UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): February 8, 2007
CONMED
CORPORATION
(Exact
name of registrant as specified in its charter)
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New
York
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0-16093
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16-0977505
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(State
or other jurisdiction of
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(Commission
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(I.R.S.
Employer
|
|
incorporation
or organization)
|
File
Number)
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Identification
No.)
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525
French Road
Utica,
New York 13502
(Address
of principal executive offices, including zip code)
(315)
797-8375
(Registrant's
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions (See General Instruction A.2 below):
|
o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Section
2
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Financial
Information
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Item
2.02
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Results
of Operations and Financial
Condition.
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On
February 8, 2007, CONMED Corporation issued a press release announcing financial
results for the fourth quarter of 2006. A copy of this press release is attached
hereto as Exhibit 99.1.
The
information in this Current Report on Form 8-K that is furnished under “Item
2.02. Results of Operations and Financial Condition” and Exhibit 99.1 attached
hereto shall not be deemed “filed” for purposes of Section 18 of the Securities
Act of 1934, nor shall they be deemed incorporated by reference in any filing
under the Securities Act of 1933, except as shall be expressly set forth by
specific reference in such filing.
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Section
9
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Financial
Statements and Exhibits
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Item
9.01
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Financial
Statements and Exhibits.
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(c)
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Exhibits
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The
following exhibit is included herewith:
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Exhibit
No.
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Description
of Exhibit
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99.1
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Press
Release dated February 8, 2007, issued by CONMED
Corporation.
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Signature
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.
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CONMED
CORPORATION
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||
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(Registrant)
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||
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By:
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Robert
D. Shallish, Jr.
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Vice
President-Finance and
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||
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Chief
Financial Officer
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||
Date: February
8, 2007
EXHIBIT
INDEX
Exhibit
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Number
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Exhibit
Description
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99.1
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Press
Release, dated February 8, 2007, issued by CONMED
Corporation.
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 |
NEWS
RELEASE
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CONTACT:
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CONMED
Corporation
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Robert
Shallish
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|
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Chief
Financial Officer
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315-624-3206
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Financial
Dynamics
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Investors:
Julie Huang/Brian Ritchie
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212-850-5600
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FOR
RELEASE: 7:00 AM (Eastern) February 8, 2007
CONMED
Corporation Announces Preliminary Fourth Quarter and
Full
Year 2006 Results
-
Sales Increase 10.9% to $169.9 Million: A New Quarterly Record
-
-
Non-GAAP EPS Grows 83% to $0.33 -
-
Quarterly Margins Improve -
-
Conference Call to be Held at 10:00 a.m. ET
Today-
Utica,
New York, February 8, 2007 ----- CONMED Corporation (Nasdaq:
CNMD) today
announced preliminary financial results for the fourth quarter and year-ended
December 31, 2006. Sales for the 2006 fourth quarter increased 10.9%, reaching
a
quarterly record of $169.9 million compared to $153.2 million in the fourth
quarter of 2005.
Excluding
transition charges related to an acquisition and other unusual charges, non-GAAP
net income for the fourth quarter increased 77% to $9.3 million, or $0.33 per
diluted share, compared to fourth quarter 2005 non-GAAP net income of $5.3
million, or $0.18 per diluted share. This was driven by solid top-line growth
and continued leverage of CONMED’s infrastructure. Non-GAAP figures exclude
transition costs related to acquisition integration, plant closure related
costs
and other unusual charges. On a GAAP basis, the Company’s net loss in the fourth
quarter 2006 was $23.6 million or $0.84 per share compared to net income of
$2.8
million, or $0.10 per share in last quarter of 2005. As described below, unusual
charges in the 2006 fourth quarter include a non-cash
charge
for the impairment of goodwill associated with the Company’s Endoscopic
Technologies business unit. (Please see section on Acquisition and Unusual
Charges as well as the attached table reconciling GAAP and non-GAAP financial
results.)
