For the quarter ended
|
Commission File Number
|
June 30, 2015
|
0-16093
|
New York
(State or other jurisdiction of
incorporation or organization)
|
16-0977505
(I.R.S. Employer
Identification No.)
|
525 French Road, Utica, New York
(Address of principal executive offices)
|
13502
(Zip Code)
|
PART I FINANCIAL INFORMATION
|
|
|
Item Number
|
|
Page
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PART II OTHER INFORMATION
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net sales
|
$
|
181,027
|
|
|
$
|
188,150
|
|
|
$
|
358,967
|
|
|
$
|
370,091
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
87,529
|
|
|
87,122
|
|
|
173,187
|
|
|
166,481
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
93,498
|
|
|
101,028
|
|
|
185,780
|
|
|
203,610
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and administrative expense
|
73,581
|
|
|
78,234
|
|
|
148,367
|
|
|
156,598
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Research and development expense
|
7,501
|
|
|
6,854
|
|
|
14,043
|
|
|
13,764
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
81,082
|
|
|
85,088
|
|
|
162,410
|
|
|
170,362
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from operations
|
12,416
|
|
|
15,940
|
|
|
23,370
|
|
|
33,248
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
1,489
|
|
|
1,571
|
|
|
2,949
|
|
|
3,032
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
10,927
|
|
|
14,369
|
|
|
20,421
|
|
|
30,216
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes
|
3,466
|
|
|
4,114
|
|
|
6,648
|
|
|
11,335
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
7,461
|
|
|
$
|
10,255
|
|
|
$
|
13,773
|
|
|
$
|
18,881
|
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
8,630
|
|
|
$
|
11,597
|
|
|
$
|
4,915
|
|
|
$
|
21,174
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Per share data:
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.27
|
|
|
$
|
0.38
|
|
|
$
|
0.50
|
|
|
$
|
0.69
|
|
Diluted
|
0.27
|
|
|
0.37
|
|
|
0.49
|
|
|
0.68
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividends per share of common stock
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
27,620
|
|
|
27,257
|
|
|
27,603
|
|
|
27,303
|
|
||||
Diluted
|
27,857
|
|
|
27,753
|
|
|
27,839
|
|
|
27,803
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
13,773
|
|
|
$
|
18,881
|
|
Adjustments to reconcile net income
|
|
|
|
|
|||
to net cash provided by operating activities:
|
|
|
|
|
|||
Depreciation
|
9,196
|
|
|
9,473
|
|
||
Amortization
|
11,885
|
|
|
12,831
|
|
||
Stock-based compensation
|
3,779
|
|
|
2,518
|
|
||
Deferred income taxes
|
2,176
|
|
|
3,837
|
|
||
Increase (decrease) in cash flows
|
|
|
|
|
|
||
from changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||
Accounts receivable
|
(3,571
|
)
|
|
5,584
|
|
||
Inventories
|
(8,003
|
)
|
|
(19,163
|
)
|
||
Accounts payable
|
3,863
|
|
|
(1,353
|
)
|
||
Income taxes receivable (payable)
|
(1,105
|
)
|
|
(1,013
|
)
|
||
Accrued compensation and benefits
|
(6,078
|
)
|
|
(5,260
|
)
|
||
Other assets
|
2,603
|
|
|
834
|
|
||
Other liabilities
|
(3,463
|
)
|
|
(2,256
|
)
|
||
|
11,282
|
|
|
6,032
|
|
||
Net cash provided by operating activities
|
25,055
|
|
|
24,913
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|||
Purchases of property, plant and equipment
|
(7,783
|
)
|
|
(8,641
|
)
|
||
Payments related to business acquisitions
|
(6,104
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(13,887
|
)
|
|
(8,641
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|||
Net proceeds from common stock issued under employee plans
|
468
|
|
|
953
|
|
||
Repurchase of common stock
|
—
|
|
|
(16,862
|
)
|
||
Payments on mortgage notes
|
(605
|
)
|
|
(558
|
)
|
||
Proceeds from senior credit agreement
|
19,000
|
|
|
31,000
|
|
||
Payments related to distribution agreement
|
(16,667
|
)
|
|
(16,667
|
)
|
||
Payment related to contingent consideration
|
(2,423
|
)
|
|
—
|
|
||
Payments related to debt issuance costs
