Securities and Exchange Commission
Washington, D.C.
20549
Form 10-Q
QUARTERLY REPORT Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Quarter Ended September 30, 2000 Commission file number 0-16093
CONMED CORPORATION
(Exact name of registrant as specified in its charter)
New York 16-0977505
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
310 Broad Street, Utica, New York 13501
(Address of principal executive offices) (Zip Code)
(315) 797-8375
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
----- -----
The number of shares outstanding of registrant's common stock, as of
November 1, 2000 is 15,344,138 shares.
<PAGE>
CONMED CORPORATION
TABLE OF CONTENTS
FORM 10-Q
PART I FINANCIAL INFORMATION
Item Number Page
Item 1 Financial Statements
- Consolidated Statements of Income 1
- Consolidated Balance Sheets 2
- Consolidated Statements of Shareholders' Equity 3
- Consolidated Statements of Cash Flows 4
- Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
<PAGE>
CONMED CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
For three months ended For nine months ended
September September
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales........................................ $91,712 $91,922 $273,064 $290,821
------- ------- -------- --------
Cost and expenses:
Cost of sales (Note 3)....................... 45,036 44,136 131,403 140,124
Selling and administrative
(Note 6)................................ 26,659 30,579 79,775 92,798
Research and development..................... 3,035 4,109 8,833 11,087
------ ------- -------- --------
Total operating expenses................. 74,730 78,824 220,011 244,009
------- ------- -------- --------
Income from operations........................... 16,982 13,098 53,053 46,812
Interest expense, net............................ (8,212) (8,834) (23,952) (25,477)
------- ------- -------- --------
Income before income taxes....................... 8,770 4,264 29,101 21,335
Provision for income taxes....................... (3,157) (1,535) (10,476) (7,681)
------- ------- -------- --------
Net income....................................... $ 5,613 $ 2,729 $ 18,625 $ 13,654
======= ======= ======== ========
Per share data:
Net Income
Basic........................................ $ .37 $ .18 $ 1.22 $ .89
Diluted...................................... .36 .18 1.19 .88
Weighted average common shares
Basic........................................ 15,276 15,324 15,228 15,307
Diluted...................................... 15,609 15,421 15,591 15,497
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
CONMED CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
ASSETS
<TABLE>
<CAPTION>
(unaudited)
December September
1999 2000
---- ----
Current assets:
<S> <C> <C>
Cash and cash equivalents............................................. $ 3,747 $ 3,308
Accounts receivable, net.............................................. 76,413 75,423
Inventories (Note 3).................................................. 89,681 104,974
Income taxes receivable............................................... - 4,113
Deferred income taxes................................................. 1,453 1,453
Prepaid expenses and other current assets............................. 5,423 5,994
-------- -------
Total current assets.............................................. 176,717 195,265
Property, plant and equipment, net........................................ 57,834 62,697
Goodwill, net............................................................. 223,174 217,799
Patents, trademarks, and other assets, net................................ 204,436 200,153
-------- --------
Total assets...................................................... $662,161 $675,914
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt..................................... $ 32,875 $ 35,270
Accrued interest...................................................... 4,588 1,574
Accounts payable...................................................... 16,518 22,501
Income taxes payable.................................................. 226 -
Accrued payroll and withholdings...................................... 9,658 7,724
Other current liabilities............................................. 3,326 3,561
------- -------
Total current liabilities......................................... 67,191 70,630
Long-term debt............................................................ 361,794 353,709
Deferred income taxes..................................................... 3,330 11,595
Other long-term liabilities............................................... 18,585 15,014
------- -------
Total liabilities................................................. 450,900 450,948
------- -------
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 authorized; 15,182,811 and
15,344,138 issued and outstanding, in
1999 and 2000, respectively.................................... 153 153
Paid-in capital....................................................... 127,394 127,842
Retained earnings..................................................... 84,520 98,174
Accumulated other comprehensive income................................ (387) (784)
Less 25,000 shares of common stock in treasury,
at cost........................................................... (419) (419)
------- --------
Total equity.............................................................. 211,261 224,966
------- --------
Total liabilities and shareholders' equity............................ $662,161 $675,914
======== ========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
CONMED CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Nine Months Ended September 1999 and 2000
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
1999 2000
---- ----
Common stock
<S> <C> <C>
Balance at beginning of period......................... $ 152 $ 153
Exercise of stock options.............................. 1 -
-------- --------
