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): January 5, 2009
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
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incorporation
or organization)
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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):
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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)
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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 January 5, 2009, CONMED Corporation
issued a press release announcing revised financial guidance for the fourth
quarter of 2008. 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 January 5,
2009, 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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(Registrant)
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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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Chief Financial
Officer
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Date: January
5, 2009
EXHIBIT
INDEX
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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 January 5,
2009, 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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Chief
Financial Officer
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315-624-3206
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FD
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Investors:
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Brian
Ritchie/Theresa Kelleher
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212-850-5600
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FOR
RELEASE: 7:00 AM (Eastern) January 5,
2009
CONMED Corporation Provides
Business Update
Utica,
New York, January 5, 2009 ----- CONMED Corporation (Nasdaq: CNMD) announced
today that its fourth quarter 2008 sales will be approximately 9% lower than
previously anticipated due to unfavorable foreign currency exchange fluctuations
and lower than anticipated sales volumes for capital equipment.
Fourth
quarter 2008 sales are expected to approximate $176 - $178 million, a decrease
of approximately 7% from fourth quarter 2007 sales, which included approximately
$10 million of integrated systems installations at an unusually large number of
hospital customers that chose to delay installations until late in that
year. Full year 2008 sales are expected to approximate $739 - $741
million, an increase of approximately 6.5% over 2007 sales.
“Usually,
the Company’s sales in the fourth quarter of each year experience a sequential
increase from the seasonal effects of the third quarter’s summer
months. This year, however, as a result of a rapid and dramatic 15%
strengthening of the U.S. dollar adversely affecting foreign sales in the fourth
quarter, and due to cash conservation measures among certain hospital customers
causing a reduction from
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CONMED
News Release Continued
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January
5, 2009
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anticipated
sales volumes for our capital equipment, the Company’s fourth quarter sales will
be lower than our previous estimates,” said Mr. Joseph J. Corasanti, President
and CEO of CONMED Corporation.
During
the first nine months of 2008, the Company gradually increased its earnings
guidance as a result of better than anticipated financial results in the first
three quarters of the year partly due to the weakening of the US dollar and its
positive effect on CONMED’s operations. However, the strengthening of
the US dollar in the fourth quarter of 2008 has reversed the currency benefits
derived earlier in the year.
The
Company now estimates the GAAP diluted earnings per share for the fourth quarter
of 2008 will approximate $0.30 - $0.35 and for the full year 2008 will
approximate $1.46 - $1.51. Non-GAAP earnings per share for the fourth
quarter of 2008 are estimated to be $0.28 - $0.33 and that the full year of 2008
will approximate $1.48 - $1.53. This current 2008 non-GAAP
diluted earnings per share estimate closely mirrors the original guidance
provided for 2008 over a year ago, and an increase of approximately 10%
over the 2007 non-GAAP earnings per share. Please refer
to the comments following for further information regarding non-GAAP
measurements.
The
change in the economic climate during the last three months has been remarkably
swift, with extreme volatility in foreign currency exchange rates and numerous
reports of reduced capital spending and cash conservation throughout the
healthcare provider industry. These changes in the overall economy
have caused the Company to reevaluate its outlook for 2009. CONMED’s
revised forecast for 2009 assumes a constant currency growth rate of
approximately 4%-5% over 2008 reported sales, compared to the Company’s previous
estimate of 6%. However, at current foreign currency rates of
exchange, the 30% of the Company’s sales denominated in foreign currency would
decline approximately 15% compared to average rates of exchange in
2008. Thus, CONMED's sales
forecast for 2009 is approximately $740 million.
As a
result of the reduced level of constant dollar sales, and since the
profitability impact of the foreign currency exchange forecast is greater than
that of the anticipated constant currency volume growth, the Company expects
reduced net income in 2009 compared to 2008. These expectations
result in a non-GAAP earnings per share forecast of $1.15 - $1.25 for 2009,
compared to the $1.77 - $1.85 previously estimated. GAAP earnings per
share in 2009 is anticipated to be lower than the non-GAAP amounts as the
Company completes the previously disclosed manufacturing restructuring and
incurs costs related thereto.
