UTICA, N.Y., Dec. 22 /PRNewswire-FirstCall/ -- CONMED Corporation
(Nasdaq: CNMD) today announced that it now expects sales for the fourth
quarter of 2005 will approximate $153-$156 million. This is below the
Company's previously announced estimate of $163-$166 million. As a
consequence of the reduced anticipated sales and higher operating costs in the
quarter, management believes that the fourth quarter non-GAAP net income and
diluted earnings per share, which exclude previously disclosed transition
charges for the Endoscopic Technologies acquisition and other matters, will
approximate $5.0 - $6.0 million and $0.16 - $0.20, respectively. GAAP net
income and diluted earnings per share are expected to be $3.0 - $4.0 million
and $0.10 - $0.14, respectively.
"We expect that our fourth quarter sales will continue to be affected by
reduced surgical procedure trends first identified this past summer, as
discussed on our last earnings call. Further, we believe that hospital
administrators appear to be extending the purchasing decision timeline for
capital equipment, causing additional delays in anticipated sales of our video
imaging and powered surgical instruments," said Joseph J. Corasanti, President
and Chief Operating Officer. "We continue to believe that the disappointing
sales growth experienced in the second half of 2005 will be short lived, and
is caused by temporary market conditions that are not specific to CONMED.
Over the long-term, we expect an annual organic growth rate of 6% supplemented
by acquisition growth. The Company has an outstanding franchise in the medical
device markets that we serve."
"CONMED's cash flow remains solid. So far in 2005, CONMED has repurchased
nearly $40 million in common stock and we will continue to buy back our stock
in 2006 as authorized by our Board," added Mr. Corasanti.
Besides the anticipated effect of reduced sales on fourth quarter
profitability, the Company expects that income will be impacted by reduced
gross margins from lower-than-expected sales volume and the resulting
unfavorable overhead absorption as well as higher raw material costs for those
products dependent on petroleum based plastics. The Company's ongoing legal
costs associated with its antitrust lawsuit against a competitor have also
accelerated as a result of the Company's response to the defendant's motion
for summary judgment, which was heard on December 16, 2005. Also, the Company
has experienced increased scrap and re-work costs as a result of identifying a
potential issue with packaging integrity on certain of its powered instrument
burrs.
The Company has implemented, or expects to implement, initiatives to
enhance the Company's short- and long-term prospects. These on-going or
anticipated initiatives include:
1. Expanded research and development activities expected to take advantage
of several new or improved technologies including high definition video
imaging, advanced vital signs monitoring and enhanced therapeutics for
gastroenterology -- These promising technologies, and others in
development, are intended to provide the Company with innovative
medical devices which command profit margins higher than the Company's
current overall gross margin.
2. Mitigation of the effects of higher material costs for plastic polymers
because of increased petroleum charges through planned price increases
on certain product lines -- While pricing to customers is generally
bound by contracts and cannot be quickly changed, the pricing upon
contract renewals is expected to be negotiated to offset the cost
increases the Company has experienced.
3. Completion of the manufacturing transition for the Endoscopic
Technologies products -- During the last year, the Company has devoted
significant human resources to this integration project. Upon the
anticipated completion of this integration, these resources will be
reallocated to other profit-enhancing activities. Additionally, as
part of this significant manufacturing expansion, we have begun a
corporate quality initiative to enhance our production and quality
systems aimed to improve production efficiency, quality management and
customer satisfaction.
4. Continuing legal action against a competitor to permit a level
competitive market for our EndoSurgery products -- The Company believes
that the current marketplace for EndoSurgery product lines does not
permit free and fair competition. CONMED will continue to pursue legal
remedies to obtain the ability to provide our products to the medical
community fairly.
The Company anticipates release of final fourth quarter and year end
results on February 9, 2006.
CONMED Profile
CONMED is a medical technology company with an emphasis on surgical
devices and equipment for minimally invasive procedures and monitoring. The
Company's products serve the clinical areas of arthroscopy, powered surgical
instruments, electrosurgery, cardiac monitoring disposables, endosurgery and
endoscopic technologies. They are used by surgeons and physicians in a
variety of specialties including orthopedics, general surgery, gynecology,
neurosurgery, and gastroenterology. Headquartered in Utica, New York, the
Company's 3,100 employees distribute its products worldwide from eleven
manufacturing locations.
Forward Looking Information
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, 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, 2004; (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 acquisition (and its
integration) or other transaction may require the Company to reconsider its
financial assumptions and goals/targets; (vii) increasing costs for raw
material and transportation; and/or (viii) 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
CONTACT:
Robert Shallish, Chief Financial Officer of
CONMED Corporation, +1-315-624-3206; or Julie Huang or Theresa
Kelleher, both of Financial Dynamics, +1-212-850-5600, for CONMED
Corporation
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