SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                   FORM 10-Q

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934




For the Quarter Ended September 30, 1998          Commission File Number 0-16093


                               CONMED CORPORATION
           (Exact name of the registrant as specified in its charter)




          New York                                               16-0977505
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)



   310 Broad Street, Utica, New York                               13501
(Address of principal executive offices)                         (Zip Code)



                                 (315) 797-8375
              (Registrant's telephone number, including area code)



         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes  [ X ]   No [  ]


         The number of shares  outstanding of  registrant's  common stock, as of
November 2, 1998 is 15,135,378 shares.





                               CONMED CORPORATION

                                TABLE OF CONTENTS
                                    FORM 10-Q



                          PART I FINANCIAL INFORMATION


Item Number

         Item 1.  Financial Statements

                           - Consolidated Statements of Income  

                           - Consolidated Balance Sheets   

                           - Consolidated Statements of Cash Flows  

                           - Notes to Consolidated Financial
                             Statements      

         Item 2.  Management's Discussion and Analysis
                             of Financial Condition and Results
                             of Operations  


                            PART II OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K     


Signatures              


Exhibit Index   




CONMED CORPORATION CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share amounts) (unaudited) For three months ended For nine months ended ------------------------ ------------------------ Sept. Sept. Sept. Sept. 1997 1998 1997 1998 --------- --------- --------- --------- Net sales .......................... $ 38,581 $ 85,714 $ 100,760 $ 246,469 --------- --------- --------- --------- Cost and expenses: Cost of sales .................... 21,601 41,121 54,335 126,377 Selling and administrative ....... 9,304 24,547 26,236 68,330 Facility consolidation expense (Note 6) ............... -- -- 2,328 -- Research and development ......... 752 2,986 2,294 8,587 --------- --------- --------- --------- Total operating expenses ....... 31,657 68,654 85,193 203,294 --------- --------- --------- --------- Income from operations ............. 6,924 17,060 15,567 43,175 Interest income (expense),net ...... 134 (7,809) 762 (22,990) --------- --------- --------- --------- Income before income taxes and extraordinary item ........... 7,058 9,251 16,329 20,185 Provision for income taxes ......... (2,541) (3,330) (5,878) (7,266) --------- --------- --------- --------- Income before extraordinary item ............................. 4,517 5,921 10,451 12,919 Extraordinary item, net of income taxes (Note 5) ............ -- -- -- (1,569) --------- --------- --------- --------- Net income ......................... $ 4,517 $ 5,921 $ 10,451 $ 11,350 ========= ========= ========= =========
CONMED CORPORATION CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share amounts) (unaudited) (continued) For three months ended For nine months ended ------------------------ ------------------------ Sept. Sept. Sept. Sept. 1997 1998 1997 1998 --------- --------- --------- --------- Per share data: Income before extraordinary item Basic ..................... $ .30 $ .39 $ .70 $ .85 Diluted ................... .30 .39 .69 .84 Extraordinary item - (Note 5) Basic ..................... $ -- $ -- $ -- $ (.10) Diluted ................... -- -- -- (.10) Net Income Basic ..................... $ .30 $ .39 $ .70 $ .75 Diluted ................... .30 .39 .69 .74 Weighted average common shares Basic ..................... 14,987 15,102 14,995 15,065 Diluted ................... 15,219 15,361 15,221 15,300
See notes to consolidated financial statements.
CONMED CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands except share amounts) ASSETS December September 1997 1998 --------- --------- (unaudited) Current assets: Cash and cash equivalents ............................. $ 13,452 $ 3,290 Accounts receivable, net .............................. 47,188 56,883 Income taxes receivable ............................... 245 -- Inventories (Note 3) .................................. 61,971 74,138 Deferred income taxes ................................. 1,898 1,898 Prepaid expenses and other current assets ............. 1,186 2,384 --------- --------- Total current assets ........................... 125,940 138,593 Property, plant and equipment, net ...................... 55,339 57,684 Deferred income taxes ................................... 10,783 11,665 Goodwill, net ........................................... 153,360 161,780 Patents, trademarks, and other assets, net .............. 216,215 214,206 --------- --------- Total assets ...................................... $ 561,637 $ 583,928 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt (Note 5) ............ $ 11,000 $ 19,003 Accounts payable ...................................... 9,556 18,237 Income taxes payable .................................. -- 1,967 Accrued interest ...................................... -- 1,580 Accrued payroll and withholdings ...................... 6,831 8,366 Other current liabilities ............................. 3,220 1,380 --------- --------- Total current liabilities ......................... 30,607 50,533 Long-term debt (Note 5) ................................. 354,000 345,626 Deferred compensation ................................... 1,235 1,403 Accrued pension ......................................... 3,276 3,276 Long-term leases ........................................ 2,651 2,214 Other long-term liabilities ............................. 7,132 6,095 --------- --------- Total liabilities .............................. 398,901 409,147 --------- ---------
