10-K

United States

Securities and Exchange Commission

Washington, D.C.

20549

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2013 Commission file number 0-16093

CONMED CORPORATION

(Exact name of registrant as specified in its charter)

New York	16-0977505
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
525 French Road, Utica, New York	13502
(Address of principal executive offices)	(Zip Code)

(315) 797-8375

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).

Yes ý      No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes o      No x

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 x     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 such shorter period that the registrant was required to submit and post such files).  Yes x     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

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 the definitions of “accelerated filer and large accelerated filer” 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 x

As of June 30, 2013, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the shares of voting common stock held by non-affiliates of the registrant was approximately $861,668,334 based upon the closing price of the Company’s common stock on the NASDAQ Stock Market.

The number of shares of the registrant's $0.01 par value common stock outstanding as of February 19, 2014 was 27,206,496.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Definitive Proxy Statement or other informational filing for the 2014 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

CONMED CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR YEAR ENDED DECEMBER 31, 2013

TABLE OF CONTENTS

Part I

		Page
Item 1.	Business	2
Item 1A.	Risk Factors	9
Item 2.	Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	16
	Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6.	Selected Financial Data	19
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 8.	Financial Statements and Supplementary Data	32
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	32
Item 9A.	Controls and Procedures	32
Item 9B.	Other Information	32
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	33
Item 11.	Executive Compensation	33
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13.	Certain Relationships and Related Transactions, and Director Independence	33
Item 14.	Principal Accounting Fees and Services	33
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	34
	Signatures	35

1

CONMED CORPORATION

Item 1. Business

Forward Looking Statements

This Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2013 (“Form 10-K”) contains certain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to CONMED Corporation (“CONMED”, the “Company”, “we” or “us” — references to “CONMED”, the “Company”, “we” or “us” shall be deemed to include our direct and indirect subsidiaries unless the context otherwise requires) which are based on the beliefs of our management, as well as assumptions made by and information currently available to our management.

When used in this Form 10-K, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, including those identified under the caption “Item 1A-Risk Factors” and elsewhere in this Form 10-K which 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, among others, the following:

• 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 tissues due to reduced donations of such tissues or due to tissues not meeting the appropriate high standards for screening and/or processing of such tissues;

• changes in regulatory requirements; and

• various other factors referenced in this Form 10-K.

See “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Item 1-Business” and “Item 1A-Risk Factors” 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 Form 10-K or to reflect the occurrence of unanticipated events.

General

CONMED Corporation was incorporated under the laws of the State of New York in 1970 by Eugene R. Corasanti, the Company’s founder and Chairman of the Board.  CONMED 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.  Headquartered in Utica, New York, the Company’s 3,600 employees distribute its products worldwide from several manufacturing locations.  

We have historically used strategic business acquisitions and exclusive distribution relationships to diversify our product offerings, increase our market share in certain product lines, realize economies of scale and take advantage of growth opportunities in the healthcare field.

We are committed to offering products with the highest standards of quality, technological excellence and customer service.  Substantially all of our facilities have attained certification under the ISO international quality standards and other domestic and international quality accreditations.

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Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are accessible free of charge through the Investor Relations section of our website (http://www.conmed.com) as soon as practicable after such materials have been electronically filed with, or furnished to, the United States Securities and Exchange Commission (the "SEC"). Our SEC filings are also available for reading and copying at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (http:/www.sec.gov) containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Industry

Market growth for our products is primarily driven by:

• Favorable Demographics.  The number of surgical procedures performed is increasing and we believe the long-term demographic trend of the aging of the population will lead to continued growth in surgical procedures, and technological advancements, which result in safer and less invasive (or non-invasive) surgical procedures.  Additionally, as people are living longer, more active lives, they are engaging in contact sports and activities such as running, skiing, rollerblading, golf and tennis which result in injuries with greater frequency and at an earlier age than ever before.  Sales of surgical products aggregated to approximately 90% of our total net revenues in 2013.  See “Products.”

• Continued Pressure to Reduce Health Care Costs.  In response to rising health care costs, managed care companies and other third-party payers have placed pressures on health care providers to reduce costs.  As a result, health care providers have focused on the high cost areas such as surgery.  To reduce costs, health care providers use minimally invasive techniques, which generally reduce patient trauma, recovery time and ultimately the length of hospitalization.  Approximately 50% of our products are designed for use in minimally invasive surgical procedures.  See “Products.”  Health care providers are also increasingly purchasing single-use, disposable products, which reduce the costs associated with sterilizing surgical instruments and products following surgery.  The single-use nature of disposable products lowers the risk of incorrectly sterilized instruments spreading infection into the patient and increasing the cost of post-operative care.  Approximately 80% of our sales are derived from single-use disposable products.

In the United States, the pressure on health care providers to contain costs has caused many health care providers to enter into comprehensive purchasing contracts with fewer suppliers, which offer a broader array of products at lower prices.  In addition, many health care providers have aligned themselves with Group Purchasing Organizations (“GPOs”) or Integrated Health Networks (“IHNs”), whose stated purpose is to aggregate the purchasing volume of their members in order to negotiate competitive pricing with suppliers, including manufacturers of surgical products.  We believe that these trends will favor entities which offer a diverse product portfolio.  See “Business Strategy”.

• Increased Global Medical Spending.  We believe that foreign markets offer significant growth opportunities for our products.  We currently distribute our products through our own sales subsidiaries or through local dealers in over 100 foreign countries.

Competitive Strengths

Management believes that we hold a significant market share position in each of our key product areas, including Orthopedic Surgery, General Surgery and Surgical Visualization.  We have established a leadership position in the marketplace by capitalizing on the following competitive strengths:

• Brand Recognition.  Our products are marketed under leading brand names, including CONMED^®, CONMED Linvatec^® and Hall Surgical^®.  These brand names are recognized by physicians and healthcare professionals for quality and service.  It is our belief that brand recognition facilitates increased demand for our products in the marketplace, enables us to build upon the brand’s associated reputation for quality and service, and allows us to realize increased market acceptance of new branded products.

• Breadth of Product Offering.  The breadth of our product lines in our key product areas enables us to meet a wide range of customer requirements and preferences.  This has enhanced our ability to market our products to surgeons, hospitals, surgery centers, GPOs, IHNs and other customers, particularly as institutions seek to reduce costs and minimize the number of suppliers.

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• Successful Integration of Acquisitions. We seek to build growth platforms around our core markets through focused acquisitions of complementary businesses and product lines.  These acquisitions have enabled us to diversify our product portfolio, expand our sales and marketing capabilities and strengthen our presence in key geographical markets.

• Strategic Marketing and Distribution Channels.  We market our products domestically through five focused sales force groups consisting of approximately 275 employee sales representatives and 215 sales professionals employed by independent sales agent groups.  Our dedicated sales professionals are highly knowledgeable in the applications and procedures for the products they sell.  Our sales representatives foster close professional relationships with physicians, surgeons, hospitals, outpatient surgery centers and physicians’ offices.  Additionally, we maintain a global presence through sales subsidiaries and branches located in key international markets.  We directly service hospital customers located in these markets through an employee-based international sales force of approximately 185 sales representatives.  We also maintain distributor relationships domestically and in numerous countries worldwide.  See “Marketing.”

• Operational Improvements and Manufacturing.  We are focused on continuously improving our supply chain effectiveness, strengthening our manufacturing processes and optimizing our plant network to increase operational efficiencies within the organization.  Substantially all of our products are manufactured and assembled from components we produce.  Our strategy has historically been to vertically integrate our manufacturing facilities in order to develop a competitive advantage.  This integration provides us with cost efficient and flexible manufacturing operations which permit us to allocate capital more efficiently.  Additionally, we attempt to exploit commercial synergies between operations, such as the procurement of common raw materials and components used in production.

• Technological Leadership.  Research and development efforts are closely aligned with our key business objectives, namely developing and improving products and processes, applying innovative technology to the manufacture of products for new global markets and reducing the cost of producing core products.  These efforts are evidenced by recent product introductions, such as the Y-Knot® Flex System for instability repairs, Y-Knot® RC anchors for rotator cuffs, the D4000 Resection System, the IM8000 2DHD Camera System, Hall 50™ Powered Instrument System, GS2000 50L Insufflator, EntriPort line of trocars, new D-Flex probes, and DetachaTip® III Multi-Use Endosurgery Instruments.  

Business Strategy

Our principal objectives are to improve the quality of surgical outcomes and patient care through the development of innovative medical devices, the refinement of existing products and the development of new technologies which reduce risk, trauma, cost and procedure time.  We believe that by meeting these objectives we will enhance our ability to anticipate and adapt to customer needs and market opportunities, and provide shareholders with superior investment returns.  We intend to achieve future growth and earnings development through the following initiatives:

• Introduction of New Products and Product Enhancements.  We continually pursue organic growth through the development of new products and enhancements to existing products.  We seek to develop new technologies which improve the durability, performance and usability of existing products.  In addition to our internal research and development efforts, we receive new ideas for products and technologies, particularly in procedure-specific areas, from surgeons, inventors and other healthcare professionals.

• Pursue Strategic Acquisitions.  We pursue strategic acquisitions, distribution and similar arrangements in existing and new growth markets to achieve increased operating efficiencies, geographic diversification and market penetration.  Targeted companies have historically included those with proven technologies and established brand names which provide potential sales, marketing and manufacturing synergies.

• Realize Manufacturing and Operating Efficiencies.  We continually review our production systems for opportunities to reduce operating costs, consolidate product lines or identical process flows, reduce inventory requirements and optimize existing processes.  Our vertically integrated manufacturing facilities allow for further opportunities to reduce overhead, increase operating efficiencies and capacity utilization.

• Geographic Diversification.  We believe that significant growth opportunities exist for our surgical products outside the United States.  Principal foreign markets for our products include Europe, Latin America and Asia/Pacific Rim.  Critical elements of our future sales growth in these markets include leveraging our existing relationships with foreign surgeons, hospitals, third-party payers and foreign distributors, maintaining an appropriate presence in emerging market countries and continually evaluating our routes-to-market.

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• Active Participation In The Medical Community.  We believe that excellent working relationships with physicians and others in the medical industry enable us to gain an understanding of new therapeutic and diagnostic alternatives, trends and emerging opportunities.  Active participation allows us to quickly respond to the changing needs of physicians and patients. In addition, we are an active sponsor of medical education both in the United States and internationally, offering new and innovative surgical techniques as well as other medical education materials for use with our products.

Products

The following table sets forth the percentage of net sales for each of our product lines during each of the three years ended December 31:

	Year Ended December 31,
	2011			2012			2013
Orthopedic surgery	51		%	54		%	54		%
General surgery	40		%	37		%	37		%
Surgical visualization	9		%	9		%	9		%
Consolidated net sales	100		%	100		%	100		%
Net Sales (in thousands)	$	725,077		$	767,140		$	762,704

Orthopedic Surgery

A significant portion of our business is derived from sales in our orthopedic surgery product lines, including sports medicine, powered surgical instruments and sports biologics and tissue. These lines are marketed under a number of reputable brands, including Hall^®, CONMED Linvatec^®, Concept^® and Shutt^®.

We offer a comprehensive range of devices and products to repair injuries which have occurred in the articulating joint areas of the body.  Many of these injuries are the result of sports related events or similar traumas.  Our sports medicine products include powered resection instruments, arthroscopes, reconstructive systems, tissue repair sets, metal and bioabsorbable implants as well as related disposable products and fluid management systems.  It is our standard practice to place some of these products, such as shaver consoles and pumps, with certain customers at no charge in exchange for commitments to purchase disposable products over certain time periods.  This capital equipment is loaned and subject to return if certain minimum single-use purchases are not met. Single-use products include products such as shaver blades, burs and pump tubing.  We have benefited from the introduction of new arthroscopic products and technologies, such as bioabsorbable screws, “push-in” and “screw-in” suture anchors, and resection shavers.

As a market leader in sports medicine, we compete with Smith & Nephew, plc, Arthrex, Inc., Stryker Corporation, ArthroCare Corporation, Johnson & Johnson: DePuy Mitek, Inc., and Biomet, Inc..

Our powered instruments offering is sold principally under the Hall^® Surgical brand name, for use in large and small bone orthopedic, arthroscopic, oral/maxillofacial, podiatric, plastic, ENT, neurological, spinal and cardiothoracic surgeries. Our newest product is the Hall 50™ Powered Instrument System, specifically designed to meet the requirements of most orthopedic applications.  The modularity and versatility of the Hall 50™ Powered Instrument System allows a facility to purchase a single power system to perform total joint arthroplasty, trauma, arthroscopy, and some small bone procedures.  

As a market leader in powered instruments, our competition includes Stryker Corporation, Medtronic, (Midas Rex and Xomed divisions), Synvasive Technology, Inc., Synthes, Inc., MicroAire Surgical Instruments, LLC, and Zimmer Holdings, Inc.

As more fully described in Note 4 to the Consolidated Financial Statements, on January 3, 2012, the Company entered into the Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”) to obtain MTF's worldwide promotion rights with respect to allograft tissues within the field of sports medicine and related products. Under the terms of this agreement, we are now the exclusive worldwide promoter of these allograft tissues, which includes the reconstruction and/or replacement of tendon, ligament, cartilage or menisci, along with the correction of deformities within the extremities.  

Surgical Visualization

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Our surgical visualization product line offers endoscopic imaging and capture devices for the complete spectrum of surgical needs including 2DHD and 3DHD vision technologies. The 3DHD vision system is an advanced three dimensional, or 3D, vision system which employs a flat screen monitor and passive glasses. It is used by surgeons during complex minimally invasive surgical procedures, with applications in gynecologic, urologic, bariatric, thoracic and general surgery. Competition includes Smith & Nephew, plc, Arthrex, Inc., Stryker Corporation, Olympus, Inc. and Karl Storz GmbH.

General Surgery

Our general surgery product line offers a large range of products in the areas of advanced energy, endomechanical instrumentation, gastrointestinal, pulmonary and patient monitoring.

CONMED is one of the medical device industry’s leading technology sources for advanced energy solutions for a range of surgical needs. We offer an extensive line of state-of-the-art electrosurgical generators, handpieces, smoke management systems, and accessories. Our competition includes Covidien Ltd.; Valley Labs, Medline Industries, Inc., ERBE Elektromedizin GmbH, and Megadyne.

Our endomechanical instrumentation products offer a full line of unique instruments including trocars, clip appliers, scissors, and surgical staplers used in the minimally invasive laparoscopic and gynecological surgery. We offer a unique and premium uterine manipulator called VCARE^® for use in increasing the efficiency of laparoscopic hysterectomies and other gynecologic laparoscopic procedures. This offering competes with such companies as Johnson & Johnson: Ethicon Endo-Surgery, Inc., Covidien Ltd; U.S. Surgical and Applied Medical Resources Corporation.

Our gastrointestinal (GI) and pulmonary offering includes a comprehensive line of minimally invasive diagnostic and therapeutic products used in conjunction with procedures which require flexible endoscopy. This offering includes mucosal management devices, forceps, scope management accessories, bronchoscopy devices, dilatation, stricture management devices, hemostasis, biliary devices, and polypectomy. Our competition includes Boston Scientific Corporation - Endoscopy, Cook Medical, Inc., Olympus America, Inc. and STERIS Corporation - U.S. Endoscopy.

Our patient monitoring offering includes a line of vital signs and cardiac monitoring products including pulse oximetry equipment & sensors, ECG electrodes and cables, cardiac defibrillation & pacing pads and blood pressure cuffs.  We also offer a complete line of suction instruments and tubing for use in the operating room, as well as a line of IV products for use in the critical care areas of the hospital. This offering competition includes Covidien Ltd: Kendall and 3M Company.

Marketing

A significant portion of our products are distributed domestically directly to more than 6,000 hospitals and other healthcare institutions as well as through medical specialty distributors and surgeons.  We are not dependent on any single customer and no single customer accounted for more than 10% of our net sales in 2011, 2012 and 2013.

A significant portion of our U.S. sales are to customers affiliated with GPOs, IDNs and other large national or regional accounts, as well as to the Veterans Administration and other hospitals operated by the Federal government.  For hospital inventory management purposes, some of our customers prefer to purchase our products through independent third-party medical product distributors.

In order to provide a high level of expertise to the medical specialties we serve, our domestic sales force consists of approximately 275 employee sales representatives who are specially trained in our various product offerings. We also have

215 sales representatives working for independent sales agent groups selling orthopedic products.

Each employee sales representative is assigned a defined geographic area and compensated on a commission basis or through a combination of salary and commission.  The sales force is supervised and supported by either area directors or district managers.  Sales agent groups are used in the United States to sell our orthopedic products.  These sales agent groups are paid a commission for sales made to customers while home office sales and marketing management provide the overall direction for sales of our products.

Our health systems organization is responsible for interacting with large regional and national accounts (e.g. GPOs, IDNs, etc.).  We have contracts with many such organizations and believe that the loss of any individual group purchasing contract will not adversely impact our business.  In addition, all of our sales professionals are required to work closely with distributors where applicable and maintain close relationships with end-users.

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Each of our dedicated sales professionals is highly knowledgeable in the applications and procedures for the products they sell.  Our sales professionals provide surgeons and medical personnel with information relating to the technical features and benefits of our products.

Maintaining and expanding our international presence is an important component of our long-term growth plan. Our products are sold in over 100 foreign countries. International sales efforts are coordinated through local country dealers or through direct in country sales. We distribute our products through sales subsidiaries and branches with offices located in Australia, Austria, Belgium, Canada, China, Denmark, Finland, France, Germany, Italy, Korea, the Netherlands, Poland, Spain, Sweden and the United Kingdom.  In these countries, our sales are denominated in the local currency and amounted to approximately 36% of our total net sales in 2013.  In the remaining countries where our products are sold through independent distributors, sales are denominated in United States dollars.

We sell to a diversified base of customers around the world and, therefore, believe there is no material concentration of credit risk.

Manufacturing

We manufacture substantially all of our products and assemble them from components, many of which we produce.  Our strategy has historically been to vertically integrate our manufacturing facilities in order to develop a competitive advantage.  This integration provides us with cost efficient and flexible manufacturing operations which permit us to allocate capital more efficiently.  Additionally, we attempt to exploit commercial synergies between operations, such as the procurement of common raw materials and components used in production.

Raw material costs constitute a substantial portion of our cost of production.  We use numerous raw materials and components in the design, development and manufacturing of our products.  Substantially all of our raw materials and select components used in the manufacturing process are procured from external suppliers.  We work closely with multiple suppliers to ensure continuity of supply while maintaining high quality and reliability.  As a consequence of best supply chain practices, new product development and acquisitions, we often form strategic partnerships with key suppliers. As a consequence of these supplier partnerships, components and raw materials may be sole sourced. Due to the strength of these suppliers and the variety of products we provide, the risk of supplier interruption does not pose an overall material adverse effect on our financial and operational performance. To date, this strategy has served us well, as we provide excellent service levels and product availability to our customers.

All of our products are classified as medical devices subject to regulation by numerous agencies and legislative bodies, including the United States Food and Drug Administration (“FDA”) and comparable foreign counterparts.  The FDA’s Quality System Regulations set forth standards for our product design and manufacturing processes, require the maintenance of certain records and provide for on-site inspections of our facilities by the FDA.  In many of the foreign countries in which we manufacture and distribute our products we are subject to regulatory requirements affecting, among other things, product performance standards, packaging requirements, labeling requirements, import laws and onsite inspection by independent bodies with the authority to issue or not issue certifications we may require to be able to sell products in certain countries.  Regulatory requirements affecting the Company vary from country to country.  The timeframes and costs for regulatory submission and approval from foreign agencies or legislative bodies may vary from those required by the FDA.  Certain requirements for approval from foreign agencies or legislative bodies may also differ from those of the FDA.

We believe that our production and inventory management practices are characteristic of those in the medical device industry.  Substantially all of our products are stocked in inventory and are not manufactured to order or to individual customer specifications.  We schedule production and maintain adequate levels of safety stock based on a number of factors including, experience, knowledge of customer ordering patterns, demand, manufacturing lead times and optimal quantities required to maintain the highest possible service levels.  Customer orders are generally processed for immediate shipment and backlog of firm orders is therefore not considered material to an understanding of our business.

Research and Development

New and improved products play a critical role in our continued sales growth.  Internal research and development efforts focus on the development of new products and product technological and design improvements aimed at complementing and expanding existing product lines.  We continually seek to leverage new technologies which improve the durability, performance and usability of existing products.  In addition, we maintain close working relationships with surgeons, inventors and operating room personnel who often make new product and technology disclosures, principally in procedure-specific areas.  For clinical

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and commercially promising disclosures, we seek to obtain rights to these ideas through negotiated agreements.  Such agreements typically compensate the originator through payments based upon a percentage of licensed product net sales.  Annual royalty expense approximated $2.9 million, $2.5 million and $2.3 million in 2011, 2012, and 2013, respectively.

Amounts expended for Company research and development was approximately $28.7 million, $28.2 million and $25.8 million during 2011, 2012, and 2013, respectively.

We have rights to intellectual property, including United States patents and foreign equivalent patents which cover a wide range of our products.  We own a majority of these patents and have exclusive and non-exclusive licensing rights to the remainder.  In addition, certain of these patents have currently been licensed to third parties on a non-exclusive basis.  We believe that the development of new products and technological and design improvements to existing products will continue to be of primary importance in maintaining our competitive position.

Government Regulation and Quality Systems

Substantially all of our products are classified as class II medical devices subject to regulation by numerous agencies and legislative bodies, including the FDA and comparable foreign counterparts.  Authorization to commercially market our products in the U.S. is granted by the FDA under a procedure referred to as 510(k) premarket notification.  This process requires us to demonstrate that our new products or significantly modified products are substantially equivalent to a legally marketed device which was on the market prior to May 28, 1976 or is currently on the U.S. market and does not require premarket approval.  We must continually meet certain FDA requirements to market our products in the United States. (Our products are classified as Class I, IIa, IIb and III in the European Union (EU) and subject to regulation by the Medical Device Directive.)  Our FDA clearance is subject to continual review and future discovery of previously unknown events could result in restrictions being placed on a product’s marketing or notification from the FDA to halt the distribution of certain medical devices.

Medical device regulations continue to evolve world-wide.  Products marketed in the EU and other countries require preparation of technical files and design dossiers which demonstrate compliance with applicable international regulations. As government regulations continue to change, there is a risk that the distribution of some of our products may be interrupted or discontinued if they do not meet the country specific requirements.

Our operations are supported by quality system/regulatory compliance personnel tasked with monitoring compliance to design controls, process controls and the other relevant government regulations for all of our design, manufacturing, distribution and servicing activities.  We and substantially all of our products are subject to the provisions of the Federal Food, Drug and Cosmetic Act of 1938, as amended by the Medical Device Amendments of 1976, Safe Medical Device Act of 1990, Medical Device Modernization Act of 1997, Medical User Fee and Modernization Act of 2002 and similar international regulations, such as the European Union Medical Device Directives.

As a manufacturer of medical devices, the FDA’s Quality System Regulations as specified in Title 21, Code of Federal Regulation (CFR) part 820, set forth requirements for our product design and manufacturing processes, require the maintenance of certain records, provide for on-site inspection of our facilities and continuing review by the FDA.  Many of our products are also subject to industry-defined standards.  Such industry-defined product standards are generally formulated by committees of the Association for the Advancement of Medical Instrumentation (AAMI), International Electrotechnical Commission (IEC) and the International Organization for Standardization (ISO).  We believe that our products and processes presently meet applicable standards in all material respects.

As noted above, our facilities are subject to periodic inspection by the FDA for, among other things, conformance to Quality System Regulation and Current Good Manufacturing Practice (“CGMP”) requirements. Following an inspection, the FDA typically provides its observations, if any, in the form of a Form 483 (Notice of Inspectional Observations) with specific observations concerning potential violation of regulations.  Although we respond to all Form 483 observations and correct deficiencies expeditiously, there can be no assurance that the FDA will not take further action including issuing a warning letter, seizing product and imposing fines. During the third quarter of 2013, the FDA inspected our Centennial, CO manufacturing facility and issued a Form 483 with observations on September 20, 2013. The Company subsequently submitted responses to the Observations, and the FDA issued a Warning Letter on January 30, 2014 relating to the inspection and the responses to the Form 483 Observations. Accordingly, we are undertaking corrective actions that may involve additional costs for the Company. These remediation costs are not expected to be material, however there can be no assurance that the actions undertaken by the Company will ensure that the Company will not undertake recalls, voluntary or otherwise, nor can there be any assurance that a future inspection by the FDA will not result in an additional Form 483 or warning letter, or other regulatory actions which may include consent decrees or fines.

