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CONMED Corporation Announces Fourth Quarter and 2001 Year End Results
- Fourth Quarter Sales Up 11% to $113.3 Million - - Fourth Quarter EPS Increases 33% to $0.32, Excluding Acquisition Related Charges -
CONMED Corporation (Nasdaq: CNMD) today announced financial results for the fourth quarter and year ended December 31, 2001.Fourth Quarter Results
Sales for the fourth quarter increased 11% to $113.3 million from $102.3 million in the comparable quarter last year. Net income, excluding a $0.7 million acquisition related charge, was $8.1 million, 43% above the $5.7 million reported in last year's fourth quarter. Earnings per diluted share, excluding the charge, grew 33% to $0.32 from $0.24 in the same quarter in 2000. Had FAS 142 on goodwill accounting been effective, earnings would have been $9.5 million, or $0.37 per diluted share, compared to $7.1 million, or $.31 per diluted share, in fourth quarter 2000.
Fourth quarter sales of the Company's orthopedic products grew to $68.9 million, 4% above the $66.1 million reported in the fourth quarter a year ago. Arthroscopy sales increased 11% to $40.3 million from $36.2 million in the same period last year. Powered instrument sales were $28.6 million compared to $29.9 million, reflecting a mature battery powered system that the Company expects to replace in the first quarter of 2002.
Electrosurgery revenues were $18.0 million, a 3% increase from the $17.5 million recorded in fourth quarter 2000. Sales of Patient Care Products grew 2% to $17.1 million compared to $16.7 million. Endoscopy revenues grew significantly to $9.3 million from $2.0 million in the same period last year, reflecting the addition of the Imagyn product line.
Year End Results
For the year ended December 31, 2001, CONMED reported revenues of $428.7 million, an 8% increase from $395.9 million in 2000. Net income, excluding unusual charges, was $25.4 million, up 25% from $20.3 million last year. Earnings per diluted share, excluding charges, grew 20% to $1.04 compared to $0.87 last year. Had FAS 142 on goodwill accounting been effective, earnings in 2001 would have been $31.1 million, or $1.27 per diluted share, compared to $25.9 million, or $1.11 per diluted share in 2000.
By product line, Arthroscopy grew 7% to $155.6 million compared to $145.0 million in the year 2000, Powered Surgical Instruments grew 1% to $114.3 million compared to $113.7, Electrosurgery grew 7% to $66.9 million from $62.5 million, Patient Care increased 1% to $69.1 million from $68.2 million, and Endoscopy grew to $22.8 million from $6.5 million. Organic Endoscopy growth was 13% in 2001, with the remainder of the growth resulting from the Imagyn product line acquisition.
During 2001, the Company reduced its balance sheet debt a total of $26 million from operating cash flows. In addition, the balance sheet debt further declined $17 million from the net effect of two financing transactions. An accounts receivable securitization facility, completed in November 2001, reduced balance sheet debt by $40 million while the purchase of the Company's Florida facility in July 2001, which had been previously leased, increased balance sheet debt by $23 million. EBITDA amounted to $99.1 million for the year, excluding acquisition charges.
Joseph J. Corasanti, President and Chief Operating Officer, commented, "We are very pleased to have closed an already successful 2001 with a better-than-expected fourth quarter. These results reflect our focused efforts to increase sales through new product launches and more aggressive marketing and sales programs. In 2001, we successfully launched 10 new products in our orthopedic offering, established CONMED as the third largest player in the fast growing endoscopy market with the acquisition of the Imagyn product line in July, and stabilized our Patient Care line after disappointing results in 2000. Furthermore, our ability to leverage our infrastructure enabled us to post a 33% earnings increase in the fourth quarter on 11% revenue growth."
Mr. Corasanti continued, "Looking ahead, we believe that our focus on new product launches will produce total revenue growth of 8% in 2002 over 2001, including the full year effects of the Imagyn acquisition. We expect operating efficiencies to generate earnings per share increases of 35% to 40% as compared to 2001 including the elimination of goodwill amortization which will add $0.22 per share to our 2002 earnings. For the first quarter, traditionally one of our stronger quarters, we anticipate revenues to be in the range of $111 to $115 million with diluted earnings per share of $0.35 to $0.38."