CONMED CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands except share amounts) December September 1997 1998 --------- --------- (unaudited) Shareholders' equity: Preferred stock, par value $.01 per share; authorized 500,000 shares; none outstanding ....... -- -- Common stock, par value $.01 per share; 40,000,000 authorized; 15,036,553 and 15,119,061 issued and outstanding,in 1997 and 1998, respectively ...................... 151 152 Paid-in capital ....................................... 123,451 124,145 Retained earnings ..................................... 39,553 50,903 Less 25,000 shares of common stock in treasury, at cost ............................................. (419) (419) --------- --------- Total equity ................................... 162,736 174,781 --------- --------- Total liabilities and shareholders' equity ........ $ 561,637 $ 583,928 ========= =========
See notes to consolidated financial statements.
CONMED CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 1997 and 1998 (in thousands) (unaudited) 1997 1998 --------- --------- Cash flows from operating activities: Net income .......................................... $ 10,451 $ 11,350 --------- --------- Adjustments to reconcile net income to net cash provided by operations: Depreciation ................................. 2,979 6,028 Amortization ................................. 2,504 11,755 Extraordinary item, net of income taxes (Note 5) ...................... -- 1,569 Increase (decrease) in cash flows from changes in assets and liabilities: Accounts receivable ................. (5,696) (9,695) Inventories ......................... 2,864 (14,760) Prepaid expenses and other current assets .............. (414) (1,198) Other assets ........................ 155 (1,873) Accounts payable .................... 753 8,681 Income taxes payable ................ 1,762 2,212 Accrued interest .................... -- 1,580 Accrued payroll and withholdings .... (169) 1,535 Other current liabilities ........... 867 (2,125) Deferred compensation and other long-term liabilities ....... 159 (1,020) --------- --------- 5,764 2,689 --------- --------- Net cash provided by operations ................... 16,215 14,039 --------- --------- Cash flows from investing activities: Payments related to business acquisitions ........... (24,000) (9,965) Acquisition of property, plant, and equipment .................................. (6,884) (9,924) --------- --------- Net cash used by investing activities ............. (30,884) (19,889) --------- ---------
CONMED CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 1997 and 1998 (in thousands) (unaudited) (continued) 1997 1998 --------- --------- Cash flows from financing activities: Proceeds from issuance of common stock .............. 213 694 Payment for purchase of treasury stock .............. (419) -- Borrowings under revolving credit facility(net) ..... -- 1,000 Proceeds of long-term debt .......................... -- 130,000 Payments related to issuance of long-term debt ...... -- (4,635) Payments on long-term debt and other obligations ................................. (139) (131,371) --------- --------- Net cash used by financing activities ............. (345) (4,312) --------- --------- Net decrease in cash and cash equivalents ............................... (15,014) (10,162) Cash and cash equivalents at beginning of period ...... 20,173 13,452 --------- --------- Cash and cash equivalents at end of period ............ $ 5,159 $ 3,290 ========= =========
See notes to consolidated financial statements. CONMED CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Consolidation The consolidated financial statements include the accounts of CONMED Corporation (the "Company") and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is a leading developer, manufacturer and supplier of a range of medical instruments and systems used in surgical and other medical procedures. The Company's product offerings include electrosurgical systems, electrocardiogram ("ECG") electrodes and accessories, surgical suction instruments, intravenous ("IV") therapy accessories and wound care products. Through its acquisition of Linvatec Corporation (Note 4), the Company has expanded its arthroscopic surgery product line and broadened its product offerings to include powered surgical instruments and imaging products for minimally invasive surgery. The Company's products are used in a variety of clinical settings, such as operating rooms, surgery centers, physicians' offices and critical care areas of hospitals. Note 2 - Interim financial information The financial statements for the three and nine months ended September 1997 and September 1998 are