- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 14, 1995
Amendment Number 1 to Form 8-K dated March 28, 1995
CONMED CORPORATION
(Exact name of registrant as specified in its charter)
New York 0-16093 16-0977505
- ------------------------------- ----------- -------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
310 Broad Street, Utica, New York 13501
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(Address of principal executive offices) (Zip Code)
(315) 797-8375
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
-------------------------------------------------------------
(Former name or former address, if changes since last report)
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements of Business Acquired.
Report of Independent Accountants
Consolidated Balance Sheets of Birtcher Medical Systems, Inc.
as of June 30, 1993 and 1994
Consolidated Statements of Operations of Birtcher Medical Systems, Inc.
for the years ended June 30, 1992, 1993 and 1994
Consolidated Statements of Shareholders' Equity of Birtcher Medical
Systems, Inc. for the years ended June 30, 1992, 1993 and 1994
Consolidated Statements of Cash Flows of Birtcher Medical Systems, Inc.
for the years ended June 30, 1992, 1993, and 1994
Notes to Consolidated Financial Statements
The financial statements of Birtcher Medical Systems, Inc. set forth above are
attached hereto beginning on page 3.
(b) Unaudited Pro Forma Consolidated Financial Information
Unaudited Pro Forma Consolidated Balance Sheet as of December 30, 1994
Unaudited Pro Forma Consolidated Statement of Income (Loss) for
the year ended December 30, 1994
Notes to Unaudited Pro Forma Consolidated Financial Information
The unaudited pro forma financial information is attached hereto beginning on
page 22.
BIRTCHER MEDICAL SYSTEMS, INC.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Birtcher Medical Systems, Inc.
We have audited the accompanying consolidated balance sheets of
Birtcher Medical Systems, Inc. as of June 30, 1994 and 1993, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended June 30, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Birtcher Medical Systems, Inc. at June 30, 1994 and 1993, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended June 30, 1994, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the financial statements, the Company's
recurring losses from operations and working capital deficiency raise
substantial doubt about its ability to continue as a going concern. Management's
plans as to these matters are also described in Note 1. The 1994 financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
ERNST & YOUNG LLP
Orange County, California
August 19, 1994
BIRTCHER MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30
1993 1994
---- ----
Current assets:
Cash and cash equivalents........................................................ $ 94,000 $ 510,000
- -------------------------- ----------- -----------
Accounts receivable, net of allowance for doubtful accounts of $587,000
- ------------------------------------------------------------------------
in 1993 and $689,000 in 1994.................................................... 9,661,000 7,158,000
- ------------------------------ --------- ---------
Inventories...................................................................... 13,041,000 4,781,000
- ------------ ---------- ---------
Dealer receivables............................................................... 604,000 --
- ------------------- ------- --
Prepaid expenses and other current assets........................................ 525,000 386,000
- ------------------------------------------ ------- -------
Refundable income taxes.......................................................... 633,000 --
- ------------------------ ------- --
Demonstration equipment, net..................................................... 3,728,000 900,000
- ----------------------------- ----------- -----------
Total current assets.......................................................... 28,286,000 13,735,000
Equipment and leasehold improvements, net......................................... 2,439,000 1,429,000
Intangible assets, net............................................................ 11,334,000 5,405,000
----------- -----------
Total assets.................................................................. $42,059,000 $20,569,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving line of credit......................................................... $ 5,980,000 $ 5,025,000
Accounts payable................................................................. 5,664,000 4,423,000
Accrued expenses and other current liabilities 1,885,000 2,839,000
Current portion of long-term debt................................................ 2,823,000 1,901,000
----------- ------------
Total current liabilities..................................................... 16,352,000 14,188,000
Other long-term liabilities....................................................... 494,000 1,205,000
Commitments and contingencies
Shareholders' equity:
Preferred stock:
Authorized shares -- 505,000
Issued and outstanding shares -- 468,000; aggregate liquidation
value $4,680,000 at June 30, 1993 and 1994...................................... 4,680,000 4,680,000
Common stock, no par value:
Authorized shares -- 50,000,000
Issued and outstanding shares -- 9,109,000 in 1993
and 10,096,000 in 1994........................................................... 24,940,000 25,788,000
Retained earnings (deficit)...................................................... (3,991,000) (24,876,000)
Notes receivable from shareholders............................................... (416,000) (416,000)
----------- ------------
Total shareholders' equity.................................................... 25,213,000 5,176,000
----------- ------------
Total liabilities and shareholders' equity.................................... $42,059,000 $ 20,569,000
=========== ============
See accompanying notes.
BIRTCHER MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30
1992 1993 1994
---- ---- ----
Net sales.............................................................. $52,446,000 $42,029,000 $ 34,254,000
- --------- ----------- ----------- ------------
Operating costs and expenses:
Cost of sales......................................................... 24,961,000 23,886,000 21,137,000
- -------------- ---------- ---------- ----------
Engineering and development........................................... 4,044,000 5,229,000 4,683,000
- ---------------------------- --------- --------- ---------
Selling, general and administrative................................... 17,533,000 16,683,000 13,380,000
- ------------------------------------ ---------- ---------- ----------
Acquisition and restructuring charges................................. 6,600,000 -- 14,941,000
License fee income.................................................... -- (2,500,000) --
....................................................................... 53,138,000 43,298,000 54,141,000
----------- ----------- ------------
Loss from operations................................................... (692,000) (1,269,000) (19,887,000)
Other income (expense):
Interest, net......................................................... (210,000) (617,000) (686,000)
Loss before provision for taxes........................................ (902,000) (1,886,000) (20,573,000)
Provision for income taxes............................................. 329,000 -- --
Net loss...............................................................$(1,231,000) $(1,886,000) $(20,573,000)
Net loss attributable to common stock..................................$(1,231,000) $(1,990,000) $(20,885,000)
Net loss per share.....................................................$ (.14) $ (.22) $ (2.28)
See accompanying notes.
