For
the quarterly period ended
|
Commission
File Number 0-16093
|
September
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
filer o
|
Non-accelerated
filer o
|
Item
Number
|
Page
|
|
1
|
||
2
|
||
3
|
||
4
|
||
13
|
||
28
|
||
28
|
||
29
|
||
29
|
||
30
|
||
31
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
$ |
154,981
|
$ |
164,448
|
$ |
476,920
|
$ |
504,720
|
||||||||
Cost
of sales
|
80,250
|
82,090
|
246,515
|
251,277
|
||||||||||||
Gross
profit
|
74,731
|
82,358
|
230,405
|
253,443
|
||||||||||||
Selling
and administrative expense
|
56,219
|
57,506
|
172,716
|
175,518
|
||||||||||||
Research
and development expense
|
7,262
|
7,936
|
22,585
|
22,983
|
||||||||||||
Other
expense (income)
|
2,066
|
-
|
4,220
|
(4,102 | ) | |||||||||||
65,547
|
65,442
|
199,521
|
194,399
|
|||||||||||||
Income
from operations
|
9,184
|
16,916
|
30,884
|
59,044
|
||||||||||||
Loss
on early extinguishment of debt
|
-
|
-
|
678
|
-
|
||||||||||||
Interest
expense
|
4,962
|
3,861
|
14,503
|
12,706
|
||||||||||||
Income
before income taxes
|
4,222
|
13,055
|
15,703
|
46,338
|
||||||||||||
Provision
for income taxes
|
890
|
4,700
|
4,617
|
16,716
|
||||||||||||
Net
income
|
$ |
3,332
|
$ |
8,355
|
$ |
11,086
|
$ |
29,622
|
||||||||
Per
share data:
|
||||||||||||||||
Net
income
|
||||||||||||||||
Basic
|
$ |
.12
|
$ |
.29
|
$ |
.40
|
$ |
1.06
|
||||||||
Diluted
|
.12
|
.29
|
.39
|
1.04
|
||||||||||||
Weighted
average common shares
|
||||||||||||||||
Basic
|
27,888
|
28,572
|
27,999
|
27,990
|
||||||||||||
Diluted
|
28,134
|
29,101
|
28,241
|
28,580
|
December
31,
|
September
30,
|
|||||||
2006
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
3,831
|
$ |
5,411
|
||||
Accounts
receivable, net
|
75,120
|
81,765
|
||||||
Inventories
|
151,687
|
166,712
|
||||||
Income
taxes receivable
|
747
|
2,919
|
||||||
Deferred
income taxes
|
15,212
|
15,432
|
||||||
Prepaid
expenses and other current assets
|
3,286
|
3,284
|
||||||
Total
current assets
|
249,883
|
275,523
|
||||||
Property,
plant and equipment, net
|
116,480
|
121,653
|
||||||
Goodwill
|
290,512
|
294,659
|
||||||
Other
intangible assets, net
|
191,135
|
189,470
|
||||||
Other
assets
|
13,561
|
10,767
|
||||||
Total
assets
|
$ |
861,571
|
$ |
892,072
|
||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Current
portion of long-term debt
|
$ |
3,148
|
$ |
3,247
|
||||
Accounts
payable
|
41,823
|
34,769
|
||||||
Accrued
compensation and benefits
|
17,712
|
18,452
|
||||||
Accrued
interest
|
727
|
1,901
|
||||||
Other
current liabilities
|
11,795
|
13,108
|
||||||
Total
current liabilities
|
75,205
|
71,477
|
||||||
Long-term
debt
|
264,676
|
239,647
|
||||||
Deferred
income taxes
|
51,004
|
66,399
|
||||||
Other
long-term liabilities
|
30,332
|
25,817
|
||||||
Total
liabilities
|
421,217
|
403,340
|
||||||
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
|
287,180
|
||||||
Retained
earnings
|
247,425
|
273,049
|
||||||
Accumulated
