- Stock Transaction Valued at Approximately $29.7 Million -
- New Products Expected to Generate
First Year Revenues of $18 to $20 Million -
- Acquisition Expected to Add $5 Million to EBITDA and $0.05 to EPS in 2002 -
- CONMED to Record $1.2 Million Charge Related to
Transition Costs in Second Half of 2001 -
UTICA, N.Y., June 12 /PRNewswire/ -- CONMED Corporation (Nasdaq: CNMD)
announced today that it has signed a definitive agreement to acquire the
remaining minimal access surgery ("MAS") product lines from Imagyn Medical
Technologies that it did not acquire in November 2000. The new products, with
expected revenues of $18 to $20 million in the first twelve months following
closing, give CONMED a significant presence in the fast-growing laparoscopic
instrument market by more than doubling the Company's existing line. The
acquisition is expected to close within four weeks.
Under the terms of the agreement, CONMED will issue to Imagyn 1.3 million
shares of CNMD common stock. Based on the stock's June 11, 2001 closing price
of $22.81 per share, the transaction is valued at approximately $29.7 million.
The issued stock will be subject to a 90-day lock-up restriction and certain
other sales restrictions. Imagyn will have certain registration rights.
The products to be acquired consist of various single-use and "reposable"
(devices integrating reusable and disposable, single-use components)
instruments such as trocars, handheld instruments and tissue ligating devices
enabling minimal access surgical techniques. Also to be acquired is Imagyn's
line of Reflex(R) skin staplers for wound closure. Together with CONMED's
present lines of minimal access surgery products, the Company's MAS division
will be a significant supplier of instruments to hospitals and surgery centers
with revenues exceeding $30 million. CONMED believes it will become the third
largest U.S. supplier of such MAS products to the healthcare industry
following the completion of the transaction.
Mr. Joseph J. Corasanti, President and Chief Operating Officer of CONMED,
stated, "We are very excited about this new addition to CONMED. Our MAS
product line is the fastest growing product group in our business,
experiencing a 20% organic sales increase in 2000. This acquisition will
allow CONMED to create a sales force that is focused exclusively on the sales
of MAS products. With the newly created sales force dedicated to minimal
access surgery, we expect continued strong growth for the line. Furthermore,
this transaction is consistent with our strategy of maintaining a leading
market share position in our product lines."
Mr. Corasanti added, "Through our Linvatec subsidiary, we are well known
for our minimal access surgery products in the orthopedic field of
arthroscopy. Over time, we expect synergistic sales opportunities between the
arthroscopy sales force and our new MAS sales force, particularly with respect
to our line of innovative, state-of-the-art scope, camera and video products."
As part of the transaction, the majority of Imagyn's domestic surgical
sales force will become CONMED employees. These sales professionals will join
the Company's current specialists in MAS products to form a new U.S. sales
force of approximately 25 specializing in minimal access surgical products.
The Company currently sells its MAS products in the U.S. through its
electrosurgical sales force and three exclusive specialty dealers that have
sales responsibility for specific geographic locations. Going forward, these
exclusive specialty dealers will continue to sell the Company's line of MAS
products in their territories. Outside the U.S., the Imagyn products have
revenues of approximately $5 million and are sold by an established and
effective dealer network. The Company will continue to distribute these
products through this same dealer network.
Manufacturing will continue in Imagyn's Kalamazoo, Michigan plant during a
transition period expected to last from four to six months. Subsequently,
manufacturing will be transferred to CONMED's Utica, New York operations. In
the third and fourth quarters, the Company will record a nonrecurring charge
to expense totaling approximately $1.2 million for incremental transition
costs.
During the transition phase in the second half of 2001, the Company
expects the acquisition to be accretive to earnings before interest, taxes,
depreciation and amortization (EBITDA), resulting in an approximate
$1.5 million increase to cash flow before the one-time special charge. The
acquisition is expected to be neutral to earnings per share during this
transition period before the nonrecurring special charge. For the year 2002,
the Company expects the acquisition to yield an approximate $5 million
increase to EBITDA and $0.05 to earnings per share.
The acquisition will be accounted for as a purchase using the proposed
FASB guidance on accounting for goodwill.
CONMED is a medical technology company specializing in instruments and
implants for arthroscopic sports medicine, and powered surgical instruments
for orthopedic, ENT, neuro-surgery, and other surgical specialties. The
Company is also a leading developer, manufacturer and supplier of advanced
medical devices, including RF electrosurgery systems used in all types of
surgery, ECG electrodes for heart monitoring and minimally invasive surgical
devices. Headquartered in Utica, New York, the Company's 2,400 employees
distribute its products worldwide from eight manufacturing locations.
This press release contains forward-looking statements based on certain
assumptions and contingencies that involve risks and uncertainties. The
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 and relate to the
Company's performance on a going-forward basis. The forward-looking
statements in this press release involve risks and uncertainties which could
cause actual results, performance or trends, including the above mentioned
anticipated revenues and earnings, to differ materially from those expressed
in the forward-looking statements herein or in previous disclosures. The
Company believes that all forward-looking statements made by it have a
reasonable basis, but there can be no assurance that management's
expectations, beliefs or projections as expressed in the forward-looking
statements will actually occur or prove to be correct. In addition to general
industry and economic conditions, factors that could cause actual results to
differ materially from those discussed in the forward-looking statements in
this press release include, but are not limited to: (i) the failure of any one
or more of the assumptions stated above, including those relating to the
timing and costs of the transition, to prove to be correct; (ii) the risks
relating to forward-looking statements discussed in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000; (iii)
cyclical purchasing patterns from customers, end-users and dealers; (iv)
timely release of new products, and acceptance of such new products by the
market; (v) the introduction of new products by competitors and other
competitive responses; (vi) the possibility that any new acquisition or other
transaction may require the Company to reconsider its financial assumptions
and goals/targets; and/or (vii) the Company's ability to devise and execute
strategies to respond to market conditions.
SOURCE CONMED Corporation
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Related links:
http://www.conmed.com
Company News On-Call:
http://www.prnewswire.com/comp/201850.html or fax,
800-758-5804, ext. 201850
CONTACT:
Robert Shallish, Chief Financial Officer of
CONMED Corporation, 315-797-8375, ext. 2219; or Investors -
Theresa Vogt, or Sarah Torres, or Media - Dan Budwick, all of
Morgen-Walke Associates, 212-850-5600, for CONMED Corporation
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