Balance at end of period............................... 153 153
-------- --------
Paid-in capital
Balance at beginning of period......................... 125,039 127,394
Exercise of stock options.............................. 1,593 448
-------- --------
Balance at end of period............................... 126,632 127,842
-------- --------
Retained earnings
Balance at beginning of period......................... 57,361 84,520
Net income (A)......................................... 18,625 13,654
-------- --------
Balance at end of period............................... 75,986 98,174
-------- --------
Accumulated other comprehensive income
Balance at beginning of period
Cumulative foreign currency translation
adjustments..................................... 35 (387)
Other comprehensive income
Foreign currency translation adjustments(B)........ (232) (397)
-------- --------
Balance at end of period
Cumulative foreign currency translation
adjustments..................................... (197) (784)
-------- --------
Treasury stock at beginning
and end of period.................................. (419) (419)
-------- --------
Total shareholders' equity................................. $202,155 $224,966
======== ========
Total comprehensive income (A + B)......................... $ 18,393 $ 13,257
======== ========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
CONMED CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1999 and 2000
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
1999 2000
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income.................................................. $18,625 $13,654
------- -------
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation................................................ 6,647 7,006
Amortization................................................ 12,215 13,494
Increase (decrease) in cash flows
from changes in assets and liabilities:
Accounts receivable..................................... (1,854) 593
Inventories............................................. (12,655) (17,054)
Prepaid expenses and
other current assets.................................. 917 (571)
Accounts payable........................................ (3,021) 5,983
Income taxes receivable/payable......................... 7,727 (4,339)
Accrued interest........................................ (3,462) (3,014)
Accrued payroll and withholdings........................ (4,166) (1,934)
Other current liabilities............................... (92) 235
Other assets/liabilities, net........................... (1,417) 2,619
------- -------
839 3,018
------- -------
Net cash provided by operations............................. 19,464 16,672
------- -------
Cash flows from investing activities:
Payments related to business acquisitions................... (38,224) -
Acquisition of property, plant, and equipment............... (5,894) (11,869)
------- -------
Net cash used by investing activities................... (44,118) (11,869)
------- -------
Cash flows from financing activities:
Proceeds of long term debt.................................. 40,900 -
Borrowings (repayments) under revolving
credit facility, net.................................... (3,000) 19,000
Proceeds from issuance of common stock...................... 1,594 448
Payments related to issuance of long-term debt.............. (661) -
Payments on long-term debt.................................. (17,268) (24,690)
------- -------
Net cash provided (used) by financing activities........ 21,565 (5,242)
------- --------
Net decrease in cash and cash equivalents....................... (3,089) (439)
Cash and cash equivalents at beginning of period................ 5,906 3,747
------- -------
Cash and cash equivalents at end of period...................... $ 2,817 $ 3,308
======= =======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
CONMED CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and Operations
The consolidated financial statements include the accounts of CONMED
Corporation and its subsidiaries (the "Company"). All intercompany accounts and
transactions have been eliminated. CONMED Corporation is a medical technology
company specializing in instruments and implants for arthroscopic sports
medicine, and powered surgical instruments, such as drills and saws, for
orthopaedic, ENT and neuro-surgery. The Company is also a leading developer,
manufacturer and supplier of advanced medical devices, including RF
electrosurgery systems used in all types of surgery, ECG electrodes for heart
monitoring, and minimally invasive surgical devices. The Company's products are
used in a variety of clinical settings, such as operating rooms, surgery
centers, physicians' offices and critical care areas of hospitals. The Company's
business is organized, managed and internally reported as a single segment,
since its product offerings have similar economic, operating and other related
characteristics.
Note 2 - Interim financial information
The financial statements for the three and nine months ended September
1999 and 2000 are unaudited; in the opinion of the Company such unaudited
statements include all adjustments (which comprise only normal recurring
accruals) necessary for a fair presentation of the results for such periods. The
consolidated financial statements for the year ending December 2000 are subject
to adjustment at the end of the year when they will be audited by independent
accountants. The results of operations for the three and nine months ended
September 2000 are not necessarily indicative of the results of operations to be
expected for any other quarter nor for the year ending December 2000. The
consolidated financial statements and notes thereto should be read in
conjunction with the financial statements and notes for the year ended December
1999 included in the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K.