“CONMED’s
fourth quarter operating performance exceeded our expectations with excellent
sales growth across our major product lines. This performance is consistent
with
our continued long-term strategy to grow our top-line through outstanding
service to our customers with innovative, high quality, cost-effective medical
devices,” commented Joseph J. Corasanti, President and Chief Executive Officer.
“Excluding transition and other unusual charges, the Company’s fourth quarter
gross margin improved to 51.0% of sales compared to 49.8% in the 2005 fourth
quarter. Our operating margin improved to 9.6% of sales compared to 7.5% a
year
ago. These results reflect that the profit improvement plans we initiated in
2006 are on track and should continue to contribute to improved performance
in
2007,” added Mr. Corasanti.
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CONMED
News Release Continued
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Page
2 of
11
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February
8, 2007
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CONMED
has significant intangible assets on its balance sheet as a result of its
history of acquisitions over the last 17 years. As of December 31, 2006, these
intangible assets amount to $481.6 million and consist of goodwill, customer
relationships, acquired technology, and tradenames. The Company’s yearly
evaluation of goodwill, as required by SFAS No. 142, “Goodwill and Other
Intangible Assets”, has resulted in a preliminary non-cash
pre-tax
write-down of approximately $46.7 million ($29.6 million after-tax) related
to
the Endoscopic Technologies business unit. Accounting rules do not permit
recording fair value increases, if any, to intangible assets of CONMED’s other
operating segments, or even to other intangible assets of Endoscopic
Technologies. The preliminary charge is the total goodwill of this business
unit. Management will complete its review of the amount of the charge for
Endoscopic Technologies when it finalizes its 2006 financial statements upon
filing of its annual report on Form 10-K with the Securities and Exchange
Commission. The write-off has no impact on CONMED’S cash flow from operations.
In
January 2006, the Company adopted Statement of Financial
Accounting Standards No. 123R, “Share-Based Payment” (“SFAS 123R”), which
requires companies to recognize the cost of stock options and other stock-based
payments as compensation expense. As a result of adopting SFAS No. 123R, the
fourth quarter basic and diluted
earnings per share and non-GAAP basic and diluted earnings per share were lower
by approximately $0.03 per share in the December 2006 quarter than they
otherwise would have been.
Sales
outside the United States were $66.5 million in the fourth quarter of 2006,
growing 19.2% overall and 14.0% on a constant currency basis compared to the
fourth quarter of 2005. For the 2006 year, international sales have grown to
38.6% of the Company’s total sales compared to 36.8% of sales in 2005.
CONMED’s
cash flow was strong in the fourth quarter of 2006 enabling a reduction in
the
senior credit facility of $31.3 million. For the 2006 year, cash from operations
increased 52.2% to $64.6 million compared to $42.4 million in 2005. Total year
debt repayment totaled $39.0 million. Additionally, the Company repurchased
$7.8
million of its common stock during 2006.
Following
is a summary of the Company’s sales by product line for the three months ended
December 31, 2006 (in millions):
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Three
Months Ended December 31,
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|||||||||||||
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Constant
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|||||||||||||
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Currency
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|||||||||||||
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2005
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2006
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Growth
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Growth
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||||||||||
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(in
millions)
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|||||||||||||
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Arthroscopy
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$
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52.4
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$
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59.9
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14.3
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%
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11.7
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%
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|||||
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Powered
Surgical Instruments
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32.1
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36.5
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13.7
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%
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11.0
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%
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|||||||
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Electrosurgery
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22.6
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26.8
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18.6
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%
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18.6
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%
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|||||||
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Endoscopic
Technologies
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14.5
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12.8
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-11.7
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%
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-11.7
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%
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|||||||
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Endosurgery
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12.5
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15.1
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20.8
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%
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20.8
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%
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|||||||
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Patient
Care
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19.1
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18.8
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-1.6
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%
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-1.6
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%
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|||||||
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$
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153.2
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$
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169.9
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10.9
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%
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9.0
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%
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||||||
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CONMED
News Release Continued
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Page
3 of
11
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February
8, 2007
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The
Company’s sports medicine Arthroscopy line grew 14.3% over fourth quarter 2005
on continued strength of video imaging sales, as well as a solid performance
from our procedure specific tissue repair devices. Powered Surgical Instruments
continued to demonstrate sales acceleration by growing 13.7% as a result of
our
MPower® and MicroPower® platform products introduced in 2006. Electrosurgery
continued to increase sales at an above market growth rate of 18.6%, while
Endosurgery increased 20.8% with strong growth internationally. The Endoscopic
Technologies line, accounting for approximately 8% of the Company’s sales during
the quarter, experienced a revenue decline in the fourth quarter due to the
termination of its distribution arrangement for the Onco-Life product and due
to
production matters at an assembly operation in Mexico. Management has taken
corrective action to address the causes associated with the product shortages
that the Company identified and disclosed in the third quarter of 2006.
