For the fiscal year ended December 31, 2014
|
Commission file number 0-16093
|
New York
|
16-0977505
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
525 French Road, Utica, New York
|
13502
|
(Address of principal executive offices)
|
(Zip Code)
|
|
Part I
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Part III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Part IV
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Item 15.
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Item 1.
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Business
|
•
|
general economic and business conditions;
|
•
|
changes in foreign exchange and interest rates;
|
•
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cyclical customer purchasing patterns due to budgetary and other constraints;
|
•
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changes in customer preferences;
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•
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competition;
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•
|
changes in technology;
|
•
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the introduction and acceptance of new products;
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•
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the ability to evaluate, finance and integrate acquired businesses, products and companies;
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•
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changes in business strategy;
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•
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the availability and cost of materials;
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•
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the possibility that United States or foreign regulatory and/or administrative agencies may initiate enforcement actions against us or our distributors;
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•
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future levels of indebtedness and capital spending;
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•
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quality of our management and business abilities and the judgment of our personnel;
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•
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the availability, terms and deployment of capital;
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•
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the risk of litigation, especially patent litigation as well as the cost associated with patent and other litigation;
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•
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the risk of a lack of allograft tissues due to reduced donations of such tissues or due to tissues not meeting the appropriate high standards for screening and/or processing of such tissues;
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•
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compliance with and changes in regulatory requirements; and
|
•
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various other factors referenced in this Form 10-K.
|
•
|
Introduction of New Products and Product Enhancements.
We continually pursue organic growth through the development of new products and enhancements to existing products. We seek to develop new technologies which improve the durability, performance and usability of existing products. In addition to our internal research and development efforts, we receive new ideas for products and technologies, particularly in procedure-specific areas, from surgeons, inventors and other healthcare professionals.
|
•
|
Pursue Strategic Acquisitions
. We pursue strategic acquisitions, distribution and similar arrangements in existing and new growth markets to achieve increased operating efficiencies, geographic diversification and market penetration. Targeted companies have historically included those with proven technologies and established brand names which provide potential sales, marketing and manufacturing synergies.
|
•
|
Realize Manufacturing and Operating Efficiencies.
We continually review our production systems for opportunities to reduce operating costs, consolidate product lines or identical process flows, reduce inventory requirements and optimize existing processes. Our vertically integrated manufacturing facilities allow for further opportunities to reduce overhead, increase operating efficiencies and capacity utilization.
|
•
|
Geographic Diversification.
We believe that significant growth opportunities exist for our surgical products outside the United States. Principal foreign markets for our products include Europe, Latin America and Asia/Pacific Rim. Critical elements of our future sales growth in these markets include leveraging our existing relationships with foreign surgeons, hospitals, third-party payers and foreign distributors, maintaining an appropriate presence in emerging market countries and continually evaluating our routes-to-market.
|
•
|
Active Participation in the Medical Community.
We believe that excellent working relationships with physicians and others in the medical industry enable us to gain an understanding of new therapeutic and diagnostic alternatives, trends and emerging opportunities. Active participation allows us to quickly respond to the changing needs of physicians and patients. In addition, we are an active sponsor of medical education both in the United States and internationally, offering new and innovative surgical techniques as well as other medical education materials for use with our products.
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|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Orthopedic surgery
|
54
|
%
|
|
54
|
%
|
|
54
|
%
|
|||
General surgery
|
38
|
|
|
37
|
|
|
37
|
|
|||
Surgical visualization
|
8
|
|
|
9
|
|
|
9
|
|
|||
Consolidated net sales
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|||
Net Sales (in thousands)
|
$
|
740,055
|
|
|
$
|
762,704
|
|
|
$
|
767,140
|
|
•
|
imposition of limitations on conversions of foreign currencies into dollars or remittance of dividends and other payments by international subsidiaries;
|
•
|
imposition or increase of withholding and other taxes on remittances and other payments by international subsidiaries;
|
•
|
trade barriers;
|
•
|
political risks, including political instability;
|
•
|
reliance on third parties to distribute our products;
|
•
|
hyperinflation in certain foreign countries; and
|
•
|
imposition or increase of investment and other restrictions by foreign governments.
|
•
|
fines or other enforcement actions;
|
•
|
recall or seizure of products;
|
•
|
total or partial suspension of production;
|
•
|
loss of certification;
|
•
|
withdrawal of existing product approvals or clearances;
|
•
|
refusal to approve or clear new applications or notices;
|
•
|
increased quality control costs; or
|
•
|
criminal prosecution.
|
•
|
capital constraints;
|
•
|
research and development delays;
|
•
|
delays in securing regulatory approvals; and
|
•
|
changes in the competitive landscape, including the emergence of alternative products or solutions which reduce or eliminate the markets for pending products.
|
•
|
our ability to develop and introduce new products and product enhancements in the time frames we currently estimate;
|
•
|
our ability to successfully implement new technologies;
|
•
|
the market’s readiness to accept new products;
|
•
|
having adequate financial and technological resources for future product development and promotion;
|
•
|
the efficacy of our products; and
|
•
|
the prices of our products compared to the prices of our competitors’ products.
|
•
|
a portion of our cash flow from operations must be dedicated to debt service and will not be available for operations, capital expenditures, acquisitions, dividends and other purposes;
|
•
|
our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or general corporate purposes may be limited or impaired or may be at higher interest rates;
|
•
|
we may be at a competitive disadvantage when compared to competitors that are less leveraged;
|
•
|
we may be hindered in our ability to adjust rapidly to market conditions;
|
•
|
our degree of leverage could make us more vulnerable in the event of a downturn in general economic conditions or other adverse circumstances applicable to us; and
|
•
|
our interest expense could increase if interest rates in general increase because a portion of our borrowings, including our borrowings under our credit agreement, are and will continue to be at variable rates of interest.
|
•
|
pending patent applications will result in issued patents;
|
•
|
patents issued to or licensed by us will not be challenged by competitors;
|
•
|
our patents will be found to be valid or sufficiently broad to protect our technology or provide us with a competitive advantage; or
|
•
|
we will be successful in defending against pending or future patent infringement claims asserted against our products.
|
Location
|
|
Square Feet
|
|
Own or Lease
|
|
Lease Expiration
|
|
|
|
|
|
|
|
|
|
Utica, NY
|
|
500,000
|
|
|
Own
|
|
—
|
Largo, FL
|
|
278,000
|
|
|
Own
|
|
—
|
Centennial, CO
|
|
87,500
|
|
|
Own
|
|
—
|
Chihuahua, Mexico
|
|
207,720
|
|
|
Lease
|
|
September 2019
|
Lithia Springs, GA
|
|
188,400
|
|
|
Lease
|
|
December 2019
|
Brussels, Belgium
|
|
45,531
|
|
|
Lease
|
|
June 2015
|
Mississauga, Canada
|
|
22,378
|
|
|
Lease
|
|
December 2016
|
Westborough, MA
|
|
18,210
|
|
|
Lease
|
|
September 2015
|
Frenchs Forest, Australia
|
|
16,909
|
|
|
Lease
|
|
July 2020
|
Seoul, Korea
|
|
15,554
|
|
|
Lease
|
|
January 2017
|
Anaheim, CA
|
|
14,037
|
|
|
Lease
|
|
September 2015
|
Frankfurt, Germany
|
|
13,606
|
|
|
Lease
|
|
March 2023
|
Milan, Italy
|
|
13,024
|
|
|
Lease
|
|
March 2017
|
Beijing, China
|
|
10,255
|
|
|
Lease
|
|
June 2016
|
Westborough, MA
|
|
10,230
|
|
|
Lease
|
|
April 2016
|
Swindon, Wiltshire, UK
|
|
8,562
|
|
|
Lease
|
|
December 2015
|
Askim, Sweden
|
|
8,353
|
|
|
Lease
|
|
May 2016
|
Barcelona, Spain
|
|
8,073
|
|
|
Lease
|
|
December 2018
|
Rungis Cedex, France
|
|
7,406
|
|
|
Lease
|
|
December 2016
|
Montreal, Canada
|
|
7,232
|
|
|
Lease
|
|
March 2016
|
Copenhagen, Denmark
|
|
5,899
|
|
|
Lease
|
|
March 2017
|
Shepshed, Leicestershire, UK
|
|
5,770
|
|
|
Lease
|
|
October 2015
|
New York, NY
|
|
3,473
|
|
|
Lease
|
|
September 2022
|
Warsaw, Poland
|
|
3,222
|
|
|
Lease
|
|
February 2018
|
Espoo, Finland
|
|
3,078
|
|
|
Lease
|
|
Open Ended
|
San Mateo, CA
|
|
3,068
|
|
|
Lease
|
|
December 2015
|
Shanghai, China
|
|
2,269
|
|
|
Lease
|
|
February 2018
|
Innsbruck, Austria
|
|
1,820
|
|
|
Lease
|
|
June 2020
|
Equity Compensation Plan Information
|
|||||||
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
Weighted-average exercise price of outstanding options, warrants and rights
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
||||
Equity compensation plans approved by security holders
|
775,094
|
|
|
$28.85
|
|
1,000,498
|
|
Equity compensation plans not approved by security holders
|
—
|
|
—
|
|
—
|
|
|
Total
|
775,094
|
|
|
$28.85
|
|
1,000,498
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Statements of Operations Data (1):
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
740,055
|
|
|
$
|
762,704
|
|
|
$
|
767,140
|
|
|
$
|
725,077
|
|
|
$
|
713,723
|
|
Cost of sales (2)
|
335,998
|
|
|
350,287
|
|
|
361,297
|
|
|
350,143
|
|
|
348,339
|
|
|||||
Gross profit
|
404,057
|
|
|
412,417
|
|
|
405,843
|
|
|
374,934
|
|
|
365,384
|
|
|||||
Selling and administrative expense
|
293,942
|
|
|
310,730
|
|
|
302,469
|
|
|
276,615
|
|
|
276,463
|
|
|||||
Research and development expense
|
27,779
|
|
|
25,831
|
|
|
28,214
|
|
|
28,651
|
|
|
29,652
|
|
|||||
Impairment of goodwill (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
60,302
|
|
|
—
|
|
|||||
Medical device excise tax
|
5,588
|
|
|
5,949
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other expense (4)
|
23,962
|
|
|
13,399
|
|
|
9,950
|
|
|
1,092
|
|
|
2,176
|
|
|||||
Income from operations
|
52,786
|
|
|
56,508
|
|
|
65,210
|
|
|
8,274
|
|
|
57,093
|
|
|||||
Loss on early extinguishment of debt (5)
|
—
|
|
|
263
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|||||
Amortization of debt discount
|
—
|
|
|
—
|
|
|
—
|
|
|
3,903
|
|
|
4,244
|
|
|||||
Interest expense
|
6,111
|
|
|
5,613
|
|
|
5,730
|
|
|
6,676
|
|
|
7,113
|
|
|||||
Income (loss) before income taxes
|
46,675
|
|
|
50,632
|
|
|
59,480
|
|
|
(2,305
|
)
|
|
45,657
|
|
|||||
Provision (benefit) for income taxes
|
14,483
|
|
|
14,693
|
|
|
18,999
|
|
|
(3,057
|
)
|
|
15,311
|
|
|||||
Net income
|
$
|
32,192
|
|
|
$
|
35,939
|
|
|
$
|
40,481
|
|
|
$
|
752
|
|
|
$
|
30,346
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per share
|
$
|
1.17
|
|
|
$
|
1.30
|
|
|
$
|
1.43
|
|
|
$
|
0.03
|
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted earnings per share
|
$
|
1.16
|
|
|
$
|
1.28
|
|
|
$
|
1.41
|
|
|
$
|
0.03
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends per share of common stock
|
$
|
0.80
|
|
|
$
|
0.65
|
|
|
$
|
0.60
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted Average Number of Common Shares In Calculating:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per share
|
27,401
|
|
|
27,722
|
|
|
28,301
|
|
|
28,246
|
|
|
28,715
|
|
|||||
Diluted earnings per share
|
27,769
|
|
|
28,114
|
|
|
28,653
|
|
|
28,633
|
|
|
28,911
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Depreciation and amortization
|
$
|
45,734
|
|
|
$
|
47,867
|
|
|
$
|
46,616
|
|
|
$
|
42,687
|
|
|
$
|
41,807
|
|
Capital expenditures
|
15,411
|
|
|
18,445
|
|
|
21,532
|
|
|
17,552
|
|
|
14,732
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
66,332
|
|
|
$
|
54,443
|
|
|
$
|
23,720
|
|
|
$
|
26,048
|
|
|
$
|
12,417
|
|
Total assets
|
1,098,194
|
|
|
1,090,508
|
|
|
1,078,849
|
|
|
935,594
|
|
|
985,773
|
|
|||||
Long-term obligations
|
400,940
|
|
|
372,924
|
|
|
346,637
|
|
|
231,339
|
|
|
219,344
|
|
|||||
Total shareholders’ equity
|
581,298
|
|
|
606,319
|
|
|
606,998
|
|
|
573,071
|
|
|
586,563
|
|
(1)
|
Results of operations of acquired businesses have been recorded in the financial statements since the date of acquisition. Refer to Note 16.
|
(2)
|
In
2014
,
2013
,
2012
,
2011
and
2010
, we incurred charges related to the restructuring of certain of our operations of
$5.6 million
,
$6.5 million
,
$7.1 million
,
$3.5 million
and
$2.4 million
, respectively; in 2013 and 2010 we incurred charges of
$2.1 million
and
$2.5 million
, respectively, related to the termination of a product offering. See additional discussion in Note 15 to the Consolidated Financial Statements.
