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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 23, 1996
CONMED CORPORATION
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(Exact name of registrant as specified in its charter)
New York 0-16093 16-0977505
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(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
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(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
On February 23, 1996, NDM, Inc., a wholly-owned subsidiary of CONMED
Corporation ("CONMED") acquired substantially all of the business and assets of
New Dimensions In Medicine, Inc. ("NDM") for a cash purchase price of $31.3
million plus the assumption of $4.6 million of liabilities. The business and
assets acquired relate to the manufacture and distribution of electrocardiograph
(ECG) monitoring electrodes, electrosurgical products and hydrogel wound
dressings.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
The financial statements of New Dimensions In Medicine, Inc. and
Subsidiaries together with auditors report as of December 31, 1995 and 1994
and the financial statements of NDM Acquisition Corp. and Subsidiaries
(predecessor of New Dimensions In Medicine, Inc.) together with auditor's
report as of October 14, 1994 and December 31, 1993 and 1992 are
incorporated herein by reference from Exhibits 99i and 99ii, respectively,
of CONMED Corporation's Report on Form 8-K dated February 16, 1996.
(b) Pro Forma Financial Information
Pro Forma Consolidated Balance Sheet as of December 29, 1995
Pro Forma Consolidated Statement of Income for the Year Ended
December 29, 1995
(c) Exhibits
Asset Purchase Agreement By and Between New Dimensions In Medicine,
Inc. and CONMED Corporation - Incorporated herein by reference from New
Dimension In Medicine, Inc.'s (Commission File No. 1-09156) Report on Form
8-K dated October 18, 1995.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited Pro Forma Consolidated Statement of Income for
the year ended December 29, 1995 has been prepared to reflect adjustments to the
Company's historical results of operations to give pro forma effect to (i) the
Birtcher Medical Systems, Inc. ("Birtcher") Acquisition, (ii) the Master Medical
Corporation ("Master Medical") Acquisition, and (iii) the NDM Acquisition. The
attached unaudited Pro Forma Consolidated Balance Sheet as of December 29, 1995
gives pro forma effect to the NDM Acquisition as if it had occurred on that
date.
These pro forma statements have been prepared by the Company based on
the unaudited financial statements of Birtcher for the period January 1, 1995
through March 14, 1995 (date of CONMED's acquisition of Birtcher), the unaudited
financial statements of Master Medical for the period January 1, 1995 through
May 19, 1995 (date of CONMED's acquisition of Master Medical) and the audited
financial statements of the Company and NDM for the years ended December 29 and
31, 1995, respectfully.
The Company has accounted for the Birtcher, Master Medical and NDM
Acquisitions using the purchase method of accounting, under which tangible and
identifiable intangible assets acquired and liabilities assumed are recorded at
their respective fair values. Adjustments to the Pro Forma Consolidated
Statement of Income include such adjustments as are necessary to allocate the
Birtcher, Master Medical and NDM purchase prices based on the estimated fair
market value of the assets acquired and the liabilities assumed and to give
effect to events that are directly attributable to the Birtcher, Master Medical
and NDM Acquisitions, which are expected to have a continuing impact on the
Company and are factually supportable. The adjustments related to the Pro Forma
Consolidated Statement of Income assume the transactions were consummated on
December 31, 1994. Allocations of the NDM 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.
These pro forma statements are not necessarily indicative of the
financial position or results of operations which would have been attained had
each of the acquisitions been consummated on the dates indicated or which may be
attained in the future.