Management expects that shortages for this product line may continue into
2007.
In
the
fourth quarter of 2006, the Internal Revenue Service completed its audit of
the
CONMED’s 2004 federal income tax return, resolving several matters which had
been partially reserved by the Company such as the research and development
credit and the extraterritorial income (“ETI”) tax benefit. Accordingly, the
benefit of approximately $1.1 million was recorded as a reduction of income
tax
expense in the fourth quarter. Additionally, in December 2006, Congress renewed
the research and development tax credit for 2006. Thus, the entire 2006
estimated benefit of the credit, amounting to $0.6 million, was recorded in
the
last quarter of 2006.
Full
Year Results
During
2006, the Company experienced sequential quarterly non-GAAP operating
performance improvement, culminating with the fourth quarter’s better than
expected operating results. For the full year 2006, CONMED reported revenues
of
$646.8 million, a 4.8% increase from the $617.3 million in 2005. Non-GAAP net
income for 2006 was $28.1 million, or $1.00 per diluted share, (excluding
acquisition transition and other charges) compared to non-GAAP net income of
$41.8 million, or $1.41 per diluted share, for 2005 (please
see attached schedule for full explanation of transition and other charges).
The
2006
GAAP net loss, including the previously described write-down of certain of
the
Company’s intangible assets, was $12.5 million, $0.45 per diluted share,
compared to net income of $32.0 million and $1.08 per diluted share in 2005.
Adoption
of SFAS 123R regarding expensing of stock options and other stock-based payments
in 2006 caused diluted earnings per share and non-GAAP diluted earnings per
share to be reduced by $0.12 for the full year.
Following
is a summary of 2006 sales by product line in millions of dollars:
|
Year
Ended December 31,
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|||||||||||||
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Constant
|
|||||||||||||
|
Currency
|
|||||||||||||
|
2005
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2006
|
Growth
|
Growth
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||||||||||
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(in
millions)
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|||||||||||||
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Arthroscopy
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$
|
211.4
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$
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228.2
|
7.9
|
%
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6.8
|
%
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|||||
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Powered
Surgical Instruments
|
132.0
|
137.2
|
3.9
|
%
|
2.8
|
%
|
|||||||
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Electrosurgery
|
88.5
|
97.7
|
10.4
|
%
|
10.4
|
%
|
|||||||
|
Endoscopic
Technologies
|
58.9
|
54.9
|
-6.8
|
%
|
-6.8
|
%
|
|||||||
|
Endosurgery
|
50.6
|
52.9
|
4.5
|
%
|
4.5
|
%
|
|||||||
|
Patient
Care
|
75.9
|
75.9
|
-
|
%
|
-
|
%
|
|||||||
|
$
|
617.3
|
$
|
646.8
|
4.8
|
%
|
4.0
|
%
|
||||||
|
CONMED
News Release Continued
|
Page
4 of
11
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February
8, 2007
|
Outlook
Mr.
Corasanti noted, “During 2006, management pursued initiatives that were intended
to reverse the weak operating results of the last half of 2005. We are pleased
that the Company was successful in improving our 2006 operating performance
as
we progressed through the year in-line with our expectations. We recognize
that
there are still improvements to be made, especially within the Endoscopic
Technologies business, where management is diligently working to resolve certain
manufacturing issues. We believe that product line performance in this division
will show steady improvement throughout 2007 once the issue impacting product
shortages is corrected. The strong fourth quarter growth of the majority of
CONMED’s product lines bodes well for our overall business as we enter 2007.”