other comprehensive income (loss)
|
(8,612 | ) | (3,869 | ) | ||||
Less: 3,321,545
and 2,698,421 shares of common stock in
|
||||||||
treasury,
at cost in 2006 and 2007, respectively
|
(83,630 | ) | (67,941 | ) | ||||
Total
shareholders’ equity
|
440,354
|
488,732
|
||||||
Total
liabilities and shareholders’ equity
|
$ |
861,571
|
$ |
892,072
|
Nine
months ended
|
||||||||
September
30,
|
||||||||
2006
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ |
11,086
|
$ |
29,622
|
||||
Adjustments
to reconcile net income,
|
||||||||
to
net cash provided by operating activities:
|
||||||||
Depreciation
|
8,591
|
9,498
|
||||||
Amortization
|
13,704
|
14,015
|
||||||
Stock-based
compensation
|
2,599
|
2,932
|
||||||
Deferred
income taxes
|
4,670
|
14,869
|
||||||
Loss
on extinguishment of debt
|
203
|
-
|
||||||
Increase
(decrease) in cash flows
|
||||||||
from
changes in assets and liabilities:
|
||||||||
Sale
of accounts receivable
|
(3,000 | ) | (4,000 | ) | ||||
Accounts
receivable
|
3,320
|
(2,424 | ) | |||||
Inventories
|
(9,975 | ) | (21,826 | ) | ||||
Accounts
payable
|
4,065
|
(5,284 | ) | |||||
Income
taxes receivable
|
(1,979 | ) | (1,904 | ) | ||||
Accrued
compensation and benefits
|
2,148
|
740
|
||||||
Accrued
interest
|
844
|
1,174
|
||||||
Other
assets
|
(1,083 | ) | (298 | ) | ||||
Other
liabilities
|
5,604
|
(1,651 | ) | |||||
29,711
|
5,841
|
|||||||
Net
cash provided by operating activities
|
40,797
|
35,463
|
||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property, plant, and equipment
|
(16,738 | ) | (15,964 | ) | ||||
Proceeds
from sale of equity investment
|
1,205
|
-
|
||||||
Payments
related to business acquisitions
|
(2,463 | ) | (5,837 | ) | ||||
Net
cash used in investing activities
|
(17,996 | ) | (21,801 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Net
proceeds from common stock issued
|
||||||||
under
employee plans
|
2,103
|
11,119
|
||||||
Excess
tax benefits from stock-based compensation
|
102
|
-
|
||||||
Repurchase
of common stock
|
(7,848 | ) |
-
|
|||||
Payments
on senior credit agreement
|
(141,822 | ) | (24,664 | ) | ||||
Proceeds
of senior credit agreement
|
135,000
|
-
|
||||||
Payments
on mortgage notes
|
(223 | ) | (266 | ) | ||||
Payments
related to issuance of long-term debt
|
(1,260 | ) |
-
|
|||||
Net
change in cash overdrafts
|
(604 | ) | (1,770 | ) | ||||
Net
cash used in financing activities
|
(14,552 | ) | (15,581 | ) | ||||
Effect
of exchange rate changes
|
||||||||
on
cash and cash equivalents
|
1,789
|
3,499
|
||||||
Net
increase in cash and cash equivalents
|
10,038
|
1,580
|
||||||
Cash
and cash equivalents at beginning of period
|
3,454
|
3,831
|
||||||
Cash
and cash equivalents at end of period
|
$ |
13,492
|
$ |
5,411
|
||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
income
|
$ |
3,332
|
$ |
8,355
|
$ |
11,086
|
$ |
29,622
|
||||||||
Other
comprehensive income:
|
||||||||||||||||
Adjustment
to net
|
