For
the quarterly period ended
|
Commission
File Number 0-16093
|
June
30, 2007
|
New
York
(State
or other jurisdiction of
incorporation
or organization)
|
16-0977505
(I.R.S.
Employer
Identification
No.)
|
525
French Road, Utica, New York
(Address
of principal executive offices)
|
13502
(Zip
Code)
|
Large
accelerated filer ý
|
Accelerated
filero
|
Non-accelerated
filer o
|
Item
Number
|
Page
|
|||
-
|
1
|
|||
-
|
2
|
|||
-
|
3
|
|||
-
|
4
|
|||
13
|
||||
27
|
||||
28
|
||||
28
|
||||
28
|
||||
30
|
||||
31
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
$ |
163,473
|
$ |
169,258
|
$ |
321,939
|
$ |
340,272
|
||||||||
Cost
of sales
|
85,699
|
83,398
|
166,265
|
169,187
|
||||||||||||
Gross
profit
|
77,774
|
85,860
|
155,674
|
171,085
|
||||||||||||
Selling
and administrative expense
|
58,123
|
58,207
|
116,497
|
118,012
|
||||||||||||
Research
and development expense
|
7,498
|
7,453
|
15,323
|
15,047
|
||||||||||||
Other
expense (income)
|
1,584
|
1,312
|
2,154
|
(4,102 | ) | |||||||||||
67,205
|
66,972
|
133,974
|
128,957
|
|||||||||||||
Income
from operations
|
10,569
|
18,888
|
21,700
|
42,128
|
||||||||||||
Loss
on early extinguishment
|
||||||||||||||||
of
debt
|
678
|
-
|
678
|
-
|
||||||||||||
Interest
expense
|
4,675
|
4,329
|
9,541
|
8,845
|
||||||||||||
Income
before income taxes
|
5,216
|
14,559
|
11,481
|
33,283
|
||||||||||||
Provision
for income taxes
|
1,802
|
5,214
|
3,727
|
12,016
|
||||||||||||
Net
income
|
$ |
3,414
|
$ |
9,345
|
$ |
7,754
|
$ |
21,267
|
||||||||
Per
share data:
|
||||||||||||||||
Net
Income
|
||||||||||||||||
Basic
|
$ |
.12
|
$ |
.33
|
$ |
.28
|
$ |
.76
|
||||||||
Diluted
|
.12
|
.32
|
.27
|
.74
|
||||||||||||
Weighted
average common shares
|
||||||||||||||||
Basic
|
28,061
|
28,180
|
28,068
|
27,988
|
||||||||||||
Diluted
|
28,266
|
28,831
|
28,312
|
28,608
|
December
31,
|
June
30,
|
|||||||
2006
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
3,831
|
$ |
3,879
|
||||
Accounts
receivable, net
|
75,120
|
77,044
|
||||||
Inventories
|
151,687
|
161,819
|
||||||
Income
taxes receivable
|
747
|
2,732
|
||||||
Deferred
income taxes
|
15,212
|
15,205
|
||||||
Prepaid
expenses and other current assets
|
3,286
|
3,129
|
||||||
Total
current assets
|
249,883
|
263,808
|
||||||
Property,
plant and equipment, net
|
116,480
|
118,959
|
||||||
Goodwill
|
290,512
|
291,178
|
||||||
Other
intangible assets, net
|
191,135
|
188,397
|
||||||
Other
assets
|
13,561
|
12,768
|
||||||
Total
assets
|
$ |
861,571
|
$ |
875,110
|
||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Current
portion of long-term debt
|
$ |
3,148
|
$ |
3,247
|
||||
Accounts
payable
|
41,823
|
39,008
|
||||||
Accrued
compensation and benefits
|
17,712
|
15,324
|
||||||
Accrued
interest
|
727
|
786
|
||||||
Other
current liabilities
|
11,795
|
13,772
|
||||||
Total
current liabilities
|
75,205
|
72,137
|
||||||
Long-term
debt
|
264,676
|
237,780
|
||||||
Deferred
income taxes
|
51,004
|
61,678
|
||||||
Other
long-term liabilities
|
30,332
|
27,210
|
||||||
Total
liabilities
|
421,217
|
398,805
|
||||||
Commitments