|
(3)
|
During 2011, we recorded a
$60.3 million
charge for the impairment of goodwill related to the legacy CONMED Patient Care reporting unit.
|
(4)
|
Other expense includes the following:
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Administrative consolidation costs
|
$
|
3,354
|
|
|
$
|
8,750
|
|
|
$
|
6,497
|
|
|
$
|
792
|
|
|
$
|
2,176
|
|
Costs associated with management restructuring
|
12,546
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Costs associated with shareholder activism
|
3,966
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Costs associated with purchase of a business
|
722
|
|
|
—
|
|
|
1,194
|
|
|
—
|
|
|
—
|
|
|||||
Costs associated with patent dispute and other matters
|
3,374
|
|
|
3,206
|
|
|
1,555
|
|
|
—
|
|
|
—
|
|
|||||
Pension settlement expense
|
—
|
|
|
1,443
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Costs associated with purchase of a distributor
|
—
|
|
|
—
|
|
|
704
|
|
|
300
|
|
|
—
|
|
|||||
Other expense
|
$
|
23,962
|
|
|
$
|
13,399
|
|
|
$
|
9,950
|
|
|
$
|
1,092
|
|
|
$
|
2,176
|
|
(5)
|
Includes in 2013 and 2010, a charge of
$0.3 million
and
$0.1 million
, respectively, related to a loss on the early extinguishment of debt. See additional discussion in Note 5 to the Consolidated Financial Statements.
|
•
|
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 and collectability is reasonably assured.
|
•
|
We place certain of our capital equipment with customers on a loaned basis in return for commitments to purchase related single-use products over time periods generally ranging from one to three years. In these circumstances, no revenue is recognized upon capital equipment shipment as the equipment is loaned and subject to return if certain minimum single-use purchases are not met. Revenue is recognized upon the sale and shipment of the related single-use products. The cost of the equipment is amortized over its estimated useful life.
|
•
|
We recognize revenues related to the promotion and marketing of sports medicine allograft tissue in accordance with the contractual terms of our agreement with Musculoskeletal Transplant Foundation (“MTF”) on a net basis as our role is limited to that of an agent earning a commission or fee. MTF records revenue when the tissue is shipped to the customer. Our services are completed at this time and net revenues for the “Service Fee” for our promotional and marketing efforts are then recognized based on a percentage of the net amounts billed by MTF to its customers. The timing of revenue recognition is determined through review of the net billings made by MTF each month. Our net commission Service Fee is based on the contractual terms of our agreement and is currently 50%. This percentage can vary over the term of the agreement but is contractually determinable. Our Service Fee revenues are recorded net of amortization of the acquired assets, which are being expensed over the expected useful life of 25 years.
|
•
|
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 included in selling and administrative expense were
$13.6 million
,
$12.6 million
and
$12.8 million
for
2014
,
2013
and
2012
, respectively.
|
•
|
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
$1.2 million
at
December 31, 2014
is adequate to provide for probable losses resulting from accounts receivable.
|
|
Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
45.4
|
|
|
45.9
|
|
|
47.1
|
|
Gross margin
|
54.6
|
|
|
54.1
|
|
|
52.9
|
|
Selling and administrative expense
|
39.7
|
|
|
40.7
|
|
|
39.4
|
|
Research and development expense
|
3.8
|
|
|
3.4
|
|
|
3.7
|
|
Medical device excise tax
|
0.8
|
|
|
0.8
|
|
|
—
|
|
Other expense
|
3.2
|
|
|
1.8
|
|
|
1.3
|
|
Income from operations
|
7.1
|
|
|
7.4
|
|
|
8.5
|
|
Loss on early extinguishment of debt
|
—
|
|
|
0.0
|
|
|
—
|
|
Interest expense
|
0.8
|
|
|
0.7
|
|
|
0.7
|
|
Income before income taxes
|
6.3
|
|
|
6.7
|
|
|
7.8
|
|
Provision for income taxes
|
2.0
|
|
|
1.9
|
|
|
2.5
|
|
Net income
|
4.3
|
%
|
|
4.8
|
%
|
|
5.3
|
%
|
•
|
Orthopedic surgery sales decreased
1.8%
in
2014
to
$402.8 million
after a decrease of
0.9%
in
2013
to
$410.2 million
from
$413.9 million
in
2012
. In
2014
, the decrease was mainly due to lower sales in our procedure specific, fluid and resection product offerings and the discontinuation of the Cascade PRP product line offset by increased sales of large bone and small bone handpieces. In
2013
, the decrease was mainly due to lower sales in our resection production offerings and large bone burs and blades. In local currency, excluding the effects of the hedging program, sales decreased
1.3%
in
2014
after an increase of
0.1%
in
2013
.
|
•
|
General surgery sales decreased
2.5%
in
2014
to
$279.4 million
after remaining relatively flat in
2013
at
$286.7 million
compared to
$286.6 million
in
2012
. In
2014
, the decrease was mainly due to decreased sales in all product offerings. In
2013
, we experienced increased sales in our endomechanical, gastrointestinal and pulmonary product offerings offset by decreased sales in our advanced energy and patient monitoring product offerings. In local currency, excluding the effects of the hedging program, sales decreased
2.0%
in
2014
after an increase of
0.5%
in
2013
.
|
•
|
Surgical visualization sales decreased
12.0%
in
2014
to
$57.9 million
after a decrease of
1.2%
to
$65.8 million
in
2013
from
$66.6 million
in
2012
. The decreases in
2014
and
2013
were both due to lower video system sales. We believe the decline in 2014 was driven by customers awaiting the release of our new IM8000 2DHD camera system. We had a limited release in the United States in the fourth quarter of 2014. In local currency, excluding the effects of the hedging program, sales decreased
10.9%
in
2014
and
0.9%
in
2013
.
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More than
5 Years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
$
|
241,435
|
|
|
$
|
1,234
|
|
|
$
|
2,791
|
|
|
$
|
237,410
|
|
|
$
|
—
|
|
Contingent consideration
|
43,572
|
|
|
23,167
|
|
|
18,667
|
|
|
1,174
|
|
|
564
|
|
|||||
Purchase obligations
|
33,602
|
|
|
33,350
|
|
|
223
|
|
|
29
|
|
|
—
|
|
|||||
Operating lease obligations
|
23,449
|
|
|
6,229
|
|
|
8,377
|
|
|
7,044
|
|
|
1,799
|
|
|||||
Total contractual obligations
|
$
|
342,058
|
|
|
$
|
63,980
|
|
|
$
|
30,058
|
|
|
$
|
245,657
|
|
|
$
|
2,363
|
|
Index to Financial Statements
|
|
|
|
|
|
(a)(1)
|
List of Financial Statements
|
Page in Form 10-K
|
|
|
|
|
Management’s Report on Internal Control Over Financial Reporting
|
35
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
36
|
|
|
|
|
Consolidated Balance Sheets at December 31, 2014 and 2013
|
37
|
|
|
|
|
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012
|
38
|
|
|
|
|
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012
|
39
|
|
|
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012
|
41
|
|
|
|
|
Notes to Consolidated Financial Statements
|
43
|
|
|
|
(2)
|
List of Financial Statement Schedules
|
|
|
|
|
|
Valuation and Qualifying Accounts (Schedule II)
|
69
|
|
|
|
|
All other schedules have been omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.
|
|
|
|
|
(3)
|
List of Exhibits
|
|
|
|
|
|
The exhibits listed on the accompanying Exhibit Index on page 32 below are filed as part of this Form 10-K.
|
|
|
|
|
|
|
|
CONMED CORPORATION
|
|
By: /s/ Curt R. Hartman
|
Curt R. Hartman
|
(President and Chief
|
Executive Officer)
|
|
Date:
|
February 23, 2015
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ MARK E. TRYNISKI
|
|
Chairman of the Board
|
|
|
Mark E. Tryniski
|
|
of Directors
|
|
February 23, 2015
|
|
|
|
|
|
/s/ CURT R. HARTMAN
|
|
President, Chief Executive
|
|
|
Curt R. Hartman
|
|
Officer and Director
|
|
February 23, 2015
|
|
|
|
|
|
/s/ ROBERT D. SHALLISH, JR.
|
|
Executive Vice President-Finance
|
|
|
Robert D. Shallish, Jr.
|
|
and Chief Financial Officer (Principal Financial Officer)
|
|
February 23, 2015
|
|
|
|
|
|
/s/ LUKE A. POMILIO
|
|
Executive Vice President-
|
|
|
Luke A. Pomilio
|
|
Controller and Corporate General Manager (Principal Accounting Officer)
|
|
February 23, 2015
|
|
|
|
|
|
/s/ BRIAN CONCANNON
|
|
|
|
|
Brian Concannon
|
|
Director
|
|
February 23, 2015
|
|
|
|
|
|
/s/ CHARLES M. FARKAS
|
|
|
|
|
Charles M. Farkas
|
|
Director
|
|
February 23, 2015
|
|
|
|
|
|
/s/ JO ANN GOLDEN
|
|
|
|
|
Jo Ann Golden
|
|
Director
|
|
February 23, 2015
|
|
|
|
|
|
/s/ DIRK M. KUYPER
|
|
|
|
|
Dirk M. Kuyper
|
|
Director
|
|
February 23, 2015
|
|
|
|
|
|
/s/ JEROME J. LANDE
|
|
|
|
|
Jerome J. Lande
|
|
Director
|
|
February 23, 2015
|
|
|
|
|
|
/s/ STEPHEN M. MANDIA
|
|
|
|
|
Stephen M. Mandia
|
|
Director
|
|
February 23, 2015
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
-
|
Amended and Restated By-Laws, as adopted by the Board of Directors on April 29, 2011 (Incorporated by reference to the Company’s Current Report on Form 10-Q filed with the Securities and Exchange Commission on May 2, 2011).
|
|
|
|
3.2
|
-
|
1999 Amendment to Certificate of Incorporation and Restated Certificate of Incorporation of CONMED Corporation (Incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1999).
|
|
|
|
4.1
|
-
|
See Exhibit 3.1.
|
|
|
|
4.2
|
-
|
See Exhibit 3.2.
|
|
|
|
4.3
|
-
|
Guarantee and Collateral Agreement, dated August 28, 2002, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
|
|
|
|
4.4
|
-
|
First Amendment to Guarantee and Collateral Agreement, dated June 30, 2003, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank and the several banks and other financial institutions or entities from time to time parties thereto (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
|
|
|
|
4.5
|
-
|
Second Amendment to Guarantee and Collateral Agreement, dated April 13, 2006, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank and the several banks and other financial institutions or entities from time to time parties thereto (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 19, 2006).
|
|
|
|
4.6
|
-
|
Third Amendment to Guarantee and Collateral Agreement, dated as of January 17, 2013, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank (Incorporated by reference to Exhibit 4.6 of the Company's Annual Report on Form 10-K for the year ended December 31, 2012).
|
|
|
|
10.1+
|
-
|
Employment Agreement between the Company and Curt R. Hartman, dated November 9, 2014 (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 10, 2014).
|
|
|
|
10.2+
|
-
|
Employment Agreement between the Company and Eugene R. Corasanti, dated October 31, 2006 (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 2, 2006).
|
|
|
|
10.3+
|
-
|
Amended and Restated Employment Agreement, dated October 30, 2009, by and between CONMED Corporation and Joseph J. Corasanti, Esq. (Incorporated by reference to the Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
|
|
|
|
10.4
|
-
|
Amended and Restated Employee Stock Option Plan (including form of Stock Option Agreement) (Incorporated by reference to Exhibit 10.6 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996).
|
|
|
|
10.5
|
-
|
Stock Option Plan for Non-Employee Directors of CONMED Corporation (Incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996).
|
|
|
|
10.6
|
-
|
Amendment to Stock Option Plan for Non-employee Directors of CONMED Corporation (Incorporated by reference to the Company’s Definitive Proxy Statement for the 2002 Annual Meeting filed with the Securities and Exchange Commission on April 17, 2002).
|
|
|
|
10.7
|
-
|
Amended and Restated 1999 Long Term Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on November 3, 2009).
|
|
|
|
10.8
|
-
|
2002 Employee Stock Purchase Plan (Incorporated by reference to the Company’s Definitive Proxy Statement for the 2002 Annual Meeting filed with the Securities and Exchange Commission on April 17, 2002).
|
|
|
|
10.9
|
-
|
Amendment to CONMED Corporation 2002 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005).
|
|
|
|
10.10
|
-
|
2006 Stock Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on August 8, 2006).
|
|
|
|
10.11
|
-
|
Amended and Restated 2007 Non-Employee Director Equity Compensation Plan of CONMED Corporation (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on August 3, 2010).
|
|
|
|
10.12
|
-
|
Amended and Restated Long Term Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on July 27, 2012).
|
|
|
|
10.13
|
-
|
Amended and Restated Credit Agreement, dated January 17, 2013, among CONMED Corporation, JP Morgan Chase Bank and the several banks and other financial institutions or entities from time to time parties thereto (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2013).
|
|
|
|
10.14
|
-
|
Change in Control Severance Agreement for Joseph J. Corasanti (Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
|
|
|
|
10.15
|
-
|
Change in Control Severance Agreement for Robert D. Shallish, Jr. (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
|
|
|
|
10.16
|
-
|
Change in Control Severance Agreement for Daniel S. Jonas (Incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
|
|
|
|
10.17
|
-
|
Change in Control Severance Agreement for Luke A. Pomilio (Incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
|
|
|
|
10.18
|
-
|
Executive Severance Agreement for Joseph G. Darling (Incorporated by reference to Exhibit 10.28 of the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
|
|
|
|
10.19
|
-
|
Change in Control Severance Agreement for Joseph G. Darling (Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010).