CONMED CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 29, 1995
(in thousands, except per share amounts)
Historical
Birtcher &
Historical Master Pro Historical
CONMED Medical Adjustments Forma NDM
---------- ----------- ----------- -------- ----------
Net sales $99,558 $ 7,971 $ (104)(2) $107,425 $ 29,536
------- ---------- ------- -------- --------
Cost of sales 52,402 4,727 344 (2) 56,811 17,675
(662)(3)
Selling and administrative expense 25,570 3,620 120 (4) 27,095 14,976
(1,461)(3)
(754)(5)
Research and development expense 2,832 600 (448)(2) 2,884
(100)(3)
------- ---------- ------- -------- --------
80,804 8,947 (2,961) 86,790 32,651
------- ---------- ------- -------- --------
Income (loss) from operations 18,754 (976) 2,857 20,635 (3,115)
Interest (expense) income, net (1,991) (90) (329)(6) (2,410) (577)
Other income (expense), net 289
------- ---------- ------- -------- --------
Income (loss) before income tax 16,763 (1,066) 2 ,528 18,225 (3,403)
Provision for income tax 5,900 0 612(7) 6,512 188
------- ---------- ------- -------- --------
Net income (loss) $10,863 $ (1,066) $ 1,916 $ 11,713 $ (3,591)
======= ========== ======= ======== ========
Earnings per common and common
equivalent share $ .94 $ .99
Weighted average number of common
shares and equivalents outstanding 11,613 270(8) 11,883
(Continued)
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Information
for an explanation of the pro forma adjustments.
CONMED CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME (Continued)
For the Year Ended December 29, 1995
(in thousands, except per share amounts)
Pro
Adjustments Forma
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Net sales $(4,034)(9)(10)(11) $132,927
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Cost of sales (3,848)(9)(10)(12) 70,638
Selling and administrative expense (8,883)(9)(11)(12) 33,188
Research and development expense 379 (9)(11)(12) 3,263
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(12,352) 107,089
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Income (loss) from operations 8,318 25,838
Interest (expense) income, net (2,048)(13) (5,035)
Other income (expense), net (289)(11)
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Income (loss) before income tax 5,981 20,803
Provision for income tax 780 (14) 7,480
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Net income (loss) $ 5,201 $ 13,323
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Earnings per common and common
equivalent share $ 1.12
Weighted average number of common
shares and equivalents outstanding 11,883
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Information
for an explanation of the pro forma adjustments.
CONMED CORPORATION -- UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 29, 1995
(in thousands)
Historical Historical Pro
CONMED NDM Adjustments Forma
---------- ---------- ----------- ---------
Assets
Current Assets:
Cash ................................ $ 1,539 $ 2,096 $ (22)(15) $ 3,613
Accounts receivable, net ............ 22,649 3,567 -- 26,216
Income tax receivable ............... 961 -- -- 961
Inventories ......................... 20,943 5,504 (1,000)(16) 25,447
Deferred income tax ................. 2,678 -- -- 2,678
Prepaid expenses .................... 476 295 -- 771
--------- --------- --------- ---------
Total current assets .... 49,246 11,462 (1,022) 59,686
Property, plant and equipment ............. 19,728 10,370 (1,000)(16) 29,098
Deferred income taxes ..................... 2,907 -- -- 2,907
Covenant not to compete ................... 1,153 -- -- 1,153
Goodwill .................................. 41,438 -- 18,452 (16) 59,890
Patents and other assets .................. 4,931 8,281 (6,026)(16) 7,186
--------- --------- --------- ---------
Total assets ............ $119,403 $ 30,113 $ 10,404 $ 159,920
========= ========= ========= =========
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt ......... $ 6,000 $ 1,403 $(1,403)(15)(16) $ 6,000
Accounts payable .......................... 2,351 2,562 1,295 (15)(16) 6,208
Accrued payroll and withholdings .... 2,282 736 2,200 (16) 5,218
Accrued pension ..................... 274 -- -- 274
Other current liabilities ........... 989 2,151 (427)(15)(16) 2,713
--------- --------- --------- ---------
Total current liabilities 11,896 6,852 1,665 20,413
Long-term debt (less current portion) ..... 26,340 8,100 23,900(15)(17) 58,340
Accrued pension ........................... 276 -- -- 276
Deferred compensation ..................... 868 -- -- 868
Long-term leases .......................... 3,521 -- -- 3,521