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We market our products in several foreign countries and therefore are subject to regulations affecting, among other things, product standards, sterilization, packaging requirements, labeling requirements, import laws and onsite inspection by independent bodies with the authority to issue or not issue certifications we may require to be able to sell products in certain countries.  Many of the regulations applicable to our devices and products in these countries are similar to those of the FDA.  The member countries of the European Union have adopted the European Medical Device Directives, which create a single set of medical device regulations for all member countries.  These regulations require companies that wish to manufacture and distribute medical devices in the European Union maintain quality system certification through European Union recognized Notified Bodies.  These Notified Bodies authorize the use of the CE Mark allowing free movement of our products throughout the member countries.  Requirements pertaining to our products vary widely from country to country, ranging from simple product registrations to detailed submissions such as those required by the FDA.  We believe that our products and quality procedures currently meet applicable standards for the countries in which they are marketed.

Our products may become subject to recall or market withdrawal regulations and we have made product recall decisions in the past.  No product recall has had a material effect on our financial condition, however there can be no assurance that regulatory issues will not have a material adverse effect in the future.

Any change in existing federal, state, foreign laws or regulations, or in the interpretation or enforcement thereof, or the promulgation or any additional laws or regulations may result in a material adverse effect on our financial condition, results of operations or cash flows.

Employees

As of December 31, 2013, we had approximately 3,600 full-time employees, including approximately 2,200 in operations, 130 in research and development, and the remaining in sales, marketing and related administrative support.  We believe that we have good relations with our employees and have never experienced a strike or similar work stoppage.  None of our domestic employees are represented by a labor union.

Item 1A.  Risk Factors

An investment in our securities, including our common stock, involves a high degree of risk.  Investors should carefully consider the specific factors set forth below as well as the other information included or incorporated by reference in this Form 10-K. See “Forward Looking Statements”.

Our financial performance is dependent on conditions in the healthcare industry and the broader economy.

The results of our business are directly tied to the economic conditions in the healthcare industry and the broader economy as a whole.  Significant volatility in the financial markets and foreign currency exchange rates and 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 2013. 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. Approximately 20% of our revenues are derived from the sale of capital products.  The sales of such products are negatively impacted if hospitals and other healthcare providers are unable to secure the financing necessary to purchase these products or otherwise defer purchases.

Our significant international operations subject us to foreign currency fluctuations and other risks associated with operating in foreign countries.

A significant portion of our revenues are derived from foreign sales.  Approximately 51% of our total 2013 consolidated net sales were to customers outside the United States.  We have sales subsidiaries in a significant number of countries in Europe as well as Australia, Canada, China and Korea.  In those countries in which we have a direct presence, our sales are denominated in the local currency and those sales denominated in local currency amounted to approximately 36% of our total net sales in 2013.  The remaining 15% of sales to customers outside the United States was on an export basis and transacted in United States dollars.

Because a significant portion of our operations consist of sales activities in foreign jurisdictions, our financial results may be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the markets in which we distribute products.  While we have implemented a hedging strategy, our revenues may be unfavorably impacted from foreign

9

currency translation if the United States dollar strengthens as compared with currencies such as the Euro.  Our international presence exposes us to certain other inherent risks, including:

• imposition of limitations on conversions of foreign currencies into dollars or remittance of dividends and other payments by international subsidiaries;

• imposition or increase of withholding and other taxes on remittances and other payments by international subsidiaries;

• trade barriers;

• political risks, including political instability;

• reliance on third parties to distribute our products;

• hyperinflation in certain foreign countries; and

• imposition or increase of investment and other restrictions by foreign governments.

We cannot assure you that such risks will not have a material adverse effect on our business and results of operations.

Our financial performance is subject to the risks inherent in our acquisition strategy, including the effects of increased borrowing and integration of newly acquired businesses or product lines.

A key element of our business strategy has been to expand through acquisitions and we may seek to pursue additional acquisitions in the future.  Our success is dependent in part upon our ability to integrate acquired companies or product lines into our existing operations.  We may not have sufficient management and other resources to accomplish the integration of our past and future acquisitions and implementing our acquisition strategy may strain our relationship with customers, suppliers, distributors, manufacturing personnel or others.  There can be no assurance that we will be able to identify and make acquisitions on acceptable terms or that we will be able to obtain financing for such acquisitions on acceptable terms.  In addition, while we are generally entitled to customary indemnification from sellers of businesses for any difficulties that may have arisen prior to our acquisition of each business, acquisitions may involve exposure to unknown liabilities and the amount and time for claiming under these indemnification provisions is often limited.  As a result, our financial performance is now and will continue to be subject to various risks associated with the acquisition of businesses, including the financial effects associated with any increased borrowing required to fund such acquisitions or with the integration of such businesses.

Our financial performance may be adversely impacted by the healthcare reform legislation.

The Patient Protection and Affordable Care Act and Health Care and Education Affordability Reconciliation Act were enacted into law in the U.S. in March 2010.  Effective January 1, 2013, as part of this legislation, a 2.3% excise tax has been imposed upon sales within the U.S. of certain medical device products. In 2013, this excise tax has imposed an additional expense of approximately 0.8% of total global sales and we expect a similar impact in 2014.  Other provisions of this legislation, including Medicare provisions aimed at improving quality and decreasing costs, comparative effectiveness research, an independent payment advisory board, and pilot programs to evaluate alternative payment methodologies, could meaningfully change the way health care is developed and delivered, and may adversely affect our business and results of operations. Further, we cannot predict what healthcare programs and regulations will be ultimately implemented at the federal or state level, or the effect of any future legislation or regulation in the U.S. or internationally. However, any changes that lower reimbursements to hospitals for surgical procedures or reduce medical procedure volumes could adversely affect our results of operations and cash flows.

Failure to comply with regulatory requirements may result in recalls, fines or materially adverse implications.

Substantially all of our products are classified as class II medical devices subject to regulation by numerous agencies and legislative bodies, including the FDA and comparable foreign counterparts.  As a manufacturer of medical devices, our manufacturing processes and facilities are subject to on-site inspection and continuing review by the FDA for compliance with the Quality System Regulations.  We received a warning letter from the FDA related to our Centennial, CO facility on January 30, 2014 and are currently undertaking corrective actions that will result in additional costs to the Company. These remediation costs are not expected to be material, however there can be no assurance that the actions undertaken by the Company will ensure that the Company will not undertake recalls, voluntary or otherwise, nor can there be any assurance that a future inspection by the FDA will not result in an additional Form 483 or warning letter, or other regulatory actions which may include consent decrees or fines. Manufacturing and sales of our products outside the United States are also subject to foreign regulatory requirements which vary from country to country.  Moreover, we are generally required to obtain regulatory clearance or approval prior to marketing a new product.  The time required to obtain approvals from foreign countries may be longer or shorter than that required for FDA clearance, and requirements for foreign approvals may differ from FDA requirements.  Failure to comply with applicable domestic and/or foreign regulatory requirements may result in:

• fines or other enforcement actions;

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• recall or seizure of products;

• total or partial suspension of production;

• loss of certification;

• withdrawal of existing product approvals or clearances;

• refusal to approve or clear new applications or notices;

• increased quality control costs; or

• criminal prosecution.

Failure to comply with Quality System Regulations and applicable foreign regulations could result in a material adverse effect on our business, financial condition or results of operations.

If we are not able to manufacture products in compliance with regulatory standards, we may decide to cease manufacturing of those products and may be subject to product recall.

In addition to the Quality System Regulations, many of our products are also subject to industry-defined standards.  We may not be able to comply with these regulations and standards due to deficiencies in component parts or our manufacturing processes.  If we are not able to comply with the Quality System Regulations or industry-defined standards, we may not be able to fill customer orders and we may decide to cease production of non-compliant products.  Failure to produce products could affect our profit margins and could lead to loss of customers.

Our products are subject to product recall and we have made product recalls in the past.  Although no recall has had a material adverse effect on our business or financial condition, we cannot assure you that regulatory issues will not have a material adverse effect on our business, financial condition or results of operations in the future or that product recalls will not harm our reputation and our customer relationships.

The highly competitive market for our products may create adverse pricing pressures.

The market for our products is highly competitive and our customers have numerous alternatives of supply.  Many of our competitors offer a range of products in areas other than those in which we compete, which may make such competitors more attractive to surgeons, hospitals, group purchasing organizations and others.  In addition, several of our competitors are large, technically competent firms with substantial assets.  Competitive pricing pressures or the introduction of new products by our competitors could have an adverse effect on our revenues.  See “Products” for a further discussion of these competitive forces.

Factors which may influence our customers’ choice of competitor products include:

•changes in surgeon preferences;

•increases or decreases in healthcare spending related to medical devices;

•our inability to supply products to them as a result of product recall, market withdrawal or back-order;

•the introduction by competitors of new products or new features to existing products;

•the introduction by competitors of alternative surgical technology; and

•advances in surgical procedures, discoveries or developments in the healthcare industry.

We use a variety of raw materials in our businesses, and significant shortages or price increases could increase our operating costs and adversely impact the competitive positions of our products.

Our reliance on certain suppliers and commodity markets to secure raw materials used in our products exposes us to volatility in the prices and availability of raw materials. In some instances, we participate in commodity markets that may be subject to allocations by suppliers. A disruption in deliveries from our suppliers, price increases, or decreased availability of raw materials or commodities, could have an adverse effect on our ability to meet our commitments to customers or increase our operating costs. We believe that our supply management practices are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices. Nonetheless, price increases or the unavailability of some raw materials may have an adverse effect on our results of operations or financial condition.

Cost reduction efforts in the healthcare industry could put pressures on our prices and margins.

In recent years, the healthcare industry has undergone significant change driven by various efforts to reduce costs.  Such efforts include national healthcare reform, trends towards managed care, cuts in Medicare, consolidation of healthcare distribution companies and collective purchasing arrangements by GPOs and IHNs.  Demand and prices for our products may be adversely affected by such trends.

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We may not be able to keep pace with technological change or to successfully develop new products with wide market acceptance, which could cause us to lose business to competitors.

The market for our products is characterized by rapidly changing technology.  Our future financial performance will depend in part on our ability to develop and manufacture new products on a cost-effective basis, to introduce them to the market on a timely basis, and to have them accepted by surgeons.

We may not be able to keep pace with technology or to develop viable new products.  Factors which may result in delays of new product introductions or cancellation of our plans to manufacture and market new products include:

• capital constraints;

• research and development delays;

• delays in securing regulatory approvals; or

• changes in the competitive landscape, including the emergence of alternative products or solutions which reduce or eliminate the markets for pending products.

Our new products may fail to achieve expected levels of market acceptance.

New product introductions may fail to achieve market acceptance.  The degree of market acceptance for any of our products will depend upon a number of factors, including:

• our ability to develop and introduce new products and product enhancements in the time frames we currently estimate;

• our ability to successfully implement new technologies;

• the market’s readiness to accept new products;

• having adequate financial and technological resources for future product development and promotion;

• the efficacy of our products; and

• the prices of our products compared to the prices of our competitors’ products.

If our new products do not achieve market acceptance, we may be unable to recover our investments and may lose business to competitors.

In addition, some of the companies with which we now compete, or may compete in the future, have or may have more extensive research, marketing and manufacturing capabilities and significantly greater technical and personnel resources than we do, and may be better positioned to continue to improve their technology in order to compete in an evolving industry.  See “Products” for a further discussion of these competitive forces.

Our senior credit agreement contains covenants which may limit our flexibility or prevent us from taking actions.

Our senior credit agreement contains, and future credit facilities are expected to contain, certain restrictive covenants which will affect, and in many respects significantly limit or prohibit, among other things, our ability to:

•incur indebtedness;

•make investments;

•engage in transactions with affiliates;

•pay dividends or make other distributions on, or redeem or repurchase, capital stock;

•sell assets; and

•pursue acquisitions.

These covenants, unless waived, may prevent us from pursuing acquisitions, significantly limit our operating and financial flexibility and limit our ability to respond to changes in our business or competitive activities.  Our ability to comply with such provisions may be affected by events beyond our control.  In the event of any default under our credit agreement, the credit agreement lenders may elect to declare all amounts borrowed under our credit agreement, together with accrued interest, to be due and payable.  If we were unable to repay such borrowings, the credit agreement lenders could proceed against collateral securing the credit agreement which consists of substantially all of our property and assets.  Our credit agreement also contains a material adverse effect clause which may limit our ability to access additional funding under our credit agreement should a material adverse change in our business occur.

Our leverage and debt service requirements may require us to adopt alternative business strategies.

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As of December 31, 2013, we had $215.6 million of debt outstanding, representing 21% of total capitalization.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”.

The degree to which we are leveraged could have important consequences to investors, including but not limited to the following:

• a portion of our cash flow from operations must be dedicated to debt service and will not be available for operations, capital expenditures, acquisitions, dividends and other purposes;

• our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or general corporate purposes may be limited or impaired, or may be at higher interest rates;

• we may be at a competitive disadvantage when compared to competitors that are less leveraged;

• we may be hindered in our ability to adjust rapidly to market conditions;

• our degree of leverage could make us more vulnerable in the event of a downturn in general economic conditions or other adverse circumstances applicable to us; and

• our interest expense could increase if interest rates in general increase because a portion of our borrowings, including our borrowings under our credit agreement, are and will continue to be at variable rates of interest.

We may not be able to generate sufficient cash to service our indebtedness, which could require us to reduce our expenditures, sell assets, restructure our indebtedness or seek additional equity capital.

Our ability to satisfy our obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control.  We may not have sufficient cash flow available to enable us to meet our obligations.  If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as foregoing acquisitions, reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital.  We cannot assure you that any of these strategies could be implemented on terms acceptable to us, if at all.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for a discussion of our indebtedness and its implications.

We rely on a third party to obtain, process and distribute sports medicine allograft tissue. If such tissue cannot be obtained, is not accepted by the market or is not accepted under numerous government regulations, our results of operations could be negatively impacted.

As described in Note 4 to the Consolidated Financial Statements, on January 3, 2012, we entered into an agreement with Muskuloskeletal Transplant Foundation ("MTF") to obtain MTF's worldwide promotional, marketing and distribution rights with respect to allograft tissues within the field of sports medicine. The supply of human tissue is dependent on donors and MTF has numerous relationships with donor groups. Likewise, the supply of tissues available for use as allografts depends on the continued successful processing of donated tissues by MTF at its processing facilities. We cannot be certain, however, that the supply of human tissue will continue to be available at current levels or will be of sufficiently high standards to meet the high processing standards maintained for such tissues by MTF, or in volumes sufficient to meet our customers' needs, or that MTF will be able to continue to process tissues to its high standards in volumes sufficient to keep pace with demand. We expect that the Company's share of revenue streams related to MTF's sports medicine allograft product line would decline in proportion to any decline or disruption in the supply of processed tissues.

The FDA and several states have statutory authority to regulate allograft processing and allograft-based materials. The FDA could identify deficiencies in future inspections of MTF or MTF's suppliers or promulgate future regulatory rulings that could disrupt our business, reducing profitability.     

If we infringe third parties’ patents, or if we lose our patents or they are held to be invalid, we could become subject to liability and our competitive position could be harmed.

Much of the technology used in the markets in which we compete is covered by patents.  We have numerous U.S. patents and corresponding foreign patents on products expiring at various dates from 2014 through 2031 and have additional patent applications pending.  See “Research and Development” for a further description of our patents.  The loss of our patents could reduce the value of the related products and any related competitive advantage.  Competitors may also be able to design around our patents and to compete effectively with our products.  In addition, the cost of enforcing our patents against third parties and defending our products against patent infringement actions by others could be substantial.  We cannot assure you that:

• pending patent applications will result in issued patents;

• patents issued to or licensed by us will not be challenged by competitors;

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• our patents will be found to be valid or sufficiently broad to protect our technology or provide us with a competitive advantage; or

• we will be successful in defending against pending or future patent infringement claims asserted against our products.

Ordering patterns of our customers may change resulting in reductions in sales.

Our hospital and surgery center customers purchase our products in quantities sufficient to meet their anticipated demand.  Likewise, our healthcare distributor customers purchase our products for ultimate resale to healthcare providers in quantities sufficient to meet the anticipated requirements of the distributors’ customers.  Should inventories of our products owned by our hospital, surgery center and distributor customers grow to levels higher than their requirements, our customers may reduce the ordering of products from us.  This could result in reduced sales during a financial accounting period.

We can be sued for producing defective products and our insurance coverage may be insufficient to cover the nature and amount of any product liability claims.

The nature of our products as medical devices and today’s litigious environment should be regarded as potential risks which could significantly and adversely affect our financial condition and results of operations.  The insurance we maintain to protect against claims associated with the use of our products have deductibles and may not adequately cover the amount or nature of any claim asserted against us.  We are also exposed to the risk that our insurers may become insolvent or that premiums may increase substantially.  See “Legal Proceedings” for a further discussion of the risk of product liability actions and our insurance coverage.

Damage to our physical properties as a result of windstorm, earthquake, fire or other natural or man-made disaster may cause a financial loss and a loss of customers.

Although we maintain insurance coverage for physical damage to our property and the resultant losses that could occur during a business interruption, we are required to pay deductibles and our insurance coverage is limited to certain caps.  For example, our deductible for windstorm damage to our Florida property amounts to 2% of any loss.

Further, while insurance reimburses us for our lost gross earnings during a business interruption, if we are unable to supply our customers with our products for an extended period of time, there can be no assurance that we will regain the customers’ business once the product supply is returned to normal.

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Item 2.  Properties

Facilities

The following table sets forth certain information with respect to our principal operating facilities.  We believe that our facilities are generally well maintained, are suitable to support our business and adequate for present and anticipated needs.

Location	Square Feet	Own or Lease	Lease Expiration
Utica, NY	500,000	Own	—
Largo, FL	278,000	Own	—
Centennial, CO	87,500	Own	—
Chihuahua, Mexico	207,720	Lease	September 2019
Lithia Springs, GA	188,400	Lease	December 2019
Brussels, Belgium	45,531	Lease	June 2015
Mississauga, Canada	22,378	Lease	December 2016
Westborough, MA	18,210	Lease	September 2015
Frenchs Forest, Australia	16,909	Lease	July 2015
Seoul, Korea	15,554	Lease	January 2017
Anaheim, CA	14,037	Lease	September 2015
Frankfurt, Germany	13,606	Lease	March 2023
Milan, Italy	13,024	Lease	March 2017
Westborough, MA	10,230	Lease	April 2016
Swindon, Wiltshire, UK	8,562	Lease	December 2015
Askim, Sweden	8,353	Lease	May 2016
Rungis Cedex, France	7,406	Lease	December 2016
Montreal, Canada	7,232	Lease	March 2016
Copenhagen, Denmark	5,899	Lease	April 2014
Shepshed, Leicestershire, UK	5,770	Lease	October 2015
Barcelona, Spain	5,382	Lease	December 2018
Edison, NJ	4,015	Lease	December 2014
New York, NY	3,473	Lease	September 2022
Beijing, China	3,456	Lease	June 2014
Warsaw, Poland	3,222	Lease	February 2018
Espoo, Finland	3,078	Lease	Open Ended
San Mateo, CA	3,068	Lease	December 2015
Shanghai, China	2,269	Lease	February 2015
Innsbruck, Austria	1,820	Lease	June 2020

Item 3.  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. We establish reserves sufficient to cover probable losses associated with 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

15

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.

During the third quarter of 2013, the FDA inspected our Centennial, CO manufacturing facility and issued a Form 483 with observations on September 20, 2013. The Company subsequently submitted responses to the Observations, and the FDA issued a Warning Letter on January 30, 2014 relating to the inspection and the responses to the Form 483 Observations. Accordingly, we are undertaking corrective actions that may involve additional costs for the Company. These remediation costs are not expected to be material, however there can be no assurance that the actions undertaken by the Company will ensure that the Company will not undertake recalls, voluntary or otherwise, nor can there be any assurance that a future inspection by the FDA will not result in an additional Form 483 or warning letter, or other regulatory actions which may include consent decrees or fines.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5.  Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock, par value $.01 per share, is traded on the NASDAQ Stock Market under the symbol “CNMD”. At January 31, 2014, there were 729 registered holders of our common stock and approximately 4,984 accounts held in “street name”.

The following table sets forth quarterly high and low sales prices for the years ended December 31, 2012 and 2013, as reported by the NASDAQ Stock Market.

	2012
Period	High		Low
First Quarter	$	30.47	$	26.00
Second Quarter	30.42		26.03
Third Quarter	29.25		25.85
Fourth Quarter	29.33		25.71

	2013
Period	High		Low
First Quarter	$	34.29	$	28.03
Second Quarter	34.04		30.42
Third Quarter	33.96		31.07
Fourth Quarter	42.50		33.25

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Our Board of Directors has authorized a share repurchase program as noted below; also see Note 7 to the Consolidated Financial Statements. 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 December 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
October 1, 2013 to
October 31, 2013	—	$	—		$	60,128,968
November 1, 2013 to
November 30, 2013	—	$	—	—	60,128,968
December 1, 2013 to
December 31, 2013	146,905	$	39.67	146,905	54,301,615
Total	146,905			146,905

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.

On February 29, 2012, the Board of Directors adopted a cash dividend policy and declared an initial quarterly dividend of $0.15 per share. On October 28, 2013, the Board of Directors increased the quarterly dividend to $0.20 per share. The fourth quarter dividend for 2013 was paid on January 6, 2014 to shareholders of record as of December 16, 2013. The total dividend payable at December 31, 2013 was $5.5 million and is included in other current liabilities in the consolidated balance sheet. Future decisions as to the payment of dividends will be at the discretion of the Board of Directors, subject to conditions then existing, including our financial requirements and condition and the limitation and payment of cash dividends contained in debt agreements.

Information relating to compensation plans under which equity securities of CONMED Corporation are authorized for issuance is set forth below:

Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	1,606,739		$25.55	1,145,915
Equity compensation plans not approved by security holders	—	—		—
Total	1,606,739		$25.55	1,145,915

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Performance Graph

The performance graph below compares the yearly percentage change in the Company’s Common Stock with the cumulative total return of the NASDAQ Composite Index and the cumulative total return of the Standard & Poor’s Health Care Equipment Index. In each case, the cumulative total return assumes reinvestment of dividends into the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable fiscal year.

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Item 6.  Selected Financial Data

The following table sets forth selected historical financial data for the years ended December 31, 2009, 2010, 2011, 2012 and 2013.  The financial data set forth below should be read in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of this Form 10-K and the Financial Statements of the Company and the notes thereto.

FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA

	Years Ended December 31,
	2009			2010		2011			2012		2013
	(in thousands, except per share data)
Statements of Operations Data (1):
Net sales	$	694,739		$	713,723	$	725,077		$	767,140	$	762,704
Cost of sales (2)	357,407			348,339		350,143			361,297		350,287
Gross profit	337,332			365,384		374,934			405,843		412,417
Selling and administrative	266,310			276,463		276,615			302,469		310,730
Research and development	31,837			29,652		28,651			28,214		25,831
Impairment of goodwill (3)	—			—		60,302			—		—
Medical device excise tax	—			—		—			—		5,949
Other expense (4)	10,916			2,176		1,092			9,950		13,399
Income from operations	28,269			57,093		8,274			65,210		56,508
(Gain) loss on early extinguishment of debt (5)	(1,083		)	79		—			—		263
Amortization of debt discount	4,111			4,244		3,903			—		—
Interest expense	7,086			7,113		6,676			5,730		5,613
Income (loss) before income taxes	18,155			45,657		(2,305		)	59,480		50,632
Provision (benefit) for income taxes	6,018			15,311		(3,057		)	18,999		14,693
Net income	$	12,137		$	30,346	$	752		$	40,481	$	35,939
Per Share Data
Basic earnings per share	$	0.42		$	1.06	$	.03		$	1.43	$	1.30
Diluted earnings per share	$	0.42		$	1.05	$	.03		$	1.41	$	1.28
Dividends per share of common stock	$	—		$	—	$	—		$	0.60	$	0.65
Weighted Average Number of Common Shares In Calculating:
Basic earnings per share	29,074			28,715		28,246			28,301		27,722
Diluted earnings per share	29,142			28,911		28,633			28,653		28,114
Other Financial Data:
Depreciation and amortization	$	41,283		$	41,807	$	42,687		$	46,616	$	47,867
Capital expenditures	21,444			14,732		17,552			21,532		18,445
Balance Sheet Data (at period end):
Cash and cash equivalents	$	10,098		$	12,417	$	26,048		$	23,720	$	54,443
Total assets	958,413			985,773		935,594			1,078,849		1,090,508
Long-term obligations	302,791			219,344		231,339			346,637		372,924
Total shareholders’ equity	576,515			586,563		573,071			606,998		606,319

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(1) Results of operations of acquired businesses have been recorded in the financial statements since the date of acquisition.