|
|
|
|
|
2014
|
|
2013
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
66,332
|
|
|
$
|
54,443
|
|
Accounts receivable, less allowance for doubtful
|
|
|
|
|
|
||
accounts of $1,239 in 2014 and $1,384 in 2013
|
129,287
|
|
|
140,426
|
|
||
Inventories
|
148,149
|
|
|
143,211
|
|
||
Income taxes receivable
|
583
|
|
|
3,805
|
|
||
Deferred income taxes
|
14,348
|
|
|
13,202
|
|
||
Prepaid expenses and other current assets
|
22,451
|
|
|
17,045
|
|
||
Total current assets
|
381,150
|
|
|
372,132
|
|
||
Property, plant and equipment, net
|
133,429
|
|
|
138,985
|
|
||
Deferred income taxes
|
1,398
|
|
|
1,183
|
|
||
Goodwill
|
256,232
|
|
|
248,428
|
|
||
Other intangible assets, net
|
316,440
|
|
|
319,440
|
|
||
Other assets
|
9,545
|
|
|
10,340
|
|
||
Total assets
|
$
|
1,098,194
|
|
|
$
|
1,090,508
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current portion of long-term debt
|
$
|
1,234
|
|
|
$
|
1,140
|
|
Accounts payable
|
23,752
|
|
|
27,448
|
|
||
Accrued compensation and benefits
|
36,446
|
|
|
33,426
|
|
||
Income taxes payable
|
2,668
|
|
|
2,116
|
|
||
Other current liabilities
|
51,856
|
|
|
47,135
|
|
||
Total current liabilities
|
115,956
|
|
|
111,265
|
|
||
|
|
|
|
||||
Long-term debt
|
240,201
|
|
|
214,435
|
|
||
Deferred income taxes
|
112,223
|
|
|
113,199
|
|
||
Other long-term liabilities
|
48,516
|
|
|
45,290
|
|
||
Total liabilities
|
516,896
|
|
|
484,189
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|||
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
|
|
||
Preferred stock, par value $.01 per share; authorized
|
|
|
|
|
|
||
500,000 shares, none issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $.01 per share; 100,000,000
|
|
|
|
|
|
||
authorized; 31,299,194 issued in 2014 and 2013, respectively
|
313
|
|
|
313
|
|
||
Paid-in capital
|
319,752
|
|
|
326,436
|
|
||
Retained earnings
|
406,145
|
|
|
395,889
|
|
||
Accumulated other comprehensive loss
|
(39,822
|
)
|
|
(17,572
|
)
|
||
Less: Treasury stock, at cost;
|
|
|
|
|
|
||
3,744,473 and 3,718,332 shares in
|
|
|
|
|
|
||
2014 and 2013, respectively
|
(105,090
|
)
|
|
(98,747
|
)
|
||
Total shareholders' equity
|
581,298
|
|
|
606,319
|
|
||
Total liabilities and shareholders' equity
|
$
|
1,098,194
|
|
|
$
|
1,090,508
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Net sales
|
$
|
740,055
|
|
|
$
|
762,704
|
|
|
$
|
767,140
|
|
Cost of sales
|
335,998
|
|
|
350,287
|
|
|
361,297
|
|
|||
|
|
|
|
|
|
||||||
Gross profit
|
404,057
|
|
|
412,417
|
|
|
405,843
|
|
|||
|
|
|
|
|
|
||||||
Selling and administrative expense
|
293,942
|
|
|
310,730
|
|
|
302,469
|
|
|||
Research and development expense
|
27,779
|
|
|
25,831
|
|
|
28,214
|
|
|||
Medical device excise tax
|
5,588
|
|
|
5,949
|
|
|
—
|
|
|||
Other expense
|
23,962
|
|
|
13,399
|
|
|
9,950
|
|
|||
|
351,271
|
|
|
355,909
|
|
|
340,633
|
|
|||
|
|
|
|
|
|
||||||
Income from operations
|
52,786
|
|
|
56,508
|
|
|
65,210
|
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
263
|
|
|
—
|
|
|||
Interest expense
|
6,111
|
|
|
5,613
|
|
|
5,730
|
|
|||
|
|
|
|
|
|
||||||
Income before income taxes
|
46,675
|
|
|
50,632
|
|
|
59,480
|
|
|||
|
|
|
|
|
|
||||||
Provision for income taxes
|
14,483
|
|
|
14,693
|
|
|
18,999
|
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
32,192
|
|
|
$
|
35,939
|
|
|
$
|
40,481
|
|
|
|
|
|
|
|
||||||
Per share data:
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
||||||
Basic
|
$
|
1.17
|
|
|
$
|
1.30
|
|
|
$
|
1.43
|
|
Diluted
|
$
|
1.16
|
|
|
$
|
1.28
|
|
|
$
|
1.41
|
|
|
|
|
|
|
|
||||||
Dividends per share of common stock
|
$
|
0.80
|
|
|
$
|
0.65
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
$
|
(15,069
|
)
|
|
$
|
(1,193
|
)
|
|
$
|
1,995
|
|
Pension liability
|
(18,781
|
)
|
|
18,175
|
|
|
1,387
|
|
|||
Cash flow hedging gain (loss)
|
7,393
|
|
|
(404
|
)
|
|
(6,507
|
)
|
|||
Other comprehensive income, before tax
|
5,735
|
|
|
52,517
|
|
|
37,356
|
|
|||
Provision (benefit) for income taxes related to items of other comprehensive income
|
(4,207
|
)
|
|
6,569
|
|
|
(1,892
|
)
|
|||
Comprehensive income
|
$
|
9,942
|
|
|
$
|
45,948
|
|
|
$
|
39,248
|
|
|
Common Stock
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury
Stock
|
|
Shareholders’
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2011
|
31,299
|
|
|
$
|
313
|
|
|
$
|
321,994
|
|
|
$
|
354,439
|
|
|
$
|
(26,348
|
)
|
|
$
|
(77,327
|
)
|
|
$
|
573,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Common stock issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
under employee plans
|
|
|
|
|
|
|
(4,377
|
)
|
|
|
|
|
|
|
|
13,287
|
|
|
8,910
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Repurchase of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(3,923
|
)
|
|
(3,923
|
)
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tax benefit arising from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
common stock issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
under employee plans
|
|
|
|
|
|
|
1,052
|
|
|
|
|
|
|
|
|
|
|
|
1,052
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
5,653
|
|
|
|
|
|
|
|
|
|
|
|
5,653
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Dividends on common stock
|
|
|
|
|
|
|
(17,013
|
)
|
|
|
|
|
|
(17,013
|
)
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency
translation adjustments
|
|
|
|
|
|
|
|
|
1,995
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Pension liability (net of income tax expense of $512)
|
|
|
|
|
|
|
|
|
875
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flow hedging loss (net of income tax benefit of $2,404)
|
|
|
|
|
|
|
|
|
(4,103
|
)
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income
|
|
|
|
|
|
|
40,481
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
income
|
|
|
|
|
|
|
|
|
|
|
|
|
39,248
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2012
|
31,299
|
|
|
$
|
313
|
|
|
$
|
324,322
|
|
|
$
|
377,907
|
|
|
$
|
(27,581
|
)
|
|
$
|
(67,963
|
)
|
|
$
|
606,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Common stock issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
under employee plans
|
|
|
|
|
|
|
(4,576
|
)
|
|
|
|
|
|
|
|
19,772
|
|
|
15,196
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Repurchase of treasury
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,556
|
)
|
|
(50,556
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tax benefit arising from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
common stock issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
under employee plans
|
|
|
|
|
|
|
1,097
|
|
|
|
|
|
|
|
|
|
|
|
1,097
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
5,593
|
|
|
|
|
|
|
|
|
|
|
|
5,593
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Dividends on common stock
|
|
|
|
|
|
|
(17,957
|
)
|
|
|
|
|
|
(17,957
|
)
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury
Stock
|
|
Shareholders’
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency
translation adjustments
|
|
|
|
|
|
|
|
|
(1,193
|
)
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Pension liability (net of income tax expense of $6,718)
|
|
|
|
|
|
|
|
|
11,457
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flow hedging loss (net of income tax benefit of $149)
|
|
|
|
|
|
|
|
|
(255
|
)
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income
|
|
|
|
|
|
|
35,939
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total comprehensive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,948
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2013
|
31,299
|
|
|
$
|
313
|
|
|
$
|
326,436
|
|
|
$
|
395,889
|
|
|
$
|
(17,572
|
)
|
|
$
|
(98,747
|
)
|
|
$
|
606,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Common stock issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
under employee plans
|
|
|
|
|
|
|
(16,658
|
)
|
|
|
|
|
|
|
|
10,519
|
|
|
(6,139
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Repurchase of treasury
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,862
|
)
|
|
(16,862
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Tax benefit arising from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
common stock issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
under employee plans
|
|
|
|
|
|
|
644
|
|
|
|
|
|
|
|
|
|
|
|
644
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
9,330
|
|
|
|
|
|
|
|
|
|
|
|
9,330
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Dividends on common stock
|
|
|
|
|
|
|
(21,936
|
)
|
|
|
|
|
|
(21,936
|
)
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency
translation adjustments
|
|
|
|
|
|
|
|
|
(15,069
|
)
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Pension liability (net of income tax benefit of $6,939)
|
|
|
|
|
|
|
|
|
(11,842
|
)
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flow hedging gain (net of income tax expense of $2,732)
|
|
|
|
|
|
|
|
|
4,661
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income
|
|
|
|
|
|
|
32,192
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,942
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2014
|
31,299
|
|
|
$
|
313
|
|
|
$
|
319,752
|
|
|
$
|
406,145
|
|
|
$
|
(39,822
|
)
|
|
$
|
(105,090
|
)
|
|
$
|
581,298
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
32,192
|
|
|
$
|
35,939
|
|
|
$
|
40,481
|
|
Adjustments to reconcile net income
|
|
|
|
|
|
|
|||||
to net cash provided by operating activities:
|
|
|
|
|
|
|
|||||
Depreciation
|
19,792
|
|
|
18,653
|
|
|
18,635
|
|
|||
Amortization
|
25,942
|
|
|
29,214
|
|
|
27,981
|
|
|||
Stock-based compensation
|
9,330
|
|
|
5,593
|
|
|
5,653
|
|
|||
Deferred income taxes
|
(284
|
)
|
|
7,218
|
|
|
12,946
|
|
|||
Income tax benefit of stock
|
|
|
|
|
|
|
|||||
option exercises
|
644
|
|
|
1,097
|
|
|
1,052
|
|
|||
Excess tax benefit from stock
|
|
|
|
|
|
|
|||||
option exercises
|
(922
|
)
|
|
(1,518
|
)
|
|
(1,206
|
)
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
263
|
|
|
—
|
|
|||
Increase (decrease) in cash flows from changes in assets and
|
|
|
|
|
|
|
|||||
liabilities, net of effects from acquisitions:
|
|
|
|
|
|
|
|||||
Accounts receivable
|
5,255
|
|
|
(798
|
)
|
|
1,687
|
|
|||
Inventories
|
(20,940
|
)
|
|
(1,817
|
)
|
|
3,810
|
|
|||
Accounts payable
|
(3,449
|
)
|
|
4,223
|
|
|
259
|
|
|||
Income taxes
|
5,291
|
|
|
(1,098
|
)
|
|
(6,497
|
)
|
|||
Accrued compensation and benefits
|
3,572
|
|
|
(71
|
)
|
|
767
|
|
|||
Other assets
|
(546
|
)
|
|
(5,222
|
)
|
|
(1,210
|
)
|
|||
Other liabilities
|
(10,701
|
)
|
|
(10,727
|
)
|
|
(9,159
|
)
|
|||
|
32,984
|
|
|
45,010
|
|
|
54,718
|
|
|||
Net cash provided by operating activities
|
65,176
|
|
|
80,949
|
|
|
95,199
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|||||
Payments related to business acquisitions and distribution agreements,
|
|
|
|
|
|
|
|||||
net of cash acquired
|
(5,265
|
)
|
|
—
|
|
|
(86,253
|
)
|
|||
Proceeds from sale of property
|
—
|
|
|
—
|
|
|
1,836
|
|
|||
Purchases of property, plant and equipment
|
(15,411
|
)
|
|
(18,445
|
)
|
|
(21,532
|
)
|
|||
Net cash used in investing activities
|
(20,676
|
)
|
|
(18,445
|
)
|
|
(105,949
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|||||
Net proceeds from common stock issued
|
|
|
|
|
|
|
|||||
under employee plans
|
2,316
|
|
|
17,264
|
|
|
10,165
|
|
|||
Repurchase of common stock
|
(16,862
|
)
|
|
(50,556
|
)
|
|
(3,923
|
)
|
|||
Excess tax benefit from stock option exercises
|
922
|
|
|
1,518
|
|
|
1,206
|
|
|||
Payments on senior credit agreement
|
—
|
|
|
—
|
|
|
(53,588
|
)
|
|||
Proceeds of senior credit agreement
|
27,000
|
|
|
55,000
|
|
|
73,000
|
|
|||
Payments related to distribution agreement
|
(16,667
|
)
|
|
(34,000
|
)
|
|
—
|
|
|||
Payments on mortgage notes
|
(1,140
|
)
|
|
(1,050
|
)
|
|
(969
|
)
|
|||
Payments on senior subordinated notes
|
—
|
|
|
(227
|
)
|
|
(100
|
)
|
|||
Payments related to issuance of debt
|
—
|
|
|
(1,725
|
)
|
|
—
|
|
|||
Dividends paid on common stock
|
(21,959
|
)
|
|
(16,696
|
)
|
|
(12,862
|
)
|
|||
Other, net
|
—
|
|
|
(824
|
)
|
|
(1,576
|
)
|
|||
Net cash provided by (used in) financing activities
|
(26,390
|
)
|
|
(31,296
|
)
|
|
11,353
|
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rate changes
|
|
|
|
|
|
|
|||||
on cash and cash equivalents
|
(6,221
|
)
|
|
(485
|
)
|
|
(2,931
|
)
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash
|
|
|
|
|
|
|
|||||
and cash equivalents
|
11,889
|
|
|
30,723
|
|
|
(2,328
|
)
|
|||
|
|
|
|
|
|
||||||
Cash and cash equivalents at beginning of year
|
54,443
|
|
|
23,720
|
|
|
26,048
|
|
|||
|
|
|
|
|
|
||||||
Cash and cash equivalents at end of year
|
$
|
66,332
|
|
|
$
|
54,443
|
|
|
$
|
23,720
|
|
|
|
|
|
|
|
||||||
Non-cash investing activities:
|
|
|
|
|
|
||||||
Contractual obligations for acquisition of a business
|
$
|
10,137
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Non-cash financing activities:
|
|
|
|
|
|
||||||
Dividends payable
|
$
|
5,510
|
|
|
$
|
5,545
|
|
|
$
|
4,256
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
|
|||||
Interest
|
$
|
5,532
|
|
|
$
|
5,143
|
|
|
$
|
5,038
|
|
Income taxes
|
10,206
|
|
|
6,837
|
|
|
10,953
|
|
|
Building and improvements
|
12 to 40 years
|
|
Leasehold improvements
|
Shorter of life of asset or life of lease
|
|
Machinery and equipment
|
2 to 15 years
|
•
|
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 and collectability is reasonably assured.