Other long-term liabilities ............... 1,500 -- -- 1,500
--------- --------- --------- ---------
Total liabilities ....... 44,401 14,952 25,565 84,918
--------- --------- --------- ---------
Shareholders' Equity:
Common stock ........................ 110 43 (43)(16) 110
Paid in capital ..................... 44,560 18,457 (18,457)(16) 44,560
Retained earnings ................... 30,332 (3,339) 3,339 (16) 30,332
--------- --------- --------- ---------
Total shareholders' equity .... 75,002 15,161 (15,161) 75,002
--------- --------- --------- ---------
Total liabilities and
shareholders' equity ....... $ 119,403 $ 30,113 $ 10,404 $ 159,920
========= ========= ========= =========
See accompanying notes to the Unaudited Pro Forma Consolidated
Financial Information for explanation of pro forma adjustments.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
General
1. The attached Pro Forma Consolidated Statement of Income for the year
ended December 29, 1995 gives effect to the Birtcher and Master Medical
Acquisitions, which were completed on March 14, 1995 and May 19, 1995,
respectively, and the NDM Acquisition which closed on February 23, 1996. The
foregoing Pro Forma Consolidated Balance Sheet as of December 29, 1995 gives
effect to the NDM Acquisition as if this transaction had occurred on that date.
No pro forma adjustments are necessary for the Birtcher and Master Medical
Acquisitions on the December 29, 1995 Pro Forma Consolidated Balance Sheet since
those transactions were completed prior to December 29, 1995.
Birtcher and Master Medical Acquisitions
2. Prior to the Birtcher Acquisition, the Company supplied certain
partially completed manufactured items to Birtcher. Net sales to Birtcher for
the period in 1995 up to the acquisition date amounted to $104. This amount has
been eliminated from Net sales and Cost of sales in the Pro Forma Combined
Statement of Income. Additionally, Cost of sales and Research and development
expense have been adjusted to conform to the Company's presentation.
3. The Birtcher and Master Medical Acquisitions involved medical
products companies with product lines similar to those manufactured and sold by
the Company. Effective with the respective acquisition dates of the two
businesses, the Company immediately reduced duplicate facilities, and eliminated
duplicate manufacturing, selling, administrative and research costs by closing
excess plants and by terminating redundant staff. The following adjustments are
made to the historical Birtcher and Master Medical amounts to reflect the cost
reductions as of the beginning of the period presented:
Cost of sales........................................ $ (662)
Selling and administrative expense................... (1,461)
Research and development expense..................... (100)
4. Selling and administrative expense has been increased $120 for the
year ended December 29, 1995 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. Birtcher patents are amortized over a ten-year period corresponding to
the average life remaining on significant patents. Birtcher goodwill is
amortized over a 40-year period while Master Medical goodwill is amortized over
a 15-year period.
5. Birtcher settled two legal actions related to the acquisition by the
Company for a total of $754 in 1995 prior to the acquisition date. This amount
has been adjusted from the historical Birtcher amounts in the Pro Forma
Consolidated Statement of Income for the year ended December 29, 1995 because
the amounts do not pertain to operating activities.
6. Additional interest expense of $329 for the year ended December 29,
1995 has been added to the Pro Forma Consolidated Statement of Income to reflect
the additional borrowings outstanding due to the Master Medical Acquisition as
if the transaction had occurred as of December 31, 1994.
7. No income tax provisions were provided by Birtcher or Master Medical
as Birtcher had operated at a loss while Master Medical formerly operated as a
subchapter S corporation and therefore did not record tax expense at the
corporate level. An adjustment has been made for the estimated tax effect of
Birtcher and Master Medical's historical results and pro forma adjustments.
8. The acquisition of Birtcher was effected by the issuance of
approximately 1,590,000 shares of the Company's common stock for all of the
outstanding shares of Birtcher common and preferred stock. Pro forma adjustments
to the weighted average number of shares and equivalents have been made as if
the transaction had occurred as of December 31, 1994.
NDM Acquisition
9. Prior to the NDM Acquisition, NDM manufactured and marketed a
therapeutic device for treatment of deep vein thrombosis commonly referred to as
a "foot pump". The Company did not acquire this small product line and has
eliminated the amounts applicable as follows:
Net sales............................................... $ (594)
Cost of sales........................................... (435)
Selling and administrative expense...................... (2,032)
Research and development expense........................ (117)
10. Prior to the NDM Acquisition, NDM manufactured a line of
electrosurgical ground pads for Birtcher and the Company. Net sales from NDM to
Birtcher and the Company amounted to $1,257 for the year ended December 29,
1995. This amount has been eliminated from Net sales and Cost of sales in the
Pro Forma Consolidated Statement of Income.
11. NDM's revenue and expense classifications are presented using
different policies than those used by the Company. The increases (decreases)
necessary to reclassify such items in accordance with the Company's policies are
as follows:
Net sales............................................... $(2,183)
Selling and administrative expense...................... (3,264)
Research and development expense........................ 792
Other income (expense), net............................. (289)
12. The NDM Acquisition involved a medical products company with
products substantially similar to products currently manufactured and marketed
by the Company. Management of the Company has developed a plan that it began to
implement on the date of the acquisition which will eliminate duplicate
personnel and other duplicate costs and therefore increase the efficiency of the
combined operation. The manufacturing operations at the NDM facility have
continued after the date of the acquisition. Patents are amortized over a
thirteen year period while goodwill is amortized over a 40- year period.
Assuming the purchase had occurred as of the beginning of the period presented,
the adjustments are as follows:
Cost of sales........................................... $(2,156)
Selling and administrative expense...................... (3,587)
Research and development expense........................ (296)
13. Historical interest expense for NDM of $577 for the year ended
December 29, 1995 has been eliminated as the related debt was not assumed.
Interest expense of $2,625 for the year ended December 29, 1995 has been added
to reflect a borrowing of $32,660 under the Company's term loan and revolving
credit facility as if the borrowing had occurred as of December 31, 1994.
14. Entry to reflect the estimated tax effect of NDM's historical
results and the pro forma adjustments.
15. The Company did not acquire the debt of NDM or the assets and
liabilities associated with the foot pump product line. Adjustments to the
historical NDM balance sheet at December 29, 1995 to eliminate these items are
as follows:
Current portion of long-term debt....................... $(1,403)
Long-term debt (less current portion)................... (8,100)
Cash.................................................... (22)
Accounts payable........................................ (205)
Accrued liabilities..................................... (427)
16. The NDM Acquisition was effected by the payment of the purchase
price which is assumed to be $32,000 for purposes of the pro forma financial
information. The transaction will be accounted for as a purchase. The total
purchase price, historical book value and preliminary adjustments of book value,
assuming the acquisition occurred on December 29, 1995, are summarized as
follows:
Purchase price of net assets acquired........................... $32,000
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Adjustments to determine goodwill:
Historical net book value of NDM................................ (15,161)
Eliminate debt not acquired..................................... (9,503)
Eliminate the net liabilities of the foot pump line........... (610)
Adjust inventory to fair market value........................... 1,000
Adjust property, plant and equipment to fair market value 1,000
Adjust patents to fair market value............................. 6,026
Increase liabilities for change in control costs and financial,
legal, accounting and similar expenses......................... 3,700
-------
Total adjustments.................................. (13,548)
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Goodwill...................................................... $18,452
=======
17. The purchase price for the NDM Acquisition was financed through an
advance under a $65,000 term loan. Additionally, the Company refinanced its
existing debt under this term loan. The entire term loan is payable over five
years at an interest rate of 1.25% over LIBOR. The Company has also received a
$15,000 revolving line of credit with similar interest amounts.
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.
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Vice President-Finance
Dated: March 8,1996