“For
the
upcoming first quarter of 2007, we anticipate revenues in the range of $164-$168
million and non-GAAP diluted earnings per share (excluding unusual charges)
of
$0.24-0.28. For the full year of 2007, we reaffirm the forecast we last
provided. We foresee 2007 sales growing approximately 5% over 2006 sales with
the resulting diluted earnings per share approximating $1.20 - $1.30, a
significant increase from the 2006 non-GAAP diluted earnings per share of $1.00.
While this expected growth is substantial, the anticipated 2007 operating profit
margin of 11.5% is not the ultimate goal. Future expected top-line growth,
together with controlling costs and leveraging the Company’s fixed-cost
structure, should result in longer-term improving profitability,” concluded Mr.
Corasanti.
Acquisition
and Unusual Charges
As
previously noted, CONMED expects to incur a non-cash pre-tax charge in the
preliminary amount of $46.7 million as a result of the Company’s yearly
evaluation of intangible asset values. Offset by income tax benefits of $17.1
million, the net charge amounted to $29.6 million.
As
a
result of the acquisition of the Endoscopic Technologies product line, the
Company had been purchasing the finished goods from the former owner until
transfer of the manufacturing process to CONMED’s facilities. During the second
quarter of 2006, manufacturing of a vast majority of the products had begun
in
the Company’s facilities or in outsourced locations. However, first-in first-out
(“FIFO”) inventory accounting requires that the higher cost purchased inventory
be sold before the expected lower-cost self-manufactured inventory is sold.
CONMED has noted this difference in cost, as well as certain other costs
associated with the start-up of production, as an adjustment to GAAP income
amounts. The Company expects that no other transition costs related to this
acquisition will be incurred in 2007 or beyond.
In
the
fourth quarter of 2006, CONMED continued to complete the previously announced
surgical light replacement program and expensed $0.4 million as an unusual
charge. For the full year of 2006, the charge amounted to $1.4 million. In
2004,
the Company ceased selling its own brand of surgical lights and initiated a
program to replace all of its surgical lights currently in use with other
manufacturers’ lights. The replacement program required access to operating
rooms, which is granted at the discretion of the affected hospitals. The
replacement program is expected to be completed in early 2007.
In
September 2006, CONMED announced the closing of its Integrated Systems assembly
operation in Montreal, Canada. Future assembly of the pendants and service
manager cabinets associated with the Company’s integrated systems line will be
absorbed by other of CONMED’s facilities and/or outsourced to a contract
manufacturer. In the 2006 fourth quarter, the Company incurred closing costs
of
$1.4 million and a total of $1.9 million for the year. The closing activities
are expected to be completed in early 2007.
In
April
2006, the Company refinanced its debt, resulting in a reduced interest rate
and
increased availability. The deferred financing fees associated with the previous
debt were written off in the second quarter of 2006 amounting to
$678,000.
|
CONMED
News Release Continued
|
Page
5 of
11
|
February
8, 2007
|
During
the second quarter of 2006, CONMED was notified that the supplier of certain
of
its pulse oximetry products could no longer provide product because of the
settlement of a patent dispute with a third party. Because the Company can
no
longer assure customers of a continuing supply of these products, CONMED has
discontinued their marketing and charged off inventory valued at $595,000 in
the
second quarter. The discontinuation of these products is not expected to have
a
material impact on the Company’s sales or results of operations. This matter
does not affect the vast majority of CONMED’s pulse oximetry products and also
does not affect sales of its proprietary Pro2® pulse oximetry line.
Conference
Call
The
Company will webcast its fourth quarter and full year 2006 conference call
live
over the Internet on Thursday, February 8, 2007 at 10:00 a.m. Eastern Time.
This
broadcast can be accessed from CONMED's web site at www.conmed.com. Replays
of
the call will be made available through February 15, 2007.