|
(1,410
|
)
|
|
—
|
|
||
Dividends paid on common stock
|
(11,026
|
)
|
|
(10,987
|
)
|
||
Other, net
|
1,598
|
|
|
1,857
|
|
||
Net cash used in financing activities
|
(11,065
|
)
|
|
(11,264
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(4,219
|
)
|
|
963
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
(4,116
|
)
|
|
5,971
|
|
||
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
66,332
|
|
|
54,443
|
|
||
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
62,216
|
|
|
$
|
60,414
|
|
|
|
|
|
||||
Non-cash financing activities:
|
|
|
|
||||
Dividends payable
|
$
|
5,539
|
|
|
$
|
5,468
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
7,461
|
|
|
$
|
10,255
|
|
|
$
|
13,773
|
|
|
$
|
18,881
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Pension liability, net of income tax (income tax expense of $297 and $158 for the three months ended June 30, 2015 and 2014, respectively, and $598 and $316 for the six months ended June 30, 2015 and 2014, respectively)
|
507
|
|
|
269
|
|
|
1,019
|
|
|
539
|
|
||||
Cash flow hedging gain (loss), net of income tax (income tax expense (benefit) of ($1,499) and ($309) for the three months ended June 30, 2015 and 2014, respectively, and ($349) and $115 for the six months ended June 30, 2015 and 2014, respectively)
|
(2,557
|
)
|
|
(528
|
)
|
|
(595
|
)
|
|
197
|
|
||||
Foreign currency translation adjustment
|
3,219
|
|
|
1,601
|
|
|
(9,282
|
)
|
|
1,557
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
8,630
|
|
|
$
|
11,597
|
|
|
$
|
4,915
|
|
|
$
|
21,174
|
|
|
|
|
|
|
|
|
|
|
Cash Flow
Hedging
Gain (Loss)
|
|
Pension
Liability
|
|
Cumulative
Translation
Adjustments
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2014
|
$
|
3,276
|
|
|
$
|
(30,760
|
)
|
|
$
|
(12,338
|
)
|
|
$
|
(39,822
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss) before reclassifications
|
2,583
|
|
|
—
|
|
|
(9,282
|
)
|
|
(6,699
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss) before tax
a
|
(5,040
|
)
|
|
1,617
|
|
|
—
|
|
|
(3,423
|
)
|
||||
Income tax
|
1,862
|
|
|
(598
|
)
|
|
—
|
|
|
1,264
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net current-period other comprehensive income (loss)
|
(595
|
)
|
|
1,019
|
|
|
(9,282
|
)
|
|
(8,858
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, June 30, 2015
|
$
|
2,681
|
|
|
$
|
(29,741
|
)
|
|
$
|
(21,620
|
)
|
|
$
|
(48,680
|
)
|
|
Cash Flow
Hedging
Gain (Loss)
|
|
Pension
Liability
|
|
Cumulative
Translation
Adjustments
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2013
|
$
|
(1,385
|
)
|
|
$
|
(18,918
|
)
|
|
$
|
2,731
|
|
|
$
|
(17,572
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss) before reclassifications
|
(150
|
)
|
|
—
|
|
|
1,557
|
|
|
1,407
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss) before tax
a
|
551
|
|
|
855
|
|
|
—
|
|
|
1,406
|
|
||||
Income tax
|
(204
|
)
|
|
(316
|
)
|
|
—
|
|
|
(520
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net current-period other comprehensive income
|
197
|
|
|
539
|
|
|
1,557
|
|
|
2,293
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Balance, June 30, 2014
|
$
|
(1,188
|
)
|
|
$
|
(18,379
|
)
|
|
$
|
4,288
|
|
|
$
|
(15,279
|
)
|
June 30, 2015
|
Asset
Balance Sheet
Location
|
|
Fair
Value
|
|
Liabilities
Balance Sheet
Location
|
|
Fair
Value
|
|
|
Net
Fair
Value
|
||||||
Derivatives designated as hedged instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
5,127
|
|
|
Prepaid expenses and other current assets
|
|
$
|
(875
|
)
|
|
|
$
|
4,252
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
—
|
|
|
Prepaid expenses and other current assets
|
|
(36
|
)
|
|
|
(36
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivatives
|
|
|
$
|
5,127
|
|
|
|
|
$
|
(911
|
)
|
|
|
$
|
4,216
|
|
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 expenses and other current assets
|
|
$
|
6,167
|
|
|
Prepaid expenses and other current assets
|
|
$
|
(971
|
)
|
|
|
$
|
5,196