unaudited; in the opinion of the Company such unaudited statements include all adjustments (which comprise only normal recurring accruals) necessary for a fair presentation of the results for such periods. The consolidated financial statements for the year ending December 1998 are subject to adjustment at the end of the year when they will be audited by independent accountants. The results of operations for the three and nine months ended September 1997 and 1998 are not necessarily indicative of the results of operations to be expected for any other quarter nor for the year ending December 31, 1998. The consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes for the year ended December 1997 included in the Company's Annual Report to the Securities and Exchange Commission on Form 10-K. Certain 1997 amounts previously reported have been reclassified to conform with the current year presentation. Note 3 - Inventories The components of inventory are as follows (in thousands): December September 1997 1998 ------- ------- Raw materials $28,097 $34,684 Work-in-process 6,569 6,323 Finished goods 27,305 33,131 ------- ------- Total $61,971 $74,138 ======= ======= Note 4 - Business acquisitions On July 1, 1997, the Company completed the acquisition of the surgical suction instrument and tubing product line from Davol, Inc., a subsidiary of C.R. Bard, Inc., for a cash purchase price of $24,000,000. This acquisition is being accounted for using the purchase method. Accordingly, the results of operations of the acquired product line are included in the consolidated results of the Company from the date of acquisition. Goodwill associated with the acquisition is being amortized on a straight-line basis over a 40-year period. On December 31, 1997, the Company acquired the business and certain assets of Linvatec Corporation, a wholly-owned subsidiary of Bristol-Myers Squibb Company, for a cash purchase price of $370,000,000 and the assumption of $16,608,000 of liabilities. Bristol-Myers Squibb Company also received a warrant to purchase 1,000,000 shares of the Company's common stock at $34.23 per share. This warrant expires December 31, 2007, and was valued at $10,625,000. The acquisition of Linvatec Corporation is being accounted for using the purchase method. The allocation of purchase price resulted in identifiable intangible assets, including patents and technology ($9,500,000), trademarks and tradenames ($96,000,000) and customer relationships ($97,000,000), aggregating $204,000,000, which will be amortized over periods from 5 to 40 years. Goodwill associated with the Linvatec acquisition approximated $80,000,000 and will be amortized on a straight-line basis over a 40-year period. Additionally, a portion of the purchase price was allocated to purchased in-process research and development ("R&D"). Purchased in-process R & D includes the value of products in the development stage and not considered to have reached technological feasibility. In accordance with applicable accounting rules, purchased in-process R&D is required to be expensed. Accordingly, $34,000,000 of the acquisition cost was expensed on December 31, 1997. In connection with the Linvatec acquisition, the Company entered into agreements with Zimmer, Inc., a wholly-owned subsidiary of Bristol-Myers Squibb Company, pursuant to which Zimmer has agreed to distribute certain of Linvatec's products for periods ranging up to three years from the acquisition date. The allocation of the purchase price for the Linvatec acquisition is based on management's preliminary estimates. It is possible that re-allocations will be required as additional information becomes available. Management does not believe that such re-allocations will have a material effect on the Company's financial position or results of operations. On an unaudited pro forma basis, assuming the Davol and Linvatec acquisitions had occurred as of January 1, 1997, the consolidated results of the Company for the three and nine months ended September 1997 are estimated to be as follows (in thousands, except per share amounts): For the Three For the Nine Months Ended Months Ended September 1997 September 1997 Pro forma revenues............ $ 88,375 $250,769 Pro forma net income (loss)... $ 5,402 $ (9,655) Pro forma earnings per share: Basic................ $ .36 $ (.64) Diluted.............. $ .35 $ (.64) Note 5 - Subordinated Note Offering As discussed under "Liquidity and Capital Resources", the Company completed a subordinated note offering in the aggregate principal amount of $130.0 million in March 1998. Proceeds from the offering amounting to $126.1 million were used to reduce the Company's term loans under its Credit Facility. Deferred financing fees related to the portion of the Credit Facility repaid amounting to $2.5 million ($1.6 million net of income taxes) were written-off as an extraordinary charge. Note 6 - Facility Consolidation During the first quarter of 1997, the Company recorded a pre-tax charge of $2,328,000 related to the closure of the Company's Dayton, Ohio manufacturing facility. Operations of the Dayton facility, were transferred to the Company's manufacturing location in Rome, New York in 1997. The components of the charge consisted primarily of costs associated with employee severance and termination, and the impairment of the carrying value of fixed assets. Note 7 - Subsidiary Guarantees The Company's Credit Facility and subordinated notes (the "Notes") are guaranteed (the "Subsidiary Guarantees") by each of the Company's subsidiaries in existence on the closing dates of the Credit Facility and the Notes (the "Subsidiary Guarantors"). The Subsidiary Guarantees provide that each Subsidiary Guarantor will fully and unconditionally guarantee the Company's obligations on a joint and several basis. Each Subsidiary Guarantor is wholly-owned by the Company. Separate financial statements and other disclosures concerning the Subsidiary Guarantors are not presented because management has determined such financial statements and other disclosures are not material to investors. The combined condensed financial information of the Company's Subsidiary Guarantors is as follows (in thousands): December September 1997 1998 ---- ---- Current assets............................. $ 54,799 $ 83,476 Non-current assets......................... 327,751 334,801 Current liabilities........................ 15,339 24,563 Non-current liabilities.................... 345,826 341,783 For the Three For the Nine Months Ended Months Ended September 1998 September 1998 -------------- -------------- Revenues................................... $ 61,285 $174,864 Income from operations..................... 13,110 31,083 Net income................................. 3,380 3,469 Note 8 - Subsequent Events On October 8, 1998, the Company entered into an asset purchase agreement whereby the Company would pay approximately $17,500,000 for the assets and business related to certain arthroscopy products. The acquisition is subject to various conditions, including the expiration or termination of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, and is expected to close in November 1998. The Company expects to fund the acquisition through available borrowings under its Credit Facility. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion includes certain forward-looking statements. Such forward-looking statements are subject to a number of factors, including material risks, uncertainties and contingencies, which could cause actual results to differ materially from the forward-looking statements. Such factors include, among others, the following: general economic and business conditions; changes in customer preferences; competition; changes in technology; the integration of any acquisitions, including the Linvatec acquisition; changes in business strategy; the indebtedness of the Company; the identification and remediation of Year 2000 issues; quality of management, business abilities and judgment of the Company's personnel; and the availability, terms and deployment of capital. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Three months ended September 1998 compared to three months ended September 1997 Sales for the quarter ended September 1998 were $85,714,000, an increase of 122% compared to sales of $38,581,000 in the quarter ended September 1997. The increase was principally the result of the acquisition of Linvatec on December 31, 1997. Cost of sales increased to $41,121,000 in the current quarter compared to the $21,601,000 in the same quarter a year ago as a result of increased sales volume. The Company's gross margin percentage was 52.0% for the third quarter of 1998 as compared to 44.0% in the third quarter of 1997 reflecting the overall higher gross margin percentage of the Linvatec product lines as compared to the Company's other products. Selling and administrative costs increased to $24,547,000 in the current quarter as compared to $9,304,000 in the third quarter of 1997, primarily as a result of the Linvatec acquisition. As a percentage of sales, selling and administrative expense was 28.6% in the third quarter of 1998 as compared to 24.1% in the comparable 1997 period. The Linvatec business has required a higher level of selling and administrative expense as a percentage of sales as compared to the Company's historic levels. Additionally, goodwill and intangible amortization related to the Linvatec acquisition amounts to approximately $2.0 million per quarter or 2.3% of the Company's consolidated sales for the current quarter. Research and development expense was $2,986,000 in the third quarter of 1998 as compared to $752,000 in the third quarter of 1997. The increase reflects expense related to Linvatec research and development activities. The third quarter of 1998 had interest expense of $7,809,000 compared to interest income of $134,000 in the third quarter of 1997. As discussed under Liquidity and Capital Resources, the Company acquired Linvatec Corporation on December 31, 1997 for $370 million that was borrowed under its Credit Facility. The Company had no borrowings outstanding during the third quarter of 1997. Nine months ended September 1998 compared to nine months ended September 1997 Sales for the nine months ended September 1998 were $246,469,000, an increase of 145% compared to sales of $100,760,000 in the nine months ended September, 1997. The increase was principally the result of the acquisitions of Linvatec on December 31, 1997 and the surgical suction instrument and tubing product line from Davol on July 1, 1997. Cost of sales increased to $126,377,000 in the first nine months of 1998 as compared to the $54,335,000 in the same period a year ago as a result of increased sales volume. The Company's gross margin percentage was 48.7% for the first nine months of 1998 as compared to 46.1% in the 1997 period. In connection with