BIRTCHER MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Preferred Common Retained Notes Total
stock stock earnings receivable shareholders'
(deficit) from equity
shareholders
-------------- -------------- -------------- -------------- --------------
Balance at June 30, 1991 .............. -- $ 23,620,000 $ 2,046,000 $ (839,000) $ 24,827,000
Exercise of stock options ............ -- 738,000 -- -- 738,000
Reduction of shareholder notes
receivable .......................... -- -- 318,000 318,000
Distributions to Solos
shareholders ........................ -- -- (2,816,000) -- (2,816,000)
Tax benefit of stock option
exercise ............................ -- 535,000 -- -- 535,000
Net loss ............................. -- -- (1,231,000) -- (1,231,000)
-------------- -------------- -------------- -------------- --------------
Balance at June 30, 1992 .............. -- 24,893,000 (2,001,000) (521,000) 22,371,000
Exercise of stock options ............ -- 47,000 -- -- 47,000
Reduction of shareholder notes
receivable .......................... -- -- -- 105,000 105,000
Issuance of preferred stock .......... 4,680,000 -- -- -- 4,680,000
Dividends accrued on preferred
stock ............................... -- -- (104,000) -- (104,000)
Net loss ............................. -- -- (1,886,000) -- (1,886,000)
-------------- -------------- -------------- -------------- --------------
Balance at June 30, 1993 .............. 4,680,000 24,940,000 (3,991,000) (416,000) 25,213,000
Issuance of common stock ............. -- 848,000 -- -- 848,000
Dividends accrued on preferred
stock ............................... -- -- (312,000) -- (312,000)
Net loss ............................. -- -- (20,573,000) -- (20,573,000)
-------------- -------------- -------------- -------------- --------------
Balance at June 30, 1994 .............. $ 4,680,000 $ 25,788,000 $ (24,876,000) $ (416,000) $ 5,176,000
============== ============== ============== ============== ==============
See accompanying notes.
BIRTCHER MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30
1992 1993 1994
---- ---- ----
Operating activities
Net income (loss) ................................................ $ (1,231,000) $ (1,886,000) $ (20,573,000)
-------------- -------------- --------------
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization ................................... 1,662,000 1,539,000 1,861,000
- ------------------------------------------------------------------ -------------- -------------- --------------
Deferred income taxes ........................................... 62,000 412,000 --
- ------------------------------------------------------------------ -------------- -------------- --------------
Net write-off of accounts receivable ............................ 184,000 (817,000) (882,000)
- ------------------------------------------------------------------ -------------- -------------- --------------
Loss on disposal of equipment ................................... 600,000 21,000 103,000
- ------------------------------------------------------------------ -------------- -------------- --------------
Write down of intangible assets ................................. -- -- 5,918,000
- ------------------------------------------------------------------ -------------- -------------- --------------
Change in assets and liabilities,
excluding effects from purchase of
Beacon in 1993:
(Increase) decrease in accounts receivable ..................... (1,856,000) 1,500,000 3,385,000
- ------------------------------------------------------------------ -------------- -------------- --------------
(Increase) decrease in inventories ............................. (2,673,000) 1,322,000 7,780,000
- ------------------------------------------------------------------ -------------- -------------- --------------
(Increase) decrease in demonstration equipment ................. -- (2,602,000) 2,828,000
- ------------------------------------------------------------------ -------------- -------------- --------------
(Increase) decrease in dealer receivables ...................... (2,306,000) 1,702,000 604,000
- ------------------------------------------------------------------ -------------- -------------- --------------
(Increase) decrease in prepaid expenses
and other current assets ...................................... (660,000) 442,000 126,000
- ------------------------------------------------------------------ -------------- -------------- --------------
(Increase) decrease in income tax receivable ................... -- (296,000) 633,000
- ------------------------------------------------------------------ -------------- -------------- --------------
(Increase) in notes receivable ................................. -- (189,000) --
- ------------------------------------------------------------------ -------------- -------------- --------------
Payments received on notes receivable .......................... -- 25,000 --
- ------------------------------------------------------------------ -------------- -------------- --------------
Increase (decrease) in accounts payable ........................ (295,000) 1,582,000 (1,241,000)
- ------------------------------------------------------------------ -------------- -------------- --------------
Increase in income tax payable ................................. -- 114,000 --
- ------------------------------------------------------------------ -------------- -------------- --------------
Increase (decrease) in accrued expenses and
other current liabilities ..................................... 259,000 (1,123,000) 954,000
- ------------------------------------------------------------------ -------------- -------------- --------------
Increase (decrease) in other long-term liabilities ............. 5,000 (25,000) 399,000
- ------------------------------------------------------------------ -------------- -------------- --------------
Total adjustments ................................................ (5,018,000) 3,607,000 22,468,000
-------------- -------------- --------------
Net cash provided by (used in) operating activities .............. (6,249,000) 1,721,000 1,895,000
BIRTCHER MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years ended June 30
1992 1993 1994
---- ---- ----
Investing activities
Patent expenditures .............................................. (919,000) (258,000) (383,000)
Cash expenditures for Beacon acquisition ......................... -- (339,000) (68,000)
Net cash acquired in purchase of Beacon .......................... -- 37,000 --
Proceeds from sale of product line ............................... -- -- 280,000
Purchase of equipment and other assets ........................... (1,573,000) (913,000) (241,000)
-------------- -------------- --------------
Net cash used in investing activities ............................ (2,492,000) (1,473,000) (412,000)
Financing activities
Proceeds from revolving line of credit ........................... 10,252,000 4,160,000 2,645,000
Proceeds from note payable to bank ............................... 4,000,000 -- --
Payments received on of notes receivable from shareholders ....... 318,000 105,000 --
Distributions to Solos shareholders .............................. (2,816,000) -- --
Repayment of revolving line of credit ............................ (7,059,000) (3,600,000)
Repayment of long-term debt ...................................... (400,000) (815,000) (960,000)
Issuance of preferred and common stock, net ...................... -- 47,000 848,000
Proceeds from exercise of options ................................ 738,000 -- --
-------------- -------------- --------------
Net cash provided by (used in) financing activities .............. 5,033,000 (683,000) (1,067,000)
-------------- -------------- --------------
Net increase (decrease) in cash and equivalents .................. (3,708,000) (435,000) 416,000
Cash and equivalents at beginning of year ........................ 4,237,000 529,000 94,000
-------------- -------------- --------------
Cash and equivalents at end of year .............................. $ 529,000 $ 94,000 $ 510,000
============== ============== ==============
BIRTCHER MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years ended June 30
1992 1993 1994
---- ---- ----
Supplemental disclosure of noncash investing and financing activities
Acquisition of Beacon Laboratories, Inc.:
Value of preferred stock issued for the fair value of assets, net
of selected liabilities ....................................................... $ -- $4,680,000 $ --
Tax benefit of stock option exercise ............................................ 535,000 -- --
Equipment purchased under capitalized lease obligations ......................... -- 30,000 38,000
Note receivable from sale of product line ....................................... -- -- 200,000
Accrual of preferred stock dividends ............................................ -- 104,000 312,000
Supplemental disclosures of cash flow information
Cash paid during the year for:
Taxes .......................................................................... 417,000 95,000 --
Interest ....................................................................... 414,000 617,000 686,000
See accompanying notes.