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
44
|
|
|
Prepaid expenses and other current assets
|
|
(61
|
)
|
|
|
(17
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivatives
|
|
|
$
|
6,211
|
|
|
|
|
$
|
(1,032
|
)
|
|
|
$
|
5,179
|
|
|
June 30,
2015 |
|
December 31,
2014 |
||||
|
|
|
|
||||
Raw materials
|
$
|
44,035
|
|
|
$
|
44,847
|
|
Work-in-process
|
15,925
|
|
|
13,876
|
|
||
Finished goods
|
89,220
|
|
|
89,426
|
|
||
Total
|
$
|
149,180
|
|
|
$
|
148,149
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
7,461
|
|
|
$
|
10,255
|
|
|
$
|
13,773
|
|
|
$
|
18,881
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic – weighted average shares outstanding
|
27,620
|
|
|
27,257
|
|
|
27,603
|
|
|
27,303
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Effect of dilutive potential securities
|
237
|
|
|
496
|
|
|
236
|
|
|
500
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Diluted – weighted average shares outstanding
|
27,857
|
|
|
27,753
|
|
|
27,839
|
|
|
27,803
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic (per share)
|
$
|
0.27
|
|
|
$
|
0.38
|
|
|
$
|
0.50
|
|
|
$
|
0.69
|
|
Diluted (per share)
|
0.27
|
|
|
0.37
|
|
|
0.49
|
|
|
0.68
|
|
Balance as of December 31, 2014
|
$
|
256,232
|
|
|
|
||
Goodwill resulting from business acquisitions
|
5,369
|
|
|
|
|
||
Reduction in goodwill resulting from a business acquisition purchase price allocation adjustment
|
(525
|
)
|
|
|
|
||
Foreign currency translation
|
(72
|
)
|
|
|
|
||
Balance as of June 30, 2015
|
$
|
261,004
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
$
|
136,898
|
|
|
$
|
(62,097
|
)
|
|
$
|
136,126
|
|
|
$
|
(59,707
|
)
|
|
|
|
|
|
|
|
|
||||||||
Promotional, marketing and distribution rights
|
149,376
|
|
|
(21,000
|
)
|
|
149,376
|
|
|
(18,000
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Patents and other intangible assets
|
63,396
|
|
|
(41,989
|
)
|
|
63,464
|
|
|
(41,363
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Unamortized intangible assets
:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Trademarks and tradenames
|
86,544
|
|
|
—
|
|
|
86,544
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
$
|
436,214
|
|
|
$
|
(125,086
|
)
|
|
$
|
435,510
|
|
|
$
|
(119,070
|
)
|
|
Amortization included in expense
|
|
Amortization recorded as a reduction of revenue
|
|
Total
|
||||||
2015
|
$
|
6,542
|
|
|
$
|
6,000
|
|
|
$
|
12,542
|
|
2016
|
7,017
|
|
|
6,000
|
|
|
13,017
|
|
|||
2017
|
7,479
|
|
|
6,000
|
|
|
13,479
|
|
|||
2018
|
7,423
|
|
|
6,000
|
|
|
13,423
|
|
|||
2019
|
7,423
|
|
|
6,000
|
|
|
13,423
|
|
|||
2020
|
7,455
|
|
|
6,000
|
|
|
13,455
|
|
|
2015
|
|
2014
|
||||
|
|
|
|
||||
Balance as of January 1,
|
$
|
2,286
|
|
|
$
|
2,422
|
|
|
|
|
|
|
|||
Provision for warranties
|
1,950
|
|
|
1,736
|
|
||
|
|
|
|
|
|||
Claims made
|
(1,716
|
)
|
|
(1,815
|
)
|
||
|
|
|
|
|
|||
Balance as of June 30,
|
$
|
2,520
|
|
|
$
|
2,343
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||
Service cost
|
$
|
52
|
|
|
$
|
72
|
|
|
$
|
120
|
|
|
$
|
145
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest cost on projected benefit obligation
|
810
|
|
|
877
|
|
|
1,697
|
|
|
1,753
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Expected return on plan assets
|
(1,380
|
)
|
|
(1,496
|
)
|
|
(2,849
|
)
|
|
(2,992
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Net amortization and deferral
|
805
|
|
|
427
|
|
|
1,617
|
|
|
855
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Net periodic pension (income) cost
|
$
|
287
|
|
|
$
|
(120
|
)
|
|
$
|
585
|
|
|
$
|
(239
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Restructuring costs included in cost of sales
|
$
|
1,534
|
|
|
$
|
1,358
|
|
|
$
|
3,863
|
|
|
$
|
2,306
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Restructuring costs
|
$
|
2,284
|
|
|
$
|
494
|
|
|
$
|
8,464
|
|
|
$
|
1,207
|
|
Patent dispute and other matters
|
—
|
|
|
1,410
|
|
|
—
|
|
|
3,304
|
|
||||