|
•
|
We place certain of our capital equipment with customers on a loaned basis in return for commitments to purchase related single-use products over time periods generally ranging from one to three years. In these circumstances, no revenue is recognized upon capital equipment shipment as the equipment is loaned and subject to return if certain minimum single-use purchases are not met. Revenue is recognized upon the sale and shipment of the related single-use products. The cost of the equipment is amortized over its estimated useful life.
|
•
|
We recognize revenues related to the promotion and marketing of sports medicine allograft tissue in accordance with the contractual terms of our agreement with Musculoskeletal Transplant Foundation (“MTF”) on a net basis as our role is limited to that of an agent earning a commission or fee. MTF records revenue when the tissue is shipped to the customer. Our services are completed at this time and net revenues for the “Service Fee” for our promotional and marketing efforts are then recognized based on a percentage of the net amounts billed by MTF to its customers. The timing of revenue recognition is determined through review of the net billings made by MTF each month. Our net commission Service
|
•
|
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 included in selling and administrative expense were
$13.6 million
,
$12.6 million
and
$12.8 million
for
2014
,
2013
and
2012
, respectively.
|
•
|
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
$1.2 million
at
December 31, 2014
is adequate to provide for probable losses resulting from accounts receivable.
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
Net income
|
$
|
32,192
|
|
|
$
|
35,939
|
|
|
$
|
40,481
|
|
|
|
|
|
|
|
||||||
Basic-weighted average shares outstanding
|
27,401
|
|
|
27,722
|
|
|
28,301
|
|
|||
|
|
|
|
|
|
||||||
Effect of dilutive potential securities
|
368
|
|
|
392
|
|
|
352
|
|
|||
|
|
|
|
|
|
||||||
Diluted-weighted average shares outstanding
|
27,769
|
|
|
28,114
|
|
|
28,653
|
|
|||
|
|
|
|
|
|
||||||
Basic EPS
|
$
|
1.17
|
|
|
$
|
1.30
|
|
|
$
|
1.43
|
|
|
|
|
|
|
|
||||||
Diluted EPS
|
$
|
1.16
|
|
|
$
|
1.28
|
|
|
$
|
1.41
|
|
|
Cash Flow
Hedging
Gain (Loss)
|
|
Pension
Liability
|
|
Cumulative
Translation
Adjustments
|
|
Accumulated
Other
Comprehensive
Loss
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2013
|
$
|
(1,385
|
)
|
|
$
|
(18,918
|
)
|
|
$
|
2,731
|
|
|
$
|
(17,572
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income
before reclassifications
|
5,061
|
|
|
(10,551
|
)
|
|
(15,069
|
)
|
|
(20,559
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Amounts reclassified from accumulated other comprehensive income before tax
a
|
(635
|
)
|
|
(2,048
|
)
|
|
—
|
|
|
(2,683
|
)
|
||||
Tax expense
|
235
|
|
|
757
|
|
|
—
|
|
|
992
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net current-period other comprehensive income (loss)
|
4,661
|
|
|
(11,842
|
)
|
|
(15,069
|
)
|
|
(22,250
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2014
|
$
|
3,276
|
|
|
$
|
(30,760
|
)
|
|
$
|
(12,338
|
)
|
|
$
|
(39,822
|
)
|
|
Cash Flow
Hedging
Gain (Loss)
|
|
Pension
Liability
|
|
Cumulative
Translation
Adjustments
|
|
Accumulated
Other
Comprehensive
Loss
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2012
|
$
|
(1,130
|
)
|
|
$
|
(30,375
|
)
|
|
$
|
3,924
|
|
|
$
|
(27,581
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income
before reclassifications
|
(158
|
)
|
|
8,618
|
|
|
(1,193
|
)
|
|
7,267
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Amounts reclassified from accumulated other comprehensive income before tax
a
|
(153
|
)
|
|
4,502
|
|
|
—
|
|
|
4,349
|
|
||||
Tax expense (benefit)
|
56
|
|
|
(1,663
|
)
|
|
—
|
|
|
(1,607
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net current-period other comprehensive income (loss)
|
(255
|
)
|
|
11,457
|
|
|
(1,193
|
)
|
|
10,009
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2013
|
$
|
(1,385
|
)
|
|
$
|
(18,918
|
)
|
|
$
|
2,731
|
|
|
$
|
(17,572
|
)
|
|
2014
|
|
2013
|
||||
|
|
|
|
||||
Raw materials
|
$
|
44,847
|
|
|
$
|
39,029
|
|
Work in process
|
13,876
|
|
|
14,736
|
|
||
Finished goods
|
89,426
|
|
|
89,446
|
|
||
|
$
|
148,149
|
|
|
$
|
143,211
|
|
|
2014
|
|
2013
|
||||
|
|
|
|
||||
Land
|
$
|
4,243
|
|
|
$
|
4,243
|
|
Building and improvements
|
96,953
|
|
|
95,397
|
|
||
Machinery and equipment
|
191,306
|
|
|
180,064
|
|
||
Construction in progress
|
5,140
|
|
|
8,750
|
|
||
|
297,642
|
|
|
288,454
|
|
||
Less: Accumulated depreciation
|
(164,213
|
)
|
|
(149,469
|
)
|
||
|
$
|
133,429
|
|
|
$
|
138,985
|
|
2015
|
$
|
6,229
|
|
2016
|
4,592
|
|
|
2017
|
3,785
|
|
|
2018
|
3,618
|
|
|
2019
|
3,426
|
|
|
Thereafter
|
1,799
|
|
|
2014
|
|
2013
|
||||
Balance as of January 1,
|
$
|
248,428
|
|
|
$
|
248,502
|
|
|
|
|
|
||||
Goodwill resulting from business acquisitions
|
7,773
|
|
|
—
|
|
||
|
|
|
|
||||
Foreign currency translation
|
31
|
|
|
(74
|
)
|
||
|
|
|
|
||||
Balance as of December 31,
|
$
|
256,232
|
|
|
$
|
248,428
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
$
|
136,126
|
|
|
$
|
(59,707
|
)
|
|
$
|
135,690
|
|
|
$
|
(54,982
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||
Promotional, marketing & distribution rights
|
149,376
|
|
|
(18,000
|
)
|
|
149,376
|
|
|
(12,000
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Patents and other intangible assets
|
63,464
|
|
|
(41,363
|
)
|
|
53,903
|
|
|
(39,091
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Unamortized intangible assets
:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Trademarks and tradenames
|
86,544
|
|
|
—
|
|
|
86,544
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
$
|
435,510
|
|
|
$
|
(119,070
|
)
|
|
$
|
425,513
|
|
|
$
|
(106,073
|
)
|
|
Amortization included in expense
|
|
Amortization recorded as a reduction of revenue
|
|
Total
|
||||
2015
|
6,615
|
|
|
6,000
|
|
|
$
|
12,615
|
|
2016
|
7,461
|
|
|
6,000
|
|
|
$
|
13,461
|
|
2017
|
7,447
|
|
|
6,000
|
|
|
$
|
13,447
|
|
2018
|
7,392
|
|
|
6,000
|
|
|
$
|
13,392
|
|
2019
|
7,392
|
|
|
6,000
|
|
|
$
|
13,392
|
|
|
2014
|
|
2013
|
||||
|
|
|
|
||||
Revolving line of credit
|
$
|
235,000
|
|
|
$
|
208,000
|
|
|
|
|
|
||||
Mortgage notes
|
6,435
|
|
|
7,575
|
|
||
|
|
|
|
||||
Total long-term debt
|
241,435
|
|
|
215,575
|
|
||
|
|
|
|
||||
Less: Current portion
|
1,234
|
|
|
1,140
|
|
||
|
|
|
|
||||
|
$
|
240,201
|
|
|
$
|
214,435
|
|
2015
|
$
|
1,234
|
|
2016
|
1,339
|
|
|
2017
|
1,452
|
|
|
2018
|
236,574
|
|
|
2019
|
836
|
|
|
Thereafter
|
—
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Current tax expense (benefit):
|
|
|
|
|
|
||||||
Federal
|
$
|
2,256
|
|
|
$
|
(2,274
|
)
|
|
$
|
503
|
|
State
|
516
|
|
|
502
|
|
|
374
|
|
|||
Foreign
|
11,995
|
|
|
9,247
|
|
|
5,176
|
|
|||
|
14,767
|
|
|
7,475
|
|
|
6,053
|
|
|||
Deferred income tax expense (benefit)
|
(284
|
)
|
|
7,218
|
|
|
12,946
|
|
|||
Provision for income taxes
|
$
|
14,483
|
|
|
$
|
14,693
|
|
|
$
|
18,999
|
|
|
2014
|
|
2013
|
|
2012
|
|||
|
|
|
|
|
|
|
||
Tax provision at statutory rate based on income before income taxes
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
|
|
|
|
|
|||
State income taxes, net of federal tax benefit
|
1.7
|
|
|
1.8
|
|
|
1.5
|
|
|
|
|
|
|
|
|||
New York State corporate tax reform
|
5.5
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|||
Stock-based compensation
|
(0.2
|
)
|
|
(0.5
|
)
|
|
(0.2
|
)
|
|
|
|
|
|
|
|||
Foreign income taxes
|
(4.8
|
)
|
|
(3.1
|
)
|
|
(4.0
|
)
|
|
|
|
|
|
|
|||
Federal research credit
|
(2.1
|
)
|
|
(2.8
|
)
|
|
—
|
|
|
|
|
|
|
|
|||
Settlement of taxing authority examinations
|
(3.7
|
)
|
|
(2.0
|
)
|
|
(0.8
|
)
|
|
|
|
|
|
|
|||
European permanent deduction
|
(3.8
|
)
|
|
(2.4
|
)
|
|
—
|
|
|
|
|
|
|
|
|||
Non deductible/non-taxable items
|
1.8
|
|
|
2.9
|
|
|
1.3
|
|
|
|
|
|
|
|
|||
Other, net
|
1.6
|
|
|
0.1
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|||
|
31.0
|
%
|
|
29.0
|
%
|
|
31.9
|
%
|
|
2014
|
|
2013
|
||||
Assets:
|
|
|
|
||||
Inventory
|
$
|
4,476
|
|
|
$
|
3,445
|
|
Net operating losses
|
10,207
|
|
|
6,450
|
|
||
Capitalized research and development
|
1,850
|
|
|
2,286
|
|
||
Deferred compensation
|
3,507
|
|
|
3,025
|
|
||
Accounts receivable
|
2,604
|
|
|
2,642
|
|
||
Compensation and benefits
|
6,003
|
|
|
5,601
|
|
||
Accrued pension
|
6,186
|
|
|
(173
|
)
|
||
Research and development credit
|
6,198
|
|
|
5,027
|
|
||
Other
|
1,564
|
|
|
4,365
|
|
||
Foreign tax credit
|
2,283
|
|
|
332
|
|
||
Less: valuation allowances
|
(293
|
)
|
|
—
|
|
||
|
44,585
|
|
|
33,000
|
|
||
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|||
Goodwill and intangible assets
|
120,012
|
|
|
114,075
|
|
||
Depreciation
|
14,041
|
|
|
13,486
|
|
||
State taxes
|
6,737
|
|
|
3,914
|
|
||
Contingent interest
|
272
|
|
|
339
|
|
||
|
|
|
|
||||
|
141,062
|
|
|
131,814
|
|
||
|
|
|
|
||||
Net liability
|
$
|
(96,477
|
)
|
|
$
|
(98,814
|
)
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
U.S. income
|
$
|
12,374
|
|
|
$
|
20,106
|
|
|
$
|
33,121
|
|
Foreign income
|
34,301
|
|
|
30,526
|
|
|
26,359
|
|
|||
|
|
|
|
|
|
||||||
Total income
|
$
|
46,675
|
|
|
$
|
50,632
|
|
|
$
|
59,480
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
Balance as of January 1,
|
$
|
1,689
|
|
|
$
|
1,587
|
|
|
$
|
2,343
|
|
|
|
|
|
|
|
||||||
Increases for positions taken in prior periods
|
45
|
|
|
70
|
|
|
30
|
|
|||
|
|
|
|
|
|
||||||
Increases for positions taken in current periods
|
—
|
|
|
1,132
|
|
|
1,129
|
|
|||
|
|
|
|
|
|
||||||
Decreases in unrecorded tax positions related to settlement with the taxing authorities
|
(1,073
|
)
|
|
(1,010
|
)
|
|
(1,857
|
)
|
|||
|
|
|
|
|
|
||||||
Decreases in unrecorded tax positions related to lapse of statute of limitations
|
(80
|
)
|
|
(90
|
)
|
|
(58
|
)
|
|||
|
|
|
|
|
|
||||||
Balance as of December 31,
|
$
|
581
|
|
|
$
|
1,689
|
|
|
$
|
1,587
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Grant date fair value of SARs
|
$
|
13.40
|
|
|
$
|
9.77
|
|
|
$
|
7.38
|
|
Expected stock price volatility
|
34.85
|
%
|
|
35.88
|
%
|
|
35.84
|
%
|
|||
Risk-free interest rate
|
1.53
|
%
|
|
1.04
|
%
|
|
0.62
|
%
|
|||
Expected annual dividend yield
|
1.80
|
%
|
|
1.79
|
%
|
|
2.00
|
%
|
|||
Expected life of options & SARs (years)
|
6.4
|
|
|
6.3
|
|
|
6.4
|
|
|
Number
of
Shares
(in 000’s)
|
|
Weighted-
Average
Exercise
Price
|
|||
|
|
|
|
|||
Outstanding at December 31, 2013
|
1,130
|
|
|
$
|
25.55
|
|
|
|
|
|
|||
Granted
|
109
|
|
|
$
|
44.56
|
|
Forfeited
|
(68
|
)
|
|
$
|
40.76
|
|
Exercised
|
(718
|
)
|
|
$
|
24.90
|
|
|
|
|
|
|||
Outstanding at December 31, 2014
|
453
|
|
|
$
|
28.85
|
|
Exercisable at December 31, 2014
|
245
|
|
|
$
|
25.38
|
|
SARs expected to vest
|
208
|
|
|
$
|
32.93
|
|
|
Number
of
Shares
(in 000’s)
|
|
Weighted-
Average
Grant-Date
Fair Value
|
|||
|
|
|
|
|||
Outstanding at December 31, 2013
|
476
|
|
|
$
|
27.14
|
|
|
|
|
|
|||
Granted
|
184
|
|
|
$
|
43.21
|
|
Vested
|
(259
|
)
|
|
$
|
28.54
|
|
Forfeited
|
(79
|
)
|
|
$
|
35.10
|
|
|
|
|
|
|||
Outstanding at December 31, 2014
|
322
|
|
|
$
|
33.14
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
Orthopedic surgery
|
$
|
402,750
|
|
|
$
|
410,171
|
|
|
$
|
413,891
|
|
General surgery
|
279,356
|
|
|
286,747
|
|
|
286,606
|
|
|||
Surgical visualization
|
57,949
|
|
|
65,786
|
|
|
66,643
|
|
|||
Consolidated net sales
|
$
|
740,055
|
|
|
$
|
762,704
|