BIRTCHER MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Summary of Significant Accounting Policies
Business
Birtcher Medical Systems, Inc. (the Company) is engaged in the design,
manufacture and sale of advanced surgical products. The Company markets a broad
line of electrosurgery products for the hospital, the outpatient surgery center,
and the private practitioner in the conventional and endoscopic surgery markets.
Results of Operations and Management's Plans
In fiscal 1994, the Company incurred a loss of approximately
$20,900,000 due to a restructuring charge of $14,900,000 and an operating loss
of $6,000,000. In management's opinion, the continuing losses since 1992 are
attributable to the Company's costs being higher than its break-even sales level
and the expenditure of resources to support the unprofitable endoscopic product
line. Consequently, in fiscal 1994, the Company decided to divest itself of the
Solos(R) endoscopic product line and take a restructuring charge for the
write-down of the related assets including inventory, demonstration equipment,
accounts receivable, intangible assets and expenses related to facility closures
and severance. In addition, management reduced headcount, subleased excess
facilities and reduced operating costs wherever possible to reduce losses and
achieve profitability and a positive cash flow and is evaluating financing and
other alternatives. The 1994 financial statements do not include any adjustments
that might result from the possible inability of the Company to continue as a
going concern.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Cash and Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
Concentration of Credit Risk
Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Financial Accounting Standards
Board's Statement No. 105, "Disclosure of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial Instruments with
Concentrations of Credit Risk," consist primarily of accounts receivable with
the Company's various customers, which include a variety of health care
organizations and distributors throughout the United States and the world. No
single customer represents more than 10% of sales or accounts receivable for any
period. The Company provides for uncollectible amounts upon recognition of
revenue and when specific credit problems arise. Management's estimates have
been adequate during historical periods and management believes that all
significant credit risks have been identified at June 30, 1994.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following at June 30:
1993 1994
---- ----
Finished goods...................................................................... $ 5,937,000 $ 751,000
- -------------- ----------- ----------
Work-in-process..................................................................... 2,356,000 899,000
- --------------- --------- -------
Materials and parts................................................................. 4,748,000 3,131,000
- ------------------- ----------- ----------
$13,041,000 $4,781,000
=========== ==========
Demonstration Equipment
During fiscal 1993, the Company implemented a strategy to replace many
of its independent dealers with an internal sales force. The Company has also
provided its internal sales force with equipment to be utilized for
demonstration purposes.
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost. Depreciation
is provided on the straight-line method over the estimated useful lives of the
assets ranging from two to twelve years. Leasehold improvements and property
under capital leases are amortized over the lives of the assets or term of the
lease, whichever is shorter, and this amortization is included in depreciation
expense.
Income Taxes
Effective July 1, 1992, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes. The
primary difference between Statement No. 109 and the accounting method
previously utilized by the Company, Statement of Financial Accounting Standards
No. 96, effecting the Company, relates to the recognition of deferred tax
assets.
Sales and Revenue Recognition
The Company recognizes revenue on the sale of its products at the time
of shipment to the customer. The Company extends up to a one year warranty for
its products and accrues related estimated costs as the revenue is recognized.
Export sales, primarily to Europe, Asia, Central and South America,
were $13,580,000, $12,179,000 and $9,866,000 during the years ended June 30,
1992, 1993 and 1994, respectively. No single export area represents more than
10% of total sales.
Export sales by geographic area were as follows:
1992 1993 1994
---- ---- ----
($ in millions)
Euro ........ $ 1.8 $2.16 $2.1
- ------------- ----- ----- ----
Asia ........ 2.7 6.5 4.1
- ------------- ----- ----- ----
Latin America 1.3 1.1 1.5
- ------------- ----- ----- ----
Middle East . 0.6 1.1 1.0
- ------------- ----- ----- ----
Other ....... 7.2(1) 0.9 1.2
- ------------- ----- ----- ----
Total ...... $13.6 $12.2 $9.9
===== ===== ====
- ---------------
(1) Prior to its acquisition by the Company in fiscal 1992, Solos did not
maintain records of export sales by geographic region. All fiscal 1992 Solos
export sales are included in "Other."
Per Share Information
Per share amounts are based on the weighted average number of shares of
common stock and dilutive common stock equivalents outstanding (9,103,000,
9,109,000 and 9,168,000 for the years ended June 30, 1992, 1993 and 1994,
respectively). Stock options are included in the weighted average number of
common shares outstanding utilizing the treasury stock method, in years in which
the impact is dilutive. The Company's preferred shares are not considered to be
common stock equivalents and, therefore, have not been included in primary
earnings per share. Fully diluted earnings per share are not presented as the
effect is antidilutive.
Reclassifications
Certain reclassifications have been made to prior year balances to
conform to the current year's presentation.