and contingencies
|
||||||||
Shareholders'
equity:
|
||||||||
Preferred
stock, par value $.01 per share;
|
||||||||
authorized
500,000 shares; none outstanding
|
-
|
-
|
||||||
Common
stock, par value $.01 per share;
|
||||||||
100,000,000
shares authorized; 31,304,203 and
|
||||||||
31,299,203
shares issued in 2006 and 2007,
|
||||||||
respectively
|
313
|
313
|
||||||
Paid-in
capital
|
284,858
|
286,280
|
||||||
Retained
earnings
|
247,425
|
264,875
|
||||||
Accumulated
other comprehensive income (loss)
|
(8,612 | ) | (6,382 | ) | ||||
Less
3,321,545 and 2,731,749 shares of common stock in
|
||||||||
treasury,
at cost in 2006 and 2007, respectively
|
(83,630 | ) | (68,781 | ) | ||||
Total
shareholders’ equity
|
440,354
|
476,305
|
||||||
Total
liabilities and shareholders’ equity
|
$ |
861,571
|
$ |
875,110
|
Six
months ended
|
||||||||
June
30,
|
||||||||
2006
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ |
7,754
|
$ |
21,267
|
||||
Adjustments
to reconcile net income
|
||||||||
to
net cash provided by operating activities:
|
||||||||
Depreciation
|
5,522
|
6,134
|
||||||
Amortization
|
9,148
|
9,266
|
||||||
Stock-based
compensation expense
|
1,585
|
1,885
|
||||||
Deferred
income taxes
|
3,650
|
10,470
|
||||||
Loss
on extinguishment of debt
|
203
|
-
|
||||||
Increase
(decrease) in cash flows
|
||||||||
from
changes in assets and liabilities:
|
||||||||
Sale
of accounts receivable
|
-
|
2,000
|
||||||
Accounts
receivable
|
2,407
|
(3,924 | ) | |||||
Inventories
|
(6,361 | ) | (15,150 | ) | ||||
Accounts
payable
|
1,373
|
(2,579 | ) | |||||
Income
taxes receivable
|
(1,979 | ) | (1,809 | ) | ||||
Accrued
compensation and benefits
|
559
|
(2,388 | ) | |||||
Accrued
interest
|
13
|
59
|
||||||
Other
assets
|
(551 | ) |
619
|
|||||
Other
liabilities
|
4,142
|
(52 | ) | |||||
19,711
|
4,531
|
|||||||
Net
cash provided by operating activities
|
27,465
|
25,798
|
||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property, plant, and equipment
|
(10,247 | ) | (9,556 | ) | ||||
Proceeds
from sale of equity investment
|
1,205
|
-
|
||||||
Payments
related to business acquisitions
|
(2,458 | ) | (1,278 | ) | ||||
Net
cash used in investing activities
|
(11,500 | ) | (10,834 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Net
proceeds from common stock issued
|
||||||||
under
employee plans
|
1,238
|
10,604
|
||||||
Excess
tax benefits from stock-based compensation
|
32
|
-
|
||||||
Repurchase
of common stock
|
(7,848 | ) |
-
|
|||||
Payments
on senior credit agreement
|
(141,484 | ) | (26,326 | ) | ||||
Proceeds
of senior credit agreement
|
135,000
|
-
|
||||||
Payments
on mortgage notes
|
(412 | ) | (471 | ) | ||||
Payments
related to issuance of long-term debt
|
(1,260 | ) |
-
|
|||||
Net
change in cash overdrafts
|
(604 | ) | (236 | ) | ||||
Net
cash used in financing activities
|
(15,338 | ) | (16,429 | ) | ||||
Effect
of exchange rate changes
|
||||||||
on
cash and cash equivalents
|
999
|
1,513
|
||||||
Net
increase in cash and cash equivalents
|
1,626
|
48
|
||||||
Cash