CONMED
Profile
CONMED
is
a medical technology company with an emphasis on surgical devices and equipment
for minimally invasive procedures and monitoring. The Company’s products serve
the clinical areas of arthroscopy, powered surgical instruments, electrosurgery,
cardiac monitoring disposables, endosurgery and endoscopic technologies. They
are used by surgeons and physicians in a variety of specialties including
orthopedics, general surgery, gynecology, neurosurgery, and gastroenterology.
Headquartered in Utica, New York, the Company’s 3,200 employees distribute its
products worldwide from several manufacturing locations.
Forward
Looking Information
This
press release contains forward-looking statements based on certain assumptions
and contingencies that involve risks and uncertainties. The forward-looking
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and relate to the Company’s performance
on a going-forward basis. The forward-looking statements in this press release
involve risks and uncertainties which could cause actual results, performance
or
trends, to differ materially from those expressed in the forward-looking
statements herein or in previous disclosures. The Company believes that all
forward-looking statements made by it have a reasonable basis, but there can
be
no assurance that management’s expectations, beliefs or projections as expressed
in the forward-looking statements will actually occur or prove to be correct.
In
addition to general industry and economic conditions, factors that could cause
actual results to differ materially from those discussed in the forward-looking
statements in this press release include, but are not limited to: (i) the
failure of any one or more of the assumptions stated above, to prove to be
correct; (ii) the risks relating to forward-looking statements discussed in
the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2005; (iii) cyclical purchasing patterns from customers, end-users and dealers;
(iv) timely release of new products, and acceptance of such new products by
the
market; (v) the introduction of new products by competitors and other
competitive responses; (vi) the possibility that any new acquisition or other
transaction may require the Company to reconsider its financial assumptions
and
goals/targets; and/or (vii) the Company’s ability to devise and execute
strategies to respond to market conditions.
|
CONMED
News Release Continued
|
Page
6 of
11
|
February
8, 2007
|
CONMED
CORPORATION
CONSOLIDATED
STATEMENTS OF INCOME
(in
thousands except per share amounts)
(unaudited)
|
|
Three
months ended
|
Twelve
months ended
|
|||||||||||
|
|
December
31,
|
December
31,
|
|||||||||||
|
|
2005
|
2006
|
2005
|
2006
|
|||||||||
|
Net
sales
|
$
|
153,200
|
$
|
169,892
|
$
|
617,305
|
$
|
646,812
|
|||||
|
Cost
of sales
|
76,862
|
83,271
|
296,438
|
322,644
|
|||||||||
|
Cost
of sales, acquisition-transition and
|
|||||||||||||
|
plant
closure - Note A
|
1,870
|
4,180
|
7,846
|
11,322
|
|||||||||
|
Gross
profit
|
74,468
|
82,441
|
313,021
|
312,846
|
|||||||||
|
Selling
and administrative - Note B
|
57,945
|
62,116
|
216,685
|
234,832
|
|||||||||
|
Research
and development
|
6,836
|
8,130
|
25,469
|
30,715
|
|||||||||
|
Other
expense - Note C
|
1,864
|
993
|
7,119
|
5,213
|
|||||||||
|
Impairment
of goodwill - Note D
|
-
|
46,689
|
-
|
46,689
|
|||||||||
|
|
|||||||||||||
|
|
66,645
|
117,928
|
249,273
|
317,449
|
|||||||||
|
Income
(loss) from operations
|
7,823
|
(35,487
|
)
|
63,748
|
(4,603
|
)
|
|||||||
|
Loss
on early extinguishment
|
|||||||||||||
|
of
debt
|
-
|
-
|
-
|
678
|
|||||||||
|
Interest
expense
|
4,214
|
4,617
|
15,578
|
19,120
|
|||||||||
|
Income