purchase accounting for the Linvatec acquisition, the Company increased the acquired value of inventory by $2.9 million over its production cost. This inventory was sold during the quarter ended March 1998 and, accordingly, this non-recurring adjustment served to reduce the Company's gross margin percentage by 1.2 percentage points. Excluding the impact of this nonrecurring adjustment, the Company's gross margin percentage was 49.9% in the first nine months of 1998 reflecting the overall higher gross margin percentage of the Linvatec product lines as compared to the Company's other products. Selling and administrative costs increased to $68,330,000 in the first nine months of 1998 as compared to $26,236,000 in the first nine months of 1997, primarily as a result of the Linvatec acquisition. As a percentage of sales, selling and administrative expense was 27.7% in the first nine months of 1998 and 26.0% in the comparable 1997 period. Research and development expense was $8,587,000 in the first nine months of 1998 as compared to $2,294,000 in the first nine months of 1997. The increase reflects expense related to Linvatec research and development activities. During the first quarter of 1997, the Company recorded a charge of $2,328,000 related to the closure of its Dayton, Ohio manufacturing facility. Operations of the Dayton facility were transferred to the Company's manufacturing location in Rome, New York. The first nine months of 1998 had interest expense of $22,990,000 compared to interest income of $762,000 in the first nine months of 1997. As discussed under Liquidity and Capital Resources, the Company acquired Linvatec Corporation on December 31, 1997 for $370 million that was borrowed under its Credit Facility. The Company had no borrowings outstanding during the first nine months of 1997. The Company completed an offering of subordinated notes during the quarter ended March 1998 and used the net proceeds to repay a portion of the Company's term loans under its Credit Facility. Deferred financing fees relating to the portion of the Credit Facility repaid amounting to $2.5 million ($1.6 million net of income taxes) were written-off as an extraordinary item. Liquidity and Capital Resources Net cash provided by operations was $14,039,000 for the first nine months of 1998 as compared to $16,215,000 for the first nine months of 1997. Depreciation and amortization increased in 1998 primarily as a result of the completed acquisitions. Additionally, during the first quarter of 1998, the Company recorded a non-cash extraordinary charge related to the write-off of deferred financing fees. Operating cash flow for the first nine months of 1998 was positively impacted by increases in income taxes payable and accounts payable. Adversely impacting operating cash flows for the first nine months of 1998 was an increase in accounts receivable and inventories primarily as a result of the establishment of international sales and distribution operations previously managed by Zimmer. Net cash used by investing activities for the first nine months of 1998 and 1997 included $9,965,000 of costs related to the Linvatec acquisition and $24.0 million related to the acquisition of the surgical suction instrument and tubing product line from Davol, Inc., respectively. Capital expenditures for the first nine months of 1998 and 1997 amounted to $9,924,000 and $6,884,000, respectively. Financing activities during the first nine months of 1998 involved the completion of a subordinated note (the "Notes") offering in the aggregate principal amount of $130.0 million in March 1998. Net proceeds from the offering amounting to $126.1 million were used to repay a portion of the Company's loans under its Credit Facility. In addition to the net proceeds of the subordinated note offering, the Company made payments on loans under its Credit Facility aggregating $5.3 million during the first nine months of 1998. In connection with the Linvatec acquisition, the Company borrowed $350.0 million in term loans under its Credit Facility. Upon the application of mandatory principal payments including the subordinated note proceeds, the Company's term loans at September 30, 1998 aggregated $218.6 million and are repayable quarterly over terms of five and seven years. The Company's Credit Facility also includes a $100 million revolving credit facility which expires December 2002, of which $84 million was available on September 30, 1998. The Credit Facility borrowings carry interest rates based on LIBOR plus 2.00% on the revolving credit facility and five-year term loan, and LIBOR plus 2.25% on the seven-year term loan. The interest rates at September 30, 1998 were 7.63%,7.88% and 7.63% for the five-year term loan, the seven-year term loan and revolving credit facility, respectively. Additionally, during the commitment period, the Company is obligated to pay a fee of 0.5% per annum on the unused portion of the revolving credit facility. The Company does not use derivative financial instruments for trading or other speculative purposes. Interest rate swaps, a form of derivative, are used to manage interest rate risk. Currently, the Company has entered into two interest rate swaps expiring in June 2001 which convert $100 million of floating rate debt under the Company's Credit Facility into fixed rate debt at rates ranging from 7.18% to 8.25%. Provisions in one of the interest rate swaps cancels such agreement when LIBOR