and cash equivalents at beginning of period
|
3,454
|
3,831
|
||||||
Cash
and cash equivalents at end of period
|
$ |
5,080
|
$ |
3,879
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
income
|
$ |
3,414
|
$ |
9,345
|
$ |
7,754
|
$ |
21,267
|
||||||||
Other
comprehensive income:
|
||||||||||||||||
Adjustment
to net amortization
|
||||||||||||||||
and
deferral of pension cost
|
-
|
144
|
-
|
289
|
||||||||||||
Foreign
currency
|
||||||||||||||||
translation
adjustment
|
1,149
|
1,452
|
1,322
|
1,941
|
||||||||||||
Comprehensive
income
|
$ |
4,563
|
$ |
10,941
|
$ |
9,076
|
$ |
23,497
|
Accumulated
|
||||||||||||
Minimum
|
Cumulative
|
Other
|
||||||||||
Pension
|
Translation
|
Comprehensive
|
||||||||||
Liability
|
Adjustments
|
Income
(loss)
|
||||||||||
Balance,
December 31, 2006
|
$ | (12,386 | ) | $ |
3,774
|
$ | (8,612 | ) | ||||
Adjustment
to net amortization
|
||||||||||||
and
deferral of pension cost
|
289
|
-
|
289
|
|||||||||
Foreign
currency translation
|
||||||||||||
adjustments
|
-
|
1,941
|
1,941
|
|||||||||
Balance,
June 30, 2007
|
$ | (12,097 | ) | $ |
5,715
|
$ | (6,382 | ) |
December
31,
|
June
30,
|
|||||||
2006
|
2007
|
|||||||
Raw
materials
|
$ |
50,225
|
$ |
58,839
|
||||
Work-in-process
|
17,815
|
21,513
|
||||||
Finished
goods
|
83,647
|
81,467
|
||||||
Total
|
$ |
151,687
|
$ |
161,819
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
income
|
$ |
3,414
|
$ |
9,345
|
$ |
7,754
|
$ |
21,267
|
||||||||
Basic
– weighted average shares
|
||||||||||||||||
outstanding
|
28,061
|
28,180
|
28,068
|
27,988
|
||||||||||||
Effect
of dilutive potential
|
||||||||||||||||
securities
|
205
|
651
|
244
|
620
|
||||||||||||
Diluted
– weighted average
|
||||||||||||||||
shares
outstanding
|
28,266
|
28,831
|
28,312
|
28,608
|
||||||||||||
Basic
EPS
|
$ |
.12
|
$ |
.33
|
$ |
.28
|
$ |
.76
|
||||||||
Diluted
EPS
|
.12
|
.32
|
.27
|
.74
|
Balance
as of January 1, 2007
|
$ |
290,512
|
||
Adjustments
to goodwill resulting from
|
||||
business
acquisitions finalized
|
397
|
|||
Foreign
currency translation
|
269
|
|||
Balance
as of June 30, 2007
|
$ |
291,178
|
December
31,
|
June
30,
|
|||||||
2006
|
2007
|
|||||||
CONMED
Electrosurgery
|
$ |
16,645
|
$ |
16,645
|
||||
CONMED
Endosurgery
|
42,419
|
42,424
|
||||||
CONMED
Linvatec
|
173,007
|
173,276
|
||||||
CONMED
Patient Care
|
58,441
|
58,833
|
||||||
Balance
|
$ |
290,512
|
$ |
291,178
|
December
31, 2006
|
June
30, 2007
|
|||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Amortized
intangible assets:
|
||||||||||||||||
Customer
relationships
|
$ |
113,376
|
$ | (24,498 | ) | $ |
113,708
|
$ | (26,237 | ) | ||||||
Patents
and other intangible assets
|
39,609
|
(24,696 | ) |
39,096
|
(25,514 | ) | ||||||||||
Unamortized
intangible assets:
|
||||||||||||||||
Trademarks
and tradenames
|
87,344
|
-
|
87,344
|
-
|
||||||||||||
$ |
240,329
|
$ | (49,194 | ) | $ |
240,148
|
$ | (51,751 | ) |
2007
|
$ |
5,608
|
||
2008
|
5,608
|
|||
2009
|
5,608
|
|||
2010
|
5,105
|
|||
2011
|
4,840
|
|||
2012
|
4,772
|
Balance
as of January 1, 2007
|
$ |
3,617
|
||
Provision
for warranties
|