(loss) before income taxes
|
3,609
|
(40,104
|
)
|
48,170
|
(24,401
|
)
|
|||||||
|
Provision
(benefit) for income taxes
|
802
|
(16,511
|
)
|
16,176
|
(11,894
|
)
|
|||||||
|
Net
income (loss)
|
$
|
2,807
|
$
|
(23,593
|
)
|
$
|
31,994
|
$
|
(12,507
|
)
|
|||
|
Per
share data:
|
|||||||||||||
|
Net
Income
|
|||||||||||||
|
Basic
|
$
|
.10
|
$
|
(.84
|
)
|
$
|
1.09
|
$
|
(.45
|
)
|
|||
|
Diluted
|
.10
|
(.84
|
)
|
1.08
|
(.45
|
)
|
|||||||
|
Weighted
average common shares
|
|||||||||||||
|
Basic
|
29,127
|
27,940
|
29,300
|
27,966
|
|||||||||
|
Diluted
|
29,407
|
27,940
|
29,737
|
27,966
|
|||||||||
|
CONMED
News Release Continued
|
Page
7 of
11
|
February
8, 2007
|
Note
A
- Cost
of sales includes costs associated with an acquisition and certain subsequent
transition activities. These costs approximated $1.9 million and $7.8 million,
respectively, in the three and twelve months ended December 31, 2005 and $2.9
million and $10.0 million, respectively, in the three and twelve months ended
December 31, 2006. Also included in cost of sales in the three and twelve months
ended December 31, 2006 is approximately $1.3 million in inventory write-off
costs associated with a plant closure.
Note
B
-
Included in selling and administrative expense in the three and twelve months
ended December 31, 2006 are approximately $1.1 million and $3.7 million,
respectively, of share-based payment expense.
Note
C
-
Included in other expense in the three months ended December 31, 2005 are $0.6
million in acquisition related costs, $0.5 million of expense related to the
termination of a product offering and $0.8 million related to a loss on an
equity investment. Included in other expense for the twelve months ended
December 31, 2005 are $4.1 million in acquisition related costs, $1.5 million
of
expense related to the termination of a product offering, $0.7 million in
environmental settlement costs and $0.8 million related to the loss on an equity
investment. Included in other expense in the three months ended December 31,
2006 are the following: $0.5 million in acquisition-related costs, $0.4 million
in cost related to the termination of a product offering and $0.1 million in
plant closure costs. Included in other expense in the twelve months ended
December 31, 2006 are the following: $2.6 million in acquisition-related costs,
$1.4 million in costs related to the termination of a product offering, $0.6
million in costs related to the settlement of a patent dispute, and $0.6 million
in plant closure costs.
Note
D
-
Impairment of goodwill is a non-cash charge related to the Endoscopic
Technologies business unit resulting from the Company’s yearly evaluation of
intangible asset values in accordance with SFAS No. 142.
|
CONMED
News Release Continued
|
Page
8 of
11
|
February
8, 2007
|
CONMED
CORPORATION
CONSOLIDATED
CONDENSED BALANCE SHEETS
(in
thousands)
(unaudited)
ASSETS
|
|
December
31,
|
||||||
|
|
2005
|
2006
|
|||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
3,454
|
$
|
3,831
|
|||
|
Accounts
receivable, net
|
83,327
|
75,120
|
|||||
|
Inventories
|
152,428
|
151,687
|
|||||
|
Deferred
income taxes
|
12,887
|
15,212
|
|||||
|
Other
current assets
|
3,419
|
4,033
|
|||||
|
Total
current assets
|
255,515
|
249,883
|
|||||
|
Property,
plant and equipment, net
|
104,224
|
116,480
|
|||||
|
Goodwill
and other assets, net
|
335,651
|
290,512
|
|||||
|
Other
intangible assets, net
|
191,402
|
191,135
|
|||||
|
Other
assets
|
16,991
|
13,561
|
|||||
|
Total
assets
|
$
|
903,783
|
$
|
861,571
|
|||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Current
portion of long-term debt
|
$
|
4,208
|
$
|
3,148
|
|||
|
Other
current liabilities
|
57,924
|
72,057
|
|||||