||||||||||||||||
amortization
and deferral of pension cost
|
-
|
145
|
-
|
434
|
||||||||||||
Foreign
currency
|
||||||||||||||||
translation
adjustment
|
860
|
2,368
|
2,182
|
4,309
|
||||||||||||
Comprehensive
income
|
$ |
4,192
|
$ |
10,868
|
$ |
13,268
|
$ |
34,365
|
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
|
434
|
-
|
434
|
|||||||||
Foreign
currency translation
|
||||||||||||
adjustments
|
-
|
4,309
|
4,309
|
|||||||||
Balance,
September 30, 2007
|
$ | (11,952 | ) | $ |
8,083
|
$ | (3,869 | ) |
December
31,
|
September
30,
|
|||||||
2006
|
2007
|
|||||||
Raw
materials
|
$ |
50,225
|
$ |
59,094
|
||||
Work-in-process
|
17,815
|
22,488
|
||||||
Finished
goods
|
83,647
|
85,130
|
||||||
Total
|
$ |
151,687
|
$ |
166,712
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
income
|
$ |
3,332
|
$ |
8,355
|
$ |
11,086
|
$ |
29,622
|
||||||||
Basic
– weighted average shares
|
||||||||||||||||
outstanding
|
27,888
|
28,572
|
27,999
|
27,990
|
||||||||||||
Effect
of dilutive potential
|
||||||||||||||||
securities
|
246
|
529
|
242
|
590
|
||||||||||||
Diluted
– weighted average
|
||||||||||||||||
shares
outstanding
|
28,134
|
29,101
|
28,241
|
28,580
|
||||||||||||
Basic
EPS
|
$ |
.12
|
$ |
.29
|
$ |
.40
|
$ |
1.06
|
||||||||
Diluted
EPS
|
.12
|
.29
|
.39
|
1.04
|
Balance
as of January 1, 2007
|
$ |
290,512
|
||
Goodwill
acquired
|
3,253
|
|||
Adjustments
to goodwill resulting from
|
||||
business
acquisitions finalized
|
492
|
Foreign
currency translation
|
402
|
|||
Balance
as of September 30, 2007
|
$ |
294,659
|
December
31,
|
September
30,
|
|||||||
2006
|
2007
|
|||||||
CONMED
Electrosurgery
|
$ |
16,645
|
$ |
16,645
|
||||
CONMED
Endosurgery
|
42,419
|
42,430
|
||||||
CONMED
Linvatec
|
173,007
|
173,409
|
||||||
CONMED
Patient Care
|
58,441
|
62,175
|
||||||
$ |
290,512
|
$ |
294,659
|
December
31, 2006
|
September
30, 2007
|
|||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Amortized
intangible assets:
|
||||||||||||||||
Customer
relationships
|
$ |
113,376
|
$ | (24,498 | ) | $ |
114,708
|
$ | (27,107 | ) | ||||||
Patents
and other intangible assets
|
39,609
|
(24,696 | ) |
39,597
|
(26,072 | ) | ||||||||||
Unamortized
intangible assets:
|
||||||||||||||||
Trademarks
and tradenames
|
87,344
|
-
|
88,344
|
-
|
||||||||||||
$ |
240,329
|
$ | (49,194 | ) | $ |
242,649
|
$ | (53,179 | ) |
2007
|
$ |
5,712
|
||
2008
|
5,718
|
|||
2009
|
5,718
|
|||
2010
|
5,119
|
|||
2011
|
4,840
|
|||
2012
|
4,788
|
Balance
as of January 1, 2007
|
$ |
3,617
|
||
Provision
for warranties
|
2,575
|
|||
Claims
made
|
(2,684 | ) | ||
Balance
as of September 30, 2007
|
$ |
3,508
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Service
cost
|
$ |
1,391
|
$ |
1,602
|
$ |
4,175
|
$ |
4,312
|
||||||||
Interest
cost on projected
|
||||||||||||||||
benefit
obligation
|
742
|
855
|
2,228
|
2,301
|
||||||||||||
Expected
return on plan assets
|
(687 | ) | (793 | ) | (2,066 | ) | (2,134 | ) | ||||||||