exceeds 7.35%. The Credit Facility is collateralized by all the Company's personal property. The Credit Facility contains covenants and restrictions which, among other things, require maintenance of certain working capital levels and financial ratios, prohibit dividend payments and restrict the incurrence of indebtedness and certain other activities, including acquisitions and dispositions. The Company is also required to make mandatory prepayments from net cash proceeds from any issue of equity and asset sales and also from any excess cash flow, as defined. The Notes are in aggregate principal amount of $130 million and have a maturity date of March 15, 2008. The subordinated notes bear interest at 9.0% per annum which is payable semi-annually. The indenture governing the subordinated notes has certain restrictive covenants and provides for, among other things, mandatory and optional redemptions by the Company. The Credit Facility and Notes are guaranteed (the "Subsidiary Guarantees") by each of the Company's subsidiaries in existence on the closing dates of the Credit Facility and the Notes (the "Subsidiary Guarantors"). The Subsidiary Guarantees provide that each Subsidiary Guarantor will fully and unconditionally guarantee the Company's obligations on a joint and several basis. Each Subsidiary Guarantor is wholly-owned by the Company. Under the Credit Facility and subordinated note indenture, the Company's subsidiaries are subject to the same covenants and restrictions that apply to the Company (except that the Subsidiary Guarantors are permitted to make dividend payments and distributions, including cash dividend payments, to the Company or another Subsidiary Guarantor). Management believes that cash generated from operations, its current cash resources and funds available under its Credit Facility will provide sufficient liquidity to ensure continued working capital for operations, debt service and funding of capital expenditures in the foreseeable future. The Company and its subsidiaries use information technology ("IT") and non-IT systems that contain embedded technology throughout their businesses. Third parties with which the Company has material relationships also use such systems. After December 31, 1999, these systems will face a potentially serious problem if they are not able to recognize and correctly process dates beyond December 31, 1999. All of the Company's products, operations and information technology systems have been inventoried and those that are not Year 2000 ready have been identified. The upgrading and testing of those which are not Year 2000 ready is on schedule to be completed by March 31, 1999. The Company is also in the process of contacting its vendors and customers to ascertain their preparation for the Year 2000 issue and is in the process of identifying critical business partners for which the need for additional due diligence will be assessed. The costs of the Company's Year 2000 assessment and remediation program have not been and are not expected to be material. However, because the program is not yet complete, there can be no assurances that such costs will not become material. Although the Company does not expect the Year 2000 issue to have a material effect on its results of operations, liquidity or financial condition, failure of critical IT systems could have a material adverse effect on the Company's results of operations, liquidity or financial condition. Further, the Company cannot eliminate the risk that revenue will be lost or costs will be incurred as a result of the failure by third parties to properly remediate their Year 2000 issues. Because the Company has not identified any areas of its own or its third parties IT and non-IT systems that will not be Year 2000 compliant, it has not yet developed any necessary contingency plans. Item 6. Exhibits and Reports on Form 8-K List of Exhibits Exhibit No. Description ----------- ----------- 11 Computation of weighted average number of shares of common stock 27 Financial Data Schedule Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONMED CORPORATION (Registrant) Date: November 13, 1998 /s/Robert D. Shallish, Jr. -------------------------- Robert D. Shallish, Jr. Vice President - Finance (Principal Financial Officer) Exhibit Index Exhibit ------- 11 - Computations of weighted average number of shares of common stock 27 - Financial Data Schedule
EXHIBIT 11 Computation of weighted average number of shares of common stock For the three months ended For the nine months ended -------------------------- ------------------------- September September September September 1997 1998 1997 1998 ------- ------- ------- ------- Shares outstanding at beginning of period ............... 14,999 15,077 14,989 15,037 Weighted average shares issued and repurchased ............ (12) 25 6 28 ------- ------- ------- ------- Shares used in the calculation of basic EPS (weighted average shares outstanding) ...................... 14,987 15,102 14,995 15,065 Effect of dilutive securities ........................ 232 259 226 235 ------- ------- ------- ------- Shares used in the calculation of diluted EPS ............................... 15,219 15,361 15,221 15,300 ======== ======= ======= =======
 

5 9-MOS DEC-31-1998 SEP-30-1998 3,290 0 59,412 (2,529) 74,138 138,593 84,571 (26,887) 583,928 50,533 364,629 0 0 152 174,629 583,928 85,714 85,714 41,121 41,121 0 0 7,809 9,251 3,330 5,921 0 0 0 5,921 .39 .39