2. Acquisitions and Related Expenses
On March 1, 1993, the Company purchased certain assets and assumed
certain liabilities of Beacon Laboratories, Inc. (Beacon) in Broomfield,
Colorado. The consideration for the purchase of Beacon consisted of 468,399
shares of preferred stock (Note 10)and cash expenditures of $339,000. The
purchase price has been allocated to the underlying assets and liabilities based
on their respective fair values at the date of acquisition. The excess of cost
over net assets was deemed to be impaired in 1994 and has been written down to
its expected net realizable value of $1,000,000 which is being amortized over a
five-year period on a straight-line basis (Note 4).
The following table presents unaudited pro forma results of operations
as if the acquisition of Beacon had occurred on July 1, 1991. These pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of what would have occurred had the acquisition taken place at the
beginning of fiscal 1992 or results which may occur in the future. Furthermore,
no effect has been given in the pro forma information for operating benefits
because precise estimates of such benefits cannot be quantified.
Year ended June 30
1992 1993
---- ----
Net sales................................. $53,793,000 $43,479,000
- --------- ----------- -----------
Net loss.................................. (2,787,000) (1,699,000)
- -------- ----------- -----------
Net loss per share of common stock....... (.31) (.19)
- ---------------------------------- ----------- -----------
During fiscal 1992, the Company acquired all of the outstanding shares
of Solos(R) Endoscopy, Inc. in exchange for 2,233,000 shares of Birtcher common
stock, in a transaction accounted for as a pooling of interests. Concurrent with
the acquisition, the Company recorded the impact of a restructuring plan
designed to increase the overall profitability of the Company by closing or
scaling back certain operations and product lines that have not met
profitability expectations. Acquisition and restructuring charges of $6.6
million represent acquisition fees, provisions for closure and lease termination
costs, write-down of related assets and severance pay.
3. Equipment and Leasehold Improvements
Equipment and leasehold improvements consist of the following at June
30:
1993 1994
---- ----
Machinery and equipment......................................................... $2,493,000 $1,703,000
- ----------------------- ---------- ----------
Tools and dies.................................................................. 1,511,000 1,845,000
- -------------- ---------- ---------
Furniture, fixtures and leasehold improvements.................................. 1,538,000 1,340,000
- ---------------------------------------------- ---------- ----------
5,542,000 4,888,000
Less accumulated depreciation and amortization.................................. 3,103,000 3,459,000
---------- ----------
$2,439,000 $1,429,000
========== ==========
4. Intangible Assets
Intangible assets consist of the following at June 30:
1993 1994
---- ----
Patents and other acquired product technology........................................ $ 5,978,000 $5,750,000
- --------------------------------------------- ----------- ----------
Cost in excess of net assets acquired................................................ 7,330,000 1,000,000
- ------------------------------------- ----------- ----------
13,308,000 6,750,000
Less accumulated amortization........................................................ 1,974,000 1,345,000
----------- ----------
$11,334,000 $5,405,000
=========== ==========
The carrying value of intangible assets is reviewed if the facts and
circumstances suggest that they may be impaired. If this review indicates that
intangible assets will not be recoverable, determined using a discounted cash
flow analysis of the related product line over the estimated remaining useful
life, the carrying value of the intangible asset is reduced.
During fiscal 1994, net income was reduced by $5,918,000 for a noncash
write-down of the Company's intangible assets. In 1994, the Company determined
the value of these intangible assets had been impaired due to the lower than
expected sales on the related product lines. The remaining intangible assets are
being amortized using the straight line basis over their estimated useful lives
ranging from five to fifteen years.
5. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following
at June 30:
1993 1994
---- ----
Accrued salaries and related expenses................................................ $ 937,000 $ 715,000
- ------------------------------------- ---------- ----------
Accrued restructuring charges........................................................ 319,000 1,423,000
- ----------------------------- ------- ---------
Other liabilities.................................................................... 629,000 701,000
- ----------------- ---------- ----------
$1,885,000 $2,839,000
========== ==========
6. Debt
Long-term debt consists of the following at June 30:
1993 1994
---- ----
Note payable to bank bearing interest at prime plus .75%, principal and interest
due monthly through December 31, ................................................. $2,800,000 $1,887,000
- ---------------------------------- ----------- ----------
Other................................................................................ 23,000 14,000
- ----- ----------- ----------
2,823,000 1,901,000
Less current portion................................................................. 2,823,000 1,901,000
----------- -----------
$ -- $ --
=========== ===========
The Company has a line of credit agreement with a bank which allows for
maximum indebtedness of $7,500,000 of which $5,025,000 was outstanding at June
30, 1994. The borrowings bear interest at a rate of prime plus 1.5% and are due
and payable on November 30, 1994. The line of credit and the note payable to
bank are collateralized by substantially all of the assets of the Company. The
loan agreements require the Company to maintain certain covenants and financial
conditions related to profitability, working capital and shareholders' equity.
The Company was in violation of all covenants as of June 30, 1994. The bank has
waived these violations and deferred principal payment on the note payable
through November 30, 1994. The Company anticipates that it may not be in
compliance with these covenants subsequent to the waiver date and has,
therefore, reclassified the long-term debt as current.
Interest expenses for each of the three years in the period ended June
30, 1994 was $686,000, $617,000 and $414,000, respectively. The prime rate was
6.5%, 6.0% and 7.25% at June 30, 1992, 1993 and 1994, respectively.
7. Income Taxes
As discussed in Note 1, the Company adopted the provisions of Statement
No. 109 as of July 1, 1992. Financial statements for the year ended June 30,
1992 have not been restated to apply the provisions of Statement No. 109.