Net
amortization and deferral
|
312
|
229
|
937
|
687
|
||||||||||||
Net
periodic pension cost
|
$ |
1,758
|
$ |
1,893
|
$ |
5,274
|
$ |
5,166
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Acquisition-related
costs
|
$ |
628
|
$ |
-
|
$ |
2,104
|
$ |
-
|
||||||||
Termination
of product offering
|
1,009
|
-
|
1,092
|
148
|
||||||||||||
Write-off
of inventory in
|
||||||||||||||||
settlement
of a patent dispute
|
-
|
-
|
595
|
-
|
||||||||||||
Facility
closure costs
|
429
|
-
|
429
|
1,822
|
||||||||||||
Litigation
settlement
|
-
|
-
|
-
|
(6,072 | ) | |||||||||||
Other
expense (income)
|
$ |
2,066
|
$ |
-
|
$ |
4,220
|
$ | (4,102 | ) | |||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Arthroscopy
|
$ |
54,773
|
$ |
58,825
|
$ |
168,387
|
$ |
186,017
|
||||||||
Powered
Surgical Instruments
|
33,184
|
36,314
|
100,598
|
109,857
|
||||||||||||
CONMED
Linvatec
|
87,957 | 95,139 | 268,985 | 295,874 | ||||||||||||
Electrosurgery
|
23,388
|
22,948
|
70,991
|
69,097
|
||||||||||||
Endosurgery
|
12,592
|
15,279
|
37,728
|
44,319
|
||||||||||||
CONMED
Linvatec, Endosurgery
|
||||||||||||||||
and
Electrosurgery
|
123,937
|
133,366
|
377,704
|
409,290
|
||||||||||||
CONMED
Patient Care
|
18,345
|
18,546
|
57,065
|
56,222
|
||||||||||||
CONMED
Endoscopic Technologies
|
12,699
|
12,536
|
42,151
|
39,208
|
||||||||||||
Total
|
$ |
154,981
|
$ |
164,448
|
$ |
476,920
|
$ |
504,720
|
||||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
CONMED
Linvatec, Endosurgery
|
||||||||||||||||
and
Electrosurgery
|
$ |
14,551
|
$ |
18,229
|
$ |
50,523
|
$ |
61,938
|
||||||||
CONMED
Patient Care
|
339
|
1,110
|
(1,109 | ) |
872
|
|||||||||||
CONMED
Endoscopic Technologies
|
(4,439 | ) | (1,449 | ) | (10,830 | ) | (5,092 | ) | ||||||||
Corporate
|
(1,267 | ) | (974 | ) | (7,700 | ) |
1,326
|
|||||||||
Income
from Operations
|
9,184
|
16,916
|
30,884
|
59,044
|
||||||||||||
Loss
on early extinguishment
|
||||||||||||||||
of
debt
|
-
|
-
|
678
|
-
|
||||||||||||
Interest
expense
|
4,962
|
3,861
|
14,503
|
12,706
|
||||||||||||
Total
income before income taxes
|
$ |
4,222
|
$ |
13,055
|
$ |
15,703
|
$ |
46,338
|
|
·
|
general
economic and business conditions;
|
|
·
|
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; and
|
|
·
|
the
availability, terms and deployment of
capital.
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Arthroscopy
|
35.4 | % | 35.8 | % | 35.3 | % | 36.8 | % | ||||||||
Powered
Surgical Instruments
|
21.4
|
22.1
|
21.1
|
21.8
|
||||||||||||
Patient
Care
|
11.8
|
11.3
|
12.0
|
11.1
|
||||||||||||
Electrosurgery
|
15.1
|
14.0
|
14.9
|
13.7
|
||||||||||||
Endosurgery
|
8.1
|
9.3
|
7.9
|
8.8
|
||||||||||||
Endoscopic
Technologies
|
8.2
|
7.5
|
8.8
|
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 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 $1.0 million at September 30, 2007 is adequate
to
provide for probable losses resulting from accounts
receivable.
