and domestic dealers, approximately 27% to international markets,
and approximately 1% were non-medical. Sales to our single largest customer, a
packer, accounted for approximately 6% of total sales during the year ended December
31, 2005. We manufacture products for other medical device companies through our
OEM program. During the year ended December 31, 2005, OEM sales represented approximately
14% of our total revenue, which included 2% purchased by international OEM companies.
RESEARCH AND DEVELOPMENT We
believe that one of our historic strengths has been our ability to quickly adapt
our expertise and experience in injection molding, insert molding, catheter extrusion,
guide wire assembly, and electronic and sensor technologies, and to apply these
core competencies to a perceived need for a new product or product improvement.
Our development efforts are presently focused on disposable, innovative single-patient
or single-use items, which can be included in our custom kits or sold separately.
Our executive officers devote a portion of their
time to research and development. Research and development expenses were approximately
$7.0 million, $5.1 million, and $4.6 million in 2005, 2004, and 2003, respectively.
We did not conduct any customer-sponsored research and development during those
periods. We anticipate that our research and development expenses will range between
approximately 4% and 5% of net sales during the year ending December 31, 2006. | |