2,844
|
|||
Claims
made
|
(2,855 | ) | ||
Balance
as of June 30, 2007
|
$ |
3,606
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Service
cost
|
$ |
1,405
|
$ |
1,381
|
$ |
2,810
|
$ |
2,763
|
||||||||
Interest
cost on projected
|
||||||||||||||||
benefit
obligation
|
827
|
737
|
1,654
|
1,474
|
||||||||||||
Expected
return on plan assets
|
(795 | ) | (683 | ) | (1,590 | ) | (1,367 | ) | ||||||||
Net
amortization and deferral
|
298
|
229
|
596
|
458
|
||||||||||||
Net
periodic pension cost
|
$ |
1,735
|
$ |
1,664
|
$ |
3,470
|
$ |
3,328
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Acquisition-related
costs
|
$ |
962
|
$ |
-
|
$ |
1,476
|
$ |
-
|
||||||||
Termination
of product offering
|
27
|
58
|
83
|
148
|
||||||||||||
Write-off
of inventory in
|
||||||||||||||||
settlement
of a patent dispute
|
595
|
-
|
595
|
-
|
||||||||||||
Facility
closure costs
|
-
|
1,254
|
-
|
1,822
|
||||||||||||
Litigation
settlement
|
-
|
-
|
-
|
(6,072 | ) | |||||||||||
Other
expense (income)
|
$ |
1,584
|
$ |
1,312
|
$ |
2,154
|
$ | (4,102 | ) |
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Arthroscopy
|
58,852
|
64,949
|
113,614
|
127,192
|
||||||||||||
Powered
Surgical Instruments
|
33,276
|
35,993
|
67,414
|
73,543
|
||||||||||||
Electrosurgery
|
24,228
|
22,123
|
47,603
|
46,149
|
||||||||||||
Endosurgery
|
13,291
|
15,465
|
25,136
|
29,040
|
||||||||||||
CONMED
Linvatec, Endosurgery,
|
||||||||||||||||
and
Electrosurgery
|
129,647
|
138,530
|
253,767
|
275,924
|
||||||||||||
CONMED
Patient Care
|
19,107
|
17,315
|
38,720
|
37,676
|
||||||||||||
CONMED
Endoscopic Technologies
|
14,719
|
13,413
|
29,452
|
26,672
|
||||||||||||
Total
|
$ |
163,473
|
$ |
169,258
|
$ |
321,939
|
$ |
340,272
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
CONMED
Endosurgery, Electrosurgery
|
||||||||||||||||
and
Linvatec
|
$ |
19,531
|
$ |
24,916
|
$ |
35,972
|
$ |
43,709
|
||||||||
CONMED
Patient Care
|
(1,712 | ) | (1,265 | ) | (1,448 | ) | (238 | ) | ||||||||
CONMED
Endoscopic Technologies
|
(4,019 | ) | (2,432 | ) | (6,391 | ) | (3,643 | ) | ||||||||
Corporate
|
(3,231 | ) | (2,331 | ) | (6,433 | ) |
2,300
|
|||||||||
Income
from operations
|
10,569
|
18,888
|
21,700
|
42,128
|
||||||||||||
Loss
on early extinguishment
|
||||||||||||||||
of
debt
|
678
|
-
|
678
|
-
|
||||||||||||
Interest
expense
|
4,675
|
4,329
|
9,541
|
8,845
|
||||||||||||
Total
income before income taxes
|
$ |
5,216
|
$ |
14,559
|
$ |
11,481
|
$ |
33,283
|
Item
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
|
|
AND
RESULTS OF OPERATIONS
|
|
·
|
cyclical
customer purchasing patterns due to budgetary and other
constraints;
|
|
·
|
changes
in customer preferences;
|
|
·
|
competition;
|
|
·
|
changes
in technology;
|
|
·
|
the
ability to evaluate, finance and integrate acquired businesses,
products
and companies;
|
|
·
|
the
introduction and acceptance of new
products;
|
|
·
|
changes
in business strategy;
|
|
·
|
the
availability and cost of materials;
|
|
·
|
the
possibility that United States or foreign regulatory and/or administrative