Note 3 - Inventories
The components of inventory are as follows (in thousands):
December September
1999 2000
---- ----
Raw materials......... $35,651 $ 38,710
Work-in-process....... 9,803 11,714
Finished goods........ 44,227 54,550
------- --------
Total........ $89,681 $104,974
======= ========
In connection with the August 1999 Powered Instrument Acquisition (Note 5), the
Company increased the acquired value of inventory by $1,600,000. This inventory
was sold during the quarter ended September 1999 resulting in a non-recurring
adjustment to increase cost of sales during the quarter ended and nine months
ended September 1999 by $1,600,000.
5
<PAGE>
Note 4 - Subsidiary Guarantees
The Company's credit facility and subordinated notes (the "Notes") are
guaranteed (the "Subsidiary Guarantees") by each of the Company's subsidiaries
(the "Subsidiary Guarantors"). The Subsidiary Guarantees provide that each
Subsidiary Guarantor will fully and unconditionally guarantee the Company's
obligations on a joint and several basis. Each Subsidiary Guarantor is
wholly-owned by the Company.
Separate financial statements and other disclosures concerning the
Subsidiary Guarantors are not presented because management has determined such
financial statements and other disclosures are not material to investors. The
combined condensed financial information of the Company's Subsidiary Guarantors
is as follows (in thousands):
December September
1999 2000
---- ----
Current assets...................... $117,541 $134,964
Non-current assets.................. 385,363 374,855
Current liabilities................. 21,921 27,156
Non-current liabilities............. 355,012 317,504
For the Nine
Months Ended Sept.
---------------------
1999 2000
---- ----
Revenues............................ $210,166 $235,523
Income from operations.............. 44,082 40,103
Net income.......................... 12,817 8,884
Note 5 - Business Acquisitions
On June 29, 1999, the Company agreed to purchase certain assets of the
powered surgical instrument business of Minnesota Mining and Manufacturing
Company ("3M") (the "Powered Instrument Acquisition"). The acquisition was
completed on August 11, 1999 for a purchase price of $38,000,000, which was
funded through borrowings under the Company's credit facility. This acquisition
is being accounted for using the purchase method. The results of operations of
the acquired business are included in the consolidated results of the Company
from the date of acquisition. Goodwill associated with the acquisition is being
amortized on a straight-line basis over a 40-year period.
Note 6 - Nonrecurring Severance Charge
During the quarter ended June 2000, the Company announced it would
replace its arthroscopy direct sales force with non-stocking, exclusive sales
agent groups in certain geographic regions of the United States. As a result,
the Company incurred a severance charge of $1,509,000, before income taxes, or
$.06 per diluted share, in the second quarter of 2000. This nonrecurring charge
is included in selling and administrative expense.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion includes certain forward-looking statements. Such
forward-looking statements are subject to a number of factors, including
material risks, uncertainties and contingencies, which could cause actual
results to differ materially from the forward-looking statements. Such factors
include, among others, the following: general economic and business conditions;
changes in customer preferences; competition; changes in technology; the
integration of any acquisitions, changes in business strategy; the indebtedness
of the Company; quality of management, business abilities and judgment of the
Company's personnel; and the availability, terms and deployment of capital.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company does not
undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Three months ended September 2000 compared to three months ended September 1999
Sales for the quarter ended September 2000 were $91,922,000 compared to sales of
$91,712,000 in the quarter ended September 1999. Sales in the Company's
orthopedic businesses grew 7.4% to $60,700,000 from $56,500,000 in the
comparable quarter last year. Adjusted for constant foreign currency exchange
rates, the orthopedic sales growth would have been 8.8%. Arthroscopy sales,
which represented approximately 55% of orthopedic revenues, were $33,100,000
compared to $33,600,000 in the third quarter last year. Sales in the powered
surgical instruments business, which represented approximately 45% of orthopedic
revenues, grew 20.5% to $27,600,000 from $22,900,000 in the same quarter in
1999. Of the total increase in the powered surgical instruments business,
approximately 4.7% was due to internal growth while 15.8% was due to the Powered
Instrument Acquisition in August 1999. Electrosurgery and patient care lines had
sales of $31,200,000 compared to $35,200,000 in the third quarter last year.
Lower sales volumes in the electrosurgery and patient care lines are primarily a
result of increased competition and pricing pressure in the surgical suction
product line.
Cost of sales decreased to $44,136,000 in the quarter ended September 2000
compared to $45,036,000 in the quarter ended September 1999. Gross margin
percentage for the quarter ended September 2000 was 52.0%. In connection with
purchase accounting for the Powered Instrument Acquisition, the Company
increased the acquired value of inventory by $1,600,000 over its production
cost. This inventory was sold during the quarter ended September 1999 and served
to increase cost of sales by $1,600,000. Excluding the impact of this
non-recurring adjustment, cost of sales in the quarter ended September 1999 was
$43,415,000. Excluding the non-recurring adjustment, the Company's gross margin
percentage for the third quarter of 1999 was 52.7%. The decrease in gross margin
percentage in the quarter ended September 2000 as compared to 1999 is primarily
a result of the decline in the value of the Euro and lower selling prices in the
Company's surgical suction product line.
7
<PAGE>
Selling and administrative costs increased to $30,579,000 in the quarter ended
September 2000 as compared to $26,659,000 in the quarter ended September 1999.
As a percentage of sales, selling and administrative expense increased to 33.2%
in the quarter ended September 2000 as compared to 29.1% in the quarter ended
September 1999. The increase in selling and administrative expense is a result
of increased spending on sales and marketing programs in the quarter.
Research and development expense increased to $4,109,000 in the quarter ended
September 2000 as compared to $3,035,000 in the quarter ended September 1999. As
a percentage of sales, research and development expense increased to 4.5% of
sales compared to 3.3% in the quarter ended September 1999. These increases are
the result of the Company's increased investment in new product development.
Interest expense for the quarter ended September 2000 was $8,834,000 compared to
$8,212,000 in the quarter ended September 1999. In conjunction with the Powered
Instrument Acquisition, the Company borrowed $40,000,000 under its amended
credit facility in August 1999 to fund acquisition expenses and the acquisition
purchase price. The increase in interest expense is primarily a result of these
higher term loan borrowings. Interest expense has also increased as a result of
the change in the weighted average interest rates the Company pays on its term
loans and revolving credit facility which have increased from 7.51% and 7.31%,
respectively, at September 30, 1999 to 8.53% and 8.93%, respectively, at
September 30, 2000. (See discussion under Liquidity and Capital Resources
section of Management's Discussion and Analysis of Financial Condition and
Results of Operations).
Nine months ended September 2000 compared to nine months ended September 1999
Sales for the nine months ended September 2000 were $290,821,000 compared to
sales of $273,064,000 in the nine months ended September 1999. Sales in the
Company's orthopedic businesses grew 15.3% to $190,900,000 from $165,500,000 in
the comparable period last year. Adjusted for constant foreign currency exchange
rates, the orthopedic sales growth would have been 16.3%. Arthroscopy sales,
which represented approximately 56% of orthopedic revenues, were $107,700,000
compared to $105,400,000 in the comparable period last year. Sales in the
powered surgical instruments business, which represented approximately 44% of
orthopedic revenues, grew 38.4% to $83,200,000 from $60,100,000 in the same
period a year ago. Of the total increase in the powered surgical instruments
business, approximately 8.6% was due to internal growth while 29.8% was due to
the Powered Instrument Acquisition in August 1999. Electrosurgery and patient
care lines had sales of $99,900,000 compared to $107,600,000 in the same period
a year ago. Lower sales volumes in the electrosurgery and patient care lines are
primarily a result of increased competition and pricing pressure in the surgical
suction product line.
Cost of sales increased to $140,124,000 in the nine months ended September 2000
compared to $131,403,000 in the nine months ended September 1999. Gross margin
percentage for the nine months ended September 2000 was 51.8%. In connection
with purchase accounting for the Powered Instrument Acquisition, the Company
increased the acquired value of inventory by
8
<PAGE>
$1,600,000 over its production cost. This inventory was sold during the quarter
ended September 1999 and served to increase cost of sales by $1,600,000.
Excluding the impact of this non-recurring adjustment, cost of sales in the nine
months ended September 1999 was $129,782,000. Excluding the non-recurring
adjustment, the Company's gross margin percentage for the nine months ended
September 1999 was 52.5%. The decrease in gross margin percentage in the nine
months ended September 2000 as compared to 1999 is primarily a result of the
decline in the value of the Euro and lower selling prices in the Company's
surgical suction production line.
Selling and administrative costs increased to $92,798,000 in the nine months
ended September 2000 as compared to $79,775,000 in the nine months ended
September 1999. The increase in selling and administrative expense is a result
of increased spending on sales and marketing programs, as well as increased
spending associated with the increase in sales in the nine months ended
September 2000 as compared to the nine months ended September 1999.
Additionally, during the second quarter of 2000, the Company announced it would
replace its arthroscopy direct sales force with non-stocking, exclusive sales
agent groups in certain geographic regions of the United States. As a result,
the Company recorded a nonrecurring severance charge of $1,509,000 in the second
quarter of 2000 (Note 6) which is included in selling and administrative
expense. As a result of the factors described above, as a percentage of sales,
selling and administrative expense increased to 31.9% in the nine months ended
September 2000 as compared to 29.2% in the nine months ended September 1999.
Research and development expense increased to $11,087,000 in the nine months
ended September 2000 as compared to $8,833,000 in the same period a year ago. As
a percentage of sales, research and development expense increased to 3.8% of
sales compared to 3.2% in the nine months ended September 1999. These increases
are the result of the Company's increased investment in new product development.
Interest expense for the nine months ended September 2000 was $25,477,000
compared to $23,952,000 in the nine months ended September 1999. In conjunction
with the Powered Instrument Acquisition, the Company borrowed $40,000,000 under
its amended credit facility in August 1999 to fund acquisition expenses and the
acquisition purchase price. The increase in interest expense is primarily a
result of these higher term loan borrowings. Interest expense has also increased
as a result of the change in the weighted average interest rates the Company
pays on its term loans and revolving credit facility which have increased from
7.51% and 7.31%, respectively, at September 30, 1999 to 8.53% and 8.93%,
respectively, at September 30, 2000. (See discussion under Liquidity and Capital
Resources section of Management's Discussion and Analysis of Financial Condition
and Results of Operations).
Liquidity and Capital Resources
The Company's net working capital position increased $15,109,000 or
13.8% to $124,635,000 at September 2000 compared to $109,526,000 at December
1999. Net cash provided by operations was $16,672,000 for the first nine months
of 2000 compared to $19,464,000 for the first nine months of 1999. Operating
cash flow decreased primarily as a result of lower net income and higher
inventory levels. Decreases in income taxes payable, accrued interest and
accrued payroll, also
9
<PAGE>
had a negative impact on cash flow. Operating cash flow was positively impacted
primarily by increases in accounts payable and deferred income taxes payable as
well as higher depreciation and amortization in the nine months ended September
2000 as compared to the nine months ended September 1999.
The increase in inventories in the third quarter is related to
anticipated strong sales in the fourth quarter. The decrease in accrued interest
is primarily related to the timing of interest payments on the Notes which are
payable semiannually in September and March. The decreases in income taxes
payable and accrued payroll, and increases in accounts payable and deferred
income taxes payable are related to the timing of payment.
Net cash used by investing activities for the nine months ended
September 2000 consisted of $11,869,000 in capital expenditures. Net cash used
by investing activities in the nine months ended September 1999 consisted of
$38,224,000 in costs related to the Powered Instrument Acquisition and
$5,894,000 in capital expenditures.
Financing activities during the nine months ended September 2000
consisted primarily of scheduled payments of $24,690,000 on the Company's term
loans and $19,000,000 in borrowings on the Company's revolving credit facility.
Financing activities during the nine months ended September 1999 consisted
primarily of a $40,000,000 term loan used to fund the Powered Instrument
Acquisition, scheduled payments of $17,268,000 on the Company's previously
existing term loans and $3,000,000 in repayments on the Company's revolving
credit facility.