(2) In 2009, 2010, 2011, 2012 and 2013, we incurred charges related to the restructuring of certain of our operations of $12.7 million, $2.4 million, $3.5 million, $7.1 million and $6.5 million, respectively; in 2010 and 2013 we incurred charges of $2.5 million and $2.1 million, respectively, related to the termination of a product offering.  See additional discussion in Note 15 to the Consolidated Financial Statements.

(3) During 2011, we recorded a $60.3 million charge for the impairment of goodwill related to the legacy CONMED Patient Care reporting unit. Refer to Note 4 to the Consolidated Financial Statements for further details.

(4) Other expense includes the following:

	2009			2010		2011		2012		2013
New plant/facility consolidation	$	2,726		$	—	$	—	$	—	$	—
Net pension gain	(1,882		)	—		—		—		—
Product recall	5,992			—		—		—		—
Administrative consolidation costs	4,080			2,176		792		6,497		8,750
Costs associated with purchase of a distributor	—			—		300		704		—
Costs associated with legal arbitration and patent dispute	—			—		—		1,555		3,206
Pension settlement expense	—			—		—		—		1,443
Costs associated with purchase of a business	—			—		—		1,194		—
Other expense	$	10,916		$	2,176	$	1,092	$	9,950	$	13,399

See additional discussion in Note 11 to the Consolidated Financial Statements.

(5) Includes in 2010 and 2013, a charge of $0.1 million and $0.3 million, respectively, related to a loss on the early extinguishment of debt.  Includes in 2009, a gain of $1.1 million on the early extinguishment of debt.  See additional discussion in Note 5 to the Consolidated Financial Statements.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Selected Financial Data (Item 6), and our Consolidated Financial Statements and related notes contained elsewhere in this report.

Overview of CONMED Corporation

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 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 and service fees related to the promotion and marketing of sports medicine allograft tissue. 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 minimally invasive orthopedic and general surgery. These product lines as a percentage of consolidated net sales are as follows:

	2011		2012		2013
Orthopedic surgery	51	%	54	%	54	%
General surgery	40		37		37
Surgical visualization	9		9		9
Consolidated net sales	100	%	100	%	100	%

A significant amount of our products are used in surgical procedures with approximately 80% of our revenues derived from the sale of disposable products.  Our capital equipment offerings also facilitate the ongoing sale of related disposable products and accessories, thus providing us with a recurring revenue stream.  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 approximated 50%, 50% and 51% in 2011, 2012 and 2013, respectively.

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 Y-Knot® Flex System for instability repairs featuring the smallest double-loaded (1.8mm) anchors available and curved, flexible instrumentation to help

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surgeons achieve ideal anchor placement and the Y-Knot® RC anchors for rotator cuffs are the world’s only self-punching all-suture anchors which helps simplify techniques while its small size is designed to improve placement options; the new D4000 Resection System featuring an intuitive touchscreen display and direct pump integration for a seamless clinical experience; the IM8000 2DHD Camera System can be used in multi-specialty procedures and includes a new autoclavable camera head featuring proprietary CMOS technology for clear, crisp imagery and a new LS8000 LED light source providing improved light sensitivity for clearer visualization; the new Hall 50™ Powered Instrument System can be used in total joint replacements featuring lighter, ergonomically-designed handpieces to provide a comfortable, high-performance clinical experience while the new Hall UL-approved autoclavable lithium batteries deliver dependable, long-lasting power and the unique, multi-tray system also provides hospitals with new levels of sterilization convenience; the new GS2000 50L Insufflator features the market’s fastest flow rate and a dual-tank shuttle valve system to help provide clear and consistent laparoscopic visualization; the EntriPort line of trocars help deliver effective sealing and clear visualization in a wide range of sizes optimal for nearly every minimally invasive abdominal surgical application; our new D-Flex probes were designed for use with the da Vinci® Surgical System and enable non-contact hemostasis with argon gas and our DetachaTip® III Multi-Use Endosurgery Instruments offer the optimal blend of performance and cost efficiency - combining precise, reliable, and comfortable performance with dramatically reduced procedural costs.

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 during 2013. 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. During the third quarter of 2013, the FDA inspected our Centennial, CO manufacturing facility and issued a Form 483 with observations on September 20, 2013. The Company subsequently submitted responses to the Observations, and the FDA issued a Warning Letter on January 30, 2014 relating to the inspection and the responses to the Form 483 Observations. Accordingly, we are undertaking corrective actions that may involve additional costs for the Company. These remediation costs are not expected to be material, however there can be no assurance that the actions undertaken by the Company will ensure that the Company will not undertake recalls, voluntary or otherwise, nor can there be any assurance that a future inspection by the FDA will not result in an additional Form 483 or warning letter, or other regulatory actions which may include consent decrees or fines.

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 describes the 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.

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:

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• Sales to customers are evidenced by firm purchase orders. Title and the risks and rewards of ownership are transferred to the customer when product is shipped under our stated shipping terms.  Payment by the customer is due under fixed payment terms and collectability is reasonably assured.

• We place certain of our capital equipment with customers on a loaned basis in return for commitments to purchase related single-use products over time periods generally ranging from one to three years. In these circumstances, no revenue is recognized upon capital equipment shipment as the equipment is loaned and subject to return if certain minimum single-use purchases are not met. Revenue is recognized upon the sale and shipment of the related single-use products. The cost of the equipment is amortized over its estimated useful life.

• We recognize revenues related to the promotion and marketing of sports medicine allograft tissue in accordance with the contractual terms of our agreement with Musculoskeletal Transplant Foundation (“MTF”) on a net basis as our role is limited to that of an agent earning a commission or fee. MTF records revenue when the tissue is shipped to the customer. Our services are completed at this time and net revenues for the “Service Fee” for our promotional and marketing efforts are then recognized based on a percentage of the net amounts billed by MTF to its customers. The timing of revenue recognition is determined through review of the net billings made by MTF each month. Our net commission Service Fee is based on the contractual terms of our agreement and is currently 50%. This percentage can vary over the term of the agreement but is contractually determinable. Our Service Fee revenues are recorded net of amortization of the acquired assets, which are being expensed over the expected useful life of 25 years.

• Product returns are only accepted at the discretion of the Company and in accordance with our “Returned Goods Policy”.  Historically the level of product returns has not been significant.  We accrue for sales returns, rebates and allowances based upon an analysis of historical customer returns and credits, rebates, discounts and current market conditions.

• Our terms of sale to customers generally do not include any obligations to perform future services.  Limited warranties are provided for capital equipment sales and provisions for warranty are provided at the time of product sale based upon an analysis of historical data.

• Amounts billed to customers related to shipping and handling have been included in net sales.  Shipping and handling costs included in selling and administrative expense were $13.0 million, $12.8 million and $12.6 million for 2011, 2012 and 2013, respectively.

• We sell to a diversified base of customers around the world and, therefore, believe there is no material concentration of credit risk.

• We assess the risk of loss on accounts receivable and adjust the allowance for doubtful accounts based on this risk assessment.  Historically, losses on accounts receivable have not been material.  Management believes that the allowance for doubtful accounts of $1.4 million at December 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 reporting our business as a single operating segment, and goodwill as a single reporting unit. Changes in our structure are further discussed in Note 8 to the Consolidated Financial Statements. Customer relationships, trademarks, tradenames, patents, and other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. Promotional, marketing and distribution rights represent intangible

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assets created under our Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”).  We have accumulated goodwill of $248.4 million and other intangible assets of $319.4 million as of December 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 business. 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 2013, we completed our goodwill impairment testing with data as of October 1, 2013. We performed a Step 1 impairment test in accordance with ASC 350 utilizing the market capitalization approach to determine whether the fair value of a reporting unit is less than its carrying amount. Based upon our assessment, we believe the fair value continues to exceed carrying value by 99%.

During 2011, we estimated the fair value of the legacy CONMED Patient Care reporting unit (refer to Note 8 for discussion regarding the change in operating segments) utilizing both a market-based approach and an income approach. Under the income approach, we utilized a discounted cash flow valuation methodology and measured the goodwill impairment in accordance with ASC 350. The first step of the impairment test determined the carrying value exceeded fair value and therefore we proceeded to Step 2. Under Step 2, we calculated the amount of impairment loss by measuring the amount the carrying value of goodwill exceeded the implied fair value of the goodwill. We determined the goodwill of our legacy CONMED Patient Care reporting unit was impaired as a result of lower future earnings due to pricing pressures in a number of our product lines and consequently we recorded a goodwill impairment charge of $60.3 million to reduce the carrying amount of the reporting unit's goodwill to its implied fair value.

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 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 useful life 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.

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For all other indefinite lived intangible assets, we perform a 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.

See Note 4 to the Consolidated Financial Statements for further discussion of goodwill and other intangible assets.

Pension Plan

We sponsor a defined benefit pension plan (the “pension plan”) that was frozen in 2009. It covered substantially all our United States based employees at the time it was frozen. Major assumptions used in accounting for the plan include the discount rate, expected return on plan assets, rate of increase in employee compensation levels 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 match precisely 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 2013 and 2014 pension expense are 3.90% and 4.75%, 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.

Pension expense in 2014 is not expected to be material. Pension expense was $2.6 million in 2013, including $1.4 million in pension settlement expenses resulting from a higher level of lump sum withdrawals from pension plan participants during 2013.  In addition, we do not expect to make any contributions to the pension plan for the 2014 plan year.

In performing a sensitivity analysis on our pension plan expense, we do not believe a 0.25% increase or decrease in discount rate or investment return would have a material impact on our pension expense.

See Note 9 to the Consolidated 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.

Income Taxes

The recorded future tax benefit arising from deductible temporary differences and tax carryforwards is approximately $33.0 million at December 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 2012. Tax years subsequent to 2012 are subject to future examination.

Consolidated Results of Operations

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

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	Year Ended December 31,
	2011		2012		2013
Net sales	100.0	%	100.0	%	100.0	%
Cost of sales	48.3		47.1		45.9
Gross margin	51.7		52.9		54.1
Selling and administrative expense	38.1		39.4		40.7
Research and development expense	4.0		3.7		3.4
Impairment of goodwill	8.3		—		—
Medical device excise tax	—		—		0.8
Other expense	0.2		1.3		1.8
Income from operations	1.1		8.5		7.4
Loss on early extinguishment of debt	—		—		0.0
Amortization of debt discount	0.5		—		—
Interest expense	0.9		0.7		0.7
Income (loss) before income taxes	(0.3	)	7.8		6.7
Provision (benefit) for income taxes	(0.4	)	2.5		1.9
Net income	0.1	%	5.3	%	4.8	%

2013 Compared to 2012

Sales for 2013 were $762.7 million, a decrease of $4.4 million (-0.6%) compared to sales of $767.1 million in 2012 with the decreases occurring in our orthopedic surgery and visualization product lines. In local currency, excluding the effects of the hedging program, sales increased 0.2%.  Sales of capital equipment decreased $2.2 million (-1.4%) to $153.7 million in 2013 from $155.9 million in 2012; sales of single-use products decreased $2.2 million (-0.4%) to $609.0 million in 2013 from $611.2 million in 2012.  In local currency, excluding the effects of the hedging program, sales of capital equipment decreased 0.8% while single-use increased 0.4%.

• Orthopedic surgery sales decreased $3.7 million (-0.9%) in 2013 to $410.2 million from $413.9 million in 2012 mainly due to lower sales in our resection product offerings and large bone burs and blades. In local currency, excluding the effects of the hedging program, sales increased 0.1%.

• General surgery sales remained relatively flat with a $0.1 million (0.0%) increase in 2013 to $286.7 million from $286.6 million in 2012 mainly due to increased sales in our endomechanical, gastrointestinal and pulmonary product offerings offset by decreased sales in our advanced energy and patient monitoring product offerings. In local currency, excluding the effects of the hedging program, sales increased 0.5%.

• Surgical visualization sales decreased $0.8 million (-1.2%) in 2013 to $65.8 million from $66.6 million in 2012 mainly due to lower video system product sales. In local currency, excluding the effects of the hedging program, sales decreased -0.9%.

Cost of sales decreased to $350.3 million in 2013 as compared to $361.3 million in 2012.  Gross profit margins increased 1.2 percentage points to 54.1% in 2013 as compared to 52.9% in 2012.  The increase in gross profit margins of 1.2 percentage points is primarily a result of the lower costs resulting from the restructuring initiatives we have completed throughout our operation.

Selling and administrative expense increased to $310.7 million in 2013 compared to $302.5 million in 2012. Selling and administrative expense as a percentage of net sales increased to 40.7% in 2013 from 39.4% in 2012.  This increase of 1.3 percentage points is attributable to higher benefit costs, lower overall sales, and higher selling and marketing expenses during the period.

Research and development expense was $25.8 million in 2013 compared to $28.2 million in 2012.  As a percentage of net sales, research and development expense decreased to 3.4% in 2013 compared to 3.7% in 2012. The decrease of 0.3 percentage points is mainly the result of 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 $5.9 million in 2013.

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As discussed in Note 11 to the Consolidated Financial Statements, other expense in 2013 consisted of an $8.8 million charge related to administrative consolidation expenses, $3.2 million in legal costs associated with a patent infringement claim and a $1.4 million pension settlement expense as further described in Note 10. Other expense in 2012 consisted of  a $6.5 million charge related to administrative consolidation expenses, a $0.7 million charge related to the purchase of the Company's former distributor for the Nordic region of Europe, $1.6 million in costs associated with a contractual dispute with a former distributor and $1.2 million in costs associated with the purchase of Viking Systems, Inc..

As discussed in Note 5 to the Consolidated Financial Statements, we entered into an amended and restated senior credit agreement on January 17, 2013. 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.

Interest expense was $5.6 million in 2013 compared to $5.7 million in 2012.  The decrease in interest expense is due to lower weighted average interest rates on higher weighted average borrowings outstanding in 2013 as compared to the same period a year ago.  The weighted average interest rates on our borrowings decreased to 2.39% in 2013 as compared to 3.03% in 2012.

A provision for income taxes was recorded at an effective rate of 29.0% in 2013 and 31.9% in 2012 as compared to the Federal statutory rate of 35.0%. The effective tax rate is lower than that recorded in the same period a year ago as a result of a greater proportion of earnings in foreign jurisdictions where the corporate tax rate and deduction for notional interest on equity allowed against taxable profits in Europe result in effective tax rates lower than the statutory rate, tax benefits recorded in the third quarter of 2013 as a result of taxing authority determinations, and 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 Note 6 to the Consolidated Financial Statements.

2012 Compared to 2011

Sales for 2012 were $767.1 million, an increase of $42.0 million (5.8%) compared to sales of $725.1 million in 2011 with the increases in our orthopedic surgery and surgical visualization product lines. The distribution agreement with Musculoskeletal Transplant Foundation ("MTF") accounted for a 3.9% annual sales increase. In local currency, excluding the effects of the hedging program, sales increased 5.7%. Sales of capital equipment decreased $6.1 million (-3.8%) to $155.9 million in 2012 from $162.0 million in 2011; sales of single-use products increased $48.1 million (8.5%) to $611.2 million in 2012 from $563.1 million in 2011. In local currency, excluding the effects of the hedging program, sales of capital equipment decreased 3.7% while single-use products increased 8.4%. We believe the overall decline in capital sales is driven by capital purchasing constraints in hospitals due to depressed economic conditions.

• Orthopedic surgery sales increased $42.7 million (11.5%) in 2012 to $413.9 million from $371.2 million in 2011 mainly due to the distribution agreement with MTF, increased sales of our procedure specific, large bone burs and blades and small bone handpiece product offerings. In local currency, excluding the effects of the hedging program sales increased 11.4%.

• General surgery sales decreased $0.8 million (-0.3%) in 2012 to $286.6 million from $287.4 million in 2011 mainly due to lower sales in our patient monitoring products and advanced energy products offset by increases in our gastrointestinal and pulmonary products. In local currency, excluding the effects of the hedging program, sales decreased -0.4%.

• Surgical visualization sales remained relatively flat, with a $0.1 million (0.2%) increase in 2012 to $66.6 million from $66.5 million in 2011 due to higher video systems sales. In local currency, excluding the effects of the hedging program, sales increased 0.7% .

Cost of sales increased to $361.3 million in 2012 as compared to $350.1 million in 2011. Gross profit margins increased 1.2 percentage points to 52.9% in 2012 as compared to 51.7% in 2011. The increase in gross profit margins of 1.2 percentage points is primarily a result of the distribution agreement we entered into during 2012 with MTF as further described in Note 4 to the Consolidated Financial Statements (1.5 percentage points) and product mix offset by the impact of unfavorable foreign exchange rates on sales and higher restructuring charges than the same period a year ago.

Selling and administrative expense increased to $302.5 million in 2012 compared to $276.6 million in 2011. Selling and administrative expense as a percentage of net sales increased to 39.4% in 2012 from 38.1% in 2011. This increase of 1.3 percentage points is primarily attributable to higher selling expenses mainly related to our MTF distribution agreement and acquisition of our

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former distributor for the Nordic region of Europe.

Research and development expense was $28.2 million in 2012 compared to $28.7 million in 2011. As a percentage of net sales, research and development expense decreased to 3.7% in 2012 compared to 4.0% in 2011. The decrease of 0.3 percentage points is mainly a result of relatively flat spending on increased sales in 2012.

During 2011, we recorded a $60.3 million charge for the impairment of goodwill related to our legacy Patient Care reporting unit. Refer to Note 4 to the Consolidated Financial Statements for further details.

As discussed in Note 11 to the Consolidated Financial Statements, other expense in 2012 consisted of a $6.5 million charge related to administrative consolidation expenses, a $0.7 million charge related to the purchase of the Company's former distributor for the Nordic region of Europe, $1.6 million in costs associated with a contractual dispute with a former distributor and $1.2 million in costs associated with the purchase of Viking Systems, Inc.. Other expense in 2011 consisted of  a $0.8 million charge related to the consolidation of administrative functions and a $0.3 million charge related to the purchase of the Company's former distributor for the Nordic region of Europe.

Amortization of debt discount was $3.9 million in 2011. The debt discount on the Notes was amortized through November 2011.

Interest expense was $5.7 million in 2012 compared to $6.7 million in 2011.  The decrease in interest expense is due to lower weighted average interests rates on higher weighted average borrowings outstanding in 2012 as compared to the same period a year ago. The weighted average interest rates on our borrowings decreased to 3.03% in 2012 as compared to 3.66% in 2011.

A provision for income taxes was recorded at an effective rate of 31.9% in 2012 and -132.6% in 2011 as compared to the Federal statutory rate of 35.0%. Income tax expense recorded in 2012 was higher than recorded in the same period a year ago as a result of increased pre-tax earnings, offset by higher earnings in foreign jurisdictions where the tax rates are lower than the statutory federal rate and tax benefits recorded in 2012 as a result of determinations received from multiple taxing authorities.  A reconciliation of the United States statutory income tax rate to our effective tax rate is included in 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 amended and restated senior credit agreement, described below. 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 amended and restated 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. We believe that our cash on hand, cash from operating activities and proceeds from our amended and restated senior credit agreement provide us with sufficient financial resources to meet our anticipated capital requirements and obligations as they come due.

We had total cash on hand at December 31, 2013 of $54.4 million, of which approximately $45.2 million was held by our foreign subsidiaries outside the United States with unremitted earnings. During the fourth quarter of 2011, we repatriated $16.2 million of foreign earnings to the United States. We do not currently intend to repatriate additional funds held outside of the United States in the foreseeable future. If we were to repatriate these funds, we would be required to accrue and pay taxes on such amounts.

Operating cash flows

Our net working capital position was $260.9 million at December 31, 2013.  Net cash provided by operating activities was $103.0 million in 2011, $95.2 million in 2012 and $80.9 million in 2013 generated on net income of $0.8 million in 2011, $40.5 million in 2012 and $35.9 million in 2013.  

The decrease in cash provided by operating activities is primarily the result of the payments related to the medical device excise tax that became effective January 1, 2013 and changes in working capital accounts in 2013.

Investing cash flows

28

Net cash used in investing activities during 2013, consisted primarily of capital expenditures.  Capital expenditures were $17.6 million, $21.5 million and $18.4 million in 2011, 2012 and 2013, respectively.  Capital expenditures are expected to approximate $20.0 million in 2014. The decrease in the cash used in investing activities during 2013 is the result of $64.1 million in payments related to the distribution and development agreement with MTF and purchase of Viking Systems, Inc. for $22.5 million during 2012.

Financing cash flows

Financing activities in 2013 resulted in a use of cash of $31.3 million compared to proceeds of cash of $11.4 million in 2012. During 2013, we repurchased common stock totaling $50.6 million compared to only $3.9 million in 2012. We also had a $34.0 million payment associated with the distribution and development agreement with MTF. Finally, we made $16.7 million in dividend payments in 2013 compared to $12.9 million in 2012; 2012 included only three quarters of payments as this was the first year we paid dividends. This increased use of cash in 2013 was offset by $17.3 million in proceeds from the issuance of common stock under our equity compensation plans and employee stock purchase plan during 2013 compared to only $10.2 million in 2012 as a result of increases in exercises in 2013. 2012 also consisted of $53.6 million in repayments of term borrowings under our then outstanding 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. 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. Interest rates are at LIBOR plus 1.625% (1.795% at December 31, 2013) or an alternative base rate. For those borrowings where we elect 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 0.625%. As described in Note 4, we entered into a distribution and development agreement with MTF on January 3, 2012 and used cash on hand and available borrowings under our revolving credit facility to fund the up front payment of $63.0 million and contingent payment made on January 3, 2013 of $34.0 million. We expect to fund the remaining $50.0 million in contingent payments, including the $16.7 million paid on January 3, 2014, through cash on hand and available borrowings under our revolving credit facility as these payments come due over the next three years.

There were $208.0 million in borrowings outstanding under the revolving credit facility as of December 31, 2013.  Our available borrowings on the revolving credit facility at December 31, 2013 were $134.2 million with approximately $7.8 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 personal property and assets.  The 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 December 31, 2013. We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.

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 $7.6 million at December 31, 2013.  The mortgage note is collateralized by the Largo, Florida property and facilities.

Our Board of Directors has authorized a $200.0 million share repurchase program. Through December 31, 2013, we have repurchased a total of 5.7 million shares of common stock aggregating $145.7 million under this authorization and have $54.3 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 $50.6 million under the share repurchase program in 2013.  We have financed the repurchases and may finance additional repurchases through operating cash flow and from available borrowings under our revolving credit facility.

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. See “Item 1. Business – Forward Looking Statements.”

Restructuring

29

During 2011, 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. For the years ending December 31, 2011, 2012 and 2013, we charged $3.5 million, $7.1 million, and $6.5 million, respectively, to cost of goods sold related to our restructuring plan. These costs include severance and other charges associated with the transfer of production to Mexico and consolidation of our Finland and Westborough, Massachusetts operations. We expect this phase of our plan to be substantially completed in the first quarter of 2014.

As part of our ongoing restructuring, the Company discontinued a patient monitoring product offering and incurred $2.1 million in costs which were charged to cost of goods sold during the year ending December 31, 2013.

During 2011, 2012 and 2013, we consolidated certain administrative functions throughout the Company and incurred $0.8 million, $6.5 million, and $8.8 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 $3.1 million at December 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 2014.

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 and other exit costs.  We estimate restructuring costs associated with the Finland and Westborough, Massachusetts consolidations and other legal costs related to a patent dispute will approximate $4.0 million to $5.0 million in 2014 and will be charged to cost of goods sold and other expense.

During February 2014, the Company announced a new phase of the restructuring plan to consolidate our Centennial, Colorado manufacturing operations into other existing CONMED manufacturing facilities. We expect this plan to be completed over the next 24 months and are in the process of determining the total costs expected to be incurred.

Refer to Note 15 to the Consolidated Financial Statements for further discussions regarding restructuring.

Contractual Obligations

The following table summarizes our contractual obligations for the next five years and thereafter (amounts in thousands) as of December 31, 2013.  Purchase obligations represent purchase orders for goods and services placed in the ordinary course of business.  There were no capital lease obligations as of December 31, 2013.