agencies may initiate enforcement actions against us or our
distributors;
|
|
·
|
future
levels of indebtedness and capital
spending;
|
|
·
|
changes
in foreign exchange and interest
rates;
|
|
·
|
quality
of our management and business abilities and the judgment of our
personnel;
|
|
·
|
the
risk of litigation, especially patent litigation as well as the
cost
associated with patent and other
litigation;
|
|
·
|
changes
in regulatory requirements;
|
|
·
|
the
availability, terms and deployment of capital;
and
|
|
·
|
general
economic and business conditions.
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Arthroscopy
|
36.0 | % | 38.3 | % | 35.2 | % | 37.4 | % | ||||||||
Powered
Surgical Instruments
|
20.4
|
21.2
|
21.0
|
21.6
|
||||||||||||
Patient
Care
|
11.7
|
10.3
|
12.1
|
11.1
|
||||||||||||
Electrosurgery
|
14.8
|
13.1
|
14.8
|
13.5
|
||||||||||||
Endosurgery
|
8.1
|
9.2
|
7.8
|
8.6
|
||||||||||||
Endoscopic
Technologies
|
9.0
|
7.9
|
9.1
|
7.8
|
||||||||||||
Consolidated
Net Sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
|
·
|
Sales
to customers are evidenced by firm purchase orders. Title and the
risks
and rewards of ownership are transferred to the customer when product
is
shipped under our stated shipping terms. Payment by the
customer is due under fixed payment
terms.
|
|
·
|
We
place certain of our capital equipment with customers in return for
commitments to purchase disposable products over time periods generally
ranging from one to three years. In these circumstances, no
revenue is recognized upon capital equipment shipment and we recognize
revenue upon the disposable product shipment. The cost of the
equipment is amortized over the term of the individual commitment
agreements.
|
|
·
|
Product
returns are only accepted at the discretion of the Company and in
accordance with our “Returned Goods Policy”. Historically the
level of product returns has not been significant. We accrue
for sales returns, rebates and allowances based upon an analysis
of
historical customer returns and credits, rebates, discounts and current
market conditions.
|
|
·
|
Our
terms of sale to customers generally do not include any obligations
to
perform future services. Limited warranties are provided for
capital equipment sales and provisions for warranty are provided
at the
time of product sale based upon an analysis of historical
data.
|
|
·
|
Amounts
billed to customers related to shipping and handling have been included
in
net sales. Shipping and handling costs are included in selling
and administrative expense.
|
|
·
|
We
sell to a diversified base of customers around the world and, therefore,
believe there is no material concentration of credit
risk.
|
|
·
|
We
assess the risk of loss on accounts receivable and adjust the allowance
for doubtful accounts based on this risk
assessment. Historically, losses on accounts receivable have
not been material. Management believes that the allowance for
doubtful accounts of $1.3 million at June 30, 2007 is adequate to
provide
for probable losses resulting from accounts
receivable.