Shareholder activism costs
|
—
|
|
|
935
|
|
|
—
|
|
|
1,525
|
|
||||
Restructuring and other expense included in selling and administrative expense
|
$
|
2,284
|
|
|
$
|
2,839
|
|
|
$
|
8,464
|
|
|
$
|
6,036
|
|
|
|
||
Balance as of January 1, 2015
|
$
|
8,254
|
|
|
|
||
Expenses incurred
|
3,979
|
|
|
|
|
||
Payments made
|
(4,549
|
)
|
|
|
|
||
Balance at June 30, 2015
|
$
|
7,684
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||
Orthopedic surgery
|
$
|
96,801
|
|
|
$
|
102,362
|
|
|
$
|
195,398
|
|
|
$
|
208,310
|
|
General surgery
|
71,111
|
|
|
70,745
|
|
|
137,173
|
|
|
134,205
|
|
||||
Surgical visualization
|
13,115
|
|
|
15,043
|
|
|
26,396
|
|
|
27,576
|
|
||||
Consolidated net sales
|
$
|
181,027
|
|
|
$
|
188,150
|
|
|
$
|
358,967
|
|
|
$
|
370,091
|
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
|
|
•
|
general economic and business conditions;
|
•
|
changes in foreign exchange and interest rates;
|
•
|
cyclical customer purchasing patterns due to budgetary and other constraints;
|
•
|
changes in customer preferences;
|
•
|
competition;
|
•
|
changes in technology;
|
•
|
the introduction and acceptance of new products;
|
•
|
the ability to evaluate, finance and integrate acquired businesses, products and companies;
|
•
|
changes in business strategy;
|
•
|
the availability and cost of materials;
|
•
|
the possibility that United States or foreign regulatory and/or administrative agencies may initiate enforcement actions against us or our distributors;
|
•
|
future levels of indebtedness and capital spending;
|
•
|
quality of our management and business abilities and the judgment of our personnel;
|
•
|
the availability, terms and deployment of capital;
|
•
|
the risk of litigation, especially patent litigation, as well as the cost associated with patent and other litigation;
|
•
|
the risk of a lack of allograft tissue 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; and
|
•
|
compliance with and changes in regulatory requirements.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
|
|
|
|
|
||
Orthopedic surgery
|
53.5
|
%
|
|
54.4
|
%
|
|
54.4
|
%
|
|
56.2
|
%
|
General surgery
|
39.3
|
%
|
|
37.6
|
%
|
|
38.2
|
%
|
|
36.3
|
%
|
Surgical visualization
|
7.2
|
%
|
|
8.0
|
%
|
|
7.4
|
%
|
|
7.5
|
%
|
Consolidated net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
•
|
revenue recognition;
|
•
|
inventory valuation;
|
•
|
goodwill and intangible assets;
|
•
|
pension plan;
|
•
|
stock-based compensation costs; and
|
•
|
income taxes.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
|
|
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
48.4
|
|
|
46.3
|
|
|
48.2
|
|
|
45.0
|
|
Gross profit
|
51.6
|
|
|
53.7
|
|
|
51.8
|
|
|
55.0
|
|
Selling and administrative expense
|
40.6
|
|
|
41.6
|
|
|
41.3
|
|
|
42.3
|
|
Research and development expense
|
4.1
|
|
|
3.6
|
|
|
3.9
|
|
|
3.7
|
|
Income from operations
|
6.9
|
|
|
8.5
|
|
|
6.6
|
|
|
9.0
|
|
Interest expense
|
0.8
|
|
|
0.8
|
|
|
0.8
|
|
|
0.8
|
|
Income before income taxes
|
6.1
|
|
|
7.7
|
|
|
5.8
|
|
|
8.2
|
|
Provision for income taxes
|
1.9
|
|
|
2.2
|
|
|
1.9
|
|
|
3.1
|
|
Net income
|
4.2
|
%
|
|
5.5
|
%
|
|
3.9
|
%
|
|
5.1
|
%
|
•
|
Orthopedic surgery sales decreased $
5.6 million
(
-5.4%
) to
$96.8 million
in the
three months ended
June 30, 2015
from $
102.4 million
in the
three months ended
June 30, 2014
due to lower sales in our resection product offerings and powered instrument burs and blades. For the
six months ended
June 30, 2015
sales decreased
$12.9 million
(
-6.2%
) to
$195.4 million
from
$208.3 million
in the
six months ended
June 30, 2014
mainly due to lower sales in our procedure specific and resection product offerings as well as our powered instrument burs and blades. In constant currency, excluding the effects of the hedging program, sales decreased
1.0%
and
2.1%
in the
three and six months ended
June 30, 2015
, respectively, from the same periods one year ago.