	Payments Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long-term debt	$	215,575	$	1,140	$	2,573	$	211,026	$	836
Contingent consideration	50,000		16,667		33,333		—		—
Purchase obligations	40,130		39,996		134		—		—
Operating lease obligations	28,529		6,723		9,926		6,874		5,006
Total contractual obligations	$	334,234	$	64,526	$	45,966	$	217,900	$	5,842

In addition to the above contractual obligations, we are required to make periodic interest payments on our long-term debt obligations (see additional discussion under Item 7A. “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk” and Note 5 to the Consolidated Financial Statements).  The above table also does not include unrecognized tax benefits of approximately $0.6 million, the timing and certainty of recognition for which is not known.  (See Note 6 to the Consolidated Financial Statements).

Stock-based Compensation

30

We have reserved shares of common stock for issuance to employees and directors under three shareholder-approved share-based compensation plans (the "Plans").  The Plans provide for grants of options, stock appreciation rights (“SARs”), dividend equivalent rights, restricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”) and other equity-based and equity-related awards.  The exercise price on all outstanding options and SARs is equal to the quoted fair market value of the stock at the date of grant.  RSUs and PSUs are valued at the market value of the underlying stock on the date of grant.  Stock options, SARs, RSUs and PSUs are non-transferable other than on death and generally become exercisable over a five year period from date of grant.  Stock options and SARs expire ten years from date of grant.  SARs are only settled in shares of the Company’s stock.  (See Note 7 to the Consolidated Financial Statements).

New Accounting Pronouncements

See Note 14 to the Consolidated Financial Statements for a discussion of new accounting pronouncements.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in market rates and prices such as commodity prices, foreign currency exchange rates and interest rates.  In the normal course of business, we are exposed to various market risks, including changes in foreign currency exchange rates and interest rates.  We manage our exposure to these and other market risks through regular operating and financing activities and as necessary through the use of derivative financial instruments.

Foreign currency risk

Approximately 51% of our total 2013 consolidated net sales were to customers outside the United States.  We have sales subsidiaries in a significant number of countries in Europe as well as Australia, Canada, China and Korea.  In those countries in which we have a direct presence, our sales are denominated in the local currency amounting to approximately 36% of our total net sales in 2013.  The remaining 15% of sales to customers outside the United States was on an export basis and transacted in United States dollars.

Because a significant portion of our operations consist of sales activities in foreign jurisdictions, our financial results may be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the markets in which we distribute products.  During 2013, foreign currency exchange rates, including the effects of the hedging program, caused sales to decrease by approximately $2.3 million and income before income taxes to decrease by approximately $1.5 million, compared to sales and income before income taxes in 2012.

We hedge forecasted intercompany sales 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 December 31, 2013 which have been accounted for as cash flow hedges totaled $132.4 million.  Net realized gains (losses) recognized for forward contracts accounted for as cash flow hedges approximated -$4.7 million, $3.8 million and $0.2 million for the years ended December 31, 2011, 2012, and 2013 respectively.  Net unrealized losses on forward contracts outstanding which have been accounted for as cash flow hedges and which have been included in other comprehensive income totaled $1.4 million at December 31, 2013.  It is expected these unrealized losses will be recognized in the consolidated statement of comprehensive income in 2014 and 2015.

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 December 31, 2013 which have not been designated as hedges totaled $42.0 million.  Net realized gains (losses) recognized in connection with those forward contracts not accounted for as hedges approximated $0.0 million, -$2.1 million and -$0.3 million for the years ended December 31, 2011, 2012, and 2013, respectively, offsetting gains (losses) on our intercompany receivables of -$0.3 million, $0.8 million and -$0.8 million for the years ended December 31, 2011, 2012, and 2013, respectively.  These gains and losses have been recorded in selling and administrative expense in the consolidated statements of comprehensive income.

We record these forward foreign exchange contracts at fair value;  the net fair value for forward foreign exchange contracts outstanding at December 31, 2013 was $2.2 million and is included in other current liabilities in the Consolidated Balance Sheets.

Refer to Note 13 in the Consolidated Financial Statements for further discussion.

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Interest rate risk

At December 31, 2013, we had approximately $208.0 million of variable rate long-term debt outstanding under our senior credit agreement.  Assuming no repayments, if market interest rates for similar borrowings averaged 1.0% more in 2014 than they did in 2013, interest expense would increase, and income before income taxes would decrease by $2.1 million.  Comparatively, if market interest rates for similar borrowings average 1.0% less in 2014 than they did in 2013, our interest expense would decrease, and income before income taxes would increase by $2.1 million.

Item 8. Financial Statements and Supplementary Data

Our 2013 Financial Statements are included elsewhere herein.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosures

There were no changes in or disagreement with accountants on accounting and financial disclosure.

Item 9A. Controls and Procedures

As of the end of the period covered by this report, an evaluation was carried out by CONMED Corporation’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934).  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report.  In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fourth quarter of the year ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm thereon are set forth in Part IV, Item 15 of the Annual Report on Form 10-K.

Item 9B. Other Information

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated herein by reference to the sections captioned “Proposal One: Election of Directors” and “Directors, Executive Officers, Other Company Officers and Nominees for the Board of Directors” in CONMED Corporation’s definitive Proxy Statement or other informational filing to be filed with the Securities and Exchange Commission on or about April 10, 2014.

Item 11. Executive Compensation

The information required by this item is incorporated herein by reference to the sections captioned “Compensation Discussion and Analysis”, “Summary Compensation Table”, “Grants of Plan-Based Awards”, “Outstanding Equity Awards at Fiscal Year-End”, “Option Exercises and Stock Vested”, “Pension Benefits”, “Non-Qualified Deferred Compensation”, “Potential Payments on Termination or Change-in-Control”, “Director Compensation” and “Board of Directors Interlocks and Insider Participation; Certain Relationships and Related Transactions” in CONMED Corporation’s definitive Proxy Statement or other informational filing to be filed with the Securities and Exchange Commission on or about April 10, 2014.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated herein by reference to the section captioned “Security Ownership of Certain Beneficial Owners and Management” in CONMED Corporation’s definitive Proxy Statement or other informational filing to be filed with the Securities and Exchange Commission on or about April 10, 2014.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporatedherein by reference to the section captioned “Board of Directors Interlocks and Insider Participation; Certain Relationships and Related Transactions” in CONMED Corporation’s definitive Proxy Statement or other informational filing to be filed with the Securities and Exchange Commission on or about April 10, 2014.

Item 14. Principal Accounting Fees and Services

The information required by this item is incorporatedherein by reference to the section captioned “Principal Accounting Fees and Services” in CONMED Corporation’s definitive Proxy Statement or other informational filing to be filed with the Securities and Exchange Commission on or about April 10, 2014.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

Index to Financial Statements
(a)(1)	List of Financial Statements	Page in Form 10-K
	Management’s Report on Internal Control Over Financial Reporting	40
	Report of Independent Registered Public Accounting Firm	41
	Consolidated Balance Sheets at December 31, 2012 and 2013	42
	Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2011, 2012 and 2013	43
	Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2011, 2012 and 2013	44
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2012 and 2013	46
	Notes to Consolidated Financial Statements	48
(2)	List of Financial Statement Schedules
	Valuation and Qualifying Accounts (Schedule II)	75
	All other schedules have been omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.
(3)	List of Exhibits
	The exhibits listed on the accompanying Exhibit Index on page 37 below are filed as part of this Form 10-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on the date indicated below.

CONMED CORPORATION

By: /s/ Joseph J. Corasanti

Joseph J. Corasanti

(President and Chief

Executive Officer)

Date:

February 24, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

35

Signature	Title	Date
/s/ EUGENE R. CORASANTI	Chairman of the Board
Eugene R. Corasanti	of Directors	February 24, 2014
/s/ JOSEPH J. CORASANTI	President, Chief Executive
Joseph J. Corasanti	Officer and Director	February 24, 2014
/s/ ROBERT D. SHALLISH, JR.	Executive Vice President-Finance
Robert D. Shallish, Jr.	and Chief Financial Officer (Principal Financial Officer)	February 24, 2014
/s/ LUKE A. POMILIO	Executive Vice President-
Luke A. Pomilio	Controller and Corporate General Manager (Principal Accounting Officer)	February 24, 2014
/s/ BRIAN CONCANNON
Brian Concannon	Director	February 24, 2014
/s/ BRUCE F. DANIELS
Bruce F. Daniels	Director	February 24, 2014
/s/ JO ANN GOLDEN
Jo Ann Golden	Director	February 24, 2014
/s/ DIRK M. KUYPER
Dirk M. Kuyper	Director	February 24, 2014
/s/ STEPHEN M. MANDIA
Stephen M. Mandia	Director	February 24, 2014
/s/ STUART J. SCHWARTZ
Stuart J. Schwartz	Director	February 24, 2014
/s/ MARK E. TRYNISKI
Mark E. Tryniski	Director	February 24, 2014

36

Exhibit Index

Exhibit No.		Description
3.1	-	Amended and Restated By-Laws, as adopted by the Board of Directors on April 29, 2011 (Incorporated by reference to the Company’s Current Report on Form 10-Q filed with the Securities and Exchange Commission on May 2, 2011).
3.2	-	1999 Amendment to Certificate of Incorporation and Restated Certificate of Incorporation of CONMED Corporation (Incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1999).
4.1	-	See Exhibit 3.1.
4.2	-	See Exhibit 3.2.
4.3	-	Guarantee and Collateral Agreement, dated August 28, 2002, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
4.4	-	First Amendment to Guarantee and Collateral Agreement, dated June 30, 2003, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank and the several banks and other financial institutions or entities from time to time parties thereto (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
4.5	-	Second Amendment to Guarantee and Collateral Agreement, dated April 13, 2006, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank and the several banks and other financial institutions or entities from time to time parties thereto (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 19, 2006).
4.6	-	Third Amendment to Guarantee and Collateral Agreement, dated as of January 17, 2013, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank (Incorporated by reference to Exhibit 4.6 of the Company's Annual Report on Form 10-K for the year ended December 31, 2012).
10.1+	-	Employment Agreement between the Company and Eugene R. Corasanti, dated October 31, 2006 (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 2, 2006).
10.2+	-	Amended and Restated Employment Agreement, dated October 30, 2009, by and between CONMED Corporation and Joseph J. Corasanti, Esq. (Incorporated by reference to the Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.3	-	Amended and Restated Employee Stock Option Plan (including form of Stock Option Agreement) (Incorporated by reference to Exhibit 10.6 of the Company’s Annual Report on  Form 10-K for the year ended December 31, 1996).
10.4	-	Stock Option Plan for Non-Employee Directors of CONMED Corporation (Incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996).

37

10.5	-	Amendment to Stock Option Plan for Non-employee Directors of CONMED Corporation (Incorporated by reference to the Company’s Definitive Proxy Statement for the 2002 Annual Meeting filed with the Securities and Exchange Commission on April 17, 2002).
10.6	-	Amended and Restated 1999 Long Term Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on November 3, 2009).
10.7	-	2002 Employee Stock Purchase Plan (Incorporated by reference to the Company’s Definitive Proxy Statement for the 2002 Annual Meeting filed with the Securities and Exchange Commission on April 17, 2002).
10.8	-	Amendment to CONMED Corporation 2002 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005).
10.9	-	2006 Stock Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on August 8, 2006).
10.10	-	Amended and Restated 2007 Non-Employee Director Equity Compensation Plan of CONMED Corporation (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on August 3, 2010).
10.11	-	Amended and Restated Long Term Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on July 27, 2012).
10.12	-	Amended and Restated Credit Agreement, dated January 17, 2013, among CONMED Corporation, JP Morgan Chase Bank and the several banks and other financial institutions or entities from time to time parties thereto (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2013).
10.13	-	Change in Control Severance Agreement for Joseph J. Corasanti (Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
10.14	-	Change in Control Severance Agreement for Robert D. Shallish, Jr. (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
10.15	-	Change in Control Severance Agreement for Daniel S. Jonas (Incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
10.16	-	Change in Control Severance Agreement for Luke A. Pomilio (Incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
10.17	-	Executive Severance Agreement for Joseph G. Darling (Incorporated by reference to Exhibit 10.28 of the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
10.18	-	Change in Control Severance Agreement for Joseph G. Darling (Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010).

38

10.19	-	Sports Medicine Joint Development and Distribution Agreement by and between Musculoskeletal Transplant Foundation, Inc. and CONMED Corporation dated as of January 3, 2012 (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated January 3, 2012).
14	-	Code of Ethics. The CONMED code of ethics may be accessed  via the Company’s website at http://www.CONMED.com/conmed_investor_template.php
21*	-	Subsidiaries of the Registrant.
23*	-	Consent of Independent Registered Public Accounting Firm.
31.1*	-	Certification of Joseph J. Corasanti pursuant to Rule 13a-14(a) and 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) and Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	-	Certifications of 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 Annual Report on Form 10-K for the year ended December 31, 2013 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Comprehensive Income for the three years ended December 31, 2013, (ii) Consolidated Balance Sheets at December 31, 2013 and 2012, (iii) Consolidated Statements of Shareholders' Equity for the three years ended December 31, 2013 (iv) Consolidated Statements of Cash Flows for the three years ended December 31, 2013, (v) Notes to the Consolidated Financial Statements for the year ended December 31, 2013 and (vi) Schedule II - Valuation and Qualifying Accounts. In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K 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.
	*	Filed herewith
	+	Management contract or compensatory plan or arrangement.

39

MANAGEMENT’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

The management of CONMED Corporation is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.  Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Management assessed the effectiveness of CONMED’s internal control over financial reporting as of December 31, 2013.  In making its assessment, management utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control-Integrated Framework”, released in 1992.  Management has concluded that based on its assessment, CONMED’s internal control over financial reporting was effective as of December 31, 2013.  The effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

/s/  Joseph J. Corasanti

Joseph J. Corasanti

President and

Chief Executive Officer

/s/  Robert D. Shallish, Jr.

Robert D. Shallish, Jr.

Executive Vice President-Finance and

Chief Financial Officer

40

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of CONMED Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive income, of shareholders’ equity and of cash flows present fairly, in all material respects, the financial position of CONMED Corporation and its subsidiaries at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2)presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 /s/ PricewaterhouseCoopers LLP

Albany, New York

February 24, 2014

41

CONMED CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31, 2012 and 2013

(In thousands except share and per share amounts)

	2012			2013
ASSETS
Current assets:
Cash and cash equivalents	$	23,720		$	54,443
Accounts receivable, less allowance for doubtful
accounts of $1,203 in 2012 and $1,384 in 2013	139,124			140,426
Inventories	156,228			143,211
Income taxes receivable	2,897			3,805
Deferred income taxes	11,931			13,202
Prepaid expenses and other current assets	14,993			17,045
Total current assets	348,893			372,132
Property, plant and equipment, net	139,041			138,985
Deferred income taxes	1,057			1,183
Goodwill	248,502			248,428
Other intangible assets, net	334,185			319,440
Other assets	7,171			10,340
Total assets	$	1,078,849		$	1,090,508
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	1,050		$	1,140
Accounts payable	23,622			27,448
Accrued compensation and benefits	33,511			33,426
Income taxes payable	2,706			2,116
Other current liabilities	64,325			47,135
Total current liabilities	125,214			111,265
Long-term debt	160,802			214,435
Deferred income taxes	99,199			113,199
Other long-term liabilities	86,636			45,290
Total liabilities	471,851			484,189
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $.01 per share; authorized
500,000 shares, none issued or outstanding	—			—
Common stock, par value $.01 per share; 100,000,000
authorized; 31,299,194 issued in 2012 and 2013, respectively	313			313
Paid-in capital	324,322			326,436
Retained earnings	377,907			395,889
Accumulated other comprehensive loss	(27,581		)	(17,572		)
Less:  Treasury stock, at cost;
2,925,801 and 3,718,332 shares in
2012 and 2013, respectively	(67,963		)	(98,747		)
Total shareholders' equity	606,998			606,319
Total liabilities and shareholders' equity	$	1,078,849		$	1,090,508

The accompanying notes are an integral part of the consolidated financial statements.

42

CONMED CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31, 2011, 2012 and 2013

(In thousands except per share amounts)

	2011			2012			2013
Net sales	$	725,077		$	767,140		$	762,704
Cost of sales	350,143			361,297			350,287
Gross profit	374,934			405,843			412,417
Selling and administrative expense	276,615			302,469			310,730
Research and development expense	28,651			28,214			25,831
Impairment of goodwill	60,302			—			—
Medical device excise tax	—			—			5,949
Other expense	1,092			9,950			13,399
	366,660			340,633			355,909
Income from operations	8,274			65,210			56,508
Loss on early extinguishment of debt	—			—			263
Amortization of debt discount	3,903			—			—
Interest expense	6,676			5,730			5,613
Income (loss) before income taxes	(2,305		)	59,480			50,632
Provision (benefit) for income taxes	(3,057		)	18,999			14,693
Net income	$	752		$	40,481		$	35,939
Per share data:
Basic	$	0.03		$	1.43		$	1.30
Diluted	$	0.03		$	1.41		$	1.28
Dividends per share of common stock	$	—		$	0.60		$	0.65
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	$	(1,937	)	$	1,995		$	(1,193	)
Pension liability	(20,250		)	1,387			18,175
Cash flow hedging gain (loss)	6,690			(6,507		)	(404		)
Other comprehensive income (loss), before tax	(14,745		)	37,356			52,517
Provision (benefit) for income taxes related to items of other comprehensive income	(5,010		)	(1,892		)	6,569
Comprehensive income (loss)	$	(9,735	)	$	39,248		$	45,948

The accompanying notes are an integral part of the consolidated financial statements.

43

CONMED CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Years Ended December 31, 2011, 2012 and 2013

(In thousands)

	Common Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2010	31,299	$	313	$	319,406		$	354,020		$	(15,861	)	$	(71,315	)	$	586,563
Common stock issued
under employee plans				(3,849		)	(333		)				9,009			4,827
Repurchase of treasury stock													(15,021		)	(15,021		)
Tax benefit arising from
common stock issued
under employee plans				1,197												1,197
Stock-based compensation				5,240												5,240
Comprehensive income (loss):
Foreign currency translation adjustments										(1,937		)
Pension liability (net of income tax benefit of $7,482)										(12,768		)
Cash flow hedging gain (net of income tax expense of $2,472)										4,218
Net income							752
Total comprehensive
income (loss)																(9,735		)
Balance at December 31, 2011	31,299	$	313	$	321,994		$	354,439		$	(26,348	)	$	(77,327	)	$	573,071
Common stock issued
under employee plans				(4,377		)							13,287			8,910
Repurchase of treasury
stock													(3,923		)	(3,923		)
Tax benefit arising from
common stock issued
under employee plans				1,052												1,052
Stock based compensation				5,653												5,653
Dividend on common stock							(17,013		)							(17,013		)

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	Common Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Shareholders’ Equity
	Shares	Amount
Comprehensive income (loss):
Foreign currency translation adjustments										1,995
Pension liability (net of income tax expense of $512)										875
Cash flow hedging loss (net of income tax benefit of $2,404)										(4,103		)
Net income							40,481
Total comprehensive
income (loss)																39,248
Balance at December 31, 2012	31,299	$	313	$	324,322		$	377,907		$	(27,581	)	$	(67,963	)	$	606,998
Common stock issued
under employee plans				(4,576		)							19,772			15,196
Repurchase of treasury
stock													(50,556		)	(50,556		)
Tax benefit arising from
common stock issued
under employee plans				1,097												1,097
Stock based compensation				5,593												5,593
Dividends on common stock							(17,957		)							(17,957		)
Comprehensive income (loss):
Foreign currency translation adjustments										(1,193		)
Pension liability (net of income tax expense of $6,718)										11,457
Cash flow hedging loss (net of income tax benefit of $149)										(255		)
Net income							35,939
Total comprehensive
income (loss)																45,948
Balance at December 31, 2013	31,299	$	313	$	326,436		$	395,889		$	(17,572	)	$	(98,747	)	$	606,319

The accompanying notes are an integral part of the consolidated financial statements.

45

CONMED CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2011, 2012 and 2013

(In thousands)

	2011			2012			2013
Cash flows from operating activities:
Net income	$	752		$	40,481		$	35,939
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation	18,519			18,635			18,653
Amortization of debt discount	3,903			—			—
Amortization, all other	20,265			27,981			29,214
Stock-based compensation	5,240			5,653			5,593
Deferred income taxes	(13,098		)	12,946			7,218
Income tax benefit of stock
option exercises	1,197			1,052			1,097
Excess tax benefit from stock
option exercises	(1,363		)	(1,206		)	(1,518		)
Loss on early extinguishment of debt	—			—			263
Impairment of goodwill	60,302			—			—
Increase (decrease) in cash flows from changes in assets and
liabilities, net of effects from acquisitions:
Accounts receivable	8,464			1,687			(798		)
Inventories	(7,850		)	3,810			(1,817		)
Accounts payable	2,649			259			4,223
Income taxes	4,838			(6,497		)	(1,098		)
Accrued compensation and benefits	1,673			767			(71		)
Other assets	(4,243		)	(1,210		)	(5,222		)
Other liabilities	1,745			(9,159		)	(10,727		)
	102,241			54,718			45,010
Net cash provided by operating activities	102,993			95,199			80,949
Cash flows from investing activities:
Payments related to business acquisitions and distribution agreements,
net of cash acquired	(4,191		)	(86,253		)	—
Proceeds from sale of property	—			1,836			—
Purchases of property, plant and equipment	(17,552		)	(21,532		)	(18,445		)
Net cash used in investing activities	(21,743		)	(105,949		)	(18,445		)
Cash flows from financing activities:
Net proceeds from common stock issued
under employee plans	6,117			10,165			17,264
Repurchase of common stock	(15,021		)	(3,923		)	(50,556		)
Excess tax benefit from stock option exercises	1,363			1,206			1,518
Payments on senior credit agreement	(1,350		)	(53,588		)	—
Proceeds of senior credit agreement	58,000			73,000			55,000
Payments related to distribution agreement	—			—			(34,000		)
Payments on mortgage notes	(894		)	(969		)	(1,050		)
Payments on senior subordinated notes	(111,766		)	(100		)	(227		)
Payments related to issuance of debt	—			—			(1,725		)
Dividends paid on common stock	—			(12,862		)	(16,696		)
Other, net	(3,148		)	(1,576		)	(824		)
Net cash provided by (used in) financing activities	(66,699		)	11,353			(31,296		)

46

Effect of exchange rate changes
on cash and cash equivalents	(920		)	(2,931		)	(485		)
Net increase (decrease) in cash
and cash equivalents	13,631			(2,328		)	30,723
Cash and cash equivalents at beginning of year	12,417			26,048			23,720
Cash and cash equivalents at end of year	$	26,048		$	23,720		$	54,443
Non-cash financing activities:
Dividends payable	$	—		$	4,256		$	5,545
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	5,797		$	5,038		$	5,143
Income taxes	4,760			10,953			6,837

The accompanying notes are an integral part of the consolidated financial statements.

47

CONMED CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands except per share amounts)

Note 1 — Operations and Significant Accounting Policies

Organization and 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.

Principles of consolidation

The consolidated financial statements include the accounts of CONMED Corporation and its controlled subsidiaries.  All significant intercompany accounts and transactions have been eliminated.

Income taxes receivable and income taxes payable at December 31, 2012 have been revised by $2.7 million to conform to the current year presentation which presents these balances net by jurisdiction.

We have reclassified the promotional, marketing and distribution rights totaling $143.4 million at December 31, 2012 from Other Assets to Other Intangible Assets to conform to current year presentation.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments which affect the reported amounts of assets, liabilities, related disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, rebates and sales allowances, inventory allowances, purchased in-process research and development, pension benefits, goodwill and intangible assets, contingencies and other accruals.  We base our estimates on historical experience and on various other assumptions which are believed to be reasonable under the circumstances.  Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates.  Estimates and assumptions are reviewed periodically, and the effect of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Cash and cash equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Inventories

Inventories are valued at the lower of cost or market.  Cost is determined on the FIFO (first-in, first-out) method of accounting.

We write-off excess and obsolete inventory resulting from the inability to sell our products at prices in excess of current carrying costs.  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. 

Property, plant and equipment

Property, plant and equipment are stated at cost and depreciated using the straight-line method over the following estimated useful lives:

48

Building and improvements	12 to 40 years
Leasehold improvements	Shorter of life of asset or life of lease
Machinery and equipment	2 to 15 years

Goodwill and other 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 reporting our business as a single operating segment, and goodwill as a single reporting unit. Changes in our structure are further discussed in Note 8 to the Consolidated Financial Statements. Customer relationships, trademarks, tradenames, patents, and other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. Promotional, marketing and distribution rights represent intangible assets created under our Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”).  We have accumulated goodwill of $248.4 million and other intangible assets of $319.4 million as of December 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 business. 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 2013, we completed our goodwill impairment testing with data as of October 1, 2013. We performed a Step 1 impairment test in accordance with ASC 350 utilizing the market capitalization approach to determine whether the fair value of a reporting unit is less than its carrying amount. Based upon our assessment, we believe the fair value continues to exceed carrying value by 99%.