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
52.4
|
49.3
|
51.6
|
49.7
|
||||||||||||
Gross
profit
|
47.6
|
50.7
|
48.4
|
50.3
|
||||||||||||
Selling
and administrative expense
|
35.5
|
34.4
|
36.2
|
34.7
|
||||||||||||
Research
and development expense
|
4.6
|
4.4
|
4.8
|
4.4
|
||||||||||||
Other
expense
|
1.0
|
0.7
|
0.7
|
(1.2 | ) | |||||||||||
Income
from operations
|
6.5
|
11.2
|
6.7
|
12.4
|
||||||||||||
Loss
on early extinguishment of debt
|
0.4
|
0.0
|
0.2
|
0.0
|
||||||||||||
Interest
expense
|
2.9
|
2.6
|
2.9
|
2.6
|
||||||||||||
Income
before income
taxes
|
3.2
|
8.6
|
3.6
|
9.8
|
||||||||||||
Provision
for income taxes
|
1.1
|
3.1
|
1.2
|
3.5
|
||||||||||||
Net
income
|
2.1 | % | 5.5 | % | 2.4 | % | 6.3 | % |
Three
months ended
June 30, |
Six
months ended
June 30, |
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
$ |
129,647
|
$ |
138,530
|
$ |
253,767
|
$ |
275,924
|
||||||||
Income
from
|
||||||||||||||||
operations
|
19,531
|
24,916
|
35,972
|
43,709
|
||||||||||||
Operating
Margin
|
15.1 | % | 18.0 | % | 14.2 | % | 15.8 | % |
|
·
|
Arthroscopy
sales increased $6.1 million (10.4%) in the quarter ended June 30,
2007 to
$64.9 million from $58.8 million in the same period a year
ago. Arthroscopy sales increased $13.6 million (12.0%) in the six
months ended June 30, 2007 to $127.1 million from $113.5 million
in the
same period a year ago. These increases are principally a result
of
increased sales of our procedure specific, resection and video imaging
products for arthroscopy and general
surgery.
|
|
·
|
Powered
surgical instrument sales increased $2.7 million (8.1%) in the quarter
ended June 30, 2007 to $36.0 million from $33.3 million in the same
period
a year ago. Powered surgical instrument sales increased $6.1
million (9.0%) in the six months ended June 30, 2007 to $73.6 million
from
$67.5 million in the same period a year ago. These increases
are principally a result of increased sales of our small bone and
large
bone powered instrument products.
|
|
·
|
Electrosurgery
sales decreased $2.1 million (8.7%) in the quarter ended June 30,
2007 to
$22.1 million from $24.2 million in the same period a year
ago. Electrosurgery sales decreased $1.4 million (3.2%) in the
six months ended June 30, 2007 to $46.1 million from $47.5 million
in the
same period a year ago. These decreases were principally a
result of decreased sales of our System 5000™ electrosurgical generator,
ground pads and ABC® Equipment which offset increased sales of our ABC®
handpieces and UltraClean®
products.
|
|
·
|
Endosurgery
sales increased $2.2 million (16.5%) in the quarter ended June 30,
2007 to
$15.5 million from $13.3 million in the same period a year
ago. Endosurgery sales increased $3.9 million (15.5%) in the
six months ended June 30, 2007 to $29.1 million from $25.2 million
in the
same period a year ago. These increases are principally a
result of increased sales of hand held instruments, suction irrigation
products and skin staplers.
|
|
·
|
Operating
margins as a percentage of net sales increased 2.9 percentage points
to
18.0% in the quarter ended June 30, 2007 compared to 15.1% in 2006
while
operating margins increased 1.6 percentage points to 15.8% in the
six
months ended June 30, 2007 compared to 14.2% in the same period a
year
ago. The increases in operating margins in the quarter and six
months ended June 30, 2007 are due to increases in gross margins
of 1.4
and 0.6 percentage points, respectively, compared to the same periods
a
year ago as a result of higher selling prices and lower production
variances. The remaining increases in operating margins in the
quarter and six months ended June 30, 2007 of 1.5 and 1.0 percentage
points, respectively, compared to the same periods a year ago are
attributable to greater leverage of our cost structure as administrative
expenses remained level offsetting higher sales force and distribution
costs associated with the increase in
sales.