A summary of income tax (benefit) expense follows:
Years ended June 30
1992 1993 1994
---- ---- ----
Current:
Federal..................................................... $ 197,000 $(412,000) $ --
- -------- --------- ---------- ----
State....................................................... 70,000 -- --
- -------- --------- ---------- ----
Tax benefit from exercise of stock options ................. (535,000) -- --
- ------------------------------------------- --------- ---------- ----
(268,000) (412,000) --
--------- ---------- ----
Deferred:
Federal..................................................... (9,000) 327,000 --
- -------- --------- ---------- ----
State....................................................... 71,000 85,000 --
- -------- --------- ---------- ----
62,000 412,000 --
Credit to paid-in capital................................... 535,000 -- --
--------- --------- ----
$ 329,000 $ -- $ --
========= ========= ====
The actual tax expense differs from the "expected" tax expense by
applying the statutory U.S. federal tax rate of 34% to loss before income tax as
follows:
Years ended June 30
1992 1993 1994
---- ---- ----
Expected income tax expense (benefit) ....................... $(307,000) $(641,000) $(6,995,000)
- ------------------------------------- --------- --------- -----------
State taxes, net of federal benefit ......................... 46,000 -- --
- ------------------------------------- --------- --------- -----------
Tax effect of Solos income which was not
subject to federal income tax due to S
corporation status.......................................... (497,000) -- --
- ------------------------------------- --------- --------- -----------
Financial reporting net operating loss
carryforward (utilized)..................................... 470,000 -- --
- ------------------------------------- --------- --------- -----------
Nondeductible expense....................................... 573,000 249,000 --
- ------------------------------------- --------- --------- -----------
Increase in valuation allowance included in
income tax expense.......................................... -- 412,000 6,875,000
- ------------------------------------- --------- --------- -----------
Other....................................................... 44,000 (20,000) 120,000
- ------------------------------------- --------- --------- -----------
$ 329,000 $ -- $ --
========= ========= ===========
The tax effects of temporary differences that give rise to deferred tax
assets and liabilities are as follows at June 30:
1993 1994
---- ----
Deferred tax assets:
Depreciation...................................................................... $ 109,000 $ 263,000
- ------------- ----------- ------------
Inventory capitalization rules.................................................... 119,000 180,000
- ------------- ----------- ------------
Inventory and demonstration equipment reserves.................................... 1,072,000 1,675,000
- ------------- ----------- ------------
Allowances for doubtful accounts.................................................. 212,000 253,000
- ------------- ----------- ------------
Acquisition and restructuring accruals............................................ 154,000 636,000
- ------------- ----------- ------------
Warranty, vacation and other accrued expenses..................................... 300,000 559,000
- ------------- ----------- ------------
Goodwill amortization............................................................. -- 1,382,000
- ------------- ----------- ------------
Other............................................................................. 40,000 2,000
- ------------- ----------- ------------
Net operating losses available for future use..................................... 2,024,000 6,041,000
- ------------- ----------- ------------
4,030,000 10,991,000
----------- ------------
Deferred tax liabilities:
Patent costs, net of accumulated amortization..................................... (771,000) (857,000)
----------- ------------
Net deferred tax assets............................................................ 3,259,000 10,134,000
Less valuation allowance........................................................... (3,259,000) (10,134,000)
----------- ------------
Net deferred tax assets............................................................ $ -- $ --
=========== ===========
At June 30, 1994, the Company has available for offset against future
federal taxable income net operating loss carryforwards of approximately
$15,918,000 which begin to expire in 2008. The use of the Company's net
operating loss carry forwards could be limited by a subsequent change of
ownership.
The Company also has net operating loss carryforwards of approximately
$10,315,000 available for offset against future taxable income for state income
tax purposes. These net operating loss carryforwards begin to expire in 1998.
These net operating loss carryforwards could be subject to similar limitation as
the federal net operating loss carryforwards, described above.
8. Commitments and Contingencies
Contingencies
During fiscal 1992, the Company was party to a patent infringement
action by Valleylab, Inc., a wholly owned subsidiary of Pfizer, Inc.
(Valleylab). On August 21, 1992, the Company settled this matter through
granting a nonexclusive worldwide license of its argon beam coagulation
technology to Valleylab. Under the license agreement, Valleylab paid the Company
a one-time license fee of $2.5 million and will pay a 5% royalty on all present
and future gas-related products sold by Valleylab for the life of the underlying
patent.
The Company is currently engaged in patent litigation in which Aspen
Laboratories (Aspen) alleges that certain of the Company's products infringe a
patent held by Aspen. Discovery in this case is continuing, and the Company is
presently unable to predict the outcome of this matter; however, if the Company
should lose this lawsuit, the Company's electrosurgical business could be
negatively affected or the Company could be forced to pay a royalty to Aspen for
the use of its patent. The Company anticipates that the ultimate resolution of
this matter will not be determinable until sometime in fiscal 1996.
From time to time during fiscal 1994 and thereafter, the Company has
been in default under leases pursuant to which Birtcher's executive offices and
certain manufacturing operations are leased.
In addition to the matters described above, the Company is subject to
litigation during the normal course of business. In management's opinion, any
such contingencies would not materially affect the Company's financial position
or operating results.
The Company is subject to regulatory requirements throughout the world.
During the normal course of business, these regulatory agencies may require
companies in the medical industry to change their products or operating
procedures, which could affect the Company. The Company regularly incurs
expenses to comply with these procedures and may be required to incur additional
expenses. Management is not able to estimate any additional expenditure outside
the normal course of operations which will be incurred by the Company in future
periods in order to comply with these regulations.
Operating Leases
The Company lease of its corporate offices and primary manufacturing
facility in Irvine, California expires on August 22, 2000. The Company also
leases facilities under operating leases in El Paso, Texas and Juarez, Mexico.
In June 1994, the Company assigned its lease obligation for a 10,318
square foot building in Braintree, Massachusetts, to the purchaser of the Solos
product line. In August 1994, the Company subleased a portion of its Irvine
facilities for $16,667 per month for six years.