|
Total
current liabilities
|
62,132
|
75,205
|
|||||
|
Long-term
debt
|
302,643
|
264,676
|
|||||
|
Deferred
income taxes
|
62,554
|
51,004
|
|||||
|
Other
long-term liabilities
|
23,448
|
30,332
|
|||||
|
Total
liabilities
|
450,777
|
421,217
|
|||||
|
Shareholders'
equity:
|
|||||||
|
Capital
accounts
|
202,810
|
201,541
|
|||||
|
Retained
earnings
|
259,932
|
247,425
|
|||||
|
Accumulated
other comprehensive loss
|
(9,736
|
)
|
(8,612
|
)
|
|||
|
Total
equity
|
453,006
|
440,354
|
|||||
|
Total
liabilities and shareholders' equity
|
$
|
903,783
|
$
|
861,571
|
|||
|
CONMED
News Release Continued
|
Page
9 of
11
|
February
8, 2007
|
CONMED
CORPORATION
CONDENSED
STATEMENT OF CASH FLOWS
(in
thousands)
(unaudited)
|
Twelve
months ended
|
|||||||
|
December
31,
|
|||||||
|
2005
|
2006
|
||||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income (loss)
|
|
$
|
31,994
|
$
|
(12,507
|
)
|
|
|
Adjustments
to reconcile net income
|
|
||||||
|
to
net cash provided by operating activities:
|
|||||||
|
Depreciation
and amortization
|
30,786
|
29,851
|
|||||
|
Share-based
payment expense
|
-
|
3,709
|
|||||
|
Deferred
income taxes
|
10,128
|
(12,289
|
)
|
||||
|
Loss
on equity investment
|
794
|
-
|
|||||
|
Sale
of accounts receivable
|
(9,000
|
)
|
4,000
|
||||
|
Impairment
of goodwill
|
-
|
46,689
|
|||||
|
Other,
net
|
(22,268
|
)
|
5,119
|
||||
|
Net
cash provided by operating activities
|
42,434
|
64,572
|
|||||
|
Cash
flow from investing activities:
|
|||||||
|
Payments
related to business acquisitions,
|
|||||||
|
net
of cash acquired
|
(372
|
)
|
(2,466
|
)
|
|||
|
Purchases
of property, plant, and equipment, net
|
(16,242
|
)
|
(21,895
|
)
|
|||
|
Proceeds
from sale of equity investment
|
-
|
1,205
|
|||||
|
Net
cash used in investing activities
|
(16,614
|
)
|
(23,156
|
)
|
|||
|
|
|||||||
|
Cash
flow from financing activities:
|
|||||||
|
Payments
on debt
|
(30,671
|
)
|
(174,027
|
)
|
|||
|
Proceeds
of debt
|
43,000
|
135,000
|
|||||
|
Payments
relating to issuance of debt
|
-
|
(1,260
|
)
|
||||
|
Net
proceeds from common stock issued under employee plans
|
16,998
|
2,731
|
|||||
|
Repurchase
of common stock
|
(45,374
|
)
|
(7,848
|
)
|
|||
|
Other,
net
|
(6,287
|
)
|
1,305
|
||||
|
Net
cash provided by financing activities
|
(22,334
|
)
|
(44,099
|
)
|
|||
|
Effect
of exchange rate change
|
|||||||
|
on
cash and cash equivalents
|
(4,221
|
)
|
3,060
|
||||
|
Net
decrease in cash and cash equivalents
|
(735
|
)
|
377
|
||||
|
Cash
and cash equivalents at beginning of period
|
4,189
|
3,454
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
3,454
|
$
|
3,831
|
|||
|
CONMED
News Release Continued
|
Page
10 of
11
|
February
8, 2007
|
CONMED
CORPORATION
RECONCILIATION
OF REPORTED NET INCOME TO NON-GAAP NET INCOME
BEFORE
UNUSUAL ITEMS
(In
thousands except per share amounts)
(unaudited)
|
Three
months ended
|
|||||||
|
December
31,
|
|||||||
|
2005
|
2006
|
||||||
|
Reported
net income (loss)
|
$
|
2,807
|
$
|
(23,593
|
)
|
||
|
Acquisition-transition
related costs included
|
|||||||
|
in
cost of sales
|
1,870
|
2,899
|
|||||
|
Plant
closure related costs included in cost of sales
|
-
|
1,281
|
|||||
|
Total
cost of sales
|
1,870
|
4,180
|
|||||
|
Other
acquisition related costs
|
620
|
488
|
|||||
|
Termination
of product offering
|
450
|
356
|
|||||
|
Loss
on equity investment
|
794
|
-
|
|||||
|
Plant
closure costs
|
-
|
149
|
|||||
|
Total
other expense
|
1,864
|
993
|
|||||
|
|
|||||||
|
Impairment
of goodwill
|
-
|
46,689
|
|||||
|
Unusual
expense before income taxes
|
3,734
|
51,862
|
|||||
|
Provision
(benefit) for income taxes on unusual expense
|
(1,288
|
)
|
(18,958
|
)
|
|||
|
Net
income before unusual items.