|
•
|
General surgery sales increased $
0.4 million
(
0.5%
) in the
three months ended
June 30, 2015
to $
71.1 million
from $
70.7 million
in the
three months ended
June 30, 2014
and increased
$3.0 million
(
2.2%
) in the
six months ended
June 30, 2015
to
$137.2 million
from
$134.2 million
in the
six months ended
June 30, 2014
. The increase in the
three and six months ended
June 30, 2015
is due to higher sales in our advanced surgical and critical care product offerings. In constant currency, excluding the effects of the hedging program, sales increased
2.3%
and
3.9%
in the
three and six months ended
June 30, 2015
, respectively, from the same periods one year ago.
|
•
|
Surgical visualization sales decreased $
2.0 million
(
-12.8%
) in the
three months ended
June 30, 2015
to $
13.1 million
from $
15.1 million
in the
three months ended
June 30, 2014
and decreased
$1.2 million
(
-4.3%
) in the
six months ended
June 30, 2015
to
$26.4 million
from
$27.6 million
in the
six months ended
June 30, 2014
. The decrease is mainly due to the discontinuation of an OEM video system in our export business. In constant currency, excluding the effects of the hedging program, sales decreased
9.4%
and
1.0%
in the
three and six months ended
June 30, 2015
, respectively, from the same periods one year ago.
|
Exhibit No.
|
Description of Exhibit
|
|
|
10.1
|
CONMED Corporation Executive Severance Plan
|
|
|
31.1
|
Certification of Curt R. Hartman pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification of Luke A. Pomilio pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certifications of Curt R. Hartman and Luke A. Pomilio pursuant to 18 U.S. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101
|
The following materials from CONMED Corporation's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Comprehensive Income for the three and six months ended June 30, 2015 and 2014, (ii) the Consolidated Condensed Balance Sheets at June 30, 2015 and December 31, 2014, (iii) Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2015 and 2014, and (iv) Notes to Consolidated Condensed Financial Statements for the three and six months ended June 30, 2015. In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
|
|
|
CONMED CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
By: /s/ Luke A. Pomilio
|
|
|
Luke A. Pomilio
|
|
|
Executive Vice President, Finance and
|
|
|
Chief Financial Officer
|
|
|
|
|
|
Date:
|
|
|
July 27, 2015
|
|
|
Sequential Page
|
Exhibit
|
|
Number
|
|
|
|
|
|
|
10.1
|
CONMED Corporation Executive Severance Plan
|
E-1
|
|
|
|
|
|
|
31.1
|
Certification of Curt R. Hartman pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
E-10
|
|
|
|
|
|
|
31.2
|
Certification of Luke A. Pomilio pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
E-11
|
|
|
|
|
|
|
32.1
|
Certifications of Curt R. Hartman and Luke A. Pomilio pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
E-12
|
|
|
|
|
|
|
101
|
The following materials from CONMED Corporation’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Comprehensive Income for the three and six months ended June 30, 2015 and 2014, (ii) the Consolidated Condensed Balance Sheets at June 30, 2015 and December 31, 2014, (iii) Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2015 and 2014, and (iv) Notes to Consolidated Condensed Financial Statements for the three and six months ended June 30, 2015. In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
|
|
Post-Change in Control Qualifying Termination
|
||
Participation Level
|
Severance Multiple
|
|
Base Salary
|
Annual Incentive
|
|
Chief Executive Officer Level
|
3
|
3
|
Senior Executive Level
|
2.5
|
2.5
|
Executive Level
|
2
|
2
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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:
|
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; and
|
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.
|
|
/s/ Curt R. Hartman
|
|
Curt R. Hartman
|
|
President & Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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; and
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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)
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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/ Luke A. Pomilio
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Luke A. Pomilio
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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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July 27, 2015
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/s/ Curt R. Hartman
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Curt R. Hartman
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President & Chief Executive Officer
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Date:
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July 27, 2015
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/s/ Luke A. Pomilio
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Luke A. Pomilio
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Executive Vice President, Finance and
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Chief Financial Officer
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