10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended	Commission File Number
March 31, 2013	0-16093

CONMED CORPORATION

(Exact name of the registrant as specified in its charter)

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)

(315) 797-8375

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer ý    Accelerated filer o    Non-accelerated filer o    Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

The number of shares outstanding of registrant's common stock, as of April 24, 2013 is 27,732,070 shares.

CONMED CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2013

PART I FINANCIAL INFORMATION
Item Number		Page
Item 1.	Financial Statements (unaudited)
	– Consolidated Condensed Statements of Comprehensive Income for the three months ended March 31, 2012 and 2013	1
	– Consolidated Condensed Balance Sheets as of December 31, 2012 and March 31, 2013	2
	– Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2012 and 2013	3
	– Notes to Consolidated Condensed Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 2.	Issuer Purchases of Equity Securities	22
Item 6.	Exhibits	23
Signatures		24

PART I                      FINANCIAL INFORMATION

Item 1.

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands except per share amounts)

	Three Months Ended
	March 31,
	2012		2013
Net sales	$	194,316	$	187,014
Cost of sales	93,405		84,332
Gross profit	100,911		102,682
Selling and administrative expense	74,806		77,725
Research and development expense	7,095		5,694
Medical device excise tax	—		1,580
Other expense	1,988		1,813
	83,889		86,812
Income from operations	17,022		15,870
Loss on early extinguishment of debt	—		263
Interest expense	1,437		1,366
Income before income taxes	15,585		14,241
Provision for income taxes	5,617		3,749
Net income	$	9,968	$	10,492
Comprehensive income	$	11,045	$	11,374
Per share data:
Net income
Basic	$	0.36	$	0.37
Diluted	0.35		0.37
Dividends per share of common stock	$	0.15	$	0.15
Weighted average common shares
Basic	28,029		28,127
Diluted	28,484		28,500

 See notes to consolidated condensed financial statements.

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CONMED CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited, in thousands except share and per share amounts)

	December 31, 2012			March 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	23,720		$	32,359
Accounts receivable, net	139,124			135,597
Inventories	156,228			156,873
Income taxes receivable	2,897			2,000
Deferred income taxes	11,931			10,703
Prepaid expenses and other current assets	14,993			16,466
Total current assets	348,893			353,998
Property, plant and equipment, net	139,041			138,411
Deferred income taxes	1,057			1,188
Goodwill	249,160			249,160
Other intangible assets, net	190,809			188,809
Other assets	150,547			151,419
Total assets	$	1,079,507		$	1,082,985
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	1,050		$	1,050
Accounts payable	23,622			25,045
Accrued compensation and benefits	33,511			24,538
Income taxes payable	2,706			2,100
Other current liabilities	64,325			44,442
Total current liabilities	125,214			97,175
Long-term debt	160,802			224,802
Deferred income taxes	99,857			102,199
Other long-term liabilities	86,636			61,229
Total liabilities	472,509			485,405
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $ .01 per share;
authorized 500,000 shares; none outstanding	—			—
Common stock, par value $ .01 per share;
100,000,000 shares authorized; 31,299,194 shares
issued in 2012 and 2013, respectively	313			313
Paid-in capital	324,322			325,801
Retained earnings	377,907			384,210
Accumulated other comprehensive loss	(27,581		)	(26,699		)
Less: 2,925,801 and 3,455,985 shares of common stock
in treasury, at cost in 2012 and 2013, respectively	(67,963		)	(86,045		)
Total shareholders’ equity	606,998			597,580
Total liabilities and shareholders’ equity	$	1,079,507		$	1,082,985

 See notes to consolidated condensed financial statements.

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CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Three Months Ended
	March 31,
	2012			2013
Cash flows from operating activities:
Net income	$	9,968		$	10,492
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation	4,688			4,619
Amortization	7,124			7,110
Stock-based compensation	1,183			1,152
Deferred income taxes	2,735			1,914
Loss on early extinguishment of debt	—			263
Increase (decrease) in cash flows
from changes in assets and liabilities:
Accounts receivable	(5,618		)	3,042
Inventories	2,764			(4,858		)
Accounts payable	2,601			313
Income taxes receivable (payable)	(1,232		)	244
Accrued compensation and benefits	(10,446		)	(8,830		)
Other assets	(1,106		)	(2,423		)
Other liabilities	(5,032		)	(7,566		)
	(2,339		)	(5,020		)
Net cash provided by operating activities	7,629			5,472
Cash flows from investing activities:
Purchases of property, plant and equipment	(6,424		)	(4,130		)
Payments related to distribution agreement	(64,116		)	—
Net cash used in investing activities	(70,540		)	(4,130		)
Cash flows from financing activities:
Net proceeds from common stock issued
under employee plans	5,345			7,633
Repurchase of common stock	—			(25,732		)
Payments on senior credit agreement	(338		)	—
Proceeds from senior credit agreement	50,000			64,000
Payment related to distribution agreement	—			(34,000		)
Payments related to issuance of debt	—			(1,636		)
Dividends paid on common stock	—			(4,256		)
Other, net	809			1,625
Net cash provided by financing activities	55,816			7,634
Effect of exchange rate changes
on cash and cash equivalents	501			(337		)
Net increase (decrease) in cash and cash equivalents	(6,594		)	8,639
Cash and cash equivalents at beginning of period	26,048			23,720
Cash and cash equivalents at end of period	$	19,454		$	32,359
Non-cash financing activities:
Dividends payable	$	4,328		$	4,189

See notes to consolidated condensed financial statements.

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CONMED CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, in thousands except per share amounts)

Note 1 – Operations

CONMED Corporation (“CONMED”, the “Company”, “we” or “us”) is a medical technology company with an emphasis on surgical devices and equipment for minimally invasive procedures and monitoring.  The Company’s products are used by surgeons and physicians in a variety of specialties including orthopedics, general surgery, gynecology, neurosurgery and gastroenterology.

Note 2 - Interim Financial Information

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. Results for the period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The consolidated condensed financial statements and notes thereto should be read in conjunction with the financial statements and notes for the year ended December 31, 2012 included in our Annual Report on Form 10-K.

Income taxes receivable and income taxes payable at December 31, 2012 have been revised to conform to the current year presentation.

Note 3 – Comprehensive Income

Comprehensive income consists of the following:

	Three Months Ended March 31,
	2012			2013
Net income	$	9,968		$	10,492
Other comprehensive income:
Pension liability, net of
income tax	462			461
Cash flow hedging gain (loss),
net of income tax	(1,561		)	2,127
Foreign currency
translation adjustment	2,176			(1,706		)
Comprehensive income	$	11,045		$	11,374

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Accumulated other comprehensive income (loss) consists of the following:

	Cash Flow Hedging Gain (Loss)a			Pension Liabilitya			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2012	$	(1,130	)	$	(30,375	)	$	3,924		$	(27,581	)
Other comprehensive income
before reclassifications	2,189			—			(1,706		)	483
Amounts reclassified from accumulated
other comprehensive incomeb	(62		)	461			—			399
Net current-period other
comprehensive income	2,127			461			(1,706		)	882
Balance, March 31, 2013	$	997		$	(29,914	)	$	2,218		$	(26,699	)

(a) All amounts are net of tax.

(b) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income components are included in sales & cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 4 and Note 9, respectively, for further details.

Note 4 – Fair Value of Financial Instruments

We enter into derivative instruments for risk management purposes only. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We use forward contracts, a type of derivative instrument, to manage certain foreign currency exposures.

By nature, all financial instruments involve market and credit risks. We enter into forward contracts with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties.

Foreign Currency Forward Contracts. We hedge certain forecasted intercompany transactions denominated in foreign currencies through the use of forward contracts. We account for these forward contracts as cash flow hedges. To the extent these forward contracts meet hedge accounting criteria, changes in their fair value are not included in current earnings but are included in accumulated other comprehensive loss. These changes in fair value will be recognized into earnings as a component of sales or cost of sales when the forecasted transaction occurs. The notional contract amounts for forward contracts outstanding at March 31, 2013 which have been accounted for as cash flow hedges totaled $89.6 million. Net realized gains recognized for forward contracts accounted for as cash flow hedges approximated $0.8 million and $0.1 million for the three months endedMarch 31, 2012 and 2013, respectively. Net unrealized gains on forward contracts outstanding, net of tax, which have been accounted for as cash flow hedges and which have been included in other comprehensive income, totaled $1.0 million at March 31, 2013. It is expected these unrealized gains will be recognized in the consolidated statements of comprehensive income in 2013 and 2014.

We also enter into forward contracts to exchange foreign currencies for United States dollars in order to hedge our currency transaction exposures on intercompany receivables denominated in foreign currencies. These forward contracts settle each month at month-end, at which time we enter into new forward contracts. We have not designated these forward contracts as hedges and have not applied hedge accounting to them. The notional contract amounts for forward contracts outstanding at March 31, 2013 which have not been designated as hedges totaled $45.5 million. Net realized gains (losses) recognized in connection with those forward contracts not accounted for as hedges approximated $(0.7) million and $0.8 million for the three months endedMarch 31, 2012 and 2013, respectively, offsetting gains (losses) on our intercompany receivables of $0.4 million and $(1.5) million for the three months endedMarch 31, 2012 and 2013, respectively. These gains and losses have been recorded in selling and administrative expense in the consolidated statements of operations.

We record these forward foreign exchange contracts at fair value; the following tables summarize the fair value for forward foreign exchange contracts outstanding at December 31, 2012 and March 31, 2013:

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December 31, 2012	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	$	(457	)	Other current liabilities	$	2,249	$	1,792
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	—			Other current liabilities	150		150
Total derivatives		$	(457	)		$	2,399	$	1,942

March 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	Prepaid expenses and other current assets	$	2,447	Prepaid expenses and other current assets	$	(866	)	$	1,581
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	5		Prepaid expenses and other current assets	(76		)	(71		)
Total derivatives		$	2,452		$	(942	)	$	1,510

Our forward foreign exchange contracts are subject to a master netting agreement and qualify for netting in the consolidated balance sheets. Accordingly, at December 31, 2012 and March 31, 2013 we have recorded the net fair value of $1.9 million in other current liabilities and $1.5 million in prepaid expenses and other current assets, respectively.

Fair Value Disclosure. Financial Accounting Standards Board (“FASB”) guidance defines fair value and establishes a framework for measuring fair value and related disclosure requirements. This guidance applies when fair value measurements are required or permitted. The guidance indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Fair value is defined based upon an exit price model.

As of March 31, 2013, we do not have any significant non-recurring measurements of non-financial assets and non-financial liabilities.

Valuation Hierarchy. A valuation hierarchy was established for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from or corroborated by observable market data through correlation. Level 3 inputs are unobservable inputs based on our own assumptions

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used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of March 31, 2013 consist of forward foreign exchange contracts. The value of the forward foreign exchange contract assets and liabilities were determined within Level 2 of the valuation hierarchy and are listed in the table above.

The carrying amounts reported in our balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term debt excluding the Notes approximate fair value. The fair value of the Notes was determined within Level 2 of the valuation hierarchy and approximated $0.2 million at both December 31, 2012 and March 31, 2013 based on their quoted market price. 

Note 5 - Inventories

Inventories consist of the following:

	December 31, 2012		March 31, 2013
Raw materials	$	45,115	$	45,161
Work-in-process	14,229		15,399
Finished goods	96,884		96,313
Total	$	156,228	$	156,873

Note 6 – Earnings Per Share

Basic earnings per share (“basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding resulting from employee stock options, restricted stock units, performance share units and stock appreciation rights (“SARs”) during the period. The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2012 and 2013.