|
|
$
|
767,140
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
United States
|
$
|
360,960
|
|
|
$
|
375,473
|
|
|
$
|
382,256
|
|
Canada
|
63,686
|
|
|
73,457
|
|
|
73,746
|
|
|||
United Kingdom
|
30,496
|
|
|
28,471
|
|
|
31,653
|
|
|||
Japan
|
37,230
|
|
|
36,705
|
|
|
33,997
|
|
|||
Australia
|
38,711
|
|
|
38,752
|
|
|
40,835
|
|
|||
All other countries
|
208,972
|
|
|
209,846
|
|
|
204,653
|
|
|||
Total
|
$
|
740,055
|
|
|
$
|
762,704
|
|
|
$
|
767,140
|
|
|
2014
|
|
2013
|
||||
|
|
|
|
||||
Accumulated Benefit Obligation
|
$
|
91,107
|
|
|
$
|
75,946
|
|
|
|
|
|
||||
Change in benefit obligation
|
|
|
|
|
|
||
Projected benefit obligation at beginning of year
|
$
|
75,946
|
|
|
$
|
85,363
|
|
Service cost
|
271
|
|
|
253
|
|
||
Interest cost
|
3,465
|
|
|
3,315
|
|
||
Actuarial (gain) loss
|
16,546
|
|
|
(8,082
|
)
|
||
Benefits paid
|
(1,414
|
)
|
|
(1,250
|
)
|
||
Settlement
|
(3,707
|
)
|
|
(3,653
|
)
|
||
Projected benefit obligation at end of year
|
$
|
91,107
|
|
|
$
|
75,946
|
|
|
|
|
|
||||
Change in plan assets
|
|
|
|
|
|
||
Fair value of plan assets at beginning of year
|
$
|
76,442
|
|
|
$
|
62,763
|
|
Actual gain on plan assets
|
2,110
|
|
|
11,082
|
|
||
Employer contributions
|
—
|
|
|
7,500
|
|
||
Benefits paid
|
(1,414
|
)
|
|
(1,250
|
)
|
||
Settlement
|
(3,707
|
)
|
|
(3,653
|
)
|
||
Fair value of plan assets at end of year
|
$
|
73,431
|
|
|
$
|
76,442
|
|
|
|
|
|
||||
Funded status
|
$
|
(17,676
|
)
|
|
$
|
496
|
|
|
2014
|
|
2013
|
||||
|
|
|
|
||||
Other assets/(Other long-term liabilities)
|
$
|
(17,676
|
)
|
|
$
|
496
|
|
Accumulated other comprehensive loss
|
(48,782
|
)
|
|
(30,001
|
)
|
|
2014
|
|
2013
|
||
|
|
|
|
||
Discount rate
|
3.81
|
%
|
|
4.75
|
%
|
Expected return on plan assets
|
8.00
|
%
|
|
8.00
|
%
|
Current year actuarial loss
|
$
|
(16,733
|
)
|
Amortization of actuarial loss
|
(2,048
|
)
|
|
Total recognized in other comprehensive loss
|
$
|
(18,781
|
)
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
Service cost
|
$
|
271
|
|
|
$
|
253
|
|
|
$
|
277
|
|
Interest cost on projected benefit obligation
|
3,465
|
|
|
3,315
|
|
|
3,429
|
|
|||
Expected return on plan assets
|
(2,297
|
)
|
|
(5,491
|
)
|
|
(4,566
|
)
|
|||
Amortization of loss
|
(2,048
|
)
|
|
3,059
|
|
|
2,876
|
|
|||
Settlement expense
|
—
|
|
|
1,443
|
|
|
—
|
|
|||
Net periodic pension (income) cost
|
$
|
(609
|
)
|
|
$
|
2,579
|
|
|
$
|
2,016
|
|
|
2014
|
|
2013
|
|
2012
|
|||
|
|
|
|
|
|
|||
Discount rate
|
4.75
|
%
|
|
3.90
|
%
|
|
4.30
|
%
|
Expected return on plan assets
|
8.00
|
%
|
|
8.00
|
%
|
|
8.00
|
%
|
|
Percentage of Pension
Plan Assets
|
|
Target
Allocation
|
|||||
|
2014
|
|
2013
|
|
2015
|
|||
|
|
|
|
|
|
|||
Equity securities
|
84
|
%
|
|
79
|
%
|
|
75
|
%
|
Debt securities
|
16
|
|
|
21
|
|
|
25
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
2014
|
|
2013
|
||||
|
|
|
|
||||
Common Stock
|
$
|
35,337
|
|
|
$
|
31,412
|
|
Money Market Fund
|
3,320
|
|
|
7,018
|
|
||
Mutual Funds
|
26,671
|
|
|
28,726
|
|
||
Fixed Income Securities
|
8,103
|
|
|
9,286
|
|
||
Total Assets at Fair Value
|
$
|
73,431
|
|
|
$
|
76,442
|
|
Common Stock:
|
Common stock is valued at the closing price reported on the common stock’s respective stock exchange and is classified within level 1 of the valuation hierarchy.
|
|
|
Money Market Fund:
|
These investments are public investment vehicles valued using $1 for the Net Asset Value (NAV). The money market fund is classified within level 2 of the valuation hierarchy.
|
|
|
Mutual Funds:
|
These investments are public investment vehicles valued using the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market and is classified within level 1 of the valuation hierarchy.
|
|
|
Fixed Income Securities:
|
Valued at the closing price reported on the active market on which the individual securities are traded and are classified within level 1 of the valuation hierarchy.
|
December 31, 2014
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Common Stock
|
$
|
35,337
|
|
|
$
|
—
|
|
|
$
|
35,337
|
|
Money Market Fund
|
—
|
|
|
3,320
|
|
|
3,320
|
|
|||
Mutual Funds
|
26,671
|
|
|
—
|
|
|
26,671
|
|
|||
Fixed Income Securities
|
8,103
|
|
|
—
|
|
|
8,103
|
|
|||
|
$
|
70,111
|
|
|
$
|
3,320
|
|
|
$
|
73,431
|
|
December 31, 2013
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Common Stock
|
$
|
31,412
|
|
|
$
|
—
|
|
|
$
|
31,412
|
|
Money Market Fund
|
—
|
|
|
7,018
|
|
|
7,018
|
|
|||
Mutual Funds
|
28,726
|
|
|
—
|
|
|
28,726
|
|
|||
Fixed Income Securities
|
9,286
|
|
|
—
|
|
|
9,286
|
|
|||
|
$
|
69,424
|
|
|
$
|
7,018
|
|
|
$
|
76,442
|
|
2015
|
|
$4,875
|
|
2016
|
2,892
|
|
|
2017
|
3,174
|
|
|
2018
|
3,589
|
|
|
2019
|
3,827
|
|
|
2020-2024
|
23,710
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Administrative consolidation costs
|
$
|
3,354
|
|
|
$
|
8,750
|
|
|
$
|
6,497
|
|
Costs associated with management restructuring
|
12,546
|
|
|
—
|
|
|
—
|
|
|||
Costs associated with shareholder activism
|
3,966
|
|
|
—
|
|
|
—
|
|
|||
Costs associated with purchase of a business
|
722
|
|
|
—
|
|
|
1,194
|
|
|||
Costs associated with patent dispute and other matters
|
3,374
|
|
|
3,206
|
|
|
1,555
|
|
|||
Pension settlement expense
|
—
|
|
|
1,443
|
|
|
—
|
|
|||
Costs associated with purchase of a distributor
|
—
|
|
|
—
|
|
|
704
|
|
|||
Other expense
|
$
|
23,962
|
|
|
$
|
13,399
|
|
|
$
|
9,950
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
Balance as of January 1,
|
$
|
2,422
|
|
|
$
|
3,636
|
|
|
$
|
3,618
|
|
|
|
|
|
|
|
||||||
Provision for warranties
|
3,492
|
|
|
3,061
|
|
|
4,163
|
|
|||
Claims made
|
(3,628
|
)
|
|
(4,275
|
)
|
|
(4,145
|
)
|
|||
|
|
|
|
|
|
||||||
Balance as of December 31,
|
$
|
2,286
|
|
|
$
|
2,422
|
|
|
$
|
3,636
|
|
December 31, 2014
|
Asset
Balance Sheet Location |
|
Fair
Value |
|
Liabilities
Balance Sheet Location |
|
Fair
Value |
|
Net
Fair Value |
||||||
Derivatives designated as hedged instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
Prepaid & other current assets
|
|
$
|
6,167
|
|
|
Prepaid & other current assets
|
|
$
|
(971
|
)
|
|
$
|
5,196
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
Prepaid & other current assets
|
|
44
|
|
|
Prepaid & other current assets
|
|
(61
|
)
|
|
(17
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total derivatives
|
|
|
$
|
6,211
|
|
|
|
|
$
|
(1,032
|
)
|
|
$
|
5,179
|
|
December 31, 2013
|
Asset
Balance Sheet
Location
|
|
Fair
Value
|
|
Liabilities
Balance Sheet
Location
|
|
Fair
Value
|
|
Net
Fair
Value
|
||||||
Derivatives designated as hedged instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
Other current liabilities
|
|
$
|
975
|
|
|
Other current liabilities
|
|
$
|
(3,172
|
)
|
|
$
|
(2,197
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
Other current liabilities
|
|
52
|
|
|
Other current liabilities
|
|
(78
|
)
|
|
(26
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total derivatives
|
|
|
$
|
1,027
|
|
|
|
|
$
|
(3,250
|
)
|
|
$
|
(2,223
|
)
|
|
2014
|
|
2013
|
|
2012
|
||||||
Facility consolidation costs
|
$
|
5,612
|
|
|
$
|
6,489
|
|
|
$
|
7,052
|
|
Termination of a product offering
|
—
|
|
|
2,137
|
|
|
—
|
|
|||
Restructuring costs included in cost of sales
|
$
|
5,612
|
|
|
$
|
8,626
|
|
|
$
|
7,052
|
|
|
|
|
|
|
|
||||||
Administrative consolidation changes
|
$
|
3,354
|
|
|
$
|
8,750
|
|
|
$
|
6,497
|
|
Costs associated with management restructuring
|
12,546
|
|
|
—
|
|
|
—
|
|
|||
Restructuring costs included in other expense
|
$
|
15,900
|
|
|
$
|
8,750
|
|
|
$
|
6,497
|
|
|
|
|
|
||
Balance as of January 1, 2014
|
|
$
|
3,128
|
|
|
|
|
|
|
||
Expenses incurred
|
|
7,434
|
|
|
|
|
|
|
|
||
Payments made
|
|
(2,308
|
)
|
|
|
|
|
|
|
||
Balance, December 31, 2014
|
|
$
|
8,254
|
|
|
|
|
2012
|
||
Net sales
|
|
$
|
774,239
|
|
Net income
|
|
38,018
|
|
|
|
|
|
||
Earnings per share:
|
|
|
||
Basic
|
|
$
|
1.34
|
|
Diluted
|
|
1.33
|
|
|
Three Months Ended
|
||||||||||||||
|
March
|
|
June
|
|
September
|
|
December
|
||||||||
2014
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
181,941
|
|
|
$
|
188,150
|
|
|
$
|
174,961
|
|
|
$
|
195,003
|
|
Gross profit
|
102,582
|
|
|
101,028
|
|
|
96,414
|
|
|
104,033
|
|
||||
Net income
|
8,626
|
|
|
10,255
|
|
|
1,972
|
|
|
11,339
|
|
||||
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
.32
|
|
|
.38
|
|
|
.07
|
|
|
.41
|
|
||||
Diluted
|
.31
|
|
|
.37
|
|
|
.07
|
|
|
.41
|
|
|
Three Months Ended
|
||||||||||||||
|
March
|
|
June
|
|
September
|
|
December
|
||||||||
2013
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
187,014
|
|
|
$
|
192,993
|
|
|
$
|
179,255
|
|
|
$
|
203,442
|
|
Gross profit
|
102,682
|
|
|
102,916
|
|
|
95,424
|
|
|
111,395
|
|
||||
Net income
|
10,492
|
|
|
9,533
|
|
|
5,687
|
|
|
10,227
|
|
||||
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
.37
|
|
|
.35
|
|
|
.21
|
|
|
.37
|
|
||||
Diluted
|
.37
|
|
|
.34
|
|
|
.20
|
|
|
.36
|
|
|
|
|
|
Column C
|
|
|
|
|
||||||||||||
|
|
|
|
Additions
|
|
|
|
|
||||||||||||
|
|
Column B
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Balance at
Beginning of
Period
|
|
Charged to
Costs and
Expenses
|
|
Charged to
Other
Accounts
|
|
|
|
Column E
|
||||||||||
Column A
|
|
|
|
|
Column D
|
|
Balance at End
of Period
|
|||||||||||||
Description
|
|
|
|
|
Deductions
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for bad debts
|
|
$
|
1,384
|
|
|
$
|
517
|
|
|
$
|
—
|
|
|
$
|
(662
|
)
|
|
$
|
1,239
|
|
Sales returns and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
allowance
|
|
3,098
|
|
|
252
|
|
|
—
|
|
|
(269
|
)
|
|
3,081
|
|
|||||
Deferred tax asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
valuation allowance
|
|
—
|
|
|
293
|
|
|
—
|
|
|
—
|
|
|
293
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for bad debts
|
|
$
|
1,203
|
|
|
$
|
421
|
|
|
$
|
—
|
|
|
$
|
(240
|
)
|
|
$
|
1,384
|
|
Sales returns and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
allowance
|
|
3,609
|
|
|
398
|
|
|
—
|
|
|
(909
|
)
|
|
3,098
|
|
|||||
Deferred tax asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
valuation allowance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for bad debts
|
|
$
|
1,183
|
|
|
$
|
530
|
|
|
$
|
—
|
|
|
$
|
(510
|
)
|
|
$
|
1,203
|
|
Sales returns and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
allowance
|
|
4,097
|
|
|
317
|
|
|
—
|
|
|
(805
|
)
|
|
3,609
|
|
|||||
Deferred tax asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
valuation allowance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
DATED
|
|
2014
|
(1)
|
CONMED U.K. LIMITED a company registered in England and Wales with company number 03535936 whose registered office is situated at 73/74 Shrivenham Hundred Business Park, Swindon SN6 8TY (“we”, “us”, “the Company”)
|
(2)
|
PAT BEYER of [The Dial House, St Peter Street, Marlow, Buckinghamshire SL7 1NQ (“you”)
|
1.
|
Definitions and Interpretation
|
1.1
|
In this Agreement the following expressions will, unless the context otherwise requires, have the meanings set opposite them:
|
1.2
|
In this Agreement:
|
1.2.1
|
words and expressions defined in the Companies Act 2006, unless the context otherwise requires, have the same meanings when used in this Agreement;
|
1.2.2
|
any reference to this Agreement or to any other document include any permitted variation or amendment to this Agreement or such other document;
|
1.2.3
|
the use of the singular includes the plural and vice versa and words denoting any gender will include a reference to each other gender;