During 2011, we estimated the fair value of the legacy CONMED Patient Care reporting unit (refer to Note 8 for discussion regarding the change in operating segments) utilizing both a market-based approach and an income approach. Under the income approach, we utilized a discounted cash flow valuation methodology and measured the goodwill impairment in accordance with ASC 350. The first step of the impairment test determined the carrying value exceeded fair value and therefore we proceeded to Step 2. Under Step 2, we calculated the amount of impairment loss by measuring the amount the carrying value of goodwill exceeded the implied fair value of the goodwill. We determined the goodwill of our legacy CONMED Patient Care reporting unit was impaired as a result of lower future earnings due to pricing pressures in a number of our product lines and consequently we recorded a goodwill impairment charge of $60.3 million to reduce the carrying amount of the reporting unit's goodwill to its implied fair value.

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 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 useful life 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

49

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 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.

Other long-lived assets

We review asset carrying amounts for impairment (consisting of intangible assets subject to amortization and property, plant and equipment) whenever events or circumstances indicate that such carrying amounts may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value to its current fair value.

Translation of foreign currency financial statements

Assets and liabilities of foreign subsidiaries have been translated into United States dollars at the applicable rates of exchange in effect at the end of the period reported. Revenues and expenses have been translated at the applicable weighted average rates of exchange in effect during the period reported. Translation adjustments are reflected in accumulated other comprehensive loss. Transaction gains and losses are included in net income.

Foreign exchange and hedging activity

We manage our foreign currency transaction risks through the use of forward contracts to hedge forecasted cash flows associated with foreign currency transaction exposures. 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 reclassified into earnings as a component of sales or cost of sales when the forecasted transaction occurs.

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. We record these forward contracts at fair value with resulting gains and losses included in selling and administrative expense in the consolidated statements of comprehensive income.

Income taxes

Deferred income tax assets and liabilities are based on the difference between the financial statement and tax basis of assets and liabilities and operating loss and tax credit carryforwards as measured by the enacted tax rates that are anticipated to be in effect in the respective jurisdictions when these differences reverse. The deferred income tax provision generally represents the net change in the assets and liabilities for deferred income taxes. A valuation allowance is established when it is necessary to reduce deferred income tax assets to amounts for which realization is likely. In assessing the need for a valuation allowance, we estimate future taxable income, considering the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards. Valuation allowances related to deferred tax assets may be impacted by changes to tax laws, changes to statutory tax rates and ongoing and future taxable income levels.

Deferred income taxes are not provided on the unremitted earnings of subsidiaries outside of the United States when it is expected that these earnings are permanently reinvested. Such earnings may become taxable upon a repatriation of assets from a subsidiary or the sale or liquidation of a subsidiary. Deferred income taxes are provided when the Company no longer considers

50

subsidiary earnings to be permanently invested, such as in situations where the Company’s subsidiaries plan to make future dividend distributions.

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 and collectability is reasonably assured.

• We place certain of our capital equipment with customers on a loaned basis in return for commitments to purchase related single-use products over time periods generally ranging from one to three years.  In these circumstances, no revenue is recognized upon capital equipment shipment as the equipment is loaned and subject to return if certain minimum single-use purchases are not met.  Revenue is recognized upon the sale and shipment of the related single-use products.  The cost of the equipment is amortized over its estimated useful life.

• We recognize revenues related to the promotion and marketing of sports medicine allograft tissue in accordance with the contractual terms of our agreement with Musculoskeletal Transplant Foundation (“MTF”) on a net basis as our role is limited to that of an agent earning a commission or fee. MTF records revenue when the tissue is shipped to the customer. Our services are completed at this time and net revenues for the “Service Fee” for our promotional and marketing efforts are then recognized based on a percentage of the net amounts billed by MTF to its customers. The timing of revenue recognition is determined through review of the net billings made by MTF each month. Our net commission Service Fee is based on the contractual terms of our agreement and is currently 50%. This percentage can vary over the term of the agreement but is contractually determinable. Our Service Fee revenues are recorded net of amortization of the acquired assets, which are being expensed over the expected useful life of 25 years.

• Product returns are only accepted at the discretion of the Company and in accordance with our “Returned Goods Policy”.  Historically the level of product returns has not been significant.  We accrue for sales returns, rebates and allowances based upon an analysis of historical customer returns and credits, rebates, discounts and current market conditions.

• Our terms of sale to customers generally do not include any obligations to perform future services.  Limited warranties are provided for capital equipment sales and provisions for warranty are provided at the time of product sale based upon an analysis of historical data.

• Amounts billed to customers related to shipping and handling have been included in net sales.  Shipping and handling costs included in selling and administrative expense were $13.0 million, $12.8 million and $12.6 million for 2011, 2012 and 2013, respectively.

• We sell to a diversified base of customers around the world and, therefore, believe there is no material concentration of credit risk.

• We assess the risk of loss on accounts receivable and adjust the allowance for doubtful accounts based on this risk assessment.  Historically, losses on accounts receivable have not been material.  Management believes that the allowance for doubtful accounts of $1.4 million at December 31, 2013 is adequate to provide for probable losses resulting from accounts receivable.

Earnings and dividends 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 at December 31, 2011, 2012 and 2013, respectively: 

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	2011		2012		2013
Net income	$	752	$	40,481	$	35,939
Basic-weighted average shares outstanding	28,246		28,301		27,722
Effect of dilutive potential securities	387		352		392
Diluted-weighted average shares outstanding	28,633		28,653		28,114
Basic EPS	$	0.03	$	1.43	$	1.30
Diluted EPS	$	0.03	$	1.41	$	1.28

The shares used in the calculation of diluted EPS exclude options to purchase shares where the exercise price was greater than the average market price of common shares for the year. Such shares aggregated approximately 0.7 million, 0.4 million and 0.0 million at December 31, 2011, 2012 and 2013, respectively.  

On February 29, 2012, the Board of Directors adopted a cash dividend policy and declared an initial quarterly dividend of $0.15 per share. On October 28, 2013, the Board of Directors increased the quarterly dividend to $0.20 per share. The fourth quarter dividend for 2013 was paid on January 6, 2014 to shareholders of record as of December 16, 2013. The total dividend payable at December 31, 2013 was $5.5 million and is included in other current liabilities in the consolidated balance sheet.

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.

We issue shares under our stock based compensation plans out of treasury stock whereby treasury stock is reduced by the weighted average cost of such treasury stock.  To the extent there is a difference between the cost of the treasury stock and the exercise price of shares issued under stock based compensation plans, we record gains to paid in capital;  losses are recorded to paid in capital to the extent any gain was previously recorded, otherwise the loss is recorded to retained earnings.

Accumulated other comprehensive loss

Accumulated other comprehensive loss consists of the following:

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	Cash Flow Hedging Gain (Loss)a			Pension Liabilitya			Cumulative Translation Adjustments			Accumulated Other Comprehensive Loss
Balance, December 31, 2012	$	(1,130	)	$	(30,375	)	$	3,924		$	(27,581	)
Other comprehensive income
before reclassifications	(158		)	8,618			(1,193		)	7,267
Amounts reclassified from accumulated other comprehensive income before taxb	(153		)	4,502			—			4,349
Tax expense (benefit)	56			(1,663		)	—			(1,607		)
Total amounts reclassified from other accumulated comprehensive income	(97		)	2,839			—			2,742
Net current-period other comprehensive income	(255		)	11,457			(1,193		)	10,009
Balance, December 31, 2013	$	(1,385	)	$	(18,918	)	$	2,731		$	(17,572	)

(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 or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 13 and Note 9, respectively, for further details.

Note 2 — Inventories

Inventories consist of the following at December 31,:

	2012		2013
Raw materials	$	45,115	$	39,029
Work in process	14,229		14,736
Finished goods	96,884		89,446
	$	156,228	$	143,211

Note 3 — Property, Plant and Equipment

Property, plant and equipment consist of the following at December 31,:

	2012			2013
Land	$	4,243		$	4,243
Building and improvements	92,775			95,397
Machinery and equipment	176,102			180,064
Construction in progress	5,508			8,750
	278,628			288,454
Less:  Accumulated depreciation	(139,587		)	(149,469		)
	$	139,041		$	138,985

We lease various manufacturing facilities, office facilities and equipment under operating leases.  Rental expense on these operating leases was approximately $6,221, $6,416, and $6,713 for the years ended December 31, 2011, 2012 and 2013, respectively. The aggregate future minimum lease commitments for operating leases at December 31, 2013 are as follows:

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2014	$	6,723
2015	5,782
2016	4,144
2017	3,492
2018	3,382
Thereafter	5,006

Note 4 – Goodwill and Other Intangible Assets

The changes in the net carrying amount of goodwill for the years ended December 31, are as follows:

	2012			2013
Balance as of January 1,	$	234,815		$	248,502
Goodwill resulting from business acquisitions	13,702			—
Foreign currency translation	(15		)	(74		)
Balance as of December 31,	$	248,502		$	248,428

During 2013, we finalized the allocation of purchase price related to our 2012 acquisition of Viking Systems, Inc.. We recorded a deferred tax asset of $8.3 million relating to the acquired net operating losses, which resulted in a corresponding reduction to goodwill. This is reflected in the 2012 amounts above. 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.

During the fourth quarter of 2011 we performed our annual goodwill impairment testing. We estimated the fair value of our legacy CONMED Patient Care reporting unit (refer to Note 8 for discussion regarding the change in operating segments) utilizing both a market-based approach and an income approach. Under the income approach, we utilized a discounted cash flow valuation methodology and measured the goodwill impairment in accordance with ASC 350. The first step of the impairment test determined the carrying value exceeded fair value and therefore we proceeded to Step 2. Under Step 2, we calculated the amount of impairment loss by measuring the amount the carrying value of goodwill exceeded the implied fair value of the goodwill. We determined the goodwill of our legacy CONMED Patient Care reporting unit was impaired as a result of lower future earnings due to pricing pressures in a number of our product lines and consequently we recorded a goodwill impairment charge of $60.3 million to reduce the carrying amount of the unit's goodwill to its implied fair value.

Total accumulated impairment losses aggregated $106,991 at December 31, 2012 and 2013, respectively.

Other intangible assets consist of the following:

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	December 31, 2012					December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer relationships	$	135,690	$	(50,083	)	$	135,690	$	(54,982	)
Promotional, marketing & distribution rights	149,376		(6,000		)	149,376		(12,000		)
Patents and other intangible assets	56,212		(37,554		)	53,903		(39,091		)
Unamortized intangible assets:
Trademarks and tradenames	86,544		—			86,544		—
	$	427,822	$	(93,637	)	$	425,513	$	(106,073	)

Customer relationships, trademarks, tradenames, patents and other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. Promotional, marketing and distribution rights represent intangible assets created under our Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”).

On January 3, 2012, the Company entered into the JDDA with MTF to obtain MTF's worldwide promotion rights with respect to allograft tissues within the field of sports medicine and related products. 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 for tissue. On January 3, 2013 and January 3, 2014, we paid $34.0 million and $16.7 million, respectively, 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. The $50.0 million related to the remaining contingent obligation as of December 31, 2013 is accrued in other current and other long term liabilities as we believe it is probable MTF will meet the supply targets.

Trademarks and tradenames were recognized principally in connection with the 1997 acquisition of Linvatec Corporation.  We continue to market products, release new product and product extensions and maintain and promote these trademarks and tradenames in the marketplace through legal registration and such methods as advertising, medical education and trade shows.  It is our belief that these trademarks and tradenames will generate cash flow for an indefinite period of time.  Therefore, our trademarks and tradenames intangible assets are not amortized.

Amortization expense related to intangible assets which are subject to amortization is included as a reduction of revenue (for amortization related to our promotional, marketing and distribution rights) and in selling and administrative expense (for all other intangible assets) in the consolidated statements of comprehensive income. The weighted average amortization period for intangible assets which are amortized is 27 years.  Customer relationships are being amortized over a weighted average life of 33 years.  Promotional, marketing and distribution rights are being amortized over a weighted average life of 25 years. Patents and other intangible assets are being amortized over a weighted average life of 15 years. Amortization expense for the year ending December 31, 2013 and estimated amortization expense related to intangible assets for each of the five succeeding years is as follows:

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	Amortization included in expense		Amortization recorded as a reduction of revenue		Total
2013	$	7,721	$	6,000	$	13,721
2014	7,031		6,000		$	13,031
2015	6,642		6,000		$	12,642
2016	6,539		6,000		$	12,539
2017	6,527		6,000		$	12,527
2018	6,470		6,000		$	12,470

Note 5 — Long Term Debt

Long-term debt consists of the following at December 31,:

	2012		2013
Revolving line of credit	$	153,000	$	208,000
2.50% convertible senior subordinated notes	227		—
Mortgage notes	8,625		7,575
Total long-term debt	161,852		215,575
Less:  Current portion	1,050		1,140
	$	160,802	$	214,435

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. In connection with the refinancing, we recorded a $0.3 million loss on the early extinguishment of debt related to write-off of unamortized deferred financing costs under the then existing senior credit agreement. There were $208.0 million in borrowings outstanding on the revolving credit facility as of December 31, 2013.  Our available borrowings on the revolving credit facility at December 31, 2013 were $134.2 million with approximately $7.8 million of the facility set aside for outstanding letters of credit.  As described in Note 4, we entered into a distribution and development agreement with Musculoskeletal Transplant Foundation (“MTF”) on January 3, 2012 and used cash on hand and available borrowings under our revolving credit facility to fund the up front payment of $63.0 million and contingent payment made on January 3, 2013 of $34.0 million.

Interest rates on the amended and restated senior credit agreement are at LIBOR plus 1.625% (1.795% at December 31, 2013) or an alternative base rate.  For those borrowings where we elect 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 0.625%.

The amended and restated senior credit agreement is collateralized by substantially all of our personal 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 (the most restrictive of which is the senior leverage ratio), and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions.  We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.

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

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the mortgage note aggregated $7.6 million at December 31, 2013.  The mortgage note is collateralized by the Largo, Florida property and facilities.

     The scheduled maturities of long-term debt outstanding at December 31, 2013 are as follows:

2014	$	1,140
2015	1,234
2016	1,339
2017	1,452
2018	209,574
Thereafter	836

Note 6 — Income Taxes

The provision (benefit) for income taxes for the years ended December 31, 2011, 2012 and 2013 consists of the following:

	2011			2012		2013
Current tax expense (benefit):
Federal	$	3,021		$	503	$	(2,274	)
State	1,596			374		502
Foreign	5,424			5,176		9,247
	10,041			6,053		7,475
Deferred income tax expense (benefit)	(13,098		)	12,946		7,218
Provision (benefit) for income taxes	$	(3,057	)	$	18,999	$	14,693

A reconciliation between income taxes computed at the statutory federal rate and the provision for income taxes for the years ended December 31, 2011, 2012 and 2013 follows:

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	2011		2012		2013
Tax provision (benefit) at statutory rate based
on income before income taxes	(35.0	)%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	22.7		1.5		1.8
Stock-based compensation	(1.6	)	(0.2	)	(0.5	)
Foreign income taxes	1.4		(4.0	)	(3.1	)
Impact of repatriation of foreign earnings	(57.5	)	—		—
Research & development credit	(32.3	)	—		(2.8	)
Settlement of taxing authority examinations	(6.5	)	(0.8	)	(2.0	)
European permanent deduction	—		—		(2.4	)
Non deductible/non-taxable items	(13.3	)	1.3		2.9
Other, net	(10.5	)	(0.9	)	0.1
	(132.6	)%	31.9	%	29.0	%

The tax effects of the significant temporary differences which comprise the deferred income tax assets and liabilities at December 31, 2012 and 2013 are as follows:

	2012			2013
Assets:
Inventory	$	4,370		$	3,445
Net operating losses	7,716			6,450
Capitalized research and development	2,730			2,286
Deferred compensation	2,905			3,025
Accounts receivable	2,759			2,642
Employee benefits	5,725			5,601
Accrued pension	8,081			(173		)
Research and development credit	3,378			5,027
Other	4,335			4,365
Foreign tax credit	—			332
	41,999			33,000
Liabilities:
Goodwill and intangible assets	111,770			114,075
Depreciation	13,070			13,486
State taxes	2,992			3,914
Contingent interest	378			339
	128,210			131,814
Net liability	$	(86,211	)	$	(98,814	)

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Income (loss) before income taxes consists of the following U.S. and foreign income:

	2011			2012		2013
U.S. income (loss)	$	(20,521	)	$	33,121	$	20,106
Foreign income	18,216			26,359		30,526
Total income (loss)	$	(2,305	)	$	59,480	$	50,632

The amount of Federal net operating loss carryforward is $18.4 million and begins to expire in 2025. The amount of Federal Research and Development credit carryforward available is $5.0 million.  These credits begin to expire in 2027.  The amount of Foreign Tax Credit Carryforward is $0.3 million and begins to expire in 2022.

Deferred tax amounts include approximately $3.3 million of future tax benefits associated with state tax credits which have an indefinite carryforward period.

As a result of the contingent interest deferred tax liability realized upon the convertible notes repurchase during the fourth quarter of 2011, the Company reevaluated our unremitted foreign earnings and tax credit carryforwards. Based upon this assessment, we repatriated $16.2 million of foreign earnings to the United States. The Company recorded a net tax benefit of $1.3 million in 2011 to recognize the tax liabilities and related foreign tax credit benefits associated with the repatriation. It is our intention to permanently reinvest the remaining amount of unremitted foreign earnings.

U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. The amount of such temporary differences totaled $80.1 million as of December 31, 2013. It is not practicable given the complexities of the hypothetical foreign tax credit calculation to determine the tax liability on this temporary difference.

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 2012.

We recognize tax liabilities in accordance with the provisions for accounting for uncertainty in income taxes. Such guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The following table summarizes the activity related to our unrecognized tax benefits for the years ending December 31,:

	2011			2012			2013
Balance as of January 1,	$	1,330		$	2,343		$	1,587
Increases for positions taken in prior periods	283			30			70
Increases for positions taken in current periods	789			1,129			1,132
Decreases in unrecorded tax positions related to settlement with the taxing authorities	—			(1,857		)	(1,010		)
Decreases in unrecorded tax positions related to lapse of statute of limitations	(59		)	(58		)	(90		)
Balance as of December 31,	$	2,343		$	1,587		$	1,689

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If the total unrecognized tax benefits of $1.7 million at December 31, 2013 were recognized, it would reduce our annual effective tax rate.  The amount of interest accrued in 2013 related to these unrecognized tax benefits was not material and is included in the provision for income taxes in the consolidated statements of comprehensive income.  It is reasonably possible that the amount of unrecognized tax benefits, each of which are individually insignificant, could change in the next 12 months as a result of the anticipated completion of taxing authority examinations and lapse of statute of limitations.  The range of change in unrecognized tax benefits is estimated between $0.0 million and $1.2 million.

Note 7 – Shareholders’ Equity

Our shareholders have authorized 500,000 shares of preferred stock, par value $.01 per share, which may be issued in one or more series by the Board of Directors without further action by the shareholders. As of December 31, 2012 and 2013, no preferred stock had been issued.

Our Board of Directors has authorized a $200.0 million share repurchase program. Through December 31, 2013, we have repurchased a total of 5.7 million shares of common stock aggregating $145.7 million under this authorization and have $54.3 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.  During 2013, we repurchased 1.6 million shares for an aggregate cost of $50.6 million.  During 2012, we repurchased 0.1 million shares for an aggregated cost of $3.9 million. During 2011, we repurchased 0.7 million shares for an aggregate cost of $15.0 million.

We have reserved 7.0 million shares of common stock for issuance to employees and directors under three shareholder-approved share-based compensation plans (the "Plans") of which approximately 1.1 million shares remain available for grant at December 31, 2013.  The exercise price on all outstanding options and stock appreciation rights (“SARs”) is equal to the quoted fair market value of the stock at the date of grant.  Restricted stock units (“RSUs”) and performance stock units (“PSUs”) are valued at the market value of the underlying stock on the date of grant.  Stock options, SARs, RSUs and PSUs are non-transferable other than on death and generally become exercisable over a five year period from date of grant.  Stock options and SARs expire ten years from date of grant.  SARs are only settled in shares of the Company’s stock.  The issuance of shares pursuant to the exercise of stock options and SARs and vesting of RSUs and PSUs are from the Company’s treasury stock.

Total pre-tax stock-based compensation expense recognized in the consolidated statements of comprehensive income was $5.2 million, $5.7 million and $5.6 million for the years ended December 31, 2011, 2012 and 2013, respectively.  This amount is included in selling and administrative expenses on the consolidated statements of comprehensive income.  Tax related benefits of $1.9 million, $2.1 million and $2.1 million were also recognized for the years ended December 31, 2011, 2012 and 2013, respectively.  Cash received from the exercise of stock options was $5.6 million, $9.6 million and $16.7 million for the years ended December 31, 2011, 2012 and 2013, respectively, and is reflected in cash flows from financing activities in the consolidated statements of cash flows.

The Company uses the Black-Scholes option pricing model to estimate the fair value of options and SARs at the date of grant. Use of a valuation model requires management to make certain assumptions with respect to select model inputs. Expected volatilities are based upon historical volatility of the Company’s stock over a period equal to the expected life of each option and SAR grant. The risk free interest rate is based on the option and SAR grant date for a traded U.S. Treasury bond with a maturity date closest to the expected life. The expected annual dividend yield is based on the Company's anticipated cash dividend payouts. The expected life represents the period of time that the options and SARs are expected to be outstanding based on a study of historical data of option holder exercise and termination behavior.

The following table illustrates the assumptions used in estimating fair value in the years ended December 31, 2011, 2012 and 2013.

	2011			2012			2013
Fair value of options & SARs	$	10.43		$	7.38		$	9.77
Expected stock price volatility	35.52		%	35.84		%	35.88		%
Risk-free interest rate	1.59		%	0.62		%	1.04		%
Expected annual dividend yield	—		%	2.00		%	1.79		%
Expected life of options & SARs (years)	6.3			6.4			6.3

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The following table illustrates the stock option and SAR activity for the year ended December 31, 2013.

	Number of Shares (in 000’s)		Weighted- Average Exercise Price
Outstanding at December 31, 2012	1,769		$	25.35
Granted	164		$	32.94
Forfeited	(9	)	$	25.96
Exercised	(794	)	$	26.62
Outstanding at December 31, 2013	1,130		$	25.55
Exercisable at December 31, 2013	659		$	24.40

The weighted average remaining contractual term for stock options and SARs outstanding and exercisable at December 31, 2013 was 6.0 years and 4.5 years, respectively.  The aggregate intrinsic value of stock options and SARs outstanding and exercisable at December 31, 2013 was $19.2 million and $11.9 million, respectively.  The aggregate intrinsic value of stock options and SARs exercised during the years ended December 31, 2011, 2012 and 2013 was $2.0 million, $3.3 million and $4.7 million, respectively.

The following table illustrates the RSU and PSU activity for the year ended December 31, 2013.  

	Number of Shares (in 000’s)		Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2012	521		$	24.25
Granted	211		$	33.02
Vested	(168	)	$	23.76
Forfeited	(88	)	$	30.55
Outstanding at December 31, 2013	476		$	27.14

The weighted average fair value of awards of RSUs and PSUs granted in the years ended December 31, 2011, 2012 and 2013 was $27.48, $26.18 and $33.02, respectively.

The total fair value of shares vested was $3.6 million, $4.4 million and $7.1 million for the years ended December 31, 2011, 2012 and 2013, respectively.

As of December 31, 2013, there was $13.1 million of total unrecognized compensation cost related to nonvested stock options, SARs, RSUs and PSUs granted under the Plan which is expected to be recognized over a weighted average period of 3.4 years.

We offer to our employees a shareholder-approved Employee Stock Purchase Plan (the “Employee Plan”), under which we have reserved 1.0 million shares of common stock for issuance to our employees.  The Employee Plan provides employees with the opportunity to invest from 1% to 10% of their annual salary to purchase shares of CONMED common stock through the exercise of stock options granted by the Company at a purchase price equal to 95% of the fair market value of the common stock on the exercise date.  During 2013, we issued approximately 18,000 shares of common stock under the Employee Plan.  No stock-based compensation expense has been recognized in the accompanying consolidated financial statements as a result of common stock issuances under the Employee Plan.