The aggregate annual rental commitments for all operating leases, net
of sublease income, subsequent to June 30, 1994 are as follows:
Years ending June 30 Operating leases
- -------------------- ----------------
1995.......................................................................................... $1,662,000
- ----- ----------
1996.......................................................................................... 1,380,000
- ----- ---------
1997.......................................................................................... 1,163,000
- ----- ---------
1998.......................................................................................... 1,042,000
- ----- ---------
1999.......................................................................................... 1,068,000
- ----- ---------
Thereafter.................................................................................... 720,000
- ----------- ----------
$7,035,000
Aggregate rent expense for the years ended June 30, 1992, 1993 and 1994
was $1,058,000, $1,729,000 and $1,842,000, respectively.
9. Shareholders' Equity
In fiscal 1994, the Company issued 987,000 shares of common stock
pursuant to a Regulation S exemption. The average price per share was $.93.
Under the Company's 1990 Equity Incentive Plan, as amended, the 1992
Employee Stock Option Plan, and the 1992 Non-Employee Director Plan a maximum
aggregate of 1,300,000 shares of common stock are reserved for grant. The
Company has also granted nonqualified stock options to individuals outside of
the stock option plan. The plan provides for the issuance to key employees of
options to purchase shares of the Company's common stock at no less than 100% of
the fair value on the date of the grant. Options become exercisable in varying
amounts over periods of one to four years from the date of grant. Certain of the
Company's stock options become immediately exercisable upon the occurrence of a
change of control of the Company, as defined.
In an effort to provide additional incentive to its key employees, on
March 25, 1994, the Company repriced options to purchase 238,500 shares of
common stock to an exercise price of $2.875, the fair market value on the date
of repricing. On April 1, 1992 the Company canceled options to purchase 127,900
shares of common stock at an exercise price of $16.75 and regranted the options
at an exercise price of $10.50, the fair market value of the stock as of the
date of the cancellation and regrant. On September 30, 1992, options to purchase
338,500 shares of common stock at exercise prices ranging from $10.50 to $16.75
per share were canceled and regranted at an exercise price of $5.375 per share
which represented the fair market value of the stock at that date. Each
cancellation and regrant resulted in a restated 48 month vesting period.
On August 18, 1994, the Company's Board of Directors approved the
repricing of options to purchase 361,915 shares of common stock to an exercise
price of $1.00, the fair market value on the date of repricing.
Following is a summary of the option activity under the Company's stock
option plans and nonqualified stock options:
Option price
Shares per share
------ ------------
Options outstanding at June 30, 1991.............................................. 820,807 $2.50-$ 9.75
Granted.......................................................................... 747,100 $6.50-$16.75
Exercised........................................................................ (141,050) $2.50-$ 9.75
Surrendered, forfeited or expired................................................ (465,884) $4.75-$10.50
-------- ------------
Options outstanding at June 30, 1992.............................................. 960,973 $2.75-$16.75
Granted.......................................................................... 224,200 $3.50-$ 7.88
Exercised........................................................................ (9,900) $4.75
Surrendered, forfeited or expired................................................ (337,765) $4.75-$10.50
-------- ------------
Options outstanding at June 30, 1993.............................................. 837,508 $2.75-$ 9.75
Granted.......................................................................... 173,943 $1.25-$ 4.25
Exercised........................................................................ -- N/A
Surrendered, forfeited or expired................................................ (331,691) $3.00-$ 9.75
-------- ------------
Options outstanding at June 30, 1994.............................................. 679,760 $1.25-$ 7.00
Exercisable options at June 30, 1994.............................................. 406,341 $1.25-$ 7.00
======== ============
Notes receivable from shareholders bearing interest at 9% or at prime
plus .5% payable annually amounting to $416,000 are secured by 186,600 shares of
common stock. On June 17, 1993, the maturity of the notes receivable was
extended to December 31, 1994, when all principal and accrued interest is due
and payable in full.
10. Preferred Stock
The Company has authorized 505,000 shares of preferred stock, which is
to be issued in one series, Series A. On March 1, 1993, the Company issued
468,399 shares of preferred stock for certain assets and the assumption of
certain liabilities of Beacon Laboratories (Note 2). Each share of preferred
stock is convertible into one share of common stock, at any time, at the option
of the shareholders. The preferred shares automatically convert into shares of
common stock in the event that the public trading price of the Company' s common
stock exceeds $10.00 per share for a period of twenty consecutive days. The
conversion factor is also subject to adjustment in certain situations.
Preferred shareholders have the right to vote with common shareholders
based upon the number of shares into which the preferred shares may convert. The
Company, at its option, may redeem the preferred shares at a price of $10.00 per
share at any time. In the event that the Company liquidates, winds down, or
dissolves, preferred shareholders are entitled to $10.00 per share plus unpaid
dividends prior to any payments to the common shareholders.
Dividends are cumulative and are to be paid to the preferred
shareholders based upon the following schedule:
Period Dividends per share
- ------ -------------------
July 1, 1994 to June 30, 1996...................................................... $.15 per quarter
- ----------------------------- ----------------
July 1, 1996 to June 30, 1997...................................................... $.175 per quarter
- ----------------------------- -----------------
July 1, 1997 and thereafter........................................................ $.20 per quarter
- --------------------------- ----------------
The Company has accrued dividends of approximately $104,000 and
$312,000 during the period from March 1, 1993 to June 30, 1993 and the year
ended June 30, 1994, respectively, the Company will continue to accrue dividends
at an estimated average dividend rate over the life of the preferred stock.
11. Selected Quarterly Financial Data (Unaudited)
Selected quarterly financial data for 1994 and 1993 are as follows:
Three months ended (1994)
September 30 December 31 March 31 June 30
------------ ----------- -------- -------
(In thousands, except per share data)
Net sales.................................................... $10,081 $10,088 $6,804 $7,281
Gross margin................................................. 4,445 4,150 (1,065) 2,494
Net loss..................................................... (507) (796) (17,597) (1,673)
Net loss per common share.................................... (.06) (.10) (1.94) (.19)
Three months ended (1993)
September 30 December 31 March 31 June 30
------------ ----------- -------- -------
(In thousands, except per share data)
Net sales.................................................... $12,319 $11,025 $9,650 $9,035
Gross margin................................................. 5,811 4,485 4,022 3,825
Net (loss) income............................................ 1,990 (892) (947) (2,037)
Net (loss) income per common share........................... .22 (.10) (.10) (.24)
During the three months ended March 31, 1994, the Company decided to
divest itself of the Solos(R) endoscopic product line and recorded a one-time
charge of $14,900,000 for the write-down of the related assets (Note 1).