In July 2001, CONMED completed its acquisition of certain surgical products from Imagyn Medical Technologies. Transitional costs related to this transaction resulted in a charge of $0.7 million, or $0.02 per diluted share, for the fourth quarter and $1.6 million, or $0.04 per diluted share, for the year. Including these charges, the Company reported net income of $7.7 million, or $0.30 per diluted share for the fourth quarter, and $24.4 million, or $1.00 per diluted share, for the year. In the second quarter of 2000, the Company incurred a severance charge of $1.5 million, or $.04, per diluted share. Including this charge, net income in 2000 was $19.3 million, or $.83 per diluted share.
CONMED is a medical technology company specializing in instruments, implants, and video equipment for arthroscopic sports medicine, and powered surgical instruments (drills and saws) for orthopedic, ENT, neuro-surgery, and other surgical specialties. The Company is also a leading developer, manufacturer and supplier of RF electrosurgery systems used routinely to cut and cauterize tissue in over ninety per cent of all surgical procedures worldwide, endoscopy products such as trocars, clip appliers, scissors, and surgical staplers, and a full line of ECG electrodes for heart monitoring and other patient care products. Headquartered in Utica, New York, the Company's 2,500 employees distribute its products worldwide from eight manufacturing locations.
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, including the above mentioned anticipated revenues and earnings, 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, 2000; (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 CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(thousands except per share amounts)
Three months ended Twelve months ended
December December
2000 2001 2000 2001
Net sales $102,346 $113,324 $395,873 $428,722
Cost of sales 48,099 52,722 188,223 202,807
Selling and
administrative 32,812 36,780 126,807 140,560
Research and
development 3,783 4,167 14,870 14,830
Unusual items -- Note A -- 681 1,509 1,567
84,694 94,350 331,409 359,764
Income from operations 17,652 18,974 64,464 68,958
Interest expense, net 8,809 7,015 34,286 30,824
Income before
income taxes 8,843 11,959 30,178 38,134
Provision for
income taxes 3,183 4,305 10,864 13,728
Net income $5,660 $7,654 $19,314 $24,406
Per share data:
Net Income
Basic $.25 $.30 $.84 $1.02
Diluted .24 .30 .83 1.00
Weighted average common shares
Basic 22,989 25,208 22,967 24,045
Diluted 23,169 25,678 23,271 24,401
Note A -- In the second quarter of 2000, the Company incurred a severance
charge of $1,509,000 related to the restructuring of the Company's
arthroscopy sales force. In the third and fourth quarters of 2001, the
Company incurred $886,000 and $681,000, respectively, of non-recurring
transition expenses related to a July 6, 2001 product line acquisition.
CONMED CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
ASSETS
December December
2000 2001
Current assets:
Cash and cash equivalents $3,470 $1,402
Accounts receivable, net 78,626 51,188
Inventories 104,612 107,390
Other current assets 5,323 4,569
Total current assets 192,031 164,549
Property, plant and equipment, net. 62,450 91,026
Goodwill and other assets, net 425,090 446,033
Total assets $679,571 $701,608
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $36,068 $73,429
Accrued interest 5,130 4,954
Other current liabilities 37,078 39,795
Total current liabilities 78,276 118,178
Long-term debt 342,680 262,500
Other long-term liabilities 28,012 36,234
Total liabilities 448,968 416,912
Shareholders' equity:
Capital accounts 127,796 160,591
Retained earnings 103,834 128,240
Accumulated other comprehensive loss (1,027) (4,135)
Total equity 230,603 284,696
Total liabilities and shareholders' equity $679,571 $701,608
OTHER FINANCIAL INFORMATION
(unaudited, in thousands)
Three months ended Twelve months ended
December December
2000 2001 2000 2001
EBITDA (excluding
non-recurring
items) $24,966 $27,109 $94,044 $99,121
Depreciation 2,428 2,407 9,434 9,055
Amortization 4,886 5,047 18,637 19,541
Capital expenditures 2,183 1,739 14,050 14,443
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SOURCE CONMED Corporation
CONTACT: Robert Shallish of CONMED Corporation, Chief Financial Officer,
+1-315-624-3206; or Investors - Theresa Vogt or Lanie Fladell, or Media - Dan
Budwick, all of Morgen-Walke Associates, +1-212-850-5600, for CONMED
Corporation
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URL: http://www.conmed.com
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