Page 2 of
5
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CONMED
News Release Continued
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January
5, 2009
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Reconciliation of Revised 2009 EPS
Guidance
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Compared to Previous
Guidance
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Sales
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Non-GAAP
EPS |
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(millions)
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(Note
1)
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Previous 2009
guidance
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$ | 803 | $ | 1.80 | ||||
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Reduction due to FX at lower
rates
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(36 | ) | (0.47 | ) | ||||
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Reduced sales growth
rate
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(27 | ) | (0.13 | ) | ||||
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Revised 2009
guidance
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$ | 740 | $ | 1.20 | ||||
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Note 1. Mid-point of range
estimate. A reconciliation of non-GAAP earnings per share determined
in accordance with GAAP is not presented because the reconciling items for
2009 are not determinable.
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Mr.
Corasanti added, “While CONMED has been adversely affected by the rapid economic
changes, we remain committed to our long-term goals of increased profitability
though the introduction of new products and increased efficiencies throughout
the organization. Our products are well-regarded, we hold significant
market share in our various product lines and our balance sheet is
strong. Therefore, as the economy stabilizes, we believe we will be
well-positioned to leverage the Company’s strengths for the benefit of our
customers and shareholders.”
Liquidity and cash
flow
CONMED’s
liquidity and cash flow remain strong. During the fourth quarter of
2008, the Company repurchased and retired $25 million face value of its 2.5%
Convertible Notes at a discount of approximately 20%. The repurchase
was substantially funded by CONMED’s own cash resources. The
transaction resulted in a pre-tax gain to the financial statements of
approximately $4.4 million, which is included in the 2008 earnings per share
estimates set forth above.
Page 3 of
5
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CONMED
News Release Continued
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January
5, 2009
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Conference call information
– February 5, 2009
CONMED
anticipates that it will report its fourth quarter 2008 financial results on
February 5, 2009, before the opening of the market. The Company will
also hold a conference call live
over the Internet at 10:00 a.m. Eastern Time that same day. This
webcast can be accessed from CONMED’s web site at www.conmed.com. Replays of the call will be
made available through February 13, 2009.
The Company anticipates that
forward-looking information and additional material details related to
fourth quarter 2008 earnings and the
Company’s expectations on a prospective basis
may be discussed during the call. Such forward-looking information may involve
risks and uncertainties such as those described in the Company’s SEC filings.
Convertible
note interest expense
In accordance with FSP APB 14-1
issued by the Financial Accounting Standards Board, beginning in 2009 the
Company will be required to record a non-cash interest expense related to its
convertible notes to bring the effective interest rate to a level approximating
that of a non-convertible note of similar size and tenor. We
currently estimate that this additional non-cash pre-tax charge will approximate
$5.2 million or $0.11 per share. The pronouncement also requires that
a similar adjustment be made in previously issued financial statements to
facilitate comparative analysis. The earnings per share estimates
provided above for 2008 and 2009 do not include this convertible note interest
adjustment.
Use of Non-GAAP Financial
Measures
Management
has disclosed financial measurements in this press announcement that present
financial information that is not in accordance with Generally Accepted
Accounting Principles (“GAAP”). These measurements are not a
substitute for GAAP measurements, although Company management uses these
measurements as aids in monitoring the Company’s on-going financial performance
from quarter-to-quarter and year-to-year on a regular basis, and for
benchmarking against other medical technology companies. Non-GAAP net
income and non-GAAP earnings per share measure the income of the Company
excluding unusual credits or charges that are considered by management to be
outside of the normal on-going operations of the Company. Management
uses and presents non-GAAP net income and non-GAAP earnings per share because
management believes that in order to properly understand the Company’s short and
long-term financial trends, the impact of unusual items should be eliminated
from on-going operating activities. These adjustments for unusual
items are
Page 4 of
5
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CONMED
News Release Continued
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January
5, 2009
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derived
from facts and circumstances that vary in frequency and impact on the Company’s
results of operations. Management uses non-GAAP net income and
non-GAAP earnings per share to forecast and evaluate the operational performance
of the Company as well as to compare results of current periods to prior periods
on a consistent basis.
Non-GAAP
financial measures used by the Company may be calculated differently from, and
therefore may not be comparable to, similarly titled measures used by other
companies. Investors should consider non-GAAP measures in addition
to, and not as a substitute for, or superior to, financial performance measures
prepared in accordance with GAAP.
In the
earnings per share estimates for the year 2008 provided above, the Company has
forecasted the per share effect of increased expenses due to the previously
disclosed manufacturing restructuring and acquisition related matters to
approximate $.12 per share, while the gain on the repurchase of the Company’s
convertible notes approximates $0.10 per share.
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, 2007; (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.
Page 5
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