	Three Months Ended March 31,
	2012		2013
Net income	$	9,968	$	10,492
Basic – weighted average shares outstanding	28,029		28,127
Effect of dilutive potential securities	455		373
Diluted – weighted average shares outstanding	28,484		28,500
Net income
Basic (per share)	$0.36		$0.37
Diluted (per share)	$0.35		$0.37

The shares used in the calculation of diluted EPS exclude options and SARs to purchase shares where the exercise price was greater than the average market price of common shares for the period. Shares excluded from the calculation of diluted EPS aggregated 0.4 million and 0.3 million for the three months endedMarch 31, 2012 and 2013, respectively.

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Note 7 – Goodwill, Other Intangible Assets, and Other Assets

The changes in the net carrying amount of goodwill for the three months ended March 31, 2013 are as follows:

Balance as of December 31, 2012, as reported	$	256,821
Goodwill resulting from a business acquisition purchase price allocation adjustment	(7,661		)
Balance as of December 31, 2012, as revised, and March 31, 2013	$	249,160

During the first quarter of 2013, we finalized the allocation of purchase price related to our acquisition of Viking Systems, Inc.. We recorded a deferred tax asset of $7.7 million relating to the acquired net operating losses, which resulted in a corresponding reduction to goodwill. There have been no other changes in the consideration paid, working capital, or other acquired assets and liabilities, other than those described above, since December 31, 2012.

      Other intangible assets consist of the following:

	December 31, 2012					March 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer relationships	$	135,690	$	(50,083	)	$	135,690	$	(51,364	)
Patents and other intangible assets	54,412		(37,554		)	54,400		(38,261		)
Unamortized intangible assets:
Trademarks and tradenames	88,344		—			88,344		—
Balance	$	278,446	$	(87,637	)	$	278,434	$	(89,625	)

Other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. The weighted average amortization period for intangible assets which are amortized is 29 years. Customer relationships are being amortized over a weighted average life of 33 years. Patents and other intangible assets are being amortized over a weighted average life of 15 years.  

Amortization expense related to intangible assets which are subject to amortization totaled $1,932 and $1,988 in the three months endedMarch 31, 2012 and March 31, 2013, respectively, and is included in selling and administrative expense on the consolidated condensed statements of income.

The estimated amortization expense for the year ending December 31, 2013, including the three month period ended March 31, 2013 and for each of the five succeeding years is as follows:

2013	$	7,731
2014	7,115
2015	6,721
2016	6,619
2017	6,608
2018	6,550

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On January 3, 2012, the Company entered into a Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”) to obtain (i) MTF's worldwide promotion rights with respect to allograft tissues within the field of sports medicine, and (ii) an exclusive license to an autograft (patient's own) blood Platelet-Rich Plasma (“PRP”) therapy technology and products (collectively, the “Transaction”). The initial consideration from the Company included a $63.0 million up-front payment for the rights and certain assets, with an additional $84.0 million contingently payable over a four year period depending on MTF meeting supply targets. On January 3, 2013, we paid $34.0 million of the additional consideration; $16.7 million of the additional consideration is due within the next fiscal year with the remainder due in equal installments in each year thereafter. At March 31, 2013, the gross carrying amount of this arrangement amounted to $149.4 million and the related accumulated amortization was $7.5 million. This has been recorded in other assets and is being amortized on a straight line basis over the 25 year term of the JDDA. Amortization expense is recorded as a reduction to sales. The $50.0 million related to the contingent payment is accrued in other current and other long term liabilities as we believe it is probable MTF will meet the supply targets.

Note 8 – Guarantees

We provide warranties on certain of our products at the time of sale. The standard warranty period for our capital and reusable equipment is generally one year. Liability under service and warranty policies is based upon a review of historical warranty and service claim experience. Adjustments are made to accruals as claim data and historical experience warrant.

Changes in the carrying amount of service and product warranties for the three months endedMarch 31, are as follows:

	2012			2013
Balance as of January 1,	$	3,618		$	3,636
Provision for warranties	1,125			908
Claims made	(1,047		)	(1,113		)
Balance as of March 31,	$	3,696		$	3,431

Note 9 – Pension Plan

Net periodic pension costs consist of the following: 

	Three Months Ended March 31,
	2012			2013
Service cost	$	65		$	68
Interest cost on projected benefit obligation	859			769
Expected return on plan assets	(1,131		)	(1,319		)
Net amortization and deferral	732			732
Net periodic pension cost	$	525		$	250

We contributed $7.5 million during the first quarter of 2013 related to the 2012 plan year. We do not expect to make any further contributions during 2013.

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Note 10 – Other Expense

Other expense consists of the following:

	Three Months Ended March 31,
	2012		2013
Administrative consolidation costs	$	273	$	1,604
Costs associated with legal arbitration and patent dispute	1,011		209
Costs associated with purchase of a distributor	704		—
Other expense	$	1,988	$	1,813

During 2012 and 2013, we restructured certain administrative functions. For the three months endedMarch 31, 2012 and 2013, we incurred $0.3 million and $1.6 million, respectively, in related costs consisting principally of severance charges.

During 2012, we incurred legal costs related to a contractual dispute with a former distributor. The dispute was resolved in the second quarter of 2012. For the three months endedMarch 31, 2012, we incurred costs totaling $1.0 million.

During the three months endedMarch 31, 2012, we incurred $0.7 million in costs associated with the purchase of the Company's former distributor in the Nordic region of Europe.

During the three months endedMarch 31, 2013, we incurred $0.2 million in legal costs associated with a patent infringement claim as further described in Note 12.

Note 11 — Business Segments

During 2011 and 2012, we undertook a variety of restructuring initiatives aimed at improving efficiency and internal effectiveness. These initiatives included changes in management lines of reporting and culminated in the implementation of a functional organizational structure. Under the new structure, we are now organized by function rather than by operating segment. Executives reporting in to the CEO include those responsible for operations and supply chain management, research and development, sales, marketing and certain corporate functions. Our chief operating decision maker (the CEO) evaluates the various global product portfolios on a net sales basis and evaluates profitability, investment and cash flow metrics on a consolidated worldwide basis due to shared infrastructure and resources. As a result, we have discontinued accounting and reporting for our businesses as five separate, operating segments. Effective January 1, 2013, we are accounting and reporting for our business as a single segment entity engaged in the development, manufacturing and sale on a global basis of surgical devices and related equipment.

As part of this reporting structure change, we also restructured our product lines. Orthopedic surgery consists of sports medicine instrumentation and small bone, large bone and specialty powered surgical instruments. General surgery consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures, a line of cardiac monitoring products as well as electrosurgical generators and related instruments. Surgical visualization consists of 2D and 3D video systems for use in orthopedic and general surgery. These product lines' net sales are as follows:

	Three Months Ended March 31,
	2012		2013
Orthopedic surgery	$	106,827	$	105,013
General surgery	69,504		66,849
Surgical visualization	17,985		15,152
Consolidated net sales	$	194,316	$	187,014

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Note 12 – Legal Proceedings

From time to time, we are a defendant in certain lawsuits alleging product liability, patent infringement, or other claims incurred in the ordinary course of business. Likewise, from time to time, the Company may receive a subpoena from a government agency such as the Securities and Exchange Commission, Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, the Department of Labor, the Treasury Department, or other federal and state agencies or foreign governments or government agencies. These subpoenas may or may not be routine inquiries, or may begin as routine inquiries and over time develop into enforcement actions of various types. The product liability claims are generally covered by various insurance policies, subject to certain deductible amounts, maximum policy limits and certain exclusions in the respective policies or as required as a matter of law. In some cases we may be entitled to indemnification by third parties. When there is no insurance coverage, as would typically be the case primarily in lawsuits alleging patent infringement or in connection with certain government investigations, or indemnification obligations of a third party, we establish reserves sufficient to cover probable losses associated with such claims. We do not expect that the resolution of any pending claims or investigations will have a material adverse effect on our financial condition, results of operations or cash flows. There can be no assurance, however, that future claims or investigations, or the costs associated with responding to such claims or investigations, especially claims and investigations not covered by insurance, will not have a material adverse effect on our financial condition, results of operations or cash flows.

Manufacturers of medical products may face exposure to significant product liability claims. To date, we have not experienced any product liability claims that have been material to our financial statements or condition, but any such claims arising in the future could have a material adverse effect on our business or results of operations. We currently maintain commercial product liability insurance of $25 million per incident and $25 million in the aggregate annually, which we believe is adequate. This coverage is on a claims-made basis. There can be no assurance that claims will not exceed insurance coverage, that the carriers will be solvent or that such insurance will be available to us in the future at a reasonable cost.

Our operations are subject, and in the past have been subject, to a number of environmental laws and regulations governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous substances and wastes, soil and groundwater remediation and employee health and safety. In some jurisdictions environmental requirements may be expected to become more stringent in the future. In the United States certain environmental laws can impose liability for the entire cost of site restoration upon each of the parties that may have contributed to conditions at the site regardless of fault or the lawfulness of the party’s activities. While we do not believe that the present costs of environmental compliance and remediation are material, there can be no assurance that future compliance or remedial obligations would not have a material adverse effect on our financial condition, results of operations or cash flows.

In September 2012, Bonutti Skeletal Innovations, LLC filed a complaint in the United States District Court for the Middle District of Florida against CONMED and certain of its subsidiaries. The Complaint asserts that select CONMED products infringe patents allegedly owned by Bonutti Skeletal Innovations. On the same day that it sued CONMED, Bonutti Skeletal Innovations sued several other orthopedic companies. The Company believes that the products in question do not infringe the patents-in-suit and intends to vigorously defend the claims. A range of potential losses cannot be estimated at this time.

Note 13 – New Accounting Pronouncements

In February 2013, the FASB issued Accounting Standards Update, Comprehensive Income (Topic 220): Presentation of Items Reclassified out of Accumulated Other Comprehensive Income. This guidance requires enhanced disclosures relating to reclassifications out of accumulated other comprehensive income. This guidance is effective for interim and annual periods beginning after December 15, 2012. The implementation of this new guidance did not have a material impact on our consolidated financial statements.

Effective January 2013, Accounting Standards Update 2011-11: Disclosures about Offsetting Assets and Liabilities, requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The adoption of this guidance did not have a material impact on the financial statements.

Note 14 – Restructuring

We incurred the following restructuring costs: 

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	Three Months Ended March 31,
	2012		2013
Restructuring costs included in cost of sales	$	1,474	$	1,622
Restructuring costs included in other expense	$	273	$	1,604

During 2012 and 2013, we continued our operational restructuring plan which includes the transfer of additional production lines from manufacturing facilities located in the United States to our manufacturing facility in Chihuahua, Mexico and the consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities. During the first quarter of 2013, we began the consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico facilities. We incurred $1.5 million and $1.6 million in costs associated with the restructuring during the three months endedMarch 31, 2012 and March 31, 2013, respectively. These costs were charged to cost of goods sold and include severance and other charges associated with the transfer of production to Mexico and consolidation of our Finland and Westborough, Massachusetts operations.

Restructuring costs included in other expense are described more fully in Note 10.