The Company's term loans under its credit facility at September 30,
2000 aggregate $209,146,000. The Company's term loans are repayable quarterly
over remaining terms of approximately five years. The Company's credit facility
also includes a $100,000,000 revolving credit facility which expires December
2002, of which $51,000,000 was available on September 30, 2000. The borrowings
under the credit facility carry interest rates based on a spread over LIBOR or
an alternative base interest rate. The covenants of the credit facility provide
for increase and decrease to this interest rate spread based on the operating
results of the Company. The weighted average interest rates at September 30,
2000 under the term loans and the revolving credit facility were 8.53% and
8.93%, respectively. Additionally, the Company is obligated to pay a fee of
.375% per annum on the unused portion of the revolving credit facility.
The Company does not use derivative financial instruments for trading
or other speculative purposes. Interest rate swaps, a form of derivative, are
used to manage interest rate risk. In June 1998, Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued. The new standard requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
value. Gains or losses resulting from the changes in the values of the
derivatives would be accounted for depending on whether it qualifies for hedge
accounting. The Company will be required to adopt this standard in the fiscal
year beginning January 1, 2001. Management does not believe that the adoption of
this statement will have a material impact on the financial statements.
Currently, the Company has entered into two interest rate swaps expiring in June
2001 and June 2003 which convert $100,000,000 of LIBOR-based floating rate debt
under the Company's credit facility into fixed rate
10
<PAGE>
debt with a base interest rate averaging 6.50%. Provisions in one of the
interest rate swaps cancels such agreement when LIBOR exceeds 7.35%. There were
no material changes in the Company's market risk during the nine months ended
September 2000. For a detailed discussion of market risk, see the Company's Form
10-K for the year ended December 31, 1999, Part II, Item 7A. Quantitative and
Qualitative Disclosures About Market Risk.
The credit facility is collateralized by all the Company's personal
property. The credit facility contains covenants and restrictions which, among
other things, require maintenance of certain working capital levels and
financial ratios, prohibit dividend payments and restrict the incurrence of
certain indebtedness and other activities, including acquisitions and
dispositions. The Company is also required to make mandatory prepayments from
net cash proceeds from any issue of equity and asset sales.
The Notes are in aggregate principal amount of $130,000,000 and have a
maturity date of March 15, 2008. The Notes bear interest at 9.0% per annum which
is payable semi-annually. The indenture governing the Notes has certain
restrictive covenants and provides for, among other things, mandatory and
optional redemptions by the Company.
The credit facility and Notes are guaranteed by each of the Company's
subsidiaries. The Subsidiary Guarantees provide that each Subsidiary Guarantor
will fully and unconditionally guarantee the Company's obligations on a joint
and several basis. Each Subsidiary Guarantor is wholly-owned by the Company.
Under the credit facility and Note indenture, the Company's subsidiaries are
subject to the same covenants and restrictions that apply to the Company (except
that the Subsidiary Guarantors are permitted to make dividend payments and
distributions, including cash dividend payments, to the Company or another
Subsidiary Guarantor).
Management believes that cash generated from operations, its current
cash resources and funds available under its credit facility will provide
sufficient liquidity to ensure continued working capital for operations, debt
service and funding of capital expenditures in the foreseeable future.
Foreign Operations
The Company's foreign operations are subject to special risks inherent
in doing business outside the United States, including governmental instability,
war and other international conflicts, civil and labor disturbances,
requirements of local ownership, partial or total expropriation,
nationalization, currency devaluation, foreign exchange controls and foreign
laws and policies, each of which may limit the movement of assets or funds or
result in the deprivation of contract rights or the taking of property without
fair compensation.
11
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
List of Exhibits
Exhibit No. Description of Instrument
----------- -------------------------
11 Computation of weighted average number of shares of common stock
27 Financial Data Schedule (included in EDGAR filing only)
Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
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
(Registrant)
Date: November 13, 2000
Robert D. Shallish, Jr.
-----------------------
Robert D. Shallish, Jr.
Vice President - Finance
(Principal Financial Officer)
13
<PAGE>
Exhibit Index
Sequential
Page
Exhibit Number
------- ------
11 - Computations of weighted average E-1
number of shares of common stock
27 - Financial Data Schedule (included in EDGAR
filing only)
14