Operating results for the quarters ended March 31 and June 30, 1994 were
negatively impacted by lower than expected sales.
During the quarter ended June 30, 1993, the Company experienced
unusually high operating costs due to the recent acquisition of Beacon (Note 2).
CONMED CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On March 14, 1995, CONMED Corporation ("CONMED") acquired Birtcher Medical
Systems Inc. ("Birtcher"), through an exchange of the Company's common stock for
all of the outstanding common and preferred stock of Birtcher. Each share of
Birtcher's common stock was converted into 1/12 of a share of CONMED common
stock and each share of Birtcher's preferred stock was converted into 1/2 of a
share of CONMED common stock. As a result of the exchange of stock, Birtcher
became a wholly owned subsidiary of CONMED. Approximately 1,080,000 shares of
the CONMED common stock was issued to effect the acquisition. The value of the
stock issued together with cash acquisition costs approximates $25,000,000.
The acquisition was accounted for using the purchase method of accounting.
Allocations of the purchase price have been determined based upon preliminary
estimates of fair market value and, therefore, are subject to change.
Differences between the amounts included herein and the final allocations are
not expected to be material. The proforma statements should be read in
conjunction with the historical financial statements.
The following pro forma consolidated statement of income for the year ended
December 30, 1994 has been prepared as if the purchase transaction and the
related bank financing had occurred at the beginning of 1994. The pro forma
balance sheet at December 30, 1994 has been prepared as if the purchase
accounting had been applied at that date. The pro forma adjustments are based
upon available information and certain assumptions that management believes are
reasonable.
The pro forma statements do not purport to represent what CONMED's results of
operations would actually have been if such transactions had occurred at the
beginning of the period or to project the results of operations as of any future
date or for any future period.
CONMED Corporation
Unaudited Pro Forma Consolidated Balance Sheet
December 30, 1994
(in thousands)
Historical Historical Pro
CONMED Birtcher Adjustments Forma
---------- ---------- ----------- -----
ASSETS
Current assets:
Cash ............................................................. $ 3,615 $ 72 $ -- $ 3,687
Accounts receivable, net ......................................... 13,141 5,987 (500)(2) 18,628
Inventories ..................................................... 9,620 4,547 205 (1)&(2) 14,372
Demonstration equipment .......................................... -- 805 (805)(1) --
Deferred income tax .............................................. 1,494 -- -- 1,494
Prepaid expenses ................................................. 451 493 -- 944
--------- --------- --------- ---------
Total current assets ...................................... 28,321 11,904 (1,100) 39,125
Property, plant and equipment ...................................... 16,227 1,009 (400)(2) 16,836
Covenant not to compete ............................................ 1,530 -- -- 1,530
Goodwill ........................................................... 13,109 -- 25,645(2) 38,754
Patents, and other assets .......................................... 2,917 5,148 (2,648)(2) 5,417
--------- --------- --------- ---------
Total Assets .............................................. $ 62,104 $ 18,061 $ 21,497 $ 101,662
========= ========= ========= =========
CONMED Corporation
Unaudited Pro Forma Consolidated Balance Sheet (Continued)
December 30, 1994
(in thousands)
Historical Historical Pro
CONMED Birtcher Adjustments Forma
---------- ---------- ----------- -----
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt ................................ $ 2,500 $ 1,754 $ (1,754)(3) $ 2,500
Bank line of credit .............................................. 4,467 (4,467)(3) --
Accounts payable ................................................. 1,539 6,501 -- 8,040
Income taxes payable ............................................. 455 -- -- 455
Accrued payroll and withholdings ................................. 2,571 -- -- 2,571
Accrued pension .................................................. 307 -- -- 307
Accrued patent litigation ........................................ 2,360 -- -- 2,360
Other current liabilities ........................................ 430 -- 3,561(2) 3,991
--------- --------- --------- ---------
Total current liabilities ................................. 10,162 12,722 (2,660) 20,224
Long-term debt ..................................................... 6,875 -- 6,221(3) 13,096
Deferred income taxes .............................................. 1,011 -- -- 1,011
Accrued pension .................................................... 276 -- -- 276
Deferred compensation .............................................. 719 -- -- 719
Other long term liabilities ........................................ -- 1,341 4,200(2) 5,541
--------- --------- --------- ---------
Total liabilities ......................................... 19,043 14,063 7,761 40,867
--------- --------- --------- ---------
Shareholders' Equity:
Preferred stock .................................................. -- 4,650 (4,650)(4) --
Common stock ..................................................... 60 25,805 (25,795)(4) 70
Paid in capital .................................................. 23,532 17,724(4) 41,256
Retained earnings ................................................ 19,469 (26,041) 26,041(4) 19,469
Shareholders' notes receivable ................................... -- (416) 416(4) --
--------- --------- --------- ---------
Total Shareholders' equity ............................... 43,061 3,998 13,736 60,795
--------- --------- --------- ---------
Total Liabilities and Shareholders' Equity ......................... $ 62,104 $ 18,061 $ 21,497 $ 101,662
========= ========= ========= =========
See notes to unaudited pro forma financial information.