|
1.2.4
|
any reference to a clause or schedule is, except where expressly stated to the contrary, reference to the relevant clause of or schedule to this Agreement;
|
1.2.5
|
Clauses and schedule headings and the use of bold type are included for ease of reference only and will not limit or affect the construction or interpretation of any provision of this Agreement;
|
1.2.6
|
any reference to any statute, statutory instrument, order, regulation or other similar instrument (including any EU order, regulation or instrument) will be construed as including references to any statutory modification, consideration or re-enactment of that provision (whether before or after the date of this Agreement) for the time being in force including all instruments, orders or regulations then in force and made under or deriving validity from it;
|
1.2.7
|
any phrase introduced by the terms ‘include’, ‘including’, ‘in particular’ or any similar expression will be construed as illustrative and will not limit the sense of the words preceding those terms.
|
2.
|
Term of Employment and Probationary Period
|
2.1
|
Your employment with the Company will begin on [9 December 2014] and this is the date that your continuous employment commences. It shall continue subject to the remaining terms of this Agreement unless or until determined by either you or the Company in accordance with clause 14 or clause 15 below. No employment
|
3.
|
Job Title and Duties
|
3.1
|
Your job title is Executive Officer. This does not limit your duties, which may include such duties that would reasonably be expected to fall within this job title together with such other duties, consistent with your status, as may reasonably be assigned to you from time to time. Unless otherwise notified, you will report to Curt Hartman, the CEO of CONMED (“the CEO”) and will be responsible for managing, supervising and overseeing CONMED’s international business.
|
3.2
|
You are required to devote your full time and attention during normal working hours to the performance of your duties and to act in the best interests of the Company at all times. You may be required to perform services for any Group Company without further remuneration (unless otherwise agreed) and your obligations under this Agreement will equally apply to such Group Company.
|
3.3
|
You shall act to the best of your abilities, knowledge and expertise and not do or willingly permit to be done anything which harms the interests of the Company. You shall at all times and in all respects promptly and faithfully comply with the proper and reasonable directions of the CEO and will keep the CEO fully and promptly informed (in writing if so required) of your conduct of the business and give the CEO such information relating to the Company and any Group Company to which your duties relate as may be requested from time to time.
|
3.4
|
You must comply with all rules, regulations, codes of practice, codes of conduct, policies and procedures that relate to the Company or any Group Company and shall use your best endeavours to ensure that the Company and each Group Company complies in all material respects with the rules, procedures, policies and codes of any professional organisation or association of which it is or they are a member.
|
3.5
|
Without prejudice to the generality of clause 3.3 you shall ensure that the CEO is promptly made aware of:
|
a)
|
any activity, actual or threatened, which might affect the interests of the Company and/or any Group Company;
|
b)
|
any actual, potential, or maturing business opportunity enjoyed by the Company or any Group Company;
|
c)
|
your own misconduct or the misconduct of any agent, employees, officer, or worker of the Company or any Group Company of which you are, or ought reasonably to be, aware;
|
d)
|
any offer of engagement or approach made by a competing business to you or any agent, employee, officer, or worker of the Company or any Group Company of which you are, or ought reasonably to be, aware;
|
e)
|
the intention (whether settled or not) of you or any agent, employee, officer, or worker of the Company or any Group Company who reports directly or indirectly to you to resign from their employment or engagement with the Company or any Group Company and which arises in relation to the business area for which you are responsible.
|
3.6
|
You will not without the CEO’s prior written consent incur any expenditure, engage or employ any person, dismiss any employee or enter into any commitment, contract or arrangement outside the scope of your normal duties or hold yourself out as having authority to do any of the acts described in this clause.
|
3.7
|
During your employment (including any period of notice), you will not without first obtaining the CEO’s prior written consent:
|
a)
|
undertake any other paid employment nor carry on or be concerned or interested directly or indirectly whether alone or with any other person in any other trade or business whatsoever, which for the avoidance of doubt shall include the setting up of a company or business (other than as a holder of not more than 5% of the shares or debentures of any company or whose shares are listed on a recognised stock exchange);
|
b)
|
take any steps that are preparatory to competing with the business of the Company or any Group Company other than making a bona fide application for new employment;
|
c)
|
accept any benefits from third parties or take undeclared profits from your position.
|
3.8
|
You confirm that you have disclosed in writing to the CEO all circumstances existing at the date of this Agreement which would require the consent of the CEO under clause 3.7 above and all circumstances in respect of which there is, or may be, a conflict of interest between the Company or any Group Company and you or any of your connected person. You agree to disclose fully to the CEO any such circumstances which may arise during your employment.
|
4.
|
Employee Warranties
|
4.1
|
You represent and warrant that:
|
a)
|
you will not, as a consequence of entering into or performing this Agreement or any other agreements or arrangements made between you and the Company or any Group Company, be in breach of any terms binding upon you of any contract, agreement, undertaking, court order or arrangement with, or any obligation to any third party;
|
b)
|
you are entitled to work in the United Kingdom without any additional approvals and will notify the Company immediately if you cease to be so entitled during your employment;
|
c)
|
you are not subject to any restriction which will hinder or restrict you from performing any duties which you are or may be required to perform under this Agreement or any other agreements or arrangements made between you and the Company or any Group Company;
|
d)
|
you have no unspent criminal convictions;
|
e)
|
you will whenever required co-operate fully with all requests for the completion of any form of background check or referencing that may be required by law or otherwise reasonably specified for the performance of your contractual duties;
|
f)
|
all of the information that you have provided to the Company, and any third party acting on behalf of the Company, prior to the commencement of your employment is to your knowledge complete, true and up-to-date and you have not deliberately omitted any information relevant to your employment.
|
5.
|
Place of Work
|
5.1
|
Your normal place of work is the Company’s registered office for the time being but the Company reserves the right to require you to work elsewhere in the United Kingdom either temporarily or permanently where reasonably necessary for the purposes of the Company’s business.
|
5.2
|
It is unlikely that you would be required to work abroad other than for occasional, short, business trips. Should you be required to work abroad for a period of a month or more we will agree with you, in advance, suitable arrangements regarding travel, time away on assignments and time at home. During any such period, with the exception of these agreed arrangements, your normal terms and conditions will remain the same unless varied by agreement.
|
6.
|
Remuneration and Benefits
|
6.1
|
You will be paid a basic salary of £270.300 per annum, in equal monthly instalments on or before the 24
th
day of every month or as soon thereafter as practicable. Payment will normally be made by credit transfer into a bank account nominated by you.
|
6.2
|
You will be eligible for a car allowance paid monthly in equal instalments of £1,000 per month, on or before the 24
th
day of every month or as soon thereafter as practicable. This payment will be subject to any customary tax withholdings.
|
6.3
|
You will have a performance review in July each year, at which time the Company will also review your salary. Additional reviews of your performance may take place at the Company’s absolute discretion. The Company is under no obligation to increase your basic remuneration at each or any performance review. There will be no
|
6.4
|
You may participate in the Company's occupational pension scheme (or such other registered pension scheme as may be established by the Company to replace this scheme) subject to the rules of the scheme and the tax reliefs and exemptions available from HM Revenue & Customs, in both cases as amended from time to time. Full details of the Company’s pension scheme may be obtained from the HR department. A contracting-out certificate (issued in accordance with Chapter 1 of Part III of the Pension Schemes Act 1993) is not in force in respect of your employment.
|
6.5
|
The Company may award discretionary bonuses from time to time. Where the Company decides to award a bonus, it will normally be dependent on both your and the Company’s performance although the award of any bonus is entirely at the Company’s discretion. The award of a bonus in one year does not imply any entitlement in respect of future years and there will be no entitlement to receive any bonus if your employment has terminated or you are under notice of termination at the expected date for payment.
|
6.6
|
You shall be eligible for death in service cover of a sum equal to at least 3 times your basic annual salary subject to your acceptance of the rules of the applicable scheme run by or in respect of the Company and your being accepted and continuing to be accepted by the scheme.
|
6.7
|
You shall be eligible to participate in the Company’s medical insurance scheme subject to your being accepted and continuing to be accepted by the scheme and your acceptance of the rules of the applicable scheme.
|
6.8
|
You will be eligible to participate in the Company’s long-term disability insurance scheme which provides benefits to employees who have been absent from work due to ill health for a continuous period of 28 weeks and who meet all the other qualifying criteria stipulated by the insurers. Payment of this benefit is subject to compliance with the rules of the scheme in force from time to time. The Company may at its absolute discretion discontinue, vary or amend the scheme at any time without compensation. If you are in receipt of benefits under this scheme you shall not be entitled to any other benefits or remuneration from the Company, save for the other insured benefits specified in this clause 6.8 (subject always to the rules of the applicable scheme).
|
6.9
|
The Company shall have no liability to continue to pay benefits under any insurance scheme or otherwise unless it receives payment of the benefit from the insurer under the scheme. If the insurer refuses for any reason to provide long-term disability insurance benefits to you the Company shall not be liable to provide you any replacement benefit of the same or similar kind or to pay any compensation in lieu of such benefit.
|
6.10
|
You are eligible for personal accident and travel insurance subject to your acceptance of the rules of the applicable scheme run by or in respect of the Company and your being accepted and continuing to be accepted by the scheme.
|
6.11
|
The Company may at its discretion change the provider of any of the benefits under this clause 6 and your continued eligibility for these benefits will be subject always to your acceptance by the provider and subject to the rules of the applicable scheme in force from time to time.
|
6.12
|
For the avoidance of doubt, on termination of your employment however arising you shall not be entitled to any compensation for the loss of any rights or benefits under any share option, bonus, long-term incentive plan or other profit sharing scheme operated by the Company or any Group Company in which you may participate.
|
6.13
|
Tax, employee’s National Insurance contributions and any other deductions required by law will be deducted from all sums due to you, where appropriate. The Company is also entitled to deduct from your salary or any other payment due to you from the Company any sums owed by you. Such sums include, without limitation, repayment of any loans or advances made to you by the Company, repayment of any excess holiday pay, overpayment of salary or other benefits received by you from the Company and the cost of any damage to or loss of the Company's property caused by you.
|
6.14
|
On termination of your employment for whatever reason you may be required to pay, at the Company’s discretion, any sums owed to the Company as a debt within 30 days of termination.
|
7.
|
Expenses
|
8.
|
Normal Hours of Work
|
8.1
|
Your normal hours of work are from 9.00 a.m. to 5.00 p.m. Monday to Friday inclusive, and such additional hours without additional remuneration as may be required from time to time for the proper performance of your duties. We reserve the right to vary your hours of work and the starting and finishing times, as we consider necessary to meet the needs of the business.
|
8.2
|
It is the Company's understanding that, in accordance with Regulation 20 of the WTR your working time is not measured or pre-determined or is determinable by you. Notwithstanding that, to the extent that Regulation 4(1) of the WTR applies to you, you agree in accordance with Regulation 5 of the WTR that the limit of maximum weekly working time set out in Regulation 4(1) of the WTR will not apply to you during your employment. You acknowledge that you may terminate such opt out at any time by giving the Company not less than three months’ written notice.
|
9.
|
Holiday Entitlement
|
9.1
|
You are entitled, in addition to the eight normal bank or public holidays, to take 28 working days in each holiday year, which runs from 1 January to 31 December. You will be paid your normal basic remuneration during such holidays and will be required to take some holiday during the Christmas holiday period at the Company’s discretion.
|
9.2
|
Effective your first day of employment you will have twenty-eight (28) days. After your first year, you are entitled to one-twelfth of your annual entitlement for each month of service rounded up to the nearest halfday. Unless previously agreed with the Company holiday may not be taken during your probationary period.
|
9.3
|
All proposed holiday dates must be agreed in advance by the CEO and must be taken at a time that is convenient to the Company. You will not normally be permitted to take more than 10 consecutive working days at any one time.
|
9.4
|
Holiday entitlement unused at the end of the holiday year cannot be carried forward into the next holiday year, unless you have been unavoidably prevented from taking such holiday during the relevant year because of sickness absence or statutory maternity, paternity or adoption leave.
|
9.5
|
If you are ill while on personally chosen holiday and have a doctor's certificate that confirms the number of days’ illness, you will be allowed to take the number of days you were ill as holiday at a later time within the same holiday year.
|
9.6
|
During any continuous period of absence due to incapacity of one month or more you shall not accrue holiday in accordance with clause 9.5 above but shall instead be entitled to the statutory minimum holiday entitlement specified under the Working Time Regulations.
|
9.7
|
Subject to clause 9.8, if you have accrued holiday that you have not taken when your employment terminates, you will be paid at the rate of 1/260
th
of annual salary for each day accrued but unused. A deduction will be made from your final salary payment if you have taken holiday that you have not accrued, using the same formula.
|
9.8
|
If you terminate your employment without the Company's consent before the expiry of the notice required to be given by you pursuant to clause 14.1, or without giving any notice, or if the Company terminates your employment for gross misconduct, you will only be entitled to be paid a nominal sum of £1 in respect of your accrued but untaken holiday.
|
10.
|
Notification of Sickness or Other Absence and Medical Examination
|
10.1
|
If you are unable to attend work for any reason and your absence has not previously been authorised by the Company you must inform an appropriate manager at the Company of your absence and the full reasons for it by 9.30 am on each working day of absence, unless you expect to be off for multiple days in which case you should notify the Company on your first day of absence with an indication of how long you expect to be absent. You must keep the Company informed on a regular basis of your progress and the date of your expected return to work.
|
10.2
|
If you are absent from work on account of sickness or injury for a period of less than seven days (including weekends), you need not produce a medical certificate unless you are specifically requested to do so.
|
10.3
|
If you are absent from work due to sickness or injury for seven days or more (including weekends) you must provide the Company with a medical certificate or fit note by the eighth day of sickness or injury. Medical certificates must be provided to the Company to cover any continued absence.
|
10.4
|
Should the Company so require, you shall at the Company’s expense undergo a medical examination by a medical practitioner nominated by the Company. The results of such medical examination will be reported to the Company, but your own doctor will be sent a copy of the medical practitioner’s report on request. The Company reserves the right to postpone your return to work after a period of absence in respect of which you have provided a sickness certificate or fit note until it has received a report from a medical practitioner confirming that you are fit to return.
|
11.
|
Sick Pay
|
11.1
|
If you are absent from work due to sickness, injury or accident and comply with the requirements in this clause 11 and with the provisions of the Company’s Sick Pay and Absence policy in force from time to time you will be paid: company sick pay in accordance with clause 11.2; and/or SSP in accordance with the provisions of the applicable legislation.
|
11.2
|
Company sick pay will be paid for up to a maximum of 26 weeks in any 12 month period and when payable will be as follows:
|
11.3
|
Where a continuing period of sickness absence covers an anniversary of employment, which would otherwise have entitled you to an increased period of company sick pay, the lower entitlement will continue to apply for that episode of sickness absence.
|
11.4
|
In the first 90 days of your employment, you will not be entitled to any payment other than SSP where this is payable in accordance with the SSP rules.
|
11.5
|
If your role is eligible for commission or sales bonus, your entitlement (if any) to such payments during periods of sickness absence will be governed by the terms of the commission/bonus policy in force from time to time.
|
11.6
|
If you are provided with items to enable you to carry out your duties including but not limited to car fuel cards, mobile phones, laptops and Blackberries the Company may at its discretion require you to return these items or to cease using them for any periods during which you are absent through illness or injury.
|
11.7
|
If you are absent from your duties due to sickness or injury for a period or periods in excess of your maximum company sick pay entitlement the Company shall not be required to pay you any salary or any other form of remuneration apart from any SSP entitlement for the remainder of the period of absence during which your company sick pay entitlement is exhausted. Entitlement to company sick pay for any further periods of absence will be determined according to the amount of sick pay received over a 12 month reference period as specified
|
11.8
|
Your entitlement (if any) to company pension contributions and car allowance will cease for periods of absence after exhaustion of your company sick pay entitlement. Further information can be found in the company car policy in force from time to time.
|
11.9
|
If you are absent from work because of illness or incapacity for 12 continuous weeks or an aggregate of 28 weeks or more in any twelve (12) month period the Company has the right to fill your position with a permanent replacement. Should you return to work after your position is filled, the Company will take reasonable steps to find a comparable position if one is available. The right of the Company to terminate your employment under the terms of this Agreement will apply even where such termination would or might cause you to forfeit any entitlement to company sick pay, long term disability payments or any other payments.
|
11.10
|
If any period of sickness absence is or reasonably appears to be caused by any third party actions in respect of which damages are or may be recoverable, you must immediately notify the Company of that fact and of any claim, compromise, settlement or judgment made or awarded in connection with it and all relevant particulars that the Company may reasonably require. You shall if required cooperate in any related legal proceedings pursue and shall refund to the Company that part of any damage or compensation recovered by you that relates to loss of earnings for the period of sickness absence as reasonably determined by the Company, provided that the amount to be refunded shall not exceed the smaller of the total amount paid to you by the Company in respect of the period of sickness absence or the total amount recovered (net of costs incurred in connection with such recovery).
|
12.
|
Confidentiality
|
12.1
|
In this Agreement “Confidential Information” means all information relating to the business, organisation, transactions, finances, processes, specifications, methods, designs, formulae, technologies, business activities, approaches, business models, techniques, contact information on the Company’s database of and concerning the Company and its clients, customers and suppliers, which the Company regards, or could reasonably be expected to regard, as confidential.
|
12.2
|
Except as authorised or required by your duties you shall keep secret and shall not use or disclose and shall use your best endeavours to prevent the use or disclosure by or to any person of any of the Company’s Confidential Information which comes to your knowledge during your employment. If you misuse or disclose to an unauthorised person confidential information you will be subject to disciplinary action which may result in your dismissal. A serious breach of this clause 12.2 by you may result in your immediate dismissal without notice or pay in lieu of notice.
|
12.3
|
You agree that Confidential Information includes details of any Relevant Customer (as defined in clause 17.1) whom you have encountered in the course of your employment with the Company and you agree that any such person who is a connection, friend, etc on any social or business networking site or similar on the Internet will be removed as a friend, connection etc no later than the last day of your employment.
|
12.4
|
The restriction in clause 12.2 shall apply during and after the termination of your employment without any time limit but shall cease to apply to information or knowledge which has in its entirety become public knowledge otherwise than through an unauthorised disclosure or through any breach by you of the restrictions in this clause 12.
|
12.5
|
The provisions of this clause 12 are without prejudice to your duties and obligations that are also implied into this Agreement at common law.
|
13.
|
Disciplinary and Grievance Procedures
|
13.1
|
The disciplinary procedure which applies to you, is contained in the Employee Handbook. If you are dissatisfied with any disciplinary or dismissal decision taken in relation to you, you may appeal in writing to the General Manager of the Company, as further specified in the disciplinary procedure.
|
13.2
|
If you have a grievance about your employment, you are entitled to raise a complaint in writing to your line manager, or as otherwise specified under the Company’s grievance policy, which is contained in the Employee Handbook.
|
13.3
|
The grievance and disciplinary procedures are not contractually binding on the Company. The Company may alter them, or omit any or all of their stages, when it considers appropriate.
|
13.4
|
In order to investigate a complaint against you, the Company may at its absolute discretion suspend you from work on full pay and benefits and exclude you from any premises of the Company and any Group Company for so long as it deems necessary to carry out a proper investigation and to hold any appropriate disciplinary hearings and may appoint someone in your absence to perform your duties.
|
13.5
|
During any period of suspension:
|
a)
|
you shall remain an employee of the Company and bound by the terms of this Agreement;
|
b)
|
you shall ensure that the Company knows where you will be and how you can be contacted during each working day (except during any periods taken as holiday in the usual way);
|
c)
|
the Company may require you not to contact or deal with (or attempt to contact or deal with) any officer, employee, consultant, client, customer, supplier, agent, distributor, shareholder, adviser or other business contact of the Company or any Group Company.
|
14.
|
Notice Period and Termination of Employment
|
14.1
|
Either party may terminate the contract by giving to the other six months’ written notice.
|
14.2
|
The Company reserves the right, in its sole and absolute discretion to dispense with the notice required by clause 14.1. In such circumstances, the Company will instead write to you notifying you that your employment will terminate immediately and that it will make a payment to you in lieu of notice of all or the remaining part of any period of entitlement to notice equivalent to your basic salary and the value of contractual benefits in kind excluding any bonus.
|
14.3
|
The Company may pay any sums due under clause 14.2 in equal monthly instalments until the date on which the notice period referred to at clause 14.1 would have expired if notice had been given. You shall be obliged to seek alternative income during this period and to notify the Company of any income so received. The instalment payments shall then be reduced by the amount of such income.
|
14.4
|
You shall have no right to receive a payment in lieu of notice unless the Company has exercised its discretion in clause 14.2. Nothing in this clause 14 shall prevent the Company from terminating your employment in breach.
|
14.5
|
Notwithstanding clause 14.2 you shall not be entitled to any payment in lieu of notice if the Company would otherwise have been entitled to terminate your employment without notice in accordance with clause 15. In that case the Company shall also be entitled to recover from you any payment in lieu (or instalments thereof) already made.
|
15.
|
Garden Leave
|
15.1
|
The Company may, in its absolute discretion, following service of notice to terminate your employment by either party, for all or part of the notice period referred to at clause 14.1:
|
a)
|
exclude you from the premises of the Company or any Group Company;
|
b)
|
require you to take any accrued but untaken holiday;
|
c)
|
require you to carry out alternative duties;
|
d)
|
require you to carry out no duties; and/or
|
e)
|
instruct you not to contact or deal with (or attempt to contact or deal with) any officer, employee, consultant, client, customer, supplier, agent, distributor, shareholder, adviser or other business contact of the Company or any Group Company,
|
15.2
|
During any such period the Company:
|
a)
|
will be under no obligation to provide any work to you or vest any powers in you; and
|
b)
|
may employ or appoint any other person to carry out your duties and functions and exercise your powers under this Agreement; and
|
c)
|
will be entitled to announce to employees, clients or customers, suppliers, agents and consultants and to any other third party that you have been given notice of termination or have resigned (as the case may be).
|
16.
|
Termination Without Notice
|
16.1
|
Notwithstanding the provisions of clause 14, the Company may terminate your employment without notice or payment in lieu of notice:
|
a)
|
if you are guilty of gross misconduct and/or negligence in connection with or affecting the business of the Company or any Group Company for which you are required to perform your duties;
|
b)
|
in the event of any serious or repeated breach or non-observance by you of any of the terms of this Agreement, or failure by you without reasonable cause to carry out your duties and obligations under this Agreement, having first been notified by the Company in writing of the breach or non-observance and being given a reasonable chance to comply;
|
c)
|
if you are convicted of any arrestable criminal offence (other than an offence under the road traffic legislation in the United Kingdom or elsewhere for which a fine or non-custodial penalty is imposed);
|
d)
|
if your conduct, whether inside or outside work, brings you or the Company or any Group Company into disrepute or is seriously prejudicial to the interests of the Company or any Group Company;
|
e)
|
if any of the warranties set out in clause 4.1 above are found by the Company to be inaccurate, misleading or untrue;
|
f)
|
if you become disqualified or disbarred from membership of, or are subject to any serious disciplinary sanction by, any professional or other body, which undermines the confidence of the CEO in your continued employment with the Company;
|
g)
|
if you cease to be eligible to work in the United Kingdom.
|
16.2
|
Any delay by the Company in exercising any right to terminate summarily under clause 16.1 will not constitute a waiver of that right.
|
16.3
|
The proper exercise by the Company of its right of termination under clause 16.1 will be without prejudice to any other rights or remedies which the Company or any Group Company may have against you.
|
17.
|
Restrictive Covenants
|
17.1
|
In this clause 17 the following expressions have the following meanings:
|
a)
|
in preliminary discussions involving a face-to-face meeting with the Company or any Group Company during the Relevant Period with a view to considering whether the Company, or any Group Company might provide Relevant Products or Services to such person, firm, company or organisation; or
|
b)
|
negotiating with the Company, or any Group Company for the sale or supply of Relevant Products or Services; or
|
c)
|
a client or customer of the Company or any Group Company for the sale or supply of Relevant Products or Services,
|
17.2
|
You will not, without the prior written consent of the Company, directly or indirectly and whether alone or in conjunction with or on behalf of any other person and whether as a principal, shareholder, director, employee, agent, consultant, partner or otherwise, at any time during your employment or:-
|
a)
|
for a period of six months from the Termination Date, be engaged, interested or concerned whether as principal, agent, representative, partner, director, employee, joint venturer, investor, consultant or otherwise in any Competing Business, except that you may hold up to 5% of any class of securities of any company listed on a recognised investment exchange
|
b)
|
for a period of six months from the Termination Date, be engaged, concerned or interested in any business which at any time during the Relevant Period has supplied products or services to the Company or any Group Company or is or was at any time during the Relevant Period a Relevant Customer of the Company or any Group Company if such engagement, concern or interest causes or would cause the supplier to cease or materially reduce its supplies to the Company or any Group Company or cause or would cause the Relevant Customer to cease or materially to reduce its orders or contracts with the Company or any Group Company; or
|
c)
|
for a period of six months from the Termination Date, so as to compete with the Company or any Group
|
d)
|
for a period of six months from the Termination Date, so as to compete with the Company or any Group Company, deal or contract with any Relevant Customer in relation to the sale or supply of any Relevant Products or Services, or endeavour to do so; or
|
e)
|
for a period of six months from the Termination Date, solicit, induce or entice away from the Company or any Group Company or, in connection with any business in or proposing to be in competition with the Company or any Group Company, employ, engage or appoint or in any way cause to be employed, engaged or appointed a Critical Person whether or not such person would commit any breach of his or her contract of employment or engagement by leaving the service of the Company or any Group Company; or
|
f)
|
use in connection with any business any name which includes the name of the Company or any Group Company or any colourable imitation of such names.
|
17.3
|
Whilst the restrictions in this clause 17 are regarded by the parties as fair and reasonable, each of the restrictions in this clause 17 is intended to be separate and severable. If any restriction is held to be unreasonably wide but would be valid if part of the wording (including in particular but without limitation the defined expressions referred to in clause 17.1) were deleted, such restriction will apply with so much of the wording deleted as may be necessary to make it valid.
|
17.4
|
The parties agree that the periods referred to in sub-clauses 17.2 a), b), c), d), and e) will be reduced by one day for every day during which at the Company’s direction and pursuant to clause 15.1 above you have been excluded from the Company's premises and/or have not carried out any duties or have carried out duties other than your normal duties.
|
17.5
|
If you apply for or are offered a new employment, appointment or engagement, with any other company firm or person, before entering into any related contract, you will bring the terms of this clause 17 to the attention of the third party proposing directly or indirectly to employ, appoint or engage you.
|
17.6
|
If your employment is transferred to any firm, company, person or entity other than a Group Company (the "New Employer") pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006, you will, if required, enter into an agreement with the New Employer containing post-termination restrictions corresponding to those restrictions in this clause 17, protecting the confidential information, trade secrets and business connections of the New Employer.
|
17.7
|
The obligations entered into by you in this clause 17 are given to the Company for itself and as trustee for each and any Group Company and the Company declares that, to the extent that such obligations relate to any Group Company, the Company holds the benefit of them as trustee.
|
17.8
|
You will, at the request and expense of the Company, enter into a separate agreement with any Group Company in which you agree to be bound by restrictions corresponding to those restrictions in this clause 17 (or such of those restrictions as the Company deems appropriate) in relation to that Group Company.
|
17.9
|
The parties confirm that they have entered into the restrictions in this clause 17 having had the opportunity to be separately legally advised. You hereby irrevocably waive any right to claim legal professional or other privilege in respect of such advice.
|
18.
|
Intellectual Property Rights
|
18.1
|
You agree to disclose promptly to the Company any invention, improvement, design, process, information, copyright work, trade mark or trade name or get-up made, created or discovered by you during your employment (whether capable of being patented or registered or not and whether or not made or discovered during the term of your employment) in conjunction with or in any way affecting or relating to the business of the Company or capable of being used or adapted for use in or in connection with such business (“Intellectual Property Rights”).
|
18.2
|
You hereby assign (by way of present and future assignment) with full title guarantee all Intellectual Property
|
18.3
|
You will at the request and reasonable expense of the Company, at any time either during or after your employment give all assistance and do all acts and things as may be in the opinion of the Company necessary or desirable to give the full benefit of clause 18.2 of this Agreement to the Company.
|
18.4
|
You warrant that you will not, during your employment, infringe the intellectual property rights of another person.
|
18.5
|
For the avoidance of doubt, the provisions of this clause 0 will remain in full force and effect even if your employment or this Agreement terminates for any reason other than by repudiatory breach of the Company.
|
19.
|
Recorded Material and Company Property
|
19.1
|
All notes, memoranda, documents, designs, drawings or other recorded material, whether in written or electronic form and all other materials, including but not limited to the Confidential Information (as defined in clause 12), which may have been made or prepared by you, or at your request, or have come into your possession or under your control in the course of your employment and which relate in any way to the business (including prospective business) or affairs of the Company or of any client, customer, supplier, agent, distributor, sub-contractor or employee thereof shall be deemed to be the property of the Company.
|
19.2
|
All such material and all property, including any computer equipment (which shall include all cables, cases, disks and related equipment), tablet, mobile telephone and any other electronic device or equipment belonging to the Company that is in your possession or under your control must be returned to the Company upon request, and in any event upon the termination of your employment.
|
19.3
|
You will co-operate with any request from the Company to provide access (including disclosing passwords) to any equipment of the type referred to in clause 19.2, whether or not owned by the Company (and any website or cloud storage) which contains information or materials relating to the Company or any of its clients, employees or suppliers. You will permit the Company to inspect, copy or remove any material relating to the business of the Company.
|
20.
|
Data Protection
|
20.1
|
As your employer, the Company needs to keep information about you and will hold computer records and personnel files containing your personal data. This personal data includes, without limitation, your employment application, references, bank details, performance appraisals, holiday and sickness records, salary reviews and remuneration details and other records which may include sensitive personal data relating to your health and ethnic origin. The Company processes such personal data for personnel, administration, compliance, regulatory and management purposes and to comply with its obligations regarding the processing of employee/worker records. Your right of access to this data is as prescribed by law.
|
20.2
|
You agree that the Company may process personal data relating to you including, without limitation, sensitive personal data relating to your health and ethnic origin, for personnel, administration, regulatory and management purposes (including the processing of sensitive data for ethnic origin monitoring purposes) and may, when necessary for these purposes or as required by law, make such data available to the following entities:
|
a)
|
its advisers;
|
b)
|
parties providing products and/or services to the Company (including, without limitation IT systems suppliers, and pension, benefits and payroll administrators);
|
c)
|
regulatory authorities (including the HM Revenue & Customs and the police);
|
d)
|
any potential purchasers of the Company or its business; and
|
e)
|
group companies,
|
21.
|
Internet, E-mail and Social Media
|
21.1
|
The Company reserves the right at any time to access and monitor e-mail messages sent or received (in whatever form) by you and any messages or information accessed or downloaded by you from the Internet, as well as the contents of any computer provided to you by the Company for the purposes of carrying out your duties. Your privacy cannot therefore be guaranteed. Use of your computer, the e-mail system and access to the Internet is expressly subject to your consenting to this clause 21.
|
21.2
|
Any inappropriate use of the Company’s computer system or equipment, including for viewing pornography or other material which might reasonably be considered offensive, or for gambling or other activities that are not appropriate to the use of business equipment, will be treated as a disciplinary offence which may result in your dismissal.
|
21.3
|
If you hold any web-based or social media accounts (whether ostensibly for business or social purposes) which substantially relates to your employment with the Company (as opposed to a purely personal account), all data or information held or maintained by you in such account, including connections or contacts, shall be the property of the Company and you must notify the Company of such accounts and regularly update such records including each such account that you open or close and all user details, logins, passwords or similar held by you from time to time in respect of such accounts. You agree to disconnect with any contacts at the request of the Company.
|
22.
|
Ethical Business Conduct
|
23.
|
Reconstruction and Amalgamation
|
24.
|
Collective Agreements
|
25.
|
Notices
|
25.1
|
A notice given to a party under this agreement shall be in writing in the English language and signed by or on behalf of the party giving it. It shall be delivered by hand or sent to the party at the address given in this agreement or as otherwise notified in writing to the other party.
|
25.2
|
A notice required to be given under this Agreement shall be validly given if sent by e-mail.
|
26.
|
Entire Agreement
|
26.1
|
This agreement and any document referred to in it constitutes the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter.
|
26.2
|
Each party acknowledges that in entering into this agreement it does not rely on, and shall have no remedies in respect of, any statement, representation, assurance or warranty (whether made innocently
|
26.3
|
Each party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based on any statement in this agreement.
|
26.4
|
Nothing in this clause 26 shall limit or exclude any liability for fraud.
|
27.
|
No Assignment
|
28.
|
Third Party Rights
|
29.
|
Non-Waiver
|
30.
|
Variation
|
31.
|
Applicable Law and Jurisdiction
|
NAME IN CAPITALS
|
/s/ Daniel S. Jonas
|
SIGNED
|
/s/ Pat Beyer
|
BY THE EMPLOYEE
|
Pat Beyer
|
Name
|
State or Country of Incorporation
|
|
|
|
|
Aspen Laboratories, Inc.
|
|
Colorado
|
CONMED Andover Medical, Inc.
|
|
New York
|
CONMED Denmark ApS
|
|
Denmark
|
CONMED Deutschland GmbH
|
|
Germany
|
CONMED Endoscopic Technologies, Inc.
|
|
Massachusetts
|
CONMED Finland Oy
|
|
Finland
|
CONMED France SAS
|
|
France
|
CONMED Italia SrL
|
|
Italy
|
CONMED Linvatec Australia PTY Ltd
|
|
Australia
|
CONMED Linvatec (Beijing) Medical Appliances Co., Ltd
|
|
China
|
CONMED Linvatec Biomaterials Oy
|
|
Finland
|
CONMED U.K. Ltd.
|
|
United Kingdom
|
Consolidated Medical Equipment Company S. de R.L. de C.V.
|
|
Mexico
|
EndoDynamix, Inc.
|
|
Delaware
|
GWH Limited Partnership
|
|
Florida
|
Largo Lakes I Limited Partnership
|
|
Delaware
|
Linvatec Corporation
|
|
Florida
|
Linvatec Austria GmbH
|
|
Austria
|
Linvatec Belgium NV
|
|
Belgium
|
Linvatec Canada ULC
|
|
Canada
|
Linvatec Europe SPRL
|
|
Belgium
|
Linvatec Korea Ltd.
|
|
Korea
|
Linvatec Nederland B.V.
|
|
Netherlands
|
Linvatec Polska Sp. z.o.o
|
|
Poland
|
Linvatec Spain S.L.
|
|
Spain
|
Linvatec Sweden AB
|
|
Sweden
|
Viking Systems, Inc.
|
|
Delaware
|
1.
|
I have reviewed this annual report on Form 10-K of CONMED Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Curt R. Hartman
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Curt R. Hartman
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President and
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Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of CONMED Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
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5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Robert D. Shallish, Jr.
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Robert D. Shallish, Jr.
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Executive Vice President - Finance and
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Chief Financial Officer
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Date:
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February 23, 2015
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/s/ Curt R. Hartman
|
|
|
Curt R. Hartman
|
|
|
President and
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|
|
Chief Executive Officer
|
|
|
|
Date:
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February 23, 2015
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/s/Robert D. Shallish, Jr.
|
|
|
Robert D. Shallish, Jr.
|
|
|
Executive Vice President-Finance and
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|
|
Chief Financial Officer
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