|
$
|
5,253
|
$
|
9,311
|
|||
|
Per
share data:
|
|||||||
|
Reported
net income
|
|||||||
|
Basic
|
$
|
.10
|
$
|
(.84
|
)
|
||
|
Diluted
|
.10
|
(.84
|
)
|
||||
|
Net
income before unusual items
|
|||||||
|
Basic
|
$
|
.18
|
$
|
.33
|
|||
|
Diluted
|
.18
|
.33
|
|||||
Management
has provided the above reconciliation of net income before unusual items as
an
additional measure that investors can use to compare operating performance
between reporting periods. Management believes this reconciliation provides
a
useful presentation of operating performance.
|
CONMED
News Release Continued
|
Page
11 of
11
|
February
8, 2007
|
CONMED
CORPORATION
RECONCILIATION
OF REPORTED NET INCOME TO NON-GAAP NET INCOME
BEFORE
UNUSUAL ITEMS
(In
thousands except per share amounts)
(unaudited)
|
Twelve
months ended
|
|||||||
|
December,
31,
|
|||||||
|
2005
|
2006
|
||||||
|
|
|||||||
|
Reported
net income (loss)
|
$
|
31,994
|
$
|
(12,507
|
)
|
||
|
Acquisition-transition
related costs included in cost of sales
|
7,846
|
10,041
|
|||||
|
|
|||||||
|
Plant
closure related cost included in cost of sales
|
-
|
1,281
|
|||||
|
Total
cost of sales
|
7,846
|
11,322
|
|||||
|
Other
acquisition related costs
|
4,108
|
2,592
|
|||||
|
Termination
of product offering
|
1,519
|
1,448
|
|||||
|
Environmental
settlement
|
698
|
-
|
|||||
|
Loss
on equity investment
|
794
|
-
|
|||||
|
Write-off
of inventory in settlement of a patent dispute
|
-
|
595
|
|||||
|
Plant
closure costs
|
-
|
578
|
|||||
|
|
|||||||
|
Total
other expense
|
7,119
|
5,213
|
|||||
|
Impairment
of goodwill
|
-
|
46,689
|
|||||
|
Loss
on early extinguishment of debt
|
-
|
678
|
|||||
|
|
|||||||
|
Unusual
expense before income taxes
|
14,965
|
63,902
|
|||||
|
Provision
(benefit) for income taxes on unusual expense
|
(5,163
|
)
|
(23,293
|
)
|
|||
|
Net
income before unusual items.
|
$
|
41,796
|
$
|
28,102
|
|||
|
Per
share data:
|
|||||||
|
Reported
net income
|
|||||||
|
Basic
|
$
|
1.09
|
$
|
(.45
|
)
|
||
|
Diluted
|
1.08
|
(.45
|
)
|
||||
|
Net
income before unusual items
|
|||||||
|
Basic
|
$
|
1.43
|
$
|
1.00
|
|||
|
Diluted
|
1.41
|
1.00
|
|||||
Management
has provided the above reconciliation of net income before unusual items as
an
additional measure that investors can use to compare operating performance
between reporting periods. Management believes this reconciliation provides
a
useful presentation of operating performance.