CONMED Corporation
Unaudited Pro Forma Consolidated Statement of Income (Loss)
For the Year Ended December 30, 1994
(in thousands, except per share amounts)
Historical Historical Pro
CONMED Birtcher Adjustments Forma
---------- ---------- ----------- ------
Net Sales ........................................... $ 71,064 $ 28,417 $ (416)(1) $ 99,065
--------- --------- --------- ---------
Cost of sales ....................................... 38,799 17,794 394(1) 56,987
Selling and administrative expense .................. 20,979 11,450 (5,889)(2) 26,540
Research and development expense .................... 2,352 3,843 (2,428)(1)&(2) 3,767
Restructuring charge ................................ -- 14,941 (14,941)(2) --
--------- --------- --------- ---------
62,130 48,028 (22,864) 87,294
--------- --------- --------- ---------
Income (loss) from operations ....................... 8,934 (19,611) 22,448 11,771
Interest income (expense) ........................... (628) (667) -- (1,295)
--------- --------- --------- ---------
Income (loss) before income taxes .................. 8,306 (20,278) 22,448 10,476
Provision (benefit) for income taxes ................ 2,890 -- 1,082(3) 3,972
--------- --------- --------- ---------
Net income (loss) ................................... $ 5,416 $ (20,278) $ 21,366 $ 6,504
========= ========= ========= =========
Weighted average number of shares
and equivalents outstanding ....................... 6,416 1,080(4) 7,496
========= ========= =========
Earnings per common and common
equivalent shares ................................... $ .84 $ .87
========= =========
See notes to unaudited pro forma financial information.
CONMED CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
(dollar amounts in thousands)
Notes to the Unaudited Pro Forma consolidated Balance Sheet
1. Demonstration equipment of Birtcher has been reclassified to
inventory to conform to the classification methodology of CONMED.
2. The acquisition of Birtcher was effected by the issuance of
approximately 1,080,000 shares of CONMED Common Stock for all of the outstanding
shares of Birtcher Common Stock and Birtcher Preferred Stock. The transaction
will be accounted for as a purchase. The total purchase price, historical book
value and preliminary adjustments of book value resulting from the acquisition
are summarized as follows:
Acquisition costs to reflect the financing of the purchase price are set forth below:
Fair market value of CONMED Common Stock issued ...................................... $ 17,734
Adjustments to determine Goodwill:
Historical book value of net assets acquired ......................................... (3,998)
To adjust historical value of accounts receivables inventory and property plant
and equipment to estimated fair value ............................................... 1,500
To eliminate Birtcher good will and adjust other intangible assets to estimate fair
market value ........................................................................ 2,648
Increase in current liabilities for costs relating to severance costs associated
with reduced employment levels, other change in control costs and financial advisory,
legal, accounting, printing and similar expenses .................................... 3,561
Increase in other long-term liabilities relating to accrued change in control costs .. 4,200
--------
Total adjustments ........................................................ 7,911
--------
Goodwill ............................................................ $ 25,645
========
3. Current portion of long-term debt ($1,754) and bank line of credit
($4,467) for Birtcher have been adjusted to reflect the repayment of Birtcher's
outstanding debt. This debt will be refinanced with a borrowing under a credit
facility of CONMED. CONMED has received a commitment from a bank to refinance
CONMED's and Birtcher's existing bank debt. The commitment includes a
$30,000,000 term facility that is payable over five years at an interest rate of
1.625% over LIBOR. A 1/8% change in the LIBOR rate would have approximately a
$20,000 annual effect on interest cost. The committed credit facility also
includes a $10,000,000 line of credit with interest at LIBOR plus 1.5%. No
adjustment for interest has been made to the Pro Forma Statements of Income
(Loss) because the net change from current interest rates for CONMED and
Birtcher to the refinanced interest rate is not material.
4. Entries to reflect the changes to pro forma shareholders' equity of
CONMED to reflect the acquisition of Birtcher pursuant to the purchase method of
accounting are set forth below:
Write-off of Birtcher shareholders' notes receivable which were foreclosed .... $ 416
Adjustments to eliminate Birtcher's shareholders' equity accounts (after giving
effect to write-off of shareholder's notes receivable):
Fair market value of CONMED Common Stock issued:
Preferred stock ...................................................... $ (4,650)
Common Stock ......................................................... (25,805)
Retained earnings .................................................... 26,041
--------
Total capital account adjustment ................................. 4,414
--------
Entries to record fair value of CONMED Common Stock to be issued:
Common Stock ......................................................... 10
Paid in capital ...................................................... 17,724
--------
Total purchase price ............................................ 17,734
Total adjustment to shareholders' equity ................... $ 13,320
========
Notes to the Unaudited Pro Forma Consolidated Statement of Income (Loss)
1. Sales and cost of sales have been adjusted for sales of products by
CONMED to Birtcher ($416 for the year ended December 30, 1994). Cost of sales
and engineering and development expense have been adjusted to conform to
CONMED's presentation for the year ended December 30, 1994.
2. Selling, general and administrative expense has been increased $154
for the year ended December 30, 1994 reflecting the additional amortization of
intangible assets resulting from purchase accounting adjustments using the
straight-line method over the estimated remaining useful lives of the acquired
assets. Patents are amortized over a ten-year period corresponding to the
average life remaining on significant patents. Goodwill is amortized over a
40-year period.
Selling, general ad administration expense has been reduced $6,043 for the year
ended December 30, 1994 due to the reduction in costs implemented by CONMED at
the acquisition date which included reductions in administration, sales and
marketing staffs and the closing of Birtcher's headquarters.
Research and development expense has been reduced $635 for the year ended
December 30, 1994 for the cost of consultants paid by Birtcher for research
activities which will not be continued by CONMED.
The Birtcher restructuring change of $14,941 recorded by Birtcher in 1994 has
been eliminated from the pro forma Statement of Income for the year ended
December 30, 1994 because the costs associated with this restructuring would
have been provided for in purchase accounting adjustments effective at the
beginning of 1994.
3. Entry to reflect estimated tax effect of Birtcher's historical loss
and the pro forma adjustments.
4. The acquisition of Birtcher was effected by the issuance of
approximately 1,080,000 shares of CONMED Common Stock for all of the outstanding
shares of Birtcher Common Stock and Birtcher Preferred Stock.
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.
CONMED CORPORATION
By: /s/ Robert D. Shallish, Jr.
----------------------------
Robert D. Shallish, Jr.
Vice President-Finance
Dated: May 29, 1995