Note 8 — Business Segments and Geographic Areas

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.

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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 and service fees related to the promotion and marketing of sports medicine allograft tissue. 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 minimally invasive orthopedic and general surgery. These product lines' net sales are as follows:

	2011		2012		2013
Orthopedic surgery	$	371,245	$	413,891	$	410,171
General surgery	287,350		286,606		286,747
Surgical visualization	66,482		66,643		65,786
Consolidated net sales	$	725,077	$	767,140	$	762,704

Net sales information for geographic areas consists of the following:

	2011		2012		2013
United States	$	364,588	$	382,256	$	375,473
Canada	65,794		73,746		73,457
United Kingdom	32,106		31,653		28,471
Japan	34,178		33,997		36,705
Australia	40,122		40,835		38,752
All other countries	188,289		204,653		209,846
Total	$	725,077	$	767,140	$	762,704

Sales are attributed to countries based on the location of the customer. There were no significant investments in long-lived assets located outside the United States at December 31, 2012 and 2013.  No single customer represented over 10% of our consolidated net sales for the years ended December 31, 2011, 2012 and 2013.

Note 9 — Employee Benefit Plans

We sponsor an employee savings plan (“401(k) plan”) covering substantially all of our Untied States based employees. We also sponsor a defined benefit pension plan (the “pension plan”) that was frozen in 2009. It covered substantially all our United States based employees at the time it was frozen.

Total employer contributions to the 401(k) plan were $6.3 million, $6.7 million and $7.3 million during the years ended December 31, 2011, 2012 and 2013, respectively.

We use a December 31, measurement date for our pension plan.  Gains and losses are amortized on a straight-line basis over the average remaining service period of active participants.  The following table provides a reconciliation of the projected benefit obligation, plan assets and funded status of the pension plan at December 31,:

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	2012			2013
Accumulated Benefit Obligation	$	85,363		$	75,946
Change in benefit obligation
Projected benefit obligation at beginning of year	$	82,289		$	85,363
Service cost	277			253
Interest cost	3,429			3,315
Actuarial (gain) loss	2,790			(8,082		)
Benefits paid	(1,059		)	(1,250		)
Settlement	(2,363		)	(3,653		)
Projected benefit obligation at end of year	$	85,363		$	75,946
Change in plan assets
Fair value of plan assets at beginning of year	$	51,822		$	62,763
Actual gain on plan assets	5,866			11,082
Employer contributions	8,497			7,500
Benefits paid	(1,059		)	(1,250		)
Settlement	(2,363		)	(3,653		)
Fair value of plan assets at end of year	$	62,763		$	76,442
Funded status	$	(22,600	)	$	496

Amounts recognized in the consolidated balance sheets consist of the following at December 31,:

	2012			2013
Other assets/(Other long-term liabilities)	$	(22,600	)	$	496
Accumulated other comprehensive loss	(48,176		)	(30,001		)

The following actuarial assumptions were used to determine our accumulated and projected benefit obligations as of December 31,:

	2012		2013
Discount rate	3.90	%	4.75	%
Expected return on plan assets	8.00	%	8.00	%

Accumulated other comprehensive loss for the years ended December 31, 2012 and 2013 consists of net actuarial losses of $48,176 and $30,001, respectively, not yet recognized in net periodic pension cost (before income taxes).

Other changes in plan assets and benefit obligations recognized in other comprehensive income in 2013 are as follows:

Current year actuarial gain	$	13,673
Settlement loss/amortization of actuarial loss	4,502
Total recognized in other comprehensive loss	$	18,175

The estimated portion of net actuarial loss in accumulated other comprehensive loss that is expected to be recognized as a component of net periodic pension cost in 2014 is $1.7 million.

Net periodic pension cost for the years ended December 31, consists of the following:

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	2011			2012			2013
Service cost	$	281		$	277		$	253
Interest cost on projected benefit obligation	3,519			3,429			3,315
Return on plan assets	(4,378		)	(4,566		)	(5,491		)
Amortization of loss	1,578			2,876			3,059
Settlement expense	—			—			1,443
Net periodic pension cost	$	1,000		$	2,016		$	2,579

The following actuarial assumptions were used to determine our net periodic pension benefit cost for the years ended December 31,:

	2011		2012		2013
Discount rate	5.41	%	4.30	%	3.90	%
Expected return on plan assets	8.00	%	8.00	%	8.00	%

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.

Asset management objectives include maintaining an adequate level of diversification to reduce interest rate and market risk and providing adequate liquidity to meet immediate and future benefit payment requirements.

The allocation of pension plan assets by category is as follows at December 31,:

	Percentage of Pension Plan Assets				Target Allocation
	2012		2013		2013
Equity securities	76	%	79	%	75	%
Debt securities	24		21		25
Total	100	%	100	%	100	%

As of December 31, 2013, the Plan held 27,562 shares of our common stock, which had a fair value of $1.2 million.  We believe that our long-term asset allocation on average will approximate the targeted allocation. We regularly review our actual asset allocation and periodically rebalance the pension plan’s investments to our targeted allocation when deemed appropriate.

The following table sets forth the fair value of Plan assets as of December 31,:

	2012		2013
Common Stock	$	25,124	$	31,412
Money Market Fund	5,209		7,018
Mutual Funds	22,810		28,726
Fixed Income Securities	9,620		9,286
Total Assets at Fair Value	$	62,763	$	76,442

FASB guidance, defines fair value, establishes a framework for measuring fair value and related disclosure requirements. 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

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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.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2012 and 2013:

Common Stock:	Common stock is valued at the closing price reported on the common stock’s respective stock exchange and is classified within level 1 of the valuation hierarchy.
Money Market Fund:	These investments are public investment vehicles valued using $1 for the Net Asset Value (NAV). The money market fund is classified within level 2 of the valuation hierarchy.
Mutual Funds:	These investments are public investment vehicles valued using the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market and is classified within level 1 of the valuation hierarchy.
Fixed Income Securities:	Valued at the closing price reported on the active market on which the individual securities are traded and are classified within level 1 of the valuation hierarchy.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair value as of December 31, 2012 and December 31, 2013:

December 31, 2012	Level 1		Level 2		Total
Common Stock	$	25,124	$	—	$	25,124
Money Market Fund	—		5,209		5,209
Mutual Funds	22,810		—		22,810
Fixed Income Securities	9,620		—		9,620
	$	57,554	$	5,209	$	62,763

December 31, 2013	Level 1		Level 2		Total
Common Stock	$	31,412	$	—	$	31,412
Money Market Fund	—		7,018		7,018
Mutual Funds	28,726		—		28,726
Fixed Income Securities	9,286		—		9,286
	$	69,424	$	7,018	$	76,442

We do not expect to make any contributions to our pension plan for the 2014 Plan year.

The following table summarizes the benefits expected to be paid by our pension plan in each of the next five years and in aggregate for the following five years. The expected benefit payments are estimated based on the same assumptions used to measure the Company’s projected benefit obligation at December 31, 2013 and reflect the impact of expected future employee service.

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2014		$5,332
2015	3,140
2016	3,100
2017	3,351
2018	3,973
2019-2023	23,943

Note 10 — Legal Matters and Contingencies

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. We establish reserves sufficient to cover probable losses associated with 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.

During the third quarter of 2013, the FDA inspected our Centennial, CO manufacturing facility and issued a Form 483 with observations on September 20, 2013. The Company subsequently submitted responses to the Observations, and the FDA issued a Warning Letter on January 30, 2014 relating to the inspection and the responses to the Form 483 Observations. Accordingly, we are undertaking corrective actions that may involve additional costs for the Company. These remediation costs are not expected to be material, however there can be no assurance that the actions undertaken by the Company will ensure that the Company will not undertake recalls, voluntary or otherwise, nor can there be any assurance that a future inspection by the FDA will not result in an additional Form 483 or warning letter, or other regulatory actions which may include consent decrees or fines.

Note 11 — Other Expense

Other expense for the year ended December 31, consists of the following:

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	2011		2012		2013
Administrative consolidation costs	$	792	$	6,497	$	8,750
Costs associated with purchase of a distributor	300		704		—
Costs associated with legal arbitration and patent dispute	—		1,555		3,206
Pension settlement expense	—		—		1,443
Costs associated with purchase of a business	—		1,194		—
Other expense	$	1,092	$	9,950	$	13,399

During 2011, 2012 and 2013, we consolidated certain administrative functions and incurred $0.8 million, $6.5 million and $8.8 million respectively, in related costs consisting principally of severance charges and the write-off of certain patents.

During 2011, we purchased the Company's former distributor for the Nordic region of Europe. We incurred $0.3 million and $0.7 million in 2011 and 2012, respectively, in charges associated with this purchase.

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. We incurred costs totaling $1.6 million.

During 2013, we incurred $3.2 million in legal costs associated with a patent infringement claim as further described in Note 10.

During 2013, we had a higher level of lump sum withdrawals from pension plan participants. This resulted in an acceleration of the recognition of a portion of our projected benefit obligation and we therefore recorded a pension settlement expense of $1.4 million. Refer to Note 9 for details.

During 2012, we acquired Viking Systems Inc. as further described in Note 16. We incurred a total of $1.2 million in costs associated with the purchase.

Note 12 — 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 year ended December 31, are as follows:

	2011			2012			2013
Balance as of January 1,	$	3,363		$	3,618		$	3,636
Provision for warranties	4,344			4,163			3,061
Claims made	(4,089		)	(4,145		)	(4,275		)
Balance as of December 31,	$	3,618		$	3,636		$	2,422

Note 13 – Fair Value Measurement

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.

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Foreign Currency Forward Contracts. We hedge forecasted intercompany sales 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 December 31, 2013 which have been accounted for as cash flow hedges totaled $132.4 million.  Net realized gains (losses) recognized for forward contracts accounted for as cash flow hedges approximated -$4.7 million, $3.8 million and $0.2 million for the years ended December 31, 2011, 2012, and 2013, respectively.  Net unrealized losses on forward contracts outstanding which have been accounted for as cash flow hedges and which have been included in other comprehensive income totaled $1.4 million at December 31, 2013.  It is expected these unrealized losses will be recognized in the consolidated statement of comprehensive income in 2014 and 2015.

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 December 31, 2013 which have not been designated as hedges totaled $42.0 million.  Net realized gains (losses) recognized in connection with those forward contracts not accounted for as hedges approximated $0.0 million, -$2.1 million and -$0.3 million for the years ended December 31, 2011, 2012, and 2013, respectively, offsetting gains (losses) on our intercompany receivables of -$0.3 million, $0.8 million and -$0.8 million for the years ended December 31, 2011, 2012, and 2013, respectively.  These gains and losses have been recorded in selling and administrative expense in the consolidated statements of comprehensive income.

We record these forward foreign exchange contracts at fair value; the following table summarizes the fair value for forward foreign exchange contracts outstanding at December 31, 2012 and December 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

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December 31, 2013	Asset Balance Sheet Location	Fair Value			Liabilities Balance Sheet Location	Fair Value		Net  Fair Value
Derivatives designated as hedged instruments:
Foreign exchange contracts	Other current liabilities	$	(975	)	Other current liabilities	$	3,172	$	2,197
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	(52		)	Other current liabilities	78		26
Total derivatives		$	(1,027	)		$	3,250	$	2,223

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 December 31, 2013 we have recorded the net fair value of $1.9 million and $2.2 million, respectively, in other current liabilities.

Fair Value Disclosure. FASB guidance defines fair value, 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.

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 December 31, 2013 consist of forward foreign exchange contracts. The Company values its forward foreign exchange contracts using quoted prices for similar assets. The most significant assumption is quoted currency rates. 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 approximate fair value.  

Note 14 - 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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In July 2013, the FASB issued ASU No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU is intended to provide guidance and reduce diversity in practice in the presentation of an unrecognized tax benefit when a tax loss or credit carryforward exists. The provisions of this ASU are effective for periods beginning after December 15, 2013 and must be applied prospectively for unrecognized tax benefits that exist at the effective date. Early adoption is permitted. We early adopted this guidance. There are no material effects on, or changes to, our financial statements or disclosures as a result of this ASU.

Note 15 – Restructuring

During 2011, 2012, and 2013 we incurred the following restructuring costs:

	2011		2012		2013
Facility consolidation costs	$	3,467	$	7,052	$	6,489
Termination of a product offering	—		—		2,137
Restructuring costs included in cost of sales	$	3,467	$	7,052	$	8,626
Restructuring costs included in other expense	$	792	$	6,497	$	8,750

During 2008, we announced a plan to restructure certain of our operations. During 2011, 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. In the first quarter of 2013, we began the consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico facilities. For the years ending December 31, 2011, 2012 and 2013, we charged $3.5 million, $7.1 million, and $6.5 million, respectively, to cost of goods sold. These costs include severance and other charges associated with the transfer of production to Mexico and consolidation of our Finland and Westborough, Massachusetts operations. We expect this phase of our plan and related cash payments to be substantially completed in the first quarter of 2014.

In the third quarter of 2013, as part of our ongoing restructuring, the Company discontinued a patient monitoring product offering and incurred $2.1 million in costs which were charged to cost of goods sold.

Restructuring costs included in other expense are described more fully in Note 11.

We have recorded an accrual in current liabilities of $3.1 million at December 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	3,895
Payments made	(4,887		)
Balance, December 31, 2013	$	3,128

During February 2014, the Company announced a new phase of the restructuring plan to consolidate our Centennial, Colorado manufacturing operations into other existing CONMED manufacturing facilities. We expect this plan to be completed over the next 24 months and are in the process of determining the total costs expected to be incurred.

Note 16 – Business Acquisition

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On September 24, 2012, we purchased Viking Systems, Inc. ("Viking acquisition") for approximately $22.5 million in cash. Viking Systems, Inc. developed, manufactured and marketed visualization solutions for minimally invasive surgeries.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the Viking acquisition.

Cash	$	390
Accounts receivable	1,349
Inventory	2,562
Prepaid expenses and other current assets	151
Deferred income taxes	7,492
Property, plant & equipment, net	117
Customer relationships	1,725
Patents	1,100
Goodwill	13,702
Total assets acquired	28,588
Accounts payable	1,324
Other liabilities	4,736
Total liabilities assumed	6,060
Net assets acquired	$	22,528

The goodwill recorded as part of the acquisition is primarily a result of planned synergies. The goodwill is not deductible for tax purposes.

The weighted average amortization period for intangible assets acquired is 9 years. Patents are being amortized over a weighted average life of 9 years. Customer relationships are being amortized over a weighted average life of 10 years.

The unaudited pro forma statements of operations for the years ended December 31, 2011 and 2012, assuming the Viking acquisition occurred as of January 1, 2011 are presented below. These pro forma statements of operations have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the Viking acquisition occurred on the dates indicated, or which may result in the future.

	2011			2012
Net sales	$	735,857		$	774,239
Net income	(2,176		)	38,018
Earnings per share:
Basic	$	(0.08	)	$	1.34
Diluted	(0.08		)	1.33

Net sales of $3.4 million and a pre-tax loss of $1.5 million have been recorded in the consolidated statement of comprehensive income for the year ended December 31, 2012 related to the Viking acquisition.

Note 17 — Selected Quarterly Financial Data (Unaudited)

Selected quarterly financial data for 2012 and 2013 are as follows:

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	Three Months Ended
	March		June		September		December
2012
Net sales	$	194,316	$	189,695	$	181,885	$	201,244
Gross profit	100,911		99,732		97,913		107,287
Net income	9,968		10,296		9,320		10,897
EPS:
Basic	.36		.36		.33		.38
Diluted	.35		.36		.32		.38

	Three Months Ended
	March		June		September		December
2013
Net sales	$	187,014	$	192,993	$	179,255	$	203,442
Gross profit	102,682		102,916		95,424		111,395
Net income	10,492		9,533		5,687		10,227
EPS:
Basic	.37		.35		.21		.37
Diluted	.37		.34		.20		.36

Items Included In Selected Quarterly Financial Data:

2012

First Quarter

During the first quarter of 2012, we incurred $1.5 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico.  These costs were charged to cost of goods sold – see Note 15.

During the first quarter of 2012, we recorded a charge of $0.3 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the first quarter of 2012, we incurred $0.7 million in costs associated with the purchase of the Company's former distributor for the Nordic region of Europe - see Note 11.

During the first quarter of 2012, we recorded a charge of $1.0 million to other expense related to legal costs associated with a contractual dispute with a former distributor - see Note 11.

Second Quarter

During the second quarter of 2012, we incurred $1.2 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico and consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities. These costs were charged to cost of goods sold – see Note 15.

During the second quarter of 2012, we recorded a charge of $1.2 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the second quarter of 2012, we recorded a charge of $0.5 million to other expense related to legal costs associated with a contractual dispute with a former distributor - see Note 11.

Third Quarter

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During the third quarter of 2012, we incurred $1.8 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico and consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the third quarter of 2012, we recorded a charge of $1.9 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the third quarter of 2012, we recorded a charge of $0.7 million to other expense related to the acquisition of Viking Systems, Inc. - see Notes 11 and 16.

Fourth Quarter

During the fourth quarter of 2012, we incurred $2.5 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico and consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the fourth quarter of 2012, we recorded a charge of $3.1 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the fourth quarter of 2012, we recorded a charge of $0.5 million to other expense related to the acquisition of Viking Systems, Inc. - see Notes 11 and 16.

2013

First Quarter

During the first quarter of 2013, we incurred $1.6 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico, consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities and consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico manufacturing facilities. These costs were charged to cost of goods sold – see Note 15.

During the first quarter of 2013, we recorded a charge of $1.6 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the first quarter of 2013, we recorded a charge of $0.2 million to other expense related to legal costs associated with a patent infringement claim - see Note 10 and Note 11.

During the first quarter of 2013, we recorded a $0.3 million loss on the early extinguishment of debt related to write-off of unamortized deferred financing costs under the then existing senior credit agreement - see Note 5.

Second Quarter

During the second quarter of 2013, we incurred $1.6 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico, consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities and consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the second quarter of 2013, we recorded a charge of $1.6 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the second quarter of 2013, we recorded a charge of $0.5 million to other expense related to legal costs associated with a patent infringement claim - see Note 10 and Note 11.

Third Quarter

During the third quarter of 2013, we incurred $1.1 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico, consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities and consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

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During the third quarter of 2013, the Company discontinued a patient monitoring product offering and incurred $2.1 million in costs which were charged to cost of goods sold - see Note 15.

During the third quarter of 2013, we recorded a charge of $3.1 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the third quarter of 2013, we recorded a charge of $1.5 million to other expense related to legal costs associated with a patent infringement claim - see Note 10 and Note 11.

Fourth Quarter

During the fourth quarter of 2013, we incurred $2.1 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico, consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities and consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the fourth quarter of 2013, we recorded a charge of $2.4 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the fourth quarter of 2013, we recorded a charge of $1.0 million to other expense related to legal costs associated with a patent infringement claim - see Note 10 and Note 11.

During the fourth quarter of 2013, we recorded a $1.4 million pension settlement expense to other expense - see Note 9 and Note 11.

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SCHEDULE II—Valuation and Qualifying Accounts

(in thousands)

			Column C
			Additions
	Column B
	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts					Column E
Column A							Column D			Balance at End of Period
Description							Deductions
2013
Allowance for bad debts	$	1,203	$	421	$	—	$	(240	)	$	1,384
Sales returns and
allowance	3,609		398		—		(909		)	3,098
Deferred tax asset
valuation allowance	—		—		—		—			—
2012
Allowance for bad debts	$	1,183	$	530	$	—	$	(510	)	$	1,203
Sales returns and
allowance	4,097		317		—		(805		)	3,609
Deferred tax asset
valuation allowance	—		—		—		—			—
2011
Allowance for bad debts	$	1,066	$	3,935	$	—	$	(3,818	)	$	1,183
Sales returns and
allowance	3,980		291		—		(174		)	4,097
Deferred tax asset
valuation allowance	226		—		—		(226		)	—

75

EX-21

EXHIBIT 21

CONMED Corporation

Subsidiaries of the Registrant

Name	State or Country of Incorporation
Aspen Laboratories, Inc.		Colorado
CONMED Andover Medical, Inc.		New York
CONMED Deutschland GmbH		Germany
CONMED Endoscopic Technologies, Inc.		Massachusetts
CONMED France SAS		France
CONMED Italia SrL		Italy
CONMED Linvatec Australia PTY LTD		Australia
CONMED Linvatec (Beijing) Medical Appliances Co., Ltd		China
CONMED Linvatec Biomaterials OY		Finland
CONMED U.K. Ltd.		United Kingdom
Consolidated Medical Equipment Company S. de R.L. de C.V.		Mexico
Consolidated Medical Equipment International, Inc.		New York
GWH Limited Partnership		Florida
Largo Lakes I Limited Partnership		Delaware
Linvatec Corporation		Florida
Linvatec Austria GmbH		Austria
Linvatec Belgium NV		Belgium
Linvatec Canada ULC		Canada
Linvatec Denmark ApS		Denmark
Linvatec Europe SPRL		Belgium
Linvatec Finland OY		Finland
Linvatec Korea Ltd.		Korea
Linvatec Nederland B.V.		Netherlands
Linvatec Polska Sp. z.o.o		Poland
Linvatec Spain S.L.		Spain
Linvatec Sweden AB		Sweden
Viking Systems, Inc.		Delaware

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-74497, 333-78987, 333-90444, 333-124202, 333-136453, 333-145150, 333-162834, 333-168493 and 333-182878) of CONMED Corporation of our report dated February 24, 2014 relating to the consolidated financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Albany, New York

February 24, 2014

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 annual report on Form 10-K of CONMED Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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;

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.

February 24, 2014

/s/ Joseph J. Corasanti

Joseph J. Corasanti

President and

Chief Executive Officer

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 annual report on Form 10-K of CONMED Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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;

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.

February 24, 2014

/s/ Robert D. Shallish Jr.

Robert D. Shallish, Jr.

Executive Vice President - Finance and

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS

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)

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 Annual Report on Form 10-K for the year ended December 31, 2013 (the “Form 10-K”) 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-K fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date:	February 24, 2014	/s/Joseph J. Corasanti
		Joseph J. Corasanti
		President and
		Chief Executive Officer
Date:	February 24, 2014	/s/Robert D. Shallish, Jr.
		Robert D. Shallish, Jr.
		Executive Vice President-Finance and
		Chief Financial Officer

XML

Restructuring (Tables)

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Schedule of restructuring costs

During 2011, 2012, and 2013 we incurred the following restructuring costs:

	2011		2012		2013
Facility consolidation costs	$	3,467	$	7,052	$	6,489
Termination of a product offering	—		—		2,137
Restructuring costs included in cost of sales	$	3,467	$	7,052	$	8,626
Restructuring costs included in other expense	$	792	$	6,497	$	8,750

Schedule of restructuring accrual

Below is a rollforward of the accrual:

Balance as of January 1, 2013	$	4,120
Expenses incurred	3,895
Payments made	(4,887		)
Balance, December 31, 2013	$	3,128

XML

Income Taxes (Provision (Benefit) for Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current Income Tax Expense (Benefit) [Abstract]
Federal	$ (2,274)	$ 503	$ 3,021
State	502	374	1,596
Foreign	9,247	5,176	5,424
Current income tax expense (benefit)	7,475	6,053	10,041
Deferred income tax expense (benefit)	7,218	12,946	(13,098)
Provision (benefit) for income taxes	$ 14,693	$ 18,999	$ (3,057)

XML

Goodwill and Other Intangible Assets (Goodwill) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Line Items]
Goodwill, Impaired, Accumulated Impairment Loss	$ 106,991,000	$ 106,991,000
Goodwill [Roll Forward]
Goodwill beginning balance	248,502,000	234,815,000
Goodwill resulting from business acquisitions	0	13,702,000
Foreign currency translation	(74,000)	(15,000)
Goodwill ending balance	248,428,000	248,502,000	234,815,000
Goodwill adjustment	8,300,000
Impairment of goodwill	$ 0	$ 0	$ 60,302,000

XML

Employee Benefit Plans (Allocation of Pension Plan Assets) (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Percentage of pension plan assets	100.00%	100.00%
Target allocation	100.00%
Number of CONMED shares in Plan	27,562
Fair value of CONMED shares in Plan	$ 1.2
Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of pension plan assets	79.00%	76.00%
Target allocation	75.00%
Debt Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of pension plan assets	21.00%	24.00%
Target allocation	25.00%

XML

Income Taxes (Effective Income Tax Rate Reconciliation) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Tax provision (benefit) at statutory rate based on income before income taxes	35.00%	35.00%	(35.00%)
State income taxes, net of federal tax benefit	1.80%	1.50%	22.70%
Stock-based compensation	(0.50%)	(0.20%)	(1.60%)
Foreign income taxes	(3.10%)	(4.00%)	1.40%
Impact of repatriation of foreign earnings	0.00%	0.00%	(57.50%)
Research & development credit	(2.80%)	0.00%	(32.30%)
Settlement of taxing authority examinations	(2.00%)	(0.80%)	(6.50%)
European permanent deduction	(2.40%)	0.00%	0.00%
Non deductible/non-taxable items	2.90%	1.30%	(13.30%)
Other, net	0.10%	(0.90%)	(10.50%)
Effective income tax rate, continuing operations	29.00%	31.90%	(132.60%)

XML

Restructuring (Restructuring Accrual) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Restructuring accrual
Balance as of January 1, 2013	$ 4,120
Expenses incurred	3,895
Payments made	(4,887)
Balance, December 31, 2013	$ 3,128

XML

Inventories (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]
Raw materials	$ 39,029	$ 45,115
Work in process	14,736	14,229
Finished goods	89,446	96,884
Total inventory	$ 143,211	$ 156,228

XML

Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2013

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock option and SAR activity

The following table illustrates the stock option and SAR activity for the year ended December 31, 2013.