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
51.8
|
49.9
|
51.7
|
49.8
|
||||||||||||
Gross
profit
|
48.2
|
50.1
|
48.3
|
50.2
|
||||||||||||
Selling
and administrative expense
|
36.3
|
35.0
|
36.2
|
34.8
|
||||||||||||
Research
and development expense
|
4.7
|
4.8
|
4.7
|
4.6
|
||||||||||||
Other
expense
|
1.3
|
0.0
|
0.9
|
(0.8 | ) | |||||||||||
Income
from operations
|
5.9
|
10.3
|
6.5
|
11.6
|
||||||||||||
Loss
on early extinguishment of debt
|
0.0
|
0.0
|
0.1
|
0.0
|
||||||||||||
Interest
expense
|
3.2
|
2.3
|
3.0
|
2.5
|
||||||||||||
Income
before income
taxes
|
2.7
|
8.0
|
3.4
|
9.1
|
||||||||||||
Provision
for income taxes
|
0.6
|
2.9
|
1.0
|
3.3
|
||||||||||||
Net
income
|
2.1 | % | 5.1 | % | 2.4 | % | 5.8 | % |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
$ |
123,937
|
$ |
133,366
|
$ |
377,704
|
$ |
409,290
|
||||||||
Income
from
|
||||||||||||||||
operations
|
14,551
|
18,229
|
50,523
|
61,938
|
||||||||||||
Operating
Margin
|
11.7 | % | 13.7 | % | 13.4 | % | 15.1 | % |
·
|
Arthroscopy
sales increased $4.0 million (7.3%) in the quarter ended September
30,
2007 to $58.8 million from $54.8 million in the same period a year
ago.
Arthroscopy sales increased $17.5 million (10.4%) in the nine months
ended
September 30, 2007 to $186.0 million from $168.4 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 $3.1 million (9.3%) in the quarter
ended September 30, 2007 to $36.3 million from $33.2 million in the
same
period a year ago. Powered surgical instrument sales increased $9.3
million (9.2%) in the nine months ended September 30, 2007 to $109.9
million from $100.6 million in the same period a year
ago. These increases are principally a result of increased
sales of our large bone and small bone
handpieces.
|
|
·
|
Electrosurgery
sales decreased $0.4 million (1.7%) in the quarter ended September
30,
2007 to $23.0 million from $23.4 million in the same period a year
ago.
Electrosurgery sales decreased $1.8 million (2.5%) in the nine months
ended September 30, 2007 to $69.1 million from $70.9 million in the
same
period a year ago. These decreases are principally a result of
decreased sales of our System 5000™ electrosurgical generators and pencils
offset by increased sales of our ABC®
handpieces.
|
|
·
|
Endosurgery
sales increased $2.7 million (21.4%) in the quarter ended September
30,
2007 to $15.3 million from $12.6 million in the same period a year
ago.
Endosurgery sales increased $6.5 million (17.2%) in the nine months
ended
September 30, 2007 to $44.3 million from $37.8 million. These increases
are principally a result of increased sales of hand held instruments,
suction irrigation products and
trocars.
|
|
·
|
Operating
margins as a percentage of net sales increased 2.0 percentage points
to
13.7% in the quarter ended September 30, 2007 compared to 11.7% in
2006
while operating margins increased 1.7 percentage points to 15.1%
in the
nine months ended September 30, 2007 compared to 13.4% in the same
period
a year ago. The increases in operating margins in the quarter
and nine months ended September 30, 2007 are due to increases in
gross
margins of 0.1 and 0.4 percentage points, respectively, compared
to the
same periods a year ago as a result of higher selling
prices. The remaining increases in operating margins in the
quarter and nine months ended September 30, 2007 are attributable
to lower
costs in the 2007 periods associated with the termination of a product
offering and facility closure costs discussed in Note 10 to the
Consolidated Condensed Financial Statements (1.2 and 0.3 percentage
points
in the quarter
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
$ |
18,345
|
$ |
18,546
|
$ |
57,065
|
$ |
56,222
|
||||||||
Income
(loss) from
|
||||||||||||||||
operations
|
339
|
1,110
|
(1,109 | ) |
872
|
|||||||||||
Operating
Margin
|
1.8 | % | 6.0 | % | (1.9 | %) | 1.6 | % |
|
·
|
Patient
Care sales increased $0.2 million (1.1%) in the quarter ended September
30, 2007 to $18.5 million from $18.3 million in the same period a
year
ago. Patient care sales decreased $0.9 million (1.6%) in the nine
months
ended September 30, 2007 to $56.2 million from $57.1 million in the
same
period a year ago. These decreases are principally a result of
decreased sales of our suction instrument and ECG electrode product
lines.
|
|
·
|
Operating
margins as a percentage of net sales increased 4.2 percentage points
to
6.0% for the quarter ended September 30, 2007 compared to 1.8% in
2006
while operating margins increased 3.5 percentage points to 1.6% for
the
nine months ended September 30, 2007 compared to -1.9% in the same
period
a year ago. The increases in operating margins in the quarter
and nine months ended September 30, 2007 are primarily due to increases
in
gross margins of 6.0 and 4.2 percentage points, respectively, compared
to
the same periods a year ago as a result of higher selling prices,
offset
by higher selling, administrative and research and development costs
(1.8
and 0.7 percentage points, respectively), in the quarter and nine
months
ended September 30, 2007 compared to the same period a year
ago.
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
Net
sales
|
$ |
12,699
|
$ |
12,536
|
$ |
42,151
|
$ |
39,208
|
||||||||
Loss
from
|
||||||||||||||||
operations
|
(4,439 | ) | (1,449 | ) | (10,830 | ) | (5,092 | ) | ||||||||
Operating
Margin
|
(35.0 | %) | (11.6 | %) | (25.7 | %) | (13.0 | %) |
|
·
|
Endoscopic
Technologies sales decreased $0.2 million (1.6%) in the quarter ended
September 30, 2007 from $12.7 million to $12.5 million in the same
period
a year ago. Endoscopic Technologies sales decreased $2.9
million (6.9%) in the nine months ended September 30, 2007 to $39.2
million from $42.1 million in the same period a year ago. These decreases
are principally a result of decreased sales of forceps and biliary
products as a result of increased competition and pricing pressures
as
well as production and operational issues which resulted in product
shortages and backorders during the first half of the
year.
|
|
·
|
Operating
margins as a percentage of net sales increased 23.4 percentage points
to
-11.6% in the quarter ended September 30, 2007 compared to -35.0%
in 2006
while operating margins increased 12.7 percentage points to -13.0%
for the
nine months ended September 30, 2007 compared to -25.7% in the same
period
a year ago. The increases in operating margins in the quarter
and nine months ended September 30, 2007 are primarily due to increases
in
gross margins of 11.4 and 9.3 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. The
remaining increases in operating margins of 12.0 and 3.4 percentage
points
in the quarter and nine months ended September 30, 2007 are attributable
to lower costs in the 2007 periods associated with acquisition-related
costs (discussed in Note 10 to the Consolidated Condensed Financial
Statements) and other administrative
expenses.
|
Exhibit
No.
|
Description
of Exhibit
|
||
3.1
|
Amended
By-laws of the Company
|
||
31.1
|
Certification
of Joseph J. Corasanti pursuant to Rule 13a-14(a) or Rule 15d-14(a),
of
the Securities Exchange Act, as adopted pursuant to Section 302 of
the
Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certification
of Robert D. Shallish, Jr. pursuant to Rule 13a-14(a) or Rule 15d-14(a),
of the Securities Exchange Act, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
||
32.1
|
Certification
of Joseph J. Corasanti and Robert D. Shallish, Jr. pursuant to 18
U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act
of 2002.
|
||
CONMED
CORPORATION
|
|
(Registrant)
|
|
Date: November
5, 2007
|
|
/s/
Robert D. Shallish, Jr.
|
|
Robert
D. Shallish, Jr.
|
|
Vice
President – Finance and
|
|
Chief
Financial Officer
|