|
Three
months ended
June 30, |
Six
months ended
June 30, |
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
$ |
19,107
|
$ |
17,315
|
$ |
38,720
|
$ |
37,676
|
||||||||
Loss
from
|
||||||||||||||||
operations
|
(1,712 | ) | (1,265 | ) | (1,448 | ) | (238 | ) | ||||||||
Operating
Margin
|
(9.0% | ) | (7.3% | ) | (3.7% | ) | (0.6% | ) |
|
·
|
Patient
care sales decreased $1.8 million (9.4%) in the quarter ended June
30,
2007 to $17.4 million from $19.2 million in the same period a year
ago. Patient care sales decreased $1.0 million (2.6%) in the six
months ended June 30, 2007 to $37.8 million from $38.8 million in
the same
period a year ago. These decreases are principally a result of decreased
sales of our suction instruments and ECG
electrodes.
|
|
·
|
Operating
margins as a percentage of net sales increased 1.7 percentage points
to
-7.3% for the quarter ended June 30, 2007 compared to -9.0% in 2006
while
|
Three
months ended
June 30, |
Six
months ended
June 30, |
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
$ |
14,719
|
$ |
13,413
|
$ |
29,452
|
$ |
26,672
|
||||||||
Loss
from
|
||||||||||||||||
operations
|
(4,019 | ) | (2,432 | ) | (6,391 | ) | (3,643 | ) | ||||||||
Operating
Margin
|
(27.3% | ) | (18.1% | ) | (21.7% | ) | (13.7% | ) |
|
·
|
Endoscopic
Technologies sales decreased $1.3 million (8.8%) in the quarter ended
June
30, 2007 from $14.7 million to $13.4 million in the same period a
year
ago. Endoscopic Technologies sales decreased $2.8 million (9.5%)
in the
six months ended June 30, 2007 to $26.6 million from $29.4 million
in the
same period a year ago. These decreases are principally a
result of decreased sales of forceps, biliary and pulmonary products
as a
result of increased competition and pricing pressures as well as
production and operational issues which resulted in product shortages
and
backorders.
|
|
·
|
Operating
margins as a percentage of net sales increased 9.2 percentage points
to
-18.1% in the quarter ended June 30, 2007 compared to -27.3% in 2006
while
operating margins increased 8.0 percentage points to -13.7% for the
six
months ended June 30, 2007 compared to -21.7% in the same period
a year
ago. The increases in operating margins in the quarter and six
months ended June 30, 2007 are primarily due to increases in gross
margins
of 12.4 and 8.5 percentage points, respectively, compared to the
same
periods a year ago as a result of the completion of the transfer
of
production lines from C.R. Bard to CONMED during 2006, offset by
the
effect of lower sales levels on administrative expenses (resulting
in an
increase as a percentage of sales of 3.2 and 0.5 percentage points,
respectively, in the quarter and six months ended June 30, 2007)
compared
to the same period a year ago.
|
Director
|
Votes
Received
|
Votes
Withheld
|
Eugene
R. Corasanti
|
26,424,991
|
428,426
|
Joseph
J. Corasanti
|
26,426,317
|
427,100
|
Bruce
F. Daniels
|
25,274,062
|
1,579,355
|
Jo
Ann Golden
|
26,677,708
|
175,709
|
Stephen
M. Mandia
|
26,632,851
|
220,566
|
William
D. Matthews
|
26,632,397
|
221,020
|
Stuart
J. Schwartz
|
26,650,617
|
202,800
|
Mark
E. Tryniski
|
26,655,657
|
197,760
|
Management
Proposals
|
For
|
Against
|
Abstain
|
Broker
Non-votes
|
||||||||||||
Approval
of PricewaterhouseCoopers LLP
as independent registered public accounting firm for the Company
for the
fiscal year ending December 31, 2007;
|
26,267,985
|
578,680
|
6,752
|
-
|
||||||||||||