	Number of Shares (in 000’s)		Weighted- Average Exercise Price
Outstanding at December 31, 2012	1,769		$	25.35
Granted	164		$	32.94
Forfeited	(9	)	$	25.96
Exercised	(794	)	$	26.62
Outstanding at December 31, 2013	1,130		$	25.55
Exercisable at December 31, 2013	659		$	24.40

Stock Options and Stock Appreciation Rights (SARs) [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Valuation Assumptions

The following table illustrates the assumptions used in estimating fair value in the years ended December 31, 2011, 2012 and 2013.

	2011			2012			2013
Fair value of options & SARs	$	10.43		$	7.38		$	9.77
Expected stock price volatility	35.52		%	35.84		%	35.88		%
Risk-free interest rate	1.59		%	0.62		%	1.04		%
Expected annual dividend yield	—		%	2.00		%	1.79		%
Expected life of options & SARs (years)	6.3			6.4			6.3

Restricted Stock Units (RSUs) and Performance Share Units (PSUs) [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of RSU and PSU activity

The following table illustrates the RSU and PSU activity for the year ended December 31, 2013.  

	Number of Shares (in 000’s)		Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2012	521		$	24.25
Granted	211		$	33.02
Vested	(168	)	$	23.76
Forfeited	(88	)	$	30.55
Outstanding at December 31, 2013	476		$	27.14

XML

Business Acqusition (Details) (USD $)	3 Months Ended								12 Months Ended				0 Months Ended	12 Months Ended		0 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Customer Relationships [Member]	Sep. 24, 2012 Viking Systems, Inc. [Member]	Dec. 31, 2012 Viking Systems, Inc. [Member]	Dec. 31, 2011 Viking Systems, Inc. [Member]	Sep. 24, 2012 Viking Systems, Inc. [Member] Customer Relationships [Member]	Sep. 24, 2012 Viking Systems, Inc. [Member] Patents [Member]
Business Acquisition [Line Items]
Cash paid for acqusition													$ 22,500,000
Assets Acquired and Liabilities Assumed
Cash													390,000
Accounts receivable													1,349,000
Inventory													2,562,000
Prepaid expenses and other current assets													151,000
Deferred income taxes													7,492,000
Property, plant, & equipment, net													117,000
Intangible assets																1,725,000	1,100,000
Goodwill	248,428,000				248,502,000				248,428,000	248,502,000	234,815,000		13,702,000
Total assets acquired													28,588,000
Accounts payable													1,324,000
Other liabilities													4,736,000
Total liabilities assumed													6,060,000
Net assets acquired													22,528,000
Weighted average amortization period (in years)									27 years			33 years	9 years			10 years	9 years
Net sales	203,442,000	179,255,000	192,993,000	187,014,000	201,244,000	181,885,000	189,695,000	194,316,000	762,704,000	767,140,000	725,077,000			3,400,000
Income (loss) before income taxes									50,632,000	59,480,000	(2,305,000)			(1,500,000)
Pro Forma Information
Net sales														774,239,000	735,857,000
Net income														$ 38,018,000	$ (2,176,000)
Basic														$ 1.34	$ (0.08)
Diluted														$ 1.33	$ (0.08)

XML

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

XML

Income Taxes (Income Before Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract]
U.S. income (loss)	$ 20,106	$ 33,121	$ (20,521)
Foreign income	30,526	26,359	18,216
Income (loss) before income taxes	$ 50,632	$ 59,480	$ (2,305)

XML

Fair Value Measurement (Foreign Currency Forward Contracts) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Derivative [Line Items]
Gains (losses) on intercompany receivables	$ (800,000)	$ 800,000	$ (300,000)
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Fair value, assets	1,027,000	457,000
Fair value, liabilities	(3,250,000)	(2,399,000)
Fair value, assets (liabilities), net	(2,223,000)	(1,942,000)
Foreign Currency Forward Contracts [Member]
Derivative [Line Items]
Forward contracts not designated as hedging instruments net realized gains (losses)	(300,000)	(2,100,000)	0
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	975,000	457,000
Fair value, liabilities	(3,172,000)	(2,249,000)
Fair value, assets (liabilities), net	(2,197,000)	(1,792,000)
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member]
Derivative [Line Items]
Notional amount of cash flow hedges	42,000,000
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	52,000	0
Fair value, liabilities	(78,000)	(150,000)
Fair value, assets (liabilities), net	(26,000)	(150,000)
Cash Flow Hedging [Member] | Foreign Currency Forward Contracts [Member]
Derivative [Line Items]
Notional amount of cash flow hedges	132,400,000
Cash flow hedges realized gains (losses)	200,000	3,800,000	(4,700,000)
Unrealized gain (loss) on cash flow hedges in accumulated other comprehensive income (loss) expected to be recognized in next fiscal year	$ (1,400,000)

XML

Selected Quarterly Financial Data (Unaudited) (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Quarterly Financial Information [Line Items]
Restructuring charges									$ 3,895
Costs associated with legal arbitration	1,000	1,500	500	200			500	1,000	3,206	1,555	0
Gains (Losses) on Extinguishment of Debt				(300)					(263)	0	0
Settlement expense	1,400								1,443	0	0
Cost of Sales [Member]
Quarterly Financial Information [Line Items]
Restructuring charges									8,626	7,052	3,467
Cost of Sales [Member] | Facility Consolidation Costs [Member]
Quarterly Financial Information [Line Items]
Restructuring charges	2,100	1,100	1,600	1,600	2,500	1,800	1,200	1,500	6,489	7,052	3,467
Cost of Sales [Member] | Termination of a product offering [Member]
Quarterly Financial Information [Line Items]
Restructuring charges		2,100							2,137	0	0
Other Expense [Member] | Administrative consolidation costs [Member]
Quarterly Financial Information [Line Items]
Restructuring charges	2,400	3,100	1,600	1,600	3,100	1,900	1,200	300	8,750	6,497	792
Distributor [Member]
Quarterly Financial Information [Line Items]
Costs associated with purchase								700	0	704	300
Business [Member]
Quarterly Financial Information [Line Items]
Costs associated with purchase					$ 500	$ 700			$ 0	$ 1,194	$ 0

XML

Restructuring (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Restructuring Cost and Reserve [Line Items]
Restructuring charges									$ 3,895
Restructuring accrual	3,128				4,120				3,128	4,120
Facility Consolidation Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring accrual	3,100								3,100
Cost of Sales [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges									8,626	7,052	3,467
Cost of Sales [Member] | Facility Consolidation Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	2,100	1,100	1,600	1,600	2,500	1,800	1,200	1,500	6,489	7,052	3,467
Cost of Sales [Member] | Termination of a product offering [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges		2,100							2,137	0	0
Other Expense [Member] | Administrative consolidation costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 2,400	$ 3,100	$ 1,600	$ 1,600	$ 3,100	$ 1,900	$ 1,200	$ 300	$ 8,750	$ 6,497	$ 792

XML

Employee Benefit Plans (Fair Value of Plan Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 76,442	$ 62,763
Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	69,424	57,554
Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	7,018	5,209
Common Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	31,412	25,124
Common Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	31,412	25,124
Common Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Money Market Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	7,018	5,209
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	7,018	5,209
Mututal Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	28,726	22,810
Mututal Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	28,726	22,810
Mututal Funds [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	9,286	9,620
Fixed Income Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	9,286	9,620
Fixed Income Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 0	$ 0

XML

Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2013

Valuation and Qualifying Accounts [Abstract]

Valuation and Qualifying Accounts

SCHEDULE II—Valuation and Qualifying Accounts

(in thousands)

			Column C
			Additions
	Column B
	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts					Column E
Column A							Column D			Balance at End of Period
Description							Deductions
2013
Allowance for bad debts	$	1,203	$	421	$	—	$	(240	)	$	1,384
Sales returns and
allowance	3,609		398		—		(909		)	3,098
Deferred tax asset
valuation allowance	—		—		—		—			—
2012
Allowance for bad debts	$	1,183	$	530	$	—	$	(510	)	$	1,203
Sales returns and
allowance	4,097		317		—		(805		)	3,609
Deferred tax asset
valuation allowance	—		—		—		—			—
2011
Allowance for bad debts	$	1,066	$	3,935	$	—	$	(3,818	)	$	1,183
Sales returns and
allowance	3,980		291		—		(174		)	4,097
Deferred tax asset
valuation allowance	226		—		—		(226		)	—

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Goodwill and Other Intangible Assets (Other Intangible Assets) (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	12 Months Ended	0 Months Ended
	Jan. 03, 2012	Dec. 31, 2013	Jan. 03, 2013 After Year 1 of Meeting Supply Target [Member]	Jan. 03, 2014 Subsequent Event [Member] After Year 2 of Meeting Supply Target [Member]	Jan. 03, 2014 Subsequent Event [Member] After Year 3 and Year 4 of Meeting Supply Target [Member]
Other Intangible Assets [Line Items]
Up-front payment	$ 63.0
Contingent payment period	4 years
Additional contingent cash payment	84.0				16.7
Conditional payment, amount paid			34.0	16.7
Conditional payment amount accrued		$ 50.0

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Operations and Significant Accounting Policies (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operations and Significant Accounting Policies [Line Items]
Revised income taxes receivable and payable		$ 2,700,000
Reclassification of promotional, marketing and distribution rights		143,400,000
Goodwill and Intangible Asset Impairment [Abstract]
Goodwill	248,428,000	248,502,000	234,815,000
Other intangible assets, net	319,440,000	334,185,000
Percent of fair values exceeding carrying values		99.00%
Impairment of goodwill	0	0	60,302,000
Acquired Intangible Assets [Abstract]
Weighted average amortization period (in years)	27 years
Revenue Recognition [Abstract]
Net Commission Service Fee Revenue	50.00%
Shipping and handling costs	12,600,000	12,800,000	13,000,000
Allowance for doubtful accounts	$ 1,384,000	$ 1,203,000
Linvatec Corporation [Member]
Acquired Intangible Assets [Abstract]
Number of years of historical revenue attrition used to evaluate acquired finite-lived intangible assets useful life	5 years
Annual attrition rate used to evaluate acquired finite-lived intangible assets useful life	2.60%
Customer Relationships [Member]
Acquired Intangible Assets [Abstract]
Weighted average amortization period (in years)	33 years
Customer Relationships [Member] | Linvatec Corporation [Member]
Acquired Intangible Assets [Abstract]
Weighted average amortization period (in years)	38 years
Customer Relationships [Member] | Other Acquisitions Excluding Linvatec Corporation[Member]
Acquired Intangible Assets [Abstract]
Weighted average amortization period (in years)	15 years
Promotional, Marketing and Distribution Rights [Member]
Acquired Intangible Assets [Abstract]
Weighted average amortization period (in years)	25 years

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Guarantees (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Movement in Standard Product Warranty Accrual [Roll Forward]
Standard warranty period	1 year
Beginning balance	$ 3,636	$ 3,618	$ 3,363
Provision for warranties	3,061	4,163	4,344
Claims made	(4,275)	(4,145)	(4,089)
Ending balance	$ 2,422	$ 3,636	$ 3,618

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Guarantees (Tables)

12 Months Ended

Dec. 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 year ended December 31, are as follows:

	2011			2012			2013
Balance as of January 1,	$	3,363		$	3,618		$	3,636
Provision for warranties	4,344			4,163			3,061
Claims made	(4,089		)	(4,145		)	(4,275		)
Balance as of December 31,	$	3,618		$	3,636		$	2,422

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Long Term Debt (Narrative) (Details) (USD $)	0 Months Ended	3 Months Ended	12 Months Ended			0 Months Ended							12 Months Ended
	Jan. 03, 2012	Mar. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Jan. 03, 2013 After Year 1 of Meeting Supply Target [Member]	Dec. 31, 2013 Revolving Line of Credit [Member]	Dec. 31, 2012 Revolving Line of Credit [Member]	Dec. 31, 2013 Letters of Credit [Member]	Dec. 31, 2013 Mortgages Notes [Member]	Dec. 31, 2012 Mortgages Notes [Member]	Jan. 17, 2013 Amended and Restated Senior Credit Agreement [Member] Revolving Line of Credit [Member]	Dec. 31, 2013 Alternate Base Rate [Member] Amended and Restated Senior Credit Agreement [Member] Revolving Line of Credit [Member]	Dec. 31, 2013 Eurodollar [Member] Amended and Restated Senior Credit Agreement [Member] Revolving Line of Credit [Member]	Dec. 31, 2013 Federal Funds Rate [Member] Amended and Restated Senior Credit Agreement [Member] Revolving Line of Credit [Member]	Dec. 31, 2013 London Interbank Offered Rate (LIBOR) [Member] Amended and Restated Senior Credit Agreement [Member] Revolving Line of Credit [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity												$ 350,000,000
Loss on early extinguishment of debt		300,000	263,000	0	0
Long-term debt outstanding			215,575,000	161,852,000			208,000,000	153,000,000		7,575,000	8,625,000
Line of credit facility, available borrowing capacity							134,200,000
Letters of credit outstanding									7,800,000
Up-front payment	63,000,000
Basis spread on variable rate													0.625%	1.00%	0.50%	1.625%
Interest rate at period end																1.795%
Debt interest rate										8.25%
Conditional payment, amount paid						34,000,000
Conditional payment amount accrued			$ 50,000,000

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Employee Benefit Plans (Actuarial Assumptions) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Compensation and Retirement Disclosure [Abstract]
Discount rate, projected benefit obligations	4.75%	3.90%
Expected return on plan assets	8.00%	8.00%	8.00%
Discount rate, net periodic pension cost	3.90%	4.30%	5.41%

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Shareholders' Equity (Stock Options) (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Equity [Abstract]
Unrecognized compensation cost	$ 13.1
Weighted average period costs expected to be recognized	3 years 4 months 24 days
Stock Options and Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value	$ 9.77	$ 7.38	$ 10.43
Expected volatility rate	35.88%	35.84%	35.52%
Risk free interest rate	1.04%	0.62%	1.59%
Expected annual dividend yield	1.79%	2.00%	0.00%
Expected term of option (years)	6 years 3 months 18 days	6 years 4 months 24 days	6 years 3 months 18 days
Weighted average remaining contractual term, options outstanding (years)	5 years 11 months 25 days
Weighted average remaining contractual term, options exercisable (years)	4 years 5 months 26 days
Aggregate intrinsic value, options outstanding	19.2
Aggregate intrinsic value, options exercisable	11.9
Aggregate intrinsic value	4.7	3.3	2.0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of shares, Outstanding at Dec. 31, 2012	1,769
Number of shares, Granted	164
Number of shares, Forfeited	(9)
Number of shares, Exercised	(794)
Number of shares, Outstanding at Dec. 31, 2013	1,130	1,769
Number of shares, Exercisable	659
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted average exercise price, Outstanding at December 31, 2012	$ 25.35
Weighted average exercise price, Granted	$ 32.94
Weighted average exercise price, Forfeited	$ 25.96
Weighted average exercise price, Exercised	$ 26.62
Weighted average exercise price, Outstanding at December 31, 2013	$ 25.55	$ 25.35
Weighted average exercise price, Exercisable at December 31, 2013	$ 24.40
Restricted Stock Units (RSUs) and Performance Share Units (PSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total fair value of shares vested	$ 7.1	$ 4.4	$ 3.6
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of shares, Outstanding at December 31, 2012	521
Number of shares, Granted	211
Number of shares, Vested	(168)
Number of shares, Forfeited	(88)
Number of shares, Outstanding at December 31, 2013	476	521
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted average exercise price, Outstanding at December 31, 2012	$ 24.25
Weighted average exercise price, Granted	$ 33.02	$ 26.18	$ 27.48
Weighted average exercise price, Forfeited	$ 30.55
Weighted average exercise price, Vested	$ 23.76
Weighted average exercise price, Outstanding at December 31, 2013	$ 27.14	$ 24.25

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Property, Plant and Equipment (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Abstract]
Rental expense	$ 6,713	$ 6,416	$ 6,221
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	288,454	278,628
Less: Accumulated depreciation	(149,469)	(139,587)
Total property, plant and equipment	138,985	139,041
Future minimum lease commitments for operating leases
2014	6,723
2015	5,782
2016	4,144
2017	3,492
2018	3,382
Thereafter	5,006
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	4,243	4,243
Building and improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	95,397	92,775
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	180,064	176,102
Construction in progress [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 8,750	$ 5,508

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Inventories

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following at December 31,:

	2012		2013
Raw materials	$	45,115	$	39,029
Work in process	14,229		14,736
Finished goods	96,884		89,446
	$	156,228	$	143,211

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Shareholders' Equity (Employee Plan) (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares reserved for share-based compensation plans	7,000,000
Unrecognized compensation cost	$ 13.1
Employee Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares reserved for share-based compensation plans	1,000,000
Minimum percent of salary employees can invest	1.00%
Maximum percent of salary employees can invest	10.00%
Purchase prices percent of fair market value	95.00%
Number of shares issued under Plan	18,000

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Operations and Significant Accounting Policies (Property, Plant and Equipment) (Details)	12 Months Ended
	Dec. 31, 2013
Building and improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life, average (in years)	12 years
Building and improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life, average (in years)	40 years
Machinery and equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life, average (in years)	2 years
Machinery and equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life, average (in years)	15 years

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment

Property, plant and equipment consist of the following at December 31,:

	2012			2013
Land	$	4,243		$	4,243
Building and improvements	92,775			95,397
Machinery and equipment	176,102			180,064
Construction in progress	5,508			8,750
	278,628			288,454
Less:  Accumulated depreciation	(139,587		)	(149,469		)
	$	139,041		$	138,985

Schedule of aggregate future minimum lease commitments for operating leases

The aggregate future minimum lease commitments for operating leases at December 31, 2013 are as follows:

2014	$	6,723
2015	5,782
2016	4,144
2017	3,492
2018	3,382
Thereafter	5,006

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Inventories (Tables)

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Schedule of inventory

Inventories consist of the following at December 31,:

	2012		2013
Raw materials	$	45,115	$	39,029
Work in process	14,229		14,736
Finished goods	96,884		89,446
	$	156,228	$	143,211

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Income Taxes (Deferred Tax Assets and Liabilities) (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Components of Deferred Tax Assets [Abstract]
Inventory	$ 3,445,000	$ 4,370,000
Net operating losses	6,450,000	7,716,000
Capitalized research and development	2,286,000	2,730,000
Deferred compensation	3,025,000	2,905,000
Accounts receivable	2,642,000	2,759,000
Employee benefits	5,601,000	5,725,000
Accrued pension	(173,000)	8,081,000
Research and development credit	5,027,000	3,378,000
Foreign tax credit	332,000	0
Other	4,365,000	4,335,000
Deferred tax asset	33,000,000	41,999,000
Components of Deferred Tax Liabilities [Abstract]
Goodwill and intangible assets	114,075,000	111,770,000
Depreciation	13,486,000	13,070,000
State taxes	3,914,000	2,992,000
Contingent interest	339,000	378,000
Deferred tax liabilities	131,814,000	128,210,000
Net liabilitiy	(98,814,000)	(86,211,000)
Cumulative amount of temporary difference	$ 80,100,000

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Operations and Significant Accounting Policies (Earnings Per Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended		3 Months Ended								12 Months Ended
	Oct. 28, 2013	Feb. 29, 2012	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share [Abstract]
Net income			$ 10,227	$ 5,687	$ 9,533	$ 10,492	$ 10,897	$ 9,320	$ 10,296	$ 9,968	$ 35,939	$ 40,481	$ 752
Basic-weighted average shares outstanding											27,722,000	28,301,000	28,246,000
Effect of dilutive potential securities											392,000	352,000	387,000
Diluted-weighted average shares outstanding											28,114,000	28,653,000	28,633,000
Basic EPS (per share)			$ 0.37	$ 0.21	$ 0.35	$ 0.37	$ 0.38	$ 0.33	$ 0.36	$ 0.36	$ 1.30	$ 1.43	$ 0.03
Diluted EPS (per share)			$ 0.36	$ 0.20	$ 0.34	$ 0.37	$ 0.38	$ 0.32	$ 0.36	$ 0.35	$ 1.28	$ 1.41	$ 0.03
Shares excluded from computation of earnings per share											0	400,000	700,000
Dividends per share of common stock	$ 0.20	$ 0.15									$ 0.65	$ 0.60	$ 0.00
Dividends payable			$ 5,545				$ 4,256				$ 5,545	$ 4,256	$ 0

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the net carrying amount of goodwill for the years ended December 31, are as follows:

	2012			2013
Balance as of January 1,	$	234,815		$	248,502
Goodwill resulting from business acquisitions	13,702			—
Foreign currency translation	(15		)	(74		)
Balance as of December 31,	$	248,502		$	248,428

Schedule of Finite-Lived and Indefinite-Lived Intangible Assets

Other intangible assets consist of the following:

	December 31, 2012					December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer relationships	$	135,690	$	(50,083	)	$	135,690	$	(54,982	)
Promotional, marketing & distribution rights	149,376		(6,000		)	149,376		(12,000		)
Patents and other intangible assets	56,212		(37,554		)	53,903		(39,091		)
Unamortized intangible assets:
Trademarks and tradenames	86,544		—			86,544		—
	$	427,822	$	(93,637	)	$	425,513	$	(106,073	)

Schedule of Estimated Amortization Expense

Amortization expense for the year ending December 31, 2013 and estimated amortization expense related to intangible assets for each of the five succeeding years is as follows:

	Amortization included in expense		Amortization recorded as a reduction of revenue		Total
2013	$	7,721	$	6,000	$	13,721
2014	7,031		6,000		$	13,031
2015	6,642		6,000		$	12,642
2016	6,539		6,000		$	12,539
2017	6,527		6,000		$	12,527
2018	6,470		6,000		$	12,470

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Long Term Debt (Tables)

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Schedule of Long-term Debt

Long-term debt consists of the following at December 31,:

	2012		2013
Revolving line of credit	$	153,000	$	208,000
2.50% convertible senior subordinated notes	227		—
Mortgage notes	8,625		7,575
Total long-term debt	161,852		215,575
Less:  Current portion	1,050		1,140
	$	160,802	$	214,435

Schedule of Maturities of Long-term Debt

The scheduled maturities of long-term debt outstanding at December 31, 2013 are as follows:

2014	$	1,140
2015	1,234
2016	1,339
2017	1,452
2018	209,574
Thereafter	836

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Operations and Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Operations and Significant Accounting Policies

— Operations and Significant Accounting Policies

Organization and 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.

Principles of consolidation

The consolidated financial statements include the accounts of CONMED Corporation and its controlled subsidiaries.  All significant intercompany accounts and transactions have been eliminated.

Income taxes receivable and income taxes payable at December 31, 2012 have been revised by $2.7 million to conform to the current year presentation which presents these balances net by jurisdiction.

We have reclassified the promotional, marketing and distribution rights totaling $143.4 million at December 31, 2012 from Other Assets to Other Intangible Assets to conform to current year presentation.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments which affect the reported amounts of assets, liabilities, related disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, rebates and sales allowances, inventory allowances, purchased in-process research and development, pension benefits, goodwill and intangible assets, contingencies and other accruals.  We base our estimates on historical experience and on various other assumptions which are believed to be reasonable under the circumstances.  Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates.  Estimates and assumptions are reviewed periodically, and the effect of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Cash and cash equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Inventories

Inventories are valued at the lower of cost or market.  Cost is determined on the FIFO (first-in, first-out) method of accounting.