We have recorded an accrual in current liabilities of $3.6 million at March 31, 2013 mainly related to severance and lease impairment costs associated with the restructuring. Below is a rollforward of the accrual:

Balance as of January 1, 2013	$	4,120
Expenses incurred	1,031
Payments made	(1,544		)
Balance at March 31, 2013	$	3,607

Note 15 - Amended and Restated Senior Credit Agreement

On January 17, 2013, we entered into an amended and restated $350.0 million senior credit agreement (the "amended and restated senior credit agreement"). The amended and restated senior credit agreement consists of a $350.0 million revolving credit facility expiring on January 17, 2018. The amended and restated senior credit agreement was used to repay borrowings outstanding on the revolving credit facility under the then existing senior credit agreement. In connection with the refinancing, we recorded a $0.3 million loss on the early extinguishment of debt related to the write-off of unamortized deferred financing costs under the previously existing senior credit agreement. Initial interest rates are at LIBOR plus 1.50% (1.71% at March 31, 2013) or an alternative base rate. For those borrowings where the Company elects to use the alternative base rate, the base rate will be the greater of the Prime Rate, the Federal Funds Rate in effect on such date plus 0.50%, or the one month Eurocurrency rate plus 1%, plus an additional margin of 0.50%.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS

Forward-Looking Statements

In this Report on Form 10-Q, we make forward-looking statements about our financial condition, results of operations and business. Forward-looking statements are statements made by us concerning events that may or may not occur in the future. These statements may be made directly in this document or may be “incorporated by reference” from other documents. Such statements may be identified by the use of words such as “anticipates”, “expects”, “estimates”, “intends” and “believes” and variations thereof and other terms of similar meaning.

Forward-Looking Statements are not Guarantees of Future Performance

Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include those identified under “Risk Factors” in our Annual Report on Form 10-K for the year-ended December 31, 2012 and the following, among others:

• 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

• changes in regulatory requirements.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below and “Risk Factors” and “Business” in our Annual Report on Form 10-K for the year-ended December 31, 2012 for a further discussion of these factors. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

Overview:

CONMED Corporation (“CONMED”, the “Company”, “we” or “us”) is a medical technology company with an emphasis on surgical devices and equipment for minimally invasive procedures and monitoring. The Company’s products are used by surgeons and physicians in a variety of specialties including orthopedics, general surgery, gynecology, neurosurgery and gastroenterology.

During 2011 and 2012, we undertook a variety of restructuring initiatives aimed at improving efficiency and internal effectiveness. These initiatives included changes in management lines of reporting and culminated in the implementation of a

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functional organizational structure. Under the new structure, we are now organized by function rather than by operating segment. Executives reporting in to the CEO include those responsible for operations and supply chain management, research and development, sales, marketing and certain corporate functions. Our chief operating decision maker (the CEO) evaluates the various global product portfolios on a net sales basis and evaluates profitability, investment and cash flow metrics on a consolidated worldwide basis due to shared infrastructure and resources. As a result, we have discontinued accounting and reporting for our businesses as five separate, operating segments. Effective January 1, 2013, we are accounting and reporting for our business as a single segment entity engaged in the development, manufacturing and sale on a global basis of surgical devices and related equipment.

As part of this reporting structure change, we also restructured our product lines. Orthopedic surgery consists of sports medicine instrumentation and small bone, large bone and specialty powered surgical instruments. General surgery consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures, a line of cardiac monitoring products as well as electrosurgical generators and related instruments. Surgical visualization consists of 2D and 3D video systems for use in orthopedic and general surgery. These product lines as a percentage of consolidated net sales are as follows:

	Three Months Ended March 31,
	2012		2013
Orthopedic surgery	55.0	%	56.2	%
General surgery	35.8		35.7
Surgical visualization	9.2		8.1
Consolidated net sales	100.0	%	100.0	%

A significant amount of our products are used in surgical procedures with the majority of our revenues derived from the sale of single-use products.  We manufacture substantially all of our products in facilities located in the United States and Mexico. We market our products both domestically and internationally directly to customers and through distributors.  International sales represent a significant portion of our business. During the three months endedMarch 31, 2013 international sales approximated 50.5% of total net sales.

Business Environment and Opportunities

The aging of the worldwide population along with lifestyle changes, continued cost containment pressures on healthcare systems and the desire of clinicians and administrators to use less invasive (or noninvasive) procedures are important trends which are driving the long-term growth in our industry. We believe that with our broad product offering of high quality surgical and patient care products, we can capitalize on this growth for the benefit of the Company and our shareholders.

In order to further our growth prospects, we have historically used strategic business acquisitions and exclusive distribution relationships to continue to diversify our product offerings, increase our market share and realize economies of scale.

We have a variety of research and development initiatives focused in each of our principal product lines as continued innovation and commercialization of new proprietary products and processes are essential elements of our long-term growth strategy. Our reputation as an innovator is exemplified by recent new product introductions such as the Genesys PressFT™ biocomposite Suture Anchor, a bioabsorbable anchor for use in arthroscopic stabilization procedures of the shoulder and labral repair of the hip; Y-Knot™ All-suture Anchor, a suture anchor implant comprised entirely of high strength suture for instability repair procedures in the shoulder and hip as well as for small joint repairs in the extremities; M-Class Blades, our new line of large bone blades that are engineered with beveled center teeth, course middle teeth and fine outer teeth that work together to provide optimal blade control and a more even cut; DetachaTip^® III with a new composite shaft and internal ratcheting mechanism provides a more ergonomic, more reliable, safer alternative for Endoscopic manual instruments; Hip Preservation System™, from access to repair, the system is committed to optimizing patient outcomes by providing a comprehensive solution of joint preserving instrumentation and techniques; the Hall^® Surgical Lithium Power Battery System offers lithium-ion battery technology which will provide greater power and longevity during surgery when compared to present batteries and the Altrus^® Thermal Tissue Fusion System which utilizes thermal energy to seal, cut, grasp, and dissect vessels up to 7mm in size utilizing a closed feedback loop between the energy source and the single-use handpiece to precisely control the desired effect on tissue.

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Business Challenges

Significant volatility in the financial markets and foreign currency exchange rates as well as depressed economic conditions in both domestic and international markets, have presented significant business challenges since the second half of 2008. While we returned to revenue growth in 2010, 2011 and 2012, we experienced a sales decline in the first quarter of 2013. We believe the first quarter of 2013 decline in sales was impacted by fewer selling days compared to the same period a year ago mainly due to leap year in 2012 and this year's timing of Easter and Passover holidays in Europe and elsewhere in the world. We are cautiously optimistic that the domestic economic environment is improving, however conditions in Europe and elsewhere may present significant business challenges for the Company. While there can be no assurance that improvement in the overall economic environment will be sustained, we will continue to monitor and manage the impact of the overall economic environment on the Company.

Over the past few years we successfully completed certain of our operational restructuring plans whereby we consolidated manufacturing and distribution centers as well as restructured certain of our administrative functions. We continue to restructure both operations and administrative functions as necessary throughout the organization. However, we cannot be certain such activities will be completed in the estimated time period or that planned cost savings will be achieved.

Our facilities are subject to periodic inspection by the United States Food and Drug Administration (“FDA”) and foreign regulatory agencies or notified bodies for, among other things, conformance to Quality System Regulation and Current Good Manufacturing Practice (“CGMP”) requirements and foreign or international standards. We are committed to the principles and strategies of systems-based quality management for improved CGMP compliance, operational performance and efficiencies through our Company-wide quality systems initiatives. However, there can be no assurance that our actions will ensure that we will not receive a warning letter or be the subject of other regulatory action, which may include consent decrees or fines, that we will not conduct product recalls or that we will not experience temporary or extended periods during which we may not be able to sell products in foreign countries.

Critical Accounting Policies

Preparation of our financial statements requires us to make estimates and assumptions which affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to the consolidated financial statements in our Annual Report on Form 10-K for the year-ended December 31, 2012 describes significant accounting policies used in preparation of the consolidated financial statements. The most significant areas involving management judgments and estimates are described below and are considered by management to be critical to understanding the financial condition and results of operations of CONMED Corporation. There have been no significant changes in our critical accounting estimates during the three months endedMarch 31, 2013.

Revenue Recognition

Revenue is recognized when title has been transferred to the customer which is at the time of shipment. The following policies apply to our major categories of revenue transactions:

• 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.

• 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.

• Service revenues earned by the Company related to the sale of sports medicine allograft tissue are recorded in accordance with the contractual terms of our agreement with Musculoskeletal Transplant Foundation ("MTF"). These revenues are recorded net of amortization of the acquired assets.

• 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.

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• 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 are included in selling and administrative expense.

• 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 $1.4 million at March 31, 2013 is adequate to provide for probable losses resulting from accounts receivable.

Inventory Valuation

We write-off excess and obsolete inventory resulting from the inability to sell our products at prices in excess of current carrying costs. The markets in which we operate are highly competitive, with new products and surgical procedures introduced on an on-going basis. Such marketplace changes may result in our products becoming obsolete. We make estimates regarding the future recoverability of the costs of our products and record a provision for excess and obsolete inventories based on historical experience, expiration of sterilization dates and expected future trends. If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write-downs may be required.

Goodwill and Intangible Assets

We have a history of growth through acquisitions. Assets and liabilities of acquired businesses are recorded at their estimated fair values as of the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Effective January 1, 2013, we are accounting and reporting for our business as a single operating segment, and goodwill as a single reporting unit. Changes in our structure are further discussed in Note 11 to the Consolidated Condensed Financial Statements. Other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. We have accumulated goodwill of $249.2 million and other intangible assets of $188.8 million as of March 31, 2013.

In accordance with FASB guidance, goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to at least annual impairment testing. It is our policy to perform our annual impairment testing in the fourth quarter. The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting units. Estimates of fair value are based on the best information available as of the date of the assessment, which primarily incorporate management assumptions about expected future cash flows and other valuation techniques. Future cash flows may be affected by changes in industry or market conditions or the rate and extent to which anticipated synergies or cost savings are realized with newly acquired entities. During 2012, we completed our goodwill impairment testing with data as of October 1, 2012. We adopted the Step 0 qualitative impairment test in accordance with ASC 350 whereby we assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Our last goodwill impairment testing, performed as of October 1, 2011, under the Step 1 method utilized CONMED Corporation’s EBITDA multiple adjusted for a market-based control premium with the resultant fair values exceeding carrying values by 42% to 107%. Based upon our qualitative assessment, we believe the fair value continues to exceed carrying value by a substantial margin.

Intangible assets with a finite life are amortized over the estimated useful life of the asset and are evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of an intangible asset subject to amortization is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. An impairment loss is recognized by reducing the carrying amount of the intangible asset to its current fair value.

Customer relationship assets arose principally as a result of the 1997 acquisition of Linvatec Corporation. These assets represent the acquisition date fair value of existing customer relationships based on the after-tax income expected to be derived during their estimated remaining useful life. The useful lives of these customer relationships were not and are not limited by

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contract or any economic, regulatory or other known factors. The estimated useful life of the Linvatec customer relationship assets was determined as of the date of acquisition as a result of a study of the observed pattern of historical revenue attrition during the 5 years immediately preceding the acquisition of Linvatec Corporation. This observed attrition pattern was then applied to the existing customer relationships to derive the future expected retirement of the customer relationships. This analysis indicated an annual attrition rate of 2.6%. Assuming an exponential attrition pattern, this equated to an average remaining useful life of approximately 38 years for the Linvatec customer relationship assets. Customer relationship intangible assets arising as a result of other business acquisitions are being amortized over a weighted average life of 15 years. The weighted average life for customer relationship assets in aggregate is 33 years.

We evaluate the remaining useful life of our customer relationship intangible assets each reporting period in order to determine whether events and circumstances warrant a revision to the remaining period of amortization. In order to further evaluate the remaining useful life of our customer relationship intangible assets, we perform an analysis and assessment of actual customer attrition and activity as events and circumstances warrant. This assessment includes a comparison of customer activity since the acquisition date and review of customer attrition rates. In the event that our analysis of actual customer attrition rates indicates a level of attrition that is in excess of that which was originally contemplated, we would change the estimated useful life of the related customer relationship asset with the remaining carrying amount amortized prospectively over the revised remaining useful life.

We test our customer relationship assets for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Factors specific to our customer relationship assets which might lead to an impairment charge include a significant increase in the annual customer attrition rate or otherwise significant loss of customers, significant decreases in sales or current-period operating or cash flow losses or a projection or forecast of losses. We do not believe that there have been events or changes in circumstances which would indicate the carrying amount of our customer relationship assets might not be recoverable.

For all other indefinite lived intangible assets, we perform a Step 0 qualitative impairment test in accordance with ASC 350. Based upon this assessment, we have determined that it is unlikely that our indefinite lived intangible assets are impaired.

Pension Plan

We sponsor a defined benefit pension plan (“the plan”) that covered substantially all our United States-based employees. The plan was frozen as of May 14, 2009. Major assumptions used in accounting for the plan include the discount rate, expected return on plan assets and expected mortality. Assumptions are determined based on Company data and appropriate market indicators, and are evaluated annually as of the plan’s measurement date. A change in any of these assumptions would have an effect on net periodic pension costs reported in the consolidated financial statements.

The weighted-average discount rate used to measure pension liabilities and costs is set by reference to the Citigroup Pension Liability Index. However, this index gives only an indication of the appropriate discount rate because the cash flows of the bonds comprising the index do not precisely match the projected benefit payment stream of the plan. For this reason, we also consider the individual characteristics of the plan, such as projected cash flow patterns and payment durations, when setting the discount rate. The rates used in determining 2012 and 2013 pension expense are 4.30% and 3.90%, respectively.

We have used an expected rate of return on pension plan assets of 8.0% for purposes of determining the net periodic pension benefit cost. In determining the expected return on pension plan assets, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, we consult with financial and investment management professionals in developing appropriate targeted rates of return.

For the three months ending March 31, 2013 we recorded pension expense of $0.3 million. Pension expense in 2013 is expected to be $1.0 million compared to expense of $2.0 million in 2012. We contributed $7.5 million during the first quarter of 2013 and do not expect any further contributions during 2013.

See Note 9 to the Consolidated Condensed Financial Statements for further discussion.

Stock Based Compensation

All share-based payments to employees, including grants of employee stock options, restricted stock units, performance share units and stock appreciation rights are recognized in the financial statements based at their fair values. Compensation expense is generally recognized using a straight-line method over the vesting period. Compensation expense for performance share units is recognized using the graded vesting method.

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Income Taxes

The recorded future tax benefit arising from deductible temporary differences and tax carryforwards is approximately $42.6 million at March 31, 2013. Management believes that earnings during the periods when the temporary differences become deductible will be sufficient to realize the related future income tax benefits.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. Taxing authority examinations can involve complex issues and may require an extended period of time to resolve. Our Federal income tax returns have been examined by the Internal Revenue Service (“IRS”) for calendar years ending through 2011. Tax years subsequent to 2011 are subject to future examination.

Results of Operations

The following table presents, as a percentage of net sales, certain categories included in our consolidated statements of income for the periods indicated:

	Three Months Ended March 31,
	2012		2013
Net sales	100.0	%	100.0	%
Cost of sales	48.1		45.1
Gross profit	51.9		54.9
Selling and administrative expense	38.5		41.6
Research and development expense	3.7		3.0
Medical device excise tax	—		0.8
Other expense	1.0		1.0
Income from operations	8.7		8.5
Loss on early extinguishment of debt	—		0.1
Interest expense	0.7		0.7
Income before income taxes	8.0		7.7
Provision for income taxes	2.9		2.0
Net income	5.1	%	5.7	%

Three months endedMarch 31, 2013 compared to three months endedMarch 31, 2012

Sales for the quarterly period ended March 31, 2013 were $187.0 million, a decrease of $7.3 million (-3.8%) compared to sales of $194.3 million in the same period a year ago with decreases across all our product lines.   Sales of capital equipment decreased $1.5 million (-3.7%) to $39.2 million in the quarterly period ended March 31, 2013 from $40.7 million in the same period a year ago; sales of single-use products decreased $5.8 million (-3.8%) to $147.8 million in the quarterly period ended March 31, 2013 from $153.6 million in the same period a year ago.  On a local currency basis, excluding the effects of our hedging program, sales of capital equipment decreased 3.4% and single-use products decreased 3.4%.  We believe the overall decline in capital sales is driven by capital purchasing constraints in hospitals due to difficult economic conditions.

• Orthopedic surgery sales decreased $1.8 million (-1.7%) in the quarter ended March 31, 2013 to $105.0 million from $106.8 million in the same period a year ago mainly due to lower sales in our resection products offerings offset by increases in our powered instrument offerings.  In local currency, excluding the effects of the hedging program, sales decreased 1.1%.  

• General surgery sales decreased $2.7 million (-3.9%) in the quarterly period ended March 31, 2013 to $66.8 million from $69.5 million in the same period a year ago mainly due to lower sales in our Endomechanical and Advanced Patient Monitoring products.  In local currency, excluding the effects of the hedging program, sales decreased 3.7%.  

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• Surgical visualization sales decreased $2.8 million (-15.6%) in the quarterly period ended March 31, 2013 to $15.2 million from $18.0 million in the same period a year ago mainly due to lower video system product sales.  In local currency, excluding the effects of the hedging program, sales decreased 15.6%.  

Cost of sales decreased to $84.3 million in the quarterly period ended March 31, 2013 as compared to $93.4 million in the same period a year ago on overall decreases in sales volumes as described above.  Gross profit margins increased 3.0 percentage points to 54.9% in the quarterly period ended March 31, 2013 as compared to 51.9% in the same period a year ago.  The increase in gross profit margins of 3.0 percentage point is primarily a result of the lower costs resulting from the restructuring initiatives we have completed throughout our operations.

Selling and administrative expense increased to $77.7 million in the quarterly period ended March 31, 2013 as compared to $74.8 million in the same period a year ago. Selling and administrative expense as a percentage of net sales increased to 41.6% in the quarterly period ended March 31, 2013 as compared to 38.5% in the same period a year ago. This increase of 3.1 percentage points is attributable to higher selling expenses and higher incentive compensation costs during the period.  

Research and development expense totaled $5.7 million in the quarterly period ended March 31, 2013 as compared to $7.1 million in the same period a year ago.  As a percentage of net sales, research and development expense decreased to 3.0% in the quarterly period ending March 31, 2013 compared to 3.7% in the same period a year ago. The decrease of 0.7 percentage points is mainly a result of restructuring within the organization and the timing of projects.

In accordance with the Patient Protection and Affordable Care Act and Health Care and Education Affordability Reconciliation Act, the Company was required in 2013 to begin paying a 2.3% excise tax imposed upon sales within the U.S. of certain medical device products. The medical device excise tax expense totaled $1.6 million in the quarterly period ending March 31, 2013.

As discussed in Note 10 to the Consolidated Condensed Financial Statements, other expense in the quarterly period ended March 31, 2013 consisted of a $1.6 million charge related to administrative consolidation expenses and $0.2 million in legal costs associated with a patent infringement claim as further described in Note 12. Other expense in the quarterly period ended March 31, 2012 consisted of $0.3 million charge related to administrative consolidation expenses, $1.0 million in costs associated with legal arbitration related to a contract dispute with a former distributor and $0.7 million in costs associated with the acquisition of our former distributor in the Nordic region of Europe.

During the quarterly period ending March 31, 2013, we recorded a $0.3 million loss on early extinguishment of debt related to the write-off of unamortized deferred financing costs under the previously existing senior credit agreement.

Interest expense was $1.4 million at March 31, 2013 and in the same period a year ago.  The consistent interest expense is due to lower weighted average interest rates resulting from the amended and restated credit agreement on higher weighted average borrowings outstanding in the quarterly period ended March 31, 2013 as compared to the same period a year ago.  The weighted average interest rates on our borrowings decreased to 2.43% in the quarterly period ended March 31, 2013 as compared to 2.76% in the same period a year ago.

A provision for income taxes has been recorded at an effective tax rate of 26.3% for the quarterly period ended March 31, 2013 compared to the 36.0% effective tax rate recorded in the same period a year ago.  The effective tax rate for the quarterly period ended March 31, 2013 is lower than that recorded in the same period a year ago as a result of higher earnings in foreign jurisdictions where the tax rates are lower than the statutory rate along with tax benefits related to business tax provisions, including the research and development credit ($0.8 million), that were enacted in the first quarter of 2013, retroactive to January 1, 2012. A reconciliation of the United States statutory income tax rate to our effective tax rate is included in our Annual Report on Form 10-K for the year-ended December 31, 2012, Note 6 to the Consolidated Financial Statements.

Liquidity and Capital Resources

Our liquidity needs arise primarily from capital investments, working capital requirements and payments on indebtedness under the senior credit agreement.  We have historically met these liquidity requirements with funds generated from operations and borrowings under our revolving credit facility.  In addition, we have historically used term borrowings, including borrowings under the senior credit agreement and borrowings under separate loan facilities, in the case of real property purchases, to finance our acquisitions.  We also have the ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering.

Operating cash flows

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Our net working capital position was $256.8 million at March 31, 2013.  Net cash provided by operating activities was $5.5 million in the three months endedMarch 31, 2013 and $7.6 million in the same period a year ago generated on net income of $10.5 million and $10.0 million as of March 31, 2013 and 2012, respectively.

The decrease in cash provided by operating activities is primarily the result of higher contributions to our pension plan in the first quarter of 2013 and the payments related to the medical device excise tax that became effective January 1, 2013.

Investing cash flows

Net cash used in investing activities in the three months ended March 31, 2013 consisted primarily of capital expenditures. Capital expenditures were $6.4 million and $4.1 million for the three month periods ended March 31, 2012 and 2013, respectively, and are expected to approximate $20.0 million in 2013.

Financing cash flows

Net cash provided by financing activities during 2013 consisted of the following:  $7.6 million in proceeds from the issuance of common stock under our equity compensation plans and employee stock purchase plan and $64.0 million in borrowings on our revolving credit facility under our senior credit agreement. These amounts were offset by a $34.0 million payment associated with the distribution and development agreement with Musculoskeletal Transplant Foundation (“MTF”), $25.7 million in repurchases of treasury stock, $4.3 million in dividend payments related to our common stock and $1.6 million in payments related to issuance of debt.

On January 17, 2013, we entered into an amended and restated $350.0 million senior credit agreement (the "amended and restated senior credit agreement"). The amended and restated senior credit agreement consists of a $350.0 million revolving credit facility expiring on January 17, 2018. The amended and restated senior credit agreement was used to repay borrowings outstanding on the revolving credit facility under the then existing senior credit agreement. In connection with the refinancing, we recorded a $0.3 million loss on the early extinguishment of debt related to the write-off of unamortized deferred financing costs under the then existing senior credit agreement. Initial interest rates are at LIBOR plus 1.50% (1.71% at March 31, 2013) or an alternative base rate. For those borrowings where the Company elects to use the alternative base rate, the base rate will be the greater of the Prime Rate, the Federal Funds Rate in effect on such date plus 0.50%, or the one month Eurocurrency rate plus 1%, plus an additional margin of 0.50%.

There were $217.0 million in borrowings outstanding on the $350.0 million revolving credit facility of the amended and restated senior credit agreement as of March 31, 2013.  Our available borrowings on the revolving credit facility of the amended and restated senior credit agreement at March 31, 2013 were $123.2 million with approximately $9.8 million of the facility set aside for outstanding letters of credit.

The amended and restated senior credit agreement is collateralized by substantially all of our property and assets.  The amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios, and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions.  We were in full compliance with these covenants and restrictions as of March 31, 2013.

We have a mortgage note outstanding in connection with the Largo, Florida property and facilities bearing interest at 8.25% per annum with semiannual payments of principal and interest through June 2019.  The principal balance outstanding on the mortgage note aggregated $8.6 million at March 31, 2013.  The mortgage note is collateralized by the Largo, Florida property and facilities.

We have outstanding $0.2 million in 2.50% convertible senior subordinated notes due 2024 (“the Notes”).  The Notes represent subordinated unsecured obligations and are convertible under certain circumstances, as defined in the indenture for the Notes, into a combination of cash and CONMED common stock. The Notes mature on November 15, 2024 and are redeemable by us at any time.  Holders of the Notes have the right to put to us some or all of the Notes for repurchase on November 15, 2014 and 2019 and, provided the terms of the indenture for the Notes are satisfied, we will be required to repurchase the Notes.

Our Board of Directors authorized a $200.0 million share repurchase program. Through March 31, 2013, we have repurchased a total of 5.0 million shares of common stock aggregating $120.9 million under this program and have $79.1 million remaining available for share repurchases.  The repurchase program calls for shares to be purchased in the open market or in private transactions from time to time.  We may suspend or discontinue the share repurchase program at any time.  We repurchased

20

$25.7 million under the share repurchase program during the first three months of 2013.  We have financed the repurchases and may finance additional repurchases through operating cash flow and from available borrowings under our amended and restated senior credit agreement.

During 2012, the Board of Directors adopted a cash dividend policy. The $0.15 per share dividend for the first quarter of 2013 was paid on April 5, 2013 to shareholders of record as of March 15, 2013. The total dividend payable at March 31, 2013 was $4.2 million and is included in other current liabilities in the consolidated condensed balance sheet.

Management believes that cash flow from operations, including cash and cash equivalents on hand and available borrowing capacity under our amended and restated senior credit agreement will be adequate to meet our anticipated operating working capital requirements, debt service, funding of capital expenditures and common stock repurchases in the foreseeable future.

Restructuring

During 2012 and 2013, we continued our operational restructuring plan which includes the transfer of additional production lines from manufacturing facilities located in the United States to our manufacturing facility in Chihuahua, Mexico and the consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities.  During the first quarter of 2013, we began the consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico facilities. We incurred $1.5 million and $1.6 million in costs associated with the restructuring during the three months endedMarch 31, 2012 and 2013, respectively. These costs were charged to cost of goods sold and include severance and other charges associated with the transfer of production to Mexico and consolidation of our Finland and Westborough, Massachusetts operations.

During 2012 and 2013, we restructured certain administrative functions throughout the Company. For the three months endedMarch 31, 2012 and 2013, we incurred $0.3 million and $1.6 million, respectively, in related costs consisting principally of severance charges. These costs were charged to other expense.

We have recorded an accrual in current liabilities of $3.6 million at March 31, 2013 mainly related to severance and lease impairment costs associated with the restructuring.  We expect this phase of our plan and related cash payments to be substantially completed in 2013.

We plan to continue to restructure both operations and administrative functions as necessary throughout the organization.  As the restructuring plan progresses, we will incur additional charges, including employee termination costs and other exit costs.  We estimate restructuring and other costs will approximate $13.0 million to $14.0 million for the full year of 2013 and will be recorded to cost of goods sold and other expense.

See Note 14 to the Consolidated Condensed Financial Statements for further discussions regarding restructuring.

New accounting pronouncements

See Note 13 to the Consolidated Condensed Financial Statements for a discussion of new accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in our primary market risk exposures or in how these exposures are managed during the three months ended March 31, 2013.  Reference is made to Item 7A. of our Annual Report on Form 10-K for the year-ended December 31, 2012 for a description of Qualitative and Quantitative Disclosures About Market Risk.

Item 4.  Controls and Procedures

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) was carried out under the supervision and with the participation of the Company’s management, including the President and Chief Executive Officer and the Executive Vice President, Finance and Chief Financial Officer (“the Certifying Officers”) as of March 31, 2013.  Based on that evaluation, the Certifying Officers concluded that the Company’s disclosure controls and procedures are effective.  There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

21

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Reference is made to Item 3 of the Company’s Annual Report on Form 10-K for the year-ended December 31, 2012 and to Note 12 of the Notes to Consolidated Condensed Financial Statements included in Part I of this Report for a description of certain legal matters.

Item 2. Issuer Purchase of Equity Securities

The following table provides information about Company purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended March 31, 2013:

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share1		(c) Total Number of Shares Purchased as Part of Publicly Announced Program2	(d) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
January 1, 2013
January 31, 2013	284,864	$	28.98	284,864	$	96,602,920
February 1, 2013
February 28, 2013	293,399	$	30.33	293,399	87,703,301
March 1, 2013
March 31, 2013	270,123	$	31.75	270,123	79,126,283
Total	848,386			848,386

¹Average price paid per share includes cash paid for commissions.

²Our Board of Directors authorized a $200.0 million share repurchase program. There is no expiration date governing the period over which the Company can make its share repurchases under the share repurchase program.

22

Item 6. Exhibits

Exhibit No.	Description of Exhibit
31.1	Certification of Joseph J. Corasanti 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 Robert D. Shallish, Jr. 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	Certification of Joseph J. Corasanti and Robert D. Shallish, Jr. pursuant to 18 U.S.C. 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 quarter ended March 31, 2013 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Comprehensive Income for the quarter ended March 31, 2012 and 2013, (ii) the Consolidated Condensed Balance Sheets at March 31, 2013 and December 31, 2012, (iii) Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2012 and 2013, and (iv) Notes to Consolidated Condensed Financial Statements for the three months ended March 31, 2013.  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.

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CONMED CORPORATION
		(Registrant)
Date:	April 26, 2013
		/s/ Robert D. Shallish, Jr.
		Robert D. Shallish, Jr.
		Executive Vice President, Finance and
		Chief Financial Officer

24

Exhibit Index

		Sequential Page
Exhibit		Number
31.1	Certification of Joseph J. Corasanti 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-1
31.2	Certification of Robert D. Shallish, Jr. 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-2
32.1	Certification of Joseph J. Corasanti and Robert D. Shallish, Jr. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	E-3
101	The following materials from CONMED Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Comprehensive Income for the quarter ended March 31, 2012 and 2013, (ii) the Consolidated Condensed Balance Sheets at March 31, 2013 and December 31, 2012, (iii) Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2012 and 2013, and (iv) Notes to Consolidated Condensed Financial Statements for the three months ended March 31, 2013.  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.

25

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph J. Corasanti, certify that:

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.

April 26, 2013

/s/ Joseph J. Corasanti

Joseph J. Corasanti

President and

Chief Executive Officer

E- 1

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert D. Shallish, Jr. certify that:

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.

April 26, 2013

/s/ Robert D. Shallish, Jr.

Robert D. Shallish, Jr.

Executive Vice President, Finance and

Chief Financial Officer

E- 2

EX-32.1

Exhibit 32.1

CERTIFICATIONS

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of CONMED Corporation, a New York corporation (the “Corporation”), does hereby certify that:

The Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (the “Form 10-Q”) of the Corporation fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date:	April 26, 2013	/s/Joseph J. Corasanti
		Joseph J. Corasanti
		President and
		Chief Executive Officer
Date:	April 26, 2013	/s/Robert D. Shallish, Jr.
		Robert D. Shallish, Jr.
		Executive Vice President, Finance and
		Chief Financial Officer

E- 3

XML

Goodwill and Other Intangible Assets and Other Assets (Goodwill Aquisition) (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended	0 Months Ended
	Jan. 03, 2012	Mar. 31, 2013	Jan. 03, 2013 After 1 Year of Meeting Supply Target [Member]	Jan. 03, 2013 After Year 2, Year 3 and Year 4 of Meeting Supply Target [Member]
Other Assets [Line Items]
Agreement term		25 years
Up-front payment	$ 63.0
Additional contingent cash payment	84.0			16.7
Contingent payment period	4 years
Joint Development and Distribution Agreement, Conditional Payment, Amount Paid			34.0
Gross carrying amount		149.4
Accumulated amortization		7.5
Amount accrued		$ 50.0

XML

Restructuring (Restructuring Accrual) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Restructuring accrual
Restructuring accrual, beginning balance	$ 4,120
Expenses incurred	1,031
Payments made	(1,544)
Restructuring accrual, ending balance	$ 3,607

XML

Fair Value of Financial Instruments (Foreign Currency Forward Contracts) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Derivative [Line Items]
Gains (losses) on intercompany receivables	$ (1,500,000)	$ 400,000
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Fair value, assets	2,452,000		457,000
Fair value, liabilities	(942,000)		(2,399,000)
Fair value, assets (liabilities), net	1,510,000		(1,942,000)
Foreign Currency Forward Contracts [Member]
Derivative [Line Items]
Notional amount of cash flow hedges	89,600,000
Cash flow hedges realized gains (losses)	100,000	800,000
Unrealized gain (loss) on cash flow hedges in accumulated other comprehensive income (loss) expected to be recognized in the next fiscal year	1,000,000
Notional amount of forward contracts not designated as hedging instruments	45,500,000
Forward contracts not designated as hedging instruments net realized gains (losses)	800,000	(700,000)
Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member]
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Fair value, assets	2,447,000
Fair value, liabilities	(866,000)
Fair value, assets (liabilities), net	1,581,000
Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Other Current Liabilities [Member]
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Fair value, assets			457,000
Fair value, liabilities			(2,249,000)
Fair value, assets (liabilities), net			(1,792,000)
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member]
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Fair value, assets	5,000
Fair value, liabilities	(76,000)
Fair value, assets (liabilities), net	(71,000)
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Other Current Liabilities [Member]
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Fair value, assets			0
Fair value, liabilities			(150,000)
Fair value, assets (liabilities), net			$ (150,000)

XML

Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill and Other Intangible Assets and Other Assets [Abstract]

Schedule of Goodwill

The changes in the net carrying amount of goodwill for the three months ended March 31, 2013 are as follows:

Balance as of December 31, 2012, as reported	$	256,821
Goodwill resulting from a business acquisition purchase price allocation adjustment	(7,661		)
Balance as of December 31, 2012, as revised, and March 31, 2013	$	249,160

Schedule of Finite-Lived and Indefinite-Lived Intangible Assets

      Other intangible assets consist of the following:

	December 31, 2012					March 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer relationships	$	135,690	$	(50,083	)	$	135,690	$	(51,364	)
Patents and other intangible assets	54,412		(37,554		)	54,400		(38,261		)
Unamortized intangible assets:
Trademarks and tradenames	88,344		—			88,344		—
Balance	$	278,446	$	(87,637	)	$	278,434	$	(89,625	)

Schedule of Estimated Amortization Expense

The estimated amortization expense for the year ending December 31, 2013, including the three month period ended March 31, 2013 and for each of the five succeeding years is as follows:

2013	$	7,731
2014	7,115
2015	6,721
2016	6,619
2017	6,608
2018	6,550

XML

Other Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Component of Operating Other Cost and Expense [Line Items]
Restructuring charges	$ 1,031
Costs associated with legal arbitration and patent dispute	209	1,011
Other expense	1,813	1,988
Distributor [Member]
Component of Operating Other Cost and Expense [Line Items]
Costs associated with purchase	0	704
Administrative consolidation costs [Member]
Component of Operating Other Cost and Expense [Line Items]
Restructuring charges	$ 1,604	$ 273

XML

Goodwill and Other Intangible Assets and Other Assets (Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Goodwill [Roll Forward]
Balance as of December 31, 2012, as reported	$ 256,821
Goodwill resulting from a business acquisition purchase price allocation adjustment	(7,661)
Balance as of December 31, 2012, as revised, and March 31, 2013	$ 249,160	$ 249,160

XML

Amended and Restated Senior Credit Agreement (Details) (USD $)	3 Months Ended		0 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Jan. 17, 2013 Revolving Credit Facility [Member] Amended and Restated Senior Credit Agreement [Member]	Jan. 17, 2013 LIBOR [Member] Revolving Credit Facility [Member] Amended and Restated Senior Credit Agreement [Member]	Jan. 17, 2013 Federal Funds Rate [Member] Revolving Credit Facility [Member] Amended and Restated Senior Credit Agreement [Member]	Jan. 17, 2013 Eurocurrency [Member] Revolving Credit Facility [Member] Amended and Restated Senior Credit Agreement [Member]	Jan. 17, 2013 Alternate Base Rate [Member] Revolving Credit Facility [Member] Amended and Restated Senior Credit Agreement [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 350,000,000
Loss on early extinguishment of debt	$ 263,000	$ 0	$ 300,000
Basis spread on variable rate				1.50%	0.50%	1.00%	0.50%
Interest rate at period end				1.71%

XML

Fair Value Measurement

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

We enter into derivative instruments for risk management purposes only. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We use forward contracts, a type of derivative instrument, to manage certain foreign currency exposures.

By nature, all financial instruments involve market and credit risks. We enter into forward contracts with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties.

Foreign Currency Forward Contracts. We hedge certain forecasted intercompany transactions denominated in foreign currencies through the use of forward contracts. We account for these forward contracts as cash flow hedges. To the extent these forward contracts meet hedge accounting criteria, changes in their fair value are not included in current earnings but are included in accumulated other comprehensive loss. These changes in fair value will be recognized into earnings as a component of sales or cost of sales when the forecasted transaction occurs. The notional contract amounts for forward contracts outstanding at March 31, 2013 which have been accounted for as cash flow hedges totaled $89.6 million. Net realized gains recognized for forward contracts accounted for as cash flow hedges approximated $0.8 million and $0.1 million for the three months endedMarch 31, 2012 and 2013, respectively. Net unrealized gains on forward contracts outstanding, net of tax, which have been accounted for as cash flow hedges and which have been included in other comprehensive income, totaled $1.0 million at March 31, 2013. It is expected these unrealized gains will be recognized in the consolidated statements of comprehensive income in 2013 and 2014.

We also enter into forward contracts to exchange foreign currencies for United States dollars in order to hedge our currency transaction exposures on intercompany receivables denominated in foreign currencies. These forward contracts settle each month at month-end, at which time we enter into new forward contracts. We have not designated these forward contracts as hedges and have not applied hedge accounting to them. The notional contract amounts for forward contracts outstanding at March 31, 2013 which have not been designated as hedges totaled $45.5 million. Net realized gains (losses) recognized in connection with those forward contracts not accounted for as hedges approximated $(0.7) million and $0.8 million for the three months endedMarch 31, 2012 and 2013, respectively, offsetting gains (losses) on our intercompany receivables of $0.4 million and $(1.5) million for the three months endedMarch 31, 2012 and 2013, respectively. These gains and losses have been recorded in selling and administrative expense in the consolidated statements of operations.

We record these forward foreign exchange contracts at fair value; the following tables summarize the fair value for forward foreign exchange contracts outstanding at December 31, 2012 and March 31, 2013:

December 31, 2012	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	$	(457	)	Other current liabilities	$	2,249	$	1,792
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	—			Other current liabilities	150		150
Total derivatives		$	(457	)		$	2,399	$	1,942

March 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	Prepaid expenses and other current assets	$	2,447	Prepaid expenses and other current assets	$	(866	)	$	1,581
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	5		Prepaid expenses and other current assets	(76		)	(71		)
Total derivatives		$	2,452		$	(942	)	$	1,510

Our forward foreign exchange contracts are subject to a master netting agreement and qualify for netting in the consolidated balance sheets. Accordingly, at December 31, 2012 and March 31, 2013 we have recorded the net fair value of $1.9 million in other current liabilities and $1.5 million in prepaid expenses and other current assets, respectively.

Fair Value Disclosure. Financial Accounting Standards Board (“FASB”) guidance defines fair value and establishes a framework for measuring fair value and related disclosure requirements. This guidance applies when fair value measurements are required or permitted. The guidance indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Fair value is defined based upon an exit price model.

As of March 31, 2013, we do not have any significant non-recurring measurements of non-financial assets and non-financial liabilities.

Valuation Hierarchy. A valuation hierarchy was established for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from or corroborated by observable market data through correlation. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of March 31, 2013 consist of forward foreign exchange contracts. The value of the forward foreign exchange contract assets and liabilities were determined within Level 2 of the valuation hierarchy and are listed in the table above.

The carrying amounts reported in our balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term debt excluding the Notes approximate fair value. The fair value of the Notes was determined within Level 2 of the valuation hierarchy and approximated $0.2 million at both December 31, 2012 and March 31, 2013 based on their quoted market price.

XML

Business Segments and Geographic Areas (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Segment Reporting Information [Line Items]
Net sales	$ 187,014	$ 194,316
Orthopedic Surgery [Member]
Segment Reporting Information [Line Items]
Net sales	105,013	106,827
General Surgery [Member]
Segment Reporting Information [Line Items]
Net sales	66,849	69,504
Surgical Visualization [Member]
Segment Reporting Information [Line Items]
Net sales	$ 15,152	$ 17,985

XML

Business Segments and Geographic Areas (Tables)

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Schedule of net sales information by product line

product lines' net sales are as follows:

	Three Months Ended March 31,
	2012		2013
Orthopedic surgery	$	106,827	$	105,013
General surgery	69,504		66,849
Surgical visualization	17,985		15,152
Consolidated net sales	$	194,316	$	187,014

XML

Other Expense (Tables)

3 Months Ended

Mar. 31, 2013

Other Cost and Expense Disclosure, Operating [Abstract]

Schedule of Other Expense

Other expense consists of the following:

	Three Months Ended March 31,
	2012		2013
Administrative consolidation costs	$	273	$	1,604
Costs associated with legal arbitration and patent dispute	1,011		209
Costs associated with purchase of a distributor	704		—
Other expense	$	1,988	$	1,813

XML

Legal Proceedings (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Product liability insurance, amount per incident	$ 25
Product liability insurance, aggregate annual amount	$ 25

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Restructuring (Tables)

3 Months Ended

Mar. 31, 2013

Restructuring and Related Activities [Abstract]

Schedule of restructuring costs

We incurred the following restructuring costs: 

	Three Months Ended March 31,
	2012		2013
Restructuring costs included in cost of sales	$	1,474	$	1,622
Restructuring costs included in other expense	$	273	$	1,604

Schedule of restructuring accrual

Below is a rollforward of the accrual:

Balance as of January 1, 2013	$	4,120
Expenses incurred	1,031
Payments made	(1,544		)
Balance at March 31, 2013	$	3,607

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Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Accumulated Other Comprehensive Income (Loss) and Comprehensive Income (Loss) [Abstract]
Net income	$ 10,492	$ 9,968
Pension liability, net of income tax	461	462
Cash flow hedging gain (loss), net of income tax	2,127	(1,561)
Foreign currency translation adjustment	(1,706)	2,176
Comprehensive income	$ 11,374	$ 11,045

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Comprehensive Income

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income (Loss) and Comprehensive Income (Loss) [Abstract]

Comprehensive Income

Comprehensive Income

Comprehensive income consists of the following:

	Three Months Ended March 31,
	2012			2013
Net income	$	9,968		$	10,492
Other comprehensive income:
Pension liability, net of
income tax	462			461
Cash flow hedging gain (loss),
net of income tax	(1,561		)	2,127
Foreign currency
translation adjustment	2,176			(1,706		)
Comprehensive income	$	11,045		$	11,374

Accumulated other comprehensive income (loss) consists of the following:

	Cash Flow Hedging Gain (Loss)a			Pension Liabilitya			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2012	$	(1,130	)	$	(30,375	)	$	3,924		$	(27,581	)
Other comprehensive income
before reclassifications	2,189			—			(1,706		)	483
Amounts reclassified from accumulated
other comprehensive incomeb	(62		)	461			—			399
Net current-period other
comprehensive income	2,127			461			(1,706		)	882
Balance, March 31, 2013	$	997		$	(29,914	)	$	2,218		$	(26,699	)

(a) All amounts are net of tax.

(b) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income components are included in sales & cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 4 and Note 9, respectively, for further details.

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Comprehensive Income Accumulated other comprehensive income (loss) (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Accumulated Other Comprehensive Income (Loss) [Member]	Mar. 31, 2013 Cash Flow Hedging Gain (Loss) [Member]	Mar. 31, 2013 Pension Liability [Member]	Mar. 31, 2013 Cumulative Translation Adjustment [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive income (loss)	$ (26,699)	$ (27,581)	$ (27,581)	$ (1,130)	$ (30,375)	$ 3,924
Other comprehensive income before reclassifications			483	2,189	0	(1,706)
Amounts reclassified from accumulated other comprehensive income			399	(62)	461	0
Net current-period other comprehensive income			882	2,127	461	(1,706)
Accumulated other comprehensive income (loss)	$ (26,699)	$ (27,581)	$ (26,699)	$ 997	$ (29,914)	$ 2,218

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Guarantees (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Guarantees [Abstract]
Standard warranty period	1 year
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning balance	$ 3,636	$ 3,618
Provision for warranties	908	1,125
Claims made	(1,113)	(1,047)
Ending balance	$ 3,431	$ 3,696

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Consolidated Condensed Statements of Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net sales	$ 187,014	$ 194,316
Cost of sales	84,332	93,405
Gross profit	102,682	100,911
Selling and administrative expense	77,725	74,806
Research and development expense	5,694	7,095
Medical device excise tax	1,580	0
Other expense	1,813	1,988
Total operating expenses	86,812	83,889
Income from operations	15,870	17,022
Loss on early extinguishment of debt	263	0
Interest expense	1,366	1,437
Income before income taxes	14,241	15,585
Provision for income taxes	3,749	5,617
Net income	10,492	9,968
Comprehensive income	$ 11,374	$ 11,045
Per share data:
Basic (per share)	$ 0.37	$ 0.36
Diluted (per share)	$ 0.37	$ 0.35
Dividends per share of common stock (in dollars per share)	$ 0.15	$ 0.15
Weighted average common shares
Basic	28,127	28,029
Diluted	28,500	28,484

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Restructuring (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 1,031
Administrative consolidation costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	1,604	273
Cost of Sales [Member] | Facility Consolidation Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	1,622	1,474
Other Expense [Member] | Administrative consolidation costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 1,604	$ 273

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Operations

3 Months Ended

Mar. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Operations

Operations

CONMED Corporation (“CONMED”, the “Company”, “we” or “us”) is a medical technology company with an emphasis on surgical devices and equipment for minimally invasive procedures and monitoring.  The Company’s products are used by surgeons and physicians in a variety of specialties including orthopedics, general surgery, gynecology, neurosurgery and gastroenterology.

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]
Raw materials	$ 45,161	$ 45,115
Work-in-process	15,399	14,229
Finished goods	96,313	96,884
Total inventory	$ 156,873	$ 156,228

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Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Schedule of Fair Value for Forward Foreign Exchange Contracts

We record these forward foreign exchange contracts at fair value; the following tables summarize the fair value for forward foreign exchange contracts outstanding at December 31, 2012 and March 31, 2013:

December 31, 2012	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	$	(457	)	Other current liabilities	$	2,249	$	1,792
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	—			Other current liabilities	150		150
Total derivatives		$	(457	)		$	2,399	$	1,942

March 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	Prepaid expenses and other current assets	$	2,447	Prepaid expenses and other current assets	$	(866	)	$	1,581
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	5		Prepaid expenses and other current assets	(76		)	(71		)
Total derivatives		$	2,452		$	(942	)	$	1,510

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Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Earnings Per Share [Abstract]
Net income	$ 10,492	$ 9,968
Basic-weighted average shares outstanding	28,127,000	28,029,000
Effect of dilutive potential securities	373,000	455,000
Diluted- weighted average shares outstanding	28,500,000	28,484,000
Basic (per share)	$ 0.37	$ 0.36
Diluted (per share)	$ 0.37	$ 0.35
Shares excluded from computation of earnings per share	300,000	400,000

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Schedule of calculation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2012 and 2013.

	Three Months Ended March 31,
	2012		2013
Net income	$	9,968	$	10,492
Basic – weighted average shares outstanding	28,029		28,127
Effect of dilutive potential securities	455		373
Diluted – weighted average shares outstanding	28,484		28,500
Net income
Basic (per share)	$0.36		$0.37
Diluted (per share)	$0.35		$0.37

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Interim financial information

3 Months Ended

Mar. 31, 2013

Interim financial information [Abstract]

Interim financial information

Interim Financial Information

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. Results for the period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The consolidated condensed financial statements and notes thereto should be read in conjunction with the financial statements and notes for the year ended December 31, 2012 included in our Annual Report on Form 10-K.

Income taxes receivable and income taxes payable at December 31, 2012 have been revised to conform to the current year presentation.

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Consolidated Condensed Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 32,359	$ 23,720
Accounts receivable, net	135,597	139,124
Inventories	156,873	156,228
Income taxes receivable	2,000	2,897
Deferred income taxes	10,703	11,931
Prepaid expenses and other current assets	16,466	14,993
Total current assets	353,998	348,893
Property, plant and equipment, net	138,411	139,041
Deferred income taxes	1,188	1,057
Goodwill	249,160	249,160
Other intangible assets, net	188,809	190,809
Other assets	151,419	150,547
Total assets	1,082,985	1,079,507
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt	1,050	1,050
Accounts payable	25,045	23,622
Accrued compensation and benefits	24,538	33,511
Income taxes payable	2,100	2,706
Other current liabilities	44,442	64,325
Total current liabilities	97,175	125,214
Long-term debt	224,802	160,802
Deferred income taxes	102,199	99,857
Other long-term liabilities	61,229	86,636
Total liabilities	485,405	472,509
Commitments and contingencies
Preferred stock, par value $.01 per share; authorized 500,000 shares; none outstanding	0	0
Common stock, par value $.01 per share; 100,000,000 shares authorized; 31,299,194 shares issued in 2012 and 2013, respectively	313	313
Paid-in capital	325,801	324,322
Retained earnings	384,210	377,907
Accumulated other comprehensive loss	(26,699)	(27,581)
Less: 2,925,801 and 3,455,985 shares of common stock in treasury, at cost in 2012 and 2013, respectively	(86,045)	(67,963)
Total shareholders' equity	597,580	606,998
Total liabilities and shareholders' equity	$ 1,082,985	$ 1,079,507

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Legal Proceedings

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

Legal Proceedings

From time to time, we are a defendant in certain lawsuits alleging product liability, patent infringement, or other claims incurred in the ordinary course of business. Likewise, from time to time, the Company may receive a subpoena from a government agency such as the Securities and Exchange Commission, Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, the Department of Labor, the Treasury Department, or other federal and state agencies or foreign governments or government agencies. These subpoenas may or may not be routine inquiries, or may begin as routine inquiries and over time develop into enforcement actions of various types. The product liability claims are generally covered by various insurance policies, subject to certain deductible amounts, maximum policy limits and certain exclusions in the respective policies or as required as a matter of law. In some cases we may be entitled to indemnification by third parties. When there is no insurance coverage, as would typically be the case primarily in lawsuits alleging patent infringement or in connection with certain government investigations, or indemnification obligations of a third party, we establish reserves sufficient to cover probable losses associated with such claims. We do not expect that the resolution of any pending claims or investigations will have a material adverse effect on our financial condition, results of operations or cash flows. There can be no assurance, however, that future claims or investigations, or the costs associated with responding to such claims or investigations, especially claims and investigations not covered by insurance, will not have a material adverse effect on our financial condition, results of operations or cash flows.

Manufacturers of medical products may face exposure to significant product liability claims. To date, we have not experienced any product liability claims that have been material to our financial statements or condition, but any such claims arising in the future could have a material adverse effect on our business or results of operations. We currently maintain commercial product liability insurance of $25 million per incident and $25 million in the aggregate annually, which we believe is adequate. This coverage is on a claims-made basis. There can be no assurance that claims will not exceed insurance coverage, that the carriers will be solvent or that such insurance will be available to us in the future at a reasonable cost.

Our operations are subject, and in the past have been subject, to a number of environmental laws and regulations governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous substances and wastes, soil and groundwater remediation and employee health and safety. In some jurisdictions environmental requirements may be expected to become more stringent in the future. In the United States certain environmental laws can impose liability for the entire cost of site restoration upon each of the parties that may have contributed to conditions at the site regardless of fault or the lawfulness of the party’s activities. While we do not believe that the present costs of environmental compliance and remediation are material, there can be no assurance that future compliance or remedial obligations would not have a material adverse effect on our financial condition, results of operations or cash flows.

In September 2012, Bonutti Skeletal Innovations, LLC filed a complaint in the United States District Court for the Middle District of Florida against CONMED and certain of its subsidiaries. The Complaint asserts that select CONMED products infringe patents allegedly owned by Bonutti Skeletal Innovations. On the same day that it sued CONMED, Bonutti Skeletal Innovations sued several other orthopedic companies. The Company believes that the products in question do not infringe the patents-in-suit and intends to vigorously defend the claims. A range of potential losses cannot be estimated at this time.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 24, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	CONMED CORP
Entity Central Index Key	0000816956
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		27,732,070

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2013

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements

New Accounting Pronouncements

In February 2013, the FASB issued Accounting Standards Update, Comprehensive Income (Topic 220): Presentation of Items Reclassified out of Accumulated Other Comprehensive Income. This guidance requires enhanced disclosures relating to reclassifications out of accumulated other comprehensive income. This guidance is effective for interim and annual periods beginning after December 15, 2012. The implementation of this new guidance did not have a material impact on our consolidated financial statements.

Effective January 2013, Accounting Standards Update 2011-11: Disclosures about Offsetting Assets and Liabilities, requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The adoption of this guidance did not have a material impact on the financial statements.

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Consolidated Condensed Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Preferred stock, par value (dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares outstanding	0	0
Common stock, par value (dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	31,299,194	31,299,194
Treasury stock, shares	3,455,985	2,925,801

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2013

Goodwill and Other Intangible Assets and Other Assets [Abstract]

Goodwill and Other Intangible Assets and Other Assets

Goodwill, Other Intangible Assets, and Other Assets

The changes in the net carrying amount of goodwill for the three months ended March 31, 2013 are as follows:

Balance as of December 31, 2012, as reported	$	256,821
Goodwill resulting from a business acquisition purchase price allocation adjustment	(7,661		)
Balance as of December 31, 2012, as revised, and March 31, 2013	$	249,160

During the first quarter of 2013, we finalized the allocation of purchase price related to our acquisition of Viking Systems, Inc.. We recorded a deferred tax asset of $7.7 million relating to the acquired net operating losses, which resulted in a corresponding reduction to goodwill. There have been no other changes in the consideration paid, working capital, or other acquired assets and liabilities, other than those described above, since December 31, 2012.

      Other intangible assets consist of the following:

	December 31, 2012					March 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer relationships	$	135,690	$	(50,083	)	$	135,690	$	(51,364	)
Patents and other intangible assets	54,412		(37,554		)	54,400		(38,261		)
Unamortized intangible assets:
Trademarks and tradenames	88,344		—			88,344		—
Balance	$	278,446	$	(87,637	)	$	278,434	$	(89,625	)

Other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. The weighted average amortization period for intangible assets which are amortized is 29 years. Customer relationships are being amortized over a weighted average life of 33 years. Patents and other intangible assets are being amortized over a weighted average life of 15 years.  

Amortization expense related to intangible assets which are subject to amortization totaled $1,932 and $1,988 in the three months endedMarch 31, 2012 and March 31, 2013, respectively, and is included in selling and administrative expense on the consolidated condensed statements of income.

The estimated amortization expense for the year ending December 31, 2013, including the three month period ended March 31, 2013 and for each of the five succeeding years is as follows:

2013	$	7,731
2014	7,115
2015	6,721
2016	6,619
2017	6,608
2018	6,550

On January 3, 2012, the Company entered into a Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”) to obtain (i) MTF's worldwide promotion rights with respect to allograft tissues within the field of sports medicine, and (ii) an exclusive license to an autograft (patient's own) blood Platelet-Rich Plasma (“PRP”) therapy technology and products (collectively, the “Transaction”). The initial consideration from the Company included a $63.0 million up-front payment for the rights and certain assets, with an additional $84.0 million contingently payable over a four year period depending on MTF meeting supply targets. On January 3, 2013, we paid $34.0 million of the additional consideration; $16.7 million of the additional consideration is due within the next fiscal year with the remainder due in equal installments in each year thereafter. At March 31, 2013, the gross carrying amount of this arrangement amounted to $149.4 million and the related accumulated amortization was $7.5 million. This has been recorded in other assets and is being amortized on a straight line basis over the 25 year term of the JDDA. Amortization expense is recorded as a reduction to sales. The $50.0 million related to the contingent payment is accrued in other current and other long term liabilities as we believe it is probable MTF will meet the supply targets.

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Earnings Per Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share (“basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding resulting from employee stock options, restricted stock units, performance share units and stock appreciation rights (“SARs”) during the period. The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2012 and 2013.

	Three Months Ended March 31,
	2012		2013
Net income	$	9,968	$	10,492
Basic – weighted average shares outstanding	28,029		28,127
Effect of dilutive potential securities	455		373
Diluted – weighted average shares outstanding	28,484		28,500
Net income
Basic (per share)	$0.36		$0.37
Diluted (per share)	$0.35		$0.37

The shares used in the calculation of diluted EPS exclude options and SARs to purchase shares where the exercise price was greater than the average market price of common shares for the period. Shares excluded from the calculation of diluted EPS aggregated 0.4 million and 0.3 million for the three months endedMarch 31, 2012 and 2013, respectively.

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Inventories (Tables)

3 Months Ended

Mar. 31, 2013

Inventory Disclosure [Abstract]

Schedule of inventory

Inventories consist of the following:

	December 31, 2012		March 31, 2013
Raw materials	$	45,115	$	45,161
Work-in-process	14,229		15,399
Finished goods	96,884		96,313
Total	$	156,228	$	156,873

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Restructuring

3 Months Ended

Mar. 31, 2013

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

We incurred the following restructuring costs: 

	Three Months Ended March 31,
	2012		2013
Restructuring costs included in cost of sales	$	1,474	$	1,622
Restructuring costs included in other expense	$	273	$	1,604

During 2012 and 2013, we continued our operational restructuring plan which includes the transfer of additional production lines from manufacturing facilities located in the United States to our manufacturing facility in Chihuahua, Mexico and the consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities. During the first quarter of 2013, we began the consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico facilities. We incurred $1.5 million and $1.6 million in costs associated with the restructuring during the three months endedMarch 31, 2012 and March 31, 2013, respectively. These costs were charged to cost of goods sold and include severance and other charges associated with the transfer of production to Mexico and consolidation of our Finland and Westborough, Massachusetts operations.

Restructuring costs included in other expense are described more fully in Note 10.

We have recorded an accrual in current liabilities of $3.6 million at March 31, 2013 mainly related to severance and lease impairment costs associated with the restructuring. Below is a rollforward of the accrual:

Balance as of January 1, 2013	$	4,120
Expenses incurred	1,031
Payments made	(1,544		)
Balance at March 31, 2013	$	3,607

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Other Expense

3 Months Ended

Mar. 31, 2013

Other Cost and Expense Disclosure, Operating [Abstract]

Other Expense

Other Expense

Other expense consists of the following:

	Three Months Ended March 31,
	2012		2013
Administrative consolidation costs	$	273	$	1,604
Costs associated with legal arbitration and patent dispute	1,011		209
Costs associated with purchase of a distributor	704		—
Other expense	$	1,988	$	1,813

During 2012 and 2013, we restructured certain administrative functions. For the three months endedMarch 31, 2012 and 2013, we incurred $0.3 million and $1.6 million, respectively, in related costs consisting principally of severance charges.

During 2012, we incurred legal costs related to a contractual dispute with a former distributor. The dispute was resolved in the second quarter of 2012. For the three months endedMarch 31, 2012, we incurred costs totaling $1.0 million.

During the three months endedMarch 31, 2012, we incurred $0.7 million in costs associated with the purchase of the Company's former distributor in the Nordic region of Europe.

During the three months endedMarch 31, 2013, we incurred $0.2 million in legal costs associated with a patent infringement claim as further described in Note 12.

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Guarantees

3 Months Ended

Mar. 31, 2013

Guarantees [Abstract]

Guarantees

Guarantees

We provide warranties on certain of our products at the time of sale. The standard warranty period for our capital and reusable equipment is generally one year. Liability under service and warranty policies is based upon a review of historical warranty and service claim experience. Adjustments are made to accruals as claim data and historical experience warrant.

Changes in the carrying amount of service and product warranties for the three months endedMarch 31, are as follows:

	2012			2013
Balance as of January 1,	$	3,618		$	3,636
Provision for warranties	1,125			908
Claims made	(1,047		)	(1,113		)
Balance as of March 31,	$	3,696		$	3,431

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Pension Plan

3 Months Ended

Mar. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pension Plans

Pension Plan

Net periodic pension costs consist of the following: 

	Three Months Ended March 31,
	2012			2013
Service cost	$	65		$	68
Interest cost on projected benefit obligation	859			769
Expected return on plan assets	(1,131		)	(1,319		)
Net amortization and deferral	732			732
Net periodic pension cost	$	525		$	250

We contributed $7.5 million during the first quarter of 2013 related to the 2012 plan year. We do not expect to make any further contributions during 2013.

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Business Segments and Geographic Areas

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Business Segments and Geographic Areas

Business Segments

During 2011 and 2012, we undertook a variety of restructuring initiatives aimed at improving efficiency and internal effectiveness. These initiatives included changes in management lines of reporting and culminated in the implementation of a functional organizational structure. Under the new structure, we are now organized by function rather than by operating segment. Executives reporting in to the CEO include those responsible for operations and supply chain management, research and development, sales, marketing and certain corporate functions. Our chief operating decision maker (the CEO) evaluates the various global product portfolios on a net sales basis and evaluates profitability, investment and cash flow metrics on a consolidated worldwide basis due to shared infrastructure and resources. As a result, we have discontinued accounting and reporting for our businesses as five separate, operating segments. Effective January 1, 2013, we are accounting and reporting for our business as a single segment entity engaged in the development, manufacturing and sale on a global basis of surgical devices and related equipment.

As part of this reporting structure change, we also restructured our product lines. Orthopedic surgery consists of sports medicine instrumentation and small bone, large bone and specialty powered surgical instruments. General surgery consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures, a line of cardiac monitoring products as well as electrosurgical generators and related instruments. Surgical visualization consists of 2D and 3D video systems for use in orthopedic and general surgery. These product lines' net sales are as follows:

	Three Months Ended March 31,
	2012		2013
Orthopedic surgery	$	106,827	$	105,013
General surgery	69,504		66,849
Surgical visualization	17,985		15,152
Consolidated net sales	$	194,316	$	187,014

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Fair Value of Financial Instruments (Long-term Debt) (Details) (Convertible Subordinated Debt [Member], USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Convertible Subordinated Debt [Member]
Debt Instrument [Line Items]
Fair value of the Notes	$ 0.2	$ 0.2

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Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income (Loss) and Comprehensive Income (Loss) [Abstract]

Schedule of Comprehensive Income

Comprehensive income consists of the following:

	Three Months Ended March 31,
	2012			2013
Net income	$	9,968		$	10,492
Other comprehensive income:
Pension liability, net of
income tax	462			461
Cash flow hedging gain (loss),
net of income tax	(1,561		)	2,127
Foreign currency
translation adjustment	2,176			(1,706		)
Comprehensive income	$	11,045		$	11,374

Schedule of Accumulated Other Comprehensive Loss

Accumulated other comprehensive income (loss) consists of the following:

	Cash Flow Hedging Gain (Loss)a			Pension Liabilitya			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2012	$	(1,130	)	$	(30,375	)	$	3,924		$	(27,581	)
Other comprehensive income
before reclassifications	2,189			—			(1,706		)	483
Amounts reclassified from accumulated
other comprehensive incomeb	(62		)	461			—			399
Net current-period other
comprehensive income	2,127			461			(1,706		)	882
Balance, March 31, 2013	$	997		$	(29,914	)	$	2,218		$	(26,699	)

(a) All amounts are net of tax.

(b) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income components are included in sales & cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 4 and Note 9, respectively, for further details.

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Guarantees (Tables)

3 Months Ended

Mar. 31, 2013

Guarantees [Abstract]

Changes in the carrying amount of service and product warranties

Changes in the carrying amount of service and product warranties for the three months endedMarch 31, are as follows:

	2012			2013
Balance as of January 1,	$	3,618		$	3,636
Provision for warranties	1,125			908
Claims made	(1,047		)	(1,113		)
Balance as of March 31,	$	3,696		$	3,431

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Pension Plan (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Compensation and Retirement Disclosure [Abstract]
Employer contributions	$ 7,500,000
Defined Benefit Plan, Net Periodic Pension Cost [Abstract]
Service cost	68,000	65,000
Interest cost on projected benefit obligation	769,000	859,000
Expected return on plan assets	(1,319,000)	(1,131,000)
Net amortization and deferral	732,000	732,000
Net periodic benefit cost	$ 250,000	$ 525,000

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Consolidated Condensed Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net income	$ 10,492	$ 9,968
Adjustments to reconcile net income to net cash provided by operating acitivites:
Depreciation	4,619	4,688
Amortization	7,110	7,124
Stock-based compensation	1,152	1,183
Deferred income taxes	1,914	2,735
Loss on early extinguishment of debt	263	0
Increase (decrease) in cash flows from changes in assets and liabilities:
Accounts receivable	3,042	(5,618)
Inventories	(4,858)	2,764
Accounts payable	313	2,601
Income taxes receivable (payable)	244	(1,232)
Accrued compensation and benefits	(8,830)	(10,446)
Other assets	(2,423)	(1,106)
Other liabilities	(7,566)	(5,032)
Total operating	(5,020)	(2,339)
Net cash provided by operating activities	5,472	7,629
Cash flows from investing activities:
Purchases of property, plant and equipment	(4,130)	(6,424)
Payments related to distribution agreement	0	(64,116)
Net cash used in investing activities	(4,130)	(70,540)
Cash flows from financing activities:
Net proceeds from common stock issued under employee plans	7,633	5,345
Repurchase of common stock	(25,732)	0
Payments on senior credit agreement	0	(338)
Proceeds from senior credit agreement	64,000	50,000
Payment related to distribution agreement	(34,000)	0
Payments related to issuance of debt	(1,636)	0
Dividends paid on common stock	(4,256)	0
Other, net	1,625	809
Net cash provided by financing activities	7,634	55,816
Effect of exchange rate changes on cash and cash equivalents	(337)	501
Net increase (decrease) in cash and cash equivalents	8,639	(6,594)
Cash and cash equivalents at beginning of period	23,720	26,048
Cash and cash equivalents at end of period	32,359	19,454
Non-cash financing activities:
Dividends payable	$ 4,189	$ 4,328

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Inventories

3 Months Ended

Mar. 31, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following:

	December 31, 2012		March 31, 2013
Raw materials	$	45,115	$	45,161
Work-in-process	14,229		15,399
Finished goods	96,884		96,313
Total	$	156,228	$	156,873

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Pension Plan (Tables)

3 Months Ended

Mar. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of net benefit cost

Net periodic pension costs consist of the following: 

	Three Months Ended March 31,
	2012			2013
Service cost	$	65		$	68
Interest cost on projected benefit obligation	859			769
Expected return on plan assets	(1,131		)	(1,319		)
Net amortization and deferral	732			732
Net periodic pension cost	$	525		$	250

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Goodwill and Other Intangible Assets and Other Assets (Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Intangible assets, gross carrying amount	$ 278,434		$ 278,446
Intangible assets, accumulated amortization	(89,625)		(87,637)
Weighted average amortization period (in years)	29 years
Amortization expense	1,988	1,932
Future amortization expense [Abstract]
2013	7,731
2014	7,115
2015	6,721
2016	6,619
2017	6,608
2018	6,550
Trademarks and Tradenames [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Unamortized intangible assets, gross carrying amount	88,344		88,344
Customer Relationships [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Amortized intangible assets, gross carrying amount	135,690		135,690
Intangible assets, accumulated amortization	(51,364)		(50,083)
Weighted average amortization period (in years)	33 years
Patents and Other Intangible Assets [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Amortized intangible assets, gross carrying amount	54,400		54,412
Intangible assets, accumulated amortization	$ (38,261)		$ (37,554)
Weighted average amortization period (in years)	15 years

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Amended and Restated Senior Credit Agreement (Notes)

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Amended and Restated Senior Credit Agreement

Amended and Restated Senior Credit Agreement

On January 17, 2013, we entered into an amended and restated $350.0 million senior credit agreement (the "amended and restated senior credit agreement"). The amended and restated senior credit agreement consists of a $350.0 million revolving credit facility expiring on January 17, 2018. The amended and restated senior credit agreement was used to repay borrowings outstanding on the revolving credit facility under the then existing senior credit agreement. In connection with the refinancing, we recorded a $0.3 million loss on the early extinguishment of debt related to the write-off of unamortized deferred financing costs under the previously existing senior credit agreement. Initial interest rates are at LIBOR plus 1.50% (1.71% at March 31, 2013) or an alternative base rate. For those borrowings where the Company elects to use the alternative base rate, the base rate will be the greater of the Prime Rate, the Federal Funds Rate in effect on such date plus 0.50%, or the one month Eurocurrency rate plus 1%, plus an additional margin of 0.50%.