We write-off excess and obsolete inventory resulting from the inability to sell our products at prices in excess of current carrying costs.  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. 

Property, plant and equipment

Property, plant and equipment are stated at cost and depreciated using the straight-line method over the following estimated useful lives:

Building and improvements	12 to 40 years
Leasehold improvements	Shorter of life of asset or life of lease
Machinery and equipment	2 to 15 years

Goodwill and other 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 reporting our business as a single operating segment, and goodwill as a single reporting unit. Changes in our structure are further discussed in Note 8 to the Consolidated Financial Statements. Customer relationships, trademarks, tradenames, patents, and other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. Promotional, marketing and distribution rights represent intangible assets created under our Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”).  We have accumulated goodwill of $248.4 million and other intangible assets of $319.4 million as of December 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 business. 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 2013, we completed our goodwill impairment testing with data as of October 1, 2013. We performed a Step 1 impairment test in accordance with ASC 350 utilizing the market capitalization approach to determine whether the fair value of a reporting unit is less than its carrying amount. Based upon our assessment, we believe the fair value continues to exceed carrying value by 99%.

During 2011, we estimated the fair value of the legacy CONMED Patient Care reporting unit (refer to Note 8 for discussion regarding the change in operating segments) utilizing both a market-based approach and an income approach. Under the income approach, we utilized a discounted cash flow valuation methodology and measured the goodwill impairment in accordance with ASC 350. The first step of the impairment test determined the carrying value exceeded fair value and therefore we proceeded to Step 2. Under Step 2, we calculated the amount of impairment loss by measuring the amount the carrying value of goodwill exceeded the implied fair value of the goodwill. We determined the goodwill of our legacy CONMED Patient Care reporting unit was impaired as a result of lower future earnings due to pricing pressures in a number of our product lines and consequently we recorded a goodwill impairment charge of $60.3 million to reduce the carrying amount of the reporting unit's goodwill to its implied fair value.

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 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 useful life 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 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.

Other long-lived assets

We review asset carrying amounts for impairment (consisting of intangible assets subject to amortization and property, plant and equipment) whenever events or circumstances indicate that such carrying amounts may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value to its current fair value.

Translation of foreign currency financial statements

Assets and liabilities of foreign subsidiaries have been translated into United States dollars at the applicable rates of exchange in effect at the end of the period reported. Revenues and expenses have been translated at the applicable weighted average rates of exchange in effect during the period reported. Translation adjustments are reflected in accumulated other comprehensive loss. Transaction gains and losses are included in net income.

Foreign exchange and hedging activity

We manage our foreign currency transaction risks through the use of forward contracts to hedge forecasted cash flows associated with foreign currency transaction exposures. 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 reclassified into earnings as a component of sales or cost of sales when the forecasted transaction occurs.

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. We record these forward contracts at fair value with resulting gains and losses included in selling and administrative expense in the consolidated statements of comprehensive income.

Income taxes

Deferred income tax assets and liabilities are based on the difference between the financial statement and tax basis of assets and liabilities and operating loss and tax credit carryforwards as measured by the enacted tax rates that are anticipated to be in effect in the respective jurisdictions when these differences reverse. The deferred income tax provision generally represents the net change in the assets and liabilities for deferred income taxes. A valuation allowance is established when it is necessary to reduce deferred income tax assets to amounts for which realization is likely. In assessing the need for a valuation allowance, we estimate future taxable income, considering the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards. Valuation allowances related to deferred tax assets may be impacted by changes to tax laws, changes to statutory tax rates and ongoing and future taxable income levels.

Deferred income taxes are not provided on the unremitted earnings of subsidiaries outside of the United States when it is expected that these earnings are permanently reinvested. Such earnings may become taxable upon a repatriation of assets from a subsidiary or the sale or liquidation of a subsidiary. Deferred income taxes are provided when the Company no longer considers subsidiary earnings to be permanently invested, such as in situations where the Company’s subsidiaries plan to make future dividend distributions.

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 and collectability is reasonably assured.

• We place certain of our capital equipment with customers on a loaned basis in return for commitments to purchase related single-use products over time periods generally ranging from one to three years.  In these circumstances, no revenue is recognized upon capital equipment shipment as the equipment is loaned and subject to return if certain minimum single-use purchases are not met.  Revenue is recognized upon the sale and shipment of the related single-use products.  The cost of the equipment is amortized over its estimated useful life.

• We recognize revenues related to the promotion and marketing of sports medicine allograft tissue in accordance with the contractual terms of our agreement with Musculoskeletal Transplant Foundation (“MTF”) on a net basis as our role is limited to that of an agent earning a commission or fee. MTF records revenue when the tissue is shipped to the customer. Our services are completed at this time and net revenues for the “Service Fee” for our promotional and marketing efforts are then recognized based on a percentage of the net amounts billed by MTF to its customers. The timing of revenue recognition is determined through review of the net billings made by MTF each month. Our net commission Service Fee is based on the contractual terms of our agreement and is currently 50%. This percentage can vary over the term of the agreement but is contractually determinable. Our Service Fee revenues are recorded net of amortization of the acquired assets, which are being expensed over the expected useful life of 25 years.

• Product returns are only accepted at the discretion of the Company and in accordance with our “Returned Goods Policy”.  Historically the level of product returns has not been significant.  We accrue for sales returns, rebates and allowances based upon an analysis of historical customer returns and credits, rebates, discounts and current market conditions.

• Our terms of sale to customers generally do not include any obligations to perform future services.  Limited warranties are provided for capital equipment sales and provisions for warranty are provided at the time of product sale based upon an analysis of historical data.

• Amounts billed to customers related to shipping and handling have been included in net sales.  Shipping and handling costs included in selling and administrative expense were $13.0 million, $12.8 million and $12.6 million for 2011, 2012 and 2013, respectively.

• We sell to a diversified base of customers around the world and, therefore, believe there is no material concentration of credit risk.

• We assess the risk of loss on accounts receivable and adjust the allowance for doubtful accounts based on this risk assessment.  Historically, losses on accounts receivable have not been material.  Management believes that the allowance for doubtful accounts of $1.4 million at December 31, 2013 is adequate to provide for probable losses resulting from accounts receivable.

Earnings and dividends 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 at December 31, 2011, 2012 and 2013, respectively: 

	2011		2012		2013
Net income	$	752	$	40,481	$	35,939
Basic-weighted average shares outstanding	28,246		28,301		27,722
Effect of dilutive potential securities	387		352		392
Diluted-weighted average shares outstanding	28,633		28,653		28,114
Basic EPS	$	0.03	$	1.43	$	1.30
Diluted EPS	$	0.03	$	1.41	$	1.28

The shares used in the calculation of diluted EPS exclude options to purchase shares where the exercise price was greater than the average market price of common shares for the year. Such shares aggregated approximately 0.7 million, 0.4 million and 0.0 million at December 31, 2011, 2012 and 2013, respectively.  

On February 29, 2012, the Board of Directors adopted a cash dividend policy and declared an initial quarterly dividend of $0.15 per share. On October 28, 2013, the Board of Directors increased the quarterly dividend to $0.20 per share. The fourth quarter dividend for 2013 was paid on January 6, 2014 to shareholders of record as of December 16, 2013. The total dividend payable at December 31, 2013 was $5.5 million and is included in other current liabilities in the consolidated balance sheet.

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.

We issue shares under our stock based compensation plans out of treasury stock whereby treasury stock is reduced by the weighted average cost of such treasury stock.  To the extent there is a difference between the cost of the treasury stock and the exercise price of shares issued under stock based compensation plans, we record gains to paid in capital;  losses are recorded to paid in capital to the extent any gain was previously recorded, otherwise the loss is recorded to retained earnings.

Accumulated other comprehensive loss

Accumulated other comprehensive loss consists of the following:

	Cash Flow Hedging Gain (Loss)a			Pension Liabilitya			Cumulative Translation Adjustments			Accumulated Other Comprehensive Loss
Balance, December 31, 2012	$	(1,130	)	$	(30,375	)	$	3,924		$	(27,581	)
Other comprehensive income
before reclassifications	(158		)	8,618			(1,193		)	7,267
Amounts reclassified from accumulated other comprehensive income before taxb	(153		)	4,502			—			4,349
Tax expense (benefit)	56			(1,663		)	—			(1,607		)
Total amounts reclassified from other accumulated comprehensive income	(97		)	2,839			—			2,742
Net current-period other comprehensive income	(255		)	11,457			(1,193		)	10,009
Balance, December 31, 2013	$	(1,385	)	$	(18,918	)	$	2,731		$	(17,572	)

(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 or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 13 and Note 9, respectively, for further details.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Schedule of Provision for Income Taxes

The provision (benefit) for income taxes for the years ended December 31, 2011, 2012 and 2013 consists of the following:

	2011			2012		2013
Current tax expense (benefit):
Federal	$	3,021		$	503	$	(2,274	)
State	1,596			374		502
Foreign	5,424			5,176		9,247
	10,041			6,053		7,475
Deferred income tax expense (benefit)	(13,098		)	12,946		7,218
Provision (benefit) for income taxes	$	(3,057	)	$	18,999	$	14,693

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation between income taxes computed at the statutory federal rate and the provision for income taxes for the years ended December 31, 2011, 2012 and 2013 follows:

	2011		2012		2013
Tax provision (benefit) at statutory rate based
on income before income taxes	(35.0	)%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	22.7		1.5		1.8
Stock-based compensation	(1.6	)	(0.2	)	(0.5	)
Foreign income taxes	1.4		(4.0	)	(3.1	)
Impact of repatriation of foreign earnings	(57.5	)	—		—
Research & development credit	(32.3	)	—		(2.8	)
Settlement of taxing authority examinations	(6.5	)	(0.8	)	(2.0	)
European permanent deduction	—		—		(2.4	)
Non deductible/non-taxable items	(13.3	)	1.3		2.9
Other, net	(10.5	)	(0.9	)	0.1
	(132.6	)%	31.9	%	29.0	%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of the significant temporary differences which comprise the deferred income tax assets and liabilities at December 31, 2012 and 2013 are as follows:

	2012			2013
Assets:
Inventory	$	4,370		$	3,445
Net operating losses	7,716			6,450
Capitalized research and development	2,730			2,286
Deferred compensation	2,905			3,025
Accounts receivable	2,759			2,642
Employee benefits	5,725			5,601
Accrued pension	8,081			(173		)
Research and development credit	3,378			5,027
Other	4,335			4,365
Foreign tax credit	—			332
	41,999			33,000
Liabilities:
Goodwill and intangible assets	111,770			114,075
Depreciation	13,070			13,486
State taxes	2,992			3,914
Contingent interest	378			339
	128,210			131,814
Net liability	$	(86,211	)	$	(98,814	)

Schedule of Income before Income Tax

Income (loss) before income taxes consists of the following U.S. and foreign income:

	2011			2012		2013
U.S. income (loss)	$	(20,521	)	$	33,121	$	20,106
Foreign income	18,216			26,359		30,526
Total income (loss)	$	(2,305	)	$	59,480	$	50,632

Schedule of Unrecognized Tax Benefits Rollforward

The following table summarizes the activity related to our unrecognized tax benefits for the years ending December 31,:

	2011			2012			2013
Balance as of January 1,	$	1,330		$	2,343		$	1,587
Increases for positions taken in prior periods	283			30			70
Increases for positions taken in current periods	789			1,129			1,132
Decreases in unrecorded tax positions related to settlement with the taxing authorities	—			(1,857		)	(1,010		)
Decreases in unrecorded tax positions related to lapse of statute of limitations	(59		)	(58		)	(90		)
Balance as of December 31,	$	2,343		$	1,587		$	1,689

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Business Acqusition (Tables)

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Schedule of Estimated Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the Viking acquisition.

Cash	$	390
Accounts receivable	1,349
Inventory	2,562
Prepaid expenses and other current assets	151
Deferred income taxes	7,492
Property, plant & equipment, net	117
Customer relationships	1,725
Patents	1,100
Goodwill	13,702
Total assets acquired	28,588
Accounts payable	1,324
Other liabilities	4,736
Total liabilities assumed	6,060
Net assets acquired	$	22,528

Pro Forma Information

These pro forma statements of operations have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the Viking acquisition occurred on the dates indicated, or which may result in the future.

	2011			2012
Net sales	$	735,857		$	774,239
Net income	(2,176		)	38,018
Earnings per share:
Basic	$	(0.08	)	$	1.34
Diluted	(0.08		)	1.33

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Long Term Debt (Maturities of Long-term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Scheduled maturities of long-term debt outstanding [Abstract]
2014	$ 1,140
2015	1,234
2016	1,339
2017	1,452
2018	209,574
Thereafter	$ 836

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Employee Benefit Plans (Expected Future Employee Service) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]
2014	$ 5,332
2015	3,140
2016	3,100
2017	3,351
2018	3,973
2019-2023	$ 23,943

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 54,443	$ 23,720
Accounts receivable, less allowance for doubtful accounts of $1,203 in 2012 and $1,384 in 2013	140,426	139,124
Inventories	143,211	156,228
Income taxes receivable	3,805	2,897
Deferred income taxes	13,202	11,931
Prepaid expenses and other current assets	17,045	14,993
Total current assets	372,132	348,893
Property, plant and equipment, net	138,985	139,041
Deferred income taxes	1,183	1,057
Goodwill	248,428	248,502
Other intangible assets, net	319,440	334,185
Other assets	10,340	7,171
Total assets	1,090,508	1,078,849
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt	1,140	1,050
Accounts payable	27,448	23,622
Accrued compensation and benefits	33,426	33,511
Income taxes payable	2,116	2,706
Other current liabilities	47,135	64,325
Total current liabilities	111,265	125,214
Long-term debt	214,435	160,802
Deferred income taxes	113,199	99,199
Other long-term liabilities	45,290	86,636
Total liabilities	484,189	471,851
Commitments and contingencies
Preferred stock, par value $.01 per share; authorized 500,000 shares, none issued or outstanding	0	0
Common stock, par value $.01 per share; 100,000,000 authorized; 31,299,194 issued in 2012 and 2013, respectively	313	313
Paid-in capital	326,436	324,322
Retained earnings	395,889	377,907
Accumulated other comprehensive loss	(17,572)	(27,581)
Less: Treasury stock, at cost; 2,925,801 and 3,718,332 shares in 2012 and 2013, respectively	(98,747)	(67,963)
Total shareholders' equity	606,319	606,998
Total liabilities and shareholders' equity	$ 1,090,508	$ 1,078,849

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Operations and Significant Accounting Policies (Accumulated Other Comprehensive Loss) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012	Dec. 31, 2011
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive loss, beginning of the period	$ (27,581)
Tax expense (benefit)	(14,693)		(18,999)	3,057
Accumulated other comprehensive loss, end of the period	(17,572)		(27,581)
Accumulated Other Comprehensive Loss [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive loss, beginning of the period	(27,581)
Other comprehensive income before reclassifications	7,267
Amounts reclassified from accumulated other comprehensive income before tax	4,349	[1]
Tax expense (benefit)	(1,607)
Total amounts reclassified from other accumulated comprehensive income	2,742
Net current-period other comprehensive income	10,009
Accumulated other comprehensive loss, end of the period	(17,572)
Cash Flow Hedging Gain (Loss) [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive loss, beginning of the period	(1,130)	[2]
Other comprehensive income before reclassifications	(158)	[2]
Amounts reclassified from accumulated other comprehensive income before tax	(153)	[1]
Tax expense (benefit)	56	[2]
Total amounts reclassified from other accumulated comprehensive income	(97)	[2]
Net current-period other comprehensive income	(255)	[2]
Accumulated other comprehensive loss, end of the period	(1,385)	[2]
Pension Liability [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive loss, beginning of the period	(30,375)	[2]
Other comprehensive income before reclassifications	8,618	[2]
Amounts reclassified from accumulated other comprehensive income before tax	4,502	[1]
Tax expense (benefit)	(1,663)	[2]
Total amounts reclassified from other accumulated comprehensive income	2,839	[2]
Net current-period other comprehensive income	11,457	[2]
Accumulated other comprehensive loss, end of the period	(18,918)	[2]
Cumulative Translation Adjustment [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive loss, beginning of the period	3,924
Other comprehensive income before reclassifications	(1,193)
Amounts reclassified from accumulated other comprehensive income before tax	0	[1]
Tax expense (benefit)	0
Total amounts reclassified from other accumulated comprehensive income	0
Net current-period other comprehensive income	(1,193)
Accumulated other comprehensive loss, end of the period	$ 2,731

[1] The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income components are included in sales or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 13 and Note 9, respectively, for further details.

[2] All amounts are net of tax.

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Consolidated Statements of Shareholder's Equity (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Pension liability, income tax expense (benefit)	$ 6,718	$ 512	$ (7,482)
Cash flow hedging gain (loss), income tax expense (benefit)	$ (149)	$ (2,404)	$ 2,472

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Income Taxes (Unrecognized Tax Benefits) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Unrecognized Tax Benefits [Roll Forward]
Balance as of January 1	$ 1,587,000	$ 2,343,000	$ 1,330,000
Increases for positions taken in prior periods	70,000	30,000	283,000
Increases for positions taken in current periods	1,132,000	1,129,000	789,000
Decreases in unrecorded tax positions related to settlement with the taxing authorities	(1,010,000)	(1,857,000)	0
Decreases in unrecorded tax positions related to lapse of statute of limitations	(90,000)	(58,000)	(59,000)
Balance as of December 31	1,689,000	1,587,000	2,343,000
Unrecognized tax benefits, estimated range of change, lower bound	0
Unrecognized tax benefits, estimated range of change, upper bound	$ 1,200,000

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Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of reconciliation of the projected benefit obligation, plan assets and funded status of the pension plan

The following table provides a reconciliation of the projected benefit obligation, plan assets and funded status of the pension plan at December 31,:

	2012			2013
Accumulated Benefit Obligation	$	85,363		$	75,946
Change in benefit obligation
Projected benefit obligation at beginning of year	$	82,289		$	85,363
Service cost	277			253
Interest cost	3,429			3,315
Actuarial (gain) loss	2,790			(8,082		)
Benefits paid	(1,059		)	(1,250		)
Settlement	(2,363		)	(3,653		)
Projected benefit obligation at end of year	$	85,363		$	75,946
Change in plan assets
Fair value of plan assets at beginning of year	$	51,822		$	62,763
Actual gain on plan assets	5,866			11,082
Employer contributions	8,497			7,500
Benefits paid	(1,059		)	(1,250		)
Settlement	(2,363		)	(3,653		)
Fair value of plan assets at end of year	$	62,763		$	76,442
Funded status	$	(22,600	)	$	496

Schedule of amounts recognized in the consolidated balance sheets

Amounts recognized in the consolidated balance sheets consist of the following at December 31,:

	2012			2013
Other assets/(Other long-term liabilities)	$	(22,600	)	$	496
Accumulated other comprehensive loss	(48,176		)	(30,001		)

Schedule of actuarial assumptions used

The following actuarial assumptions were used to determine our accumulated and projected benefit obligations as of December 31,:

	2012		2013
Discount rate	3.90	%	4.75	%
Expected return on plan assets	8.00	%	8.00	%

The following actuarial assumptions were used to determine our net periodic pension benefit cost for the years ended December 31,:

	2011		2012		2013
Discount rate	5.41	%	4.30	%	3.90	%
Expected return on plan assets	8.00	%	8.00	%	8.00	%

Schedule of plan assets and benefit obligations recognized in other comprehensive income

Other changes in plan assets and benefit obligations recognized in other comprehensive income in 2013 are as follows:

Current year actuarial gain	$	13,673
Settlement loss/amortization of actuarial loss	4,502
Total recognized in other comprehensive loss	$	18,175

Schedule of net benefit cost

Net periodic pension cost for the years ended December 31, consists of the following:

	2011			2012			2013
Service cost	$	281		$	277		$	253
Interest cost on projected benefit obligation	3,519			3,429			3,315
Return on plan assets	(4,378		)	(4,566		)	(5,491		)
Amortization of loss	1,578			2,876			3,059
Settlement expense	—			—			1,443
Net periodic pension cost	$	1,000		$	2,016		$	2,579

Schedule of allocation of plan assets

The allocation of pension plan assets by category is as follows at December 31,:

	Percentage of Pension Plan Assets				Target Allocation
	2012		2013		2013
Equity securities	76	%	79	%	75	%
Debt securities	24		21		25
Total	100	%	100	%	100	%

The following table sets forth the fair value of Plan assets as of December 31,:

	2012		2013
Common Stock	$	25,124	$	31,412
Money Market Fund	5,209		7,018
Mutual Funds	22,810		28,726
Fixed Income Securities	9,620		9,286
Total Assets at Fair Value	$	62,763	$	76,442

The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair value as of December 31, 2012 and December 31, 2013:

December 31, 2012	Level 1		Level 2		Total
Common Stock	$	25,124	$	—	$	25,124
Money Market Fund	—		5,209		5,209
Mutual Funds	22,810		—		22,810
Fixed Income Securities	9,620		—		9,620
	$	57,554	$	5,209	$	62,763

December 31, 2013	Level 1		Level 2		Total
Common Stock	$	31,412	$	—	$	31,412
Money Market Fund	—		7,018		7,018
Mutual Funds	28,726		—		28,726
Fixed Income Securities	9,286		—		9,286
	$	69,424	$	7,018	$	76,442

Schedule of expected benefit payments

The following table summarizes the benefits expected to be paid by our pension plan in each of the next five years and in aggregate for the following five years. The expected benefit payments are estimated based on the same assumptions used to measure the Company’s projected benefit obligation at December 31, 2013 and reflect the impact of expected future employee service.

2014		$5,332
2015	3,140
2016	3,100
2017	3,351
2018	3,973
2019-2023	23,943

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Employee Benefit Plans (Employee Benefit Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Service cost	$ 253	$ 277	$ 281
Interest cost	3,315	3,429	3,519
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year	62,763
Fair value of plan assets at end of year	76,442	62,763
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Accumulated Benefit Obligation	75,946	85,363
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Projected benefit obligation at beginning of year	85,363	82,289
Service cost	253	277
Interest cost	3,315	3,429
Actuarial (gain) loss	(8,082)	2,790
Benefits paid	(1,250)	(1,059)
Settlement	(3,653)	(2,363)
Projected benefit obligation at end of year	75,946	85,363
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year	62,763	51,822
Actual gain on plan assets	11,082	5,866
Employer contributions	7,500	8,497
Benefits paid	(1,250)	(1,059)
Fair value of plan assets at end of year	76,442	62,763
Funded status	$ 496	$ (22,600)

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Restructuring

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

During 2011, 2012, and 2013 we incurred the following restructuring costs:

	2011		2012		2013
Facility consolidation costs	$	3,467	$	7,052	$	6,489
Termination of a product offering	—		—		2,137
Restructuring costs included in cost of sales	$	3,467	$	7,052	$	8,626
Restructuring costs included in other expense	$	792	$	6,497	$	8,750

During 2008, we announced a plan to restructure certain of our operations. During 2011, 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. In the first quarter of 2013, we began the consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico facilities. For the years ending December 31, 2011, 2012 and 2013, we charged $3.5 million, $7.1 million, and $6.5 million, respectively, to cost of goods sold. These costs include severance and other charges associated with the transfer of production to Mexico and consolidation of our Finland and Westborough, Massachusetts operations. We expect this phase of our plan and related cash payments to be substantially completed in the first quarter of 2014.

In the third quarter of 2013, as part of our ongoing restructuring, the Company discontinued a patient monitoring product offering and incurred $2.1 million in costs which were charged to cost of goods sold.

Restructuring costs included in other expense are described more fully in Note 11.

We have recorded an accrual in current liabilities of $3.1 million at December 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	3,895
Payments made	(4,887		)
Balance, December 31, 2013	$	3,128

During February 2014, the Company announced a new phase of the restructuring plan to consolidate our Centennial, Colorado manufacturing operations into other existing CONMED manufacturing facilities. We expect this plan to be completed over the next 24 months and are in the process of determining the total costs expected to be incurred.

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Other Expense (Tables)

12 Months Ended

Dec. 31, 2013

Other Income and Expenses [Abstract]

Schedule of Other Expense

Other expense for the year ended December 31, consists of the following:

	2011		2012		2013
Administrative consolidation costs	$	792	$	6,497	$	8,750
Costs associated with purchase of a distributor	300		704		—
Costs associated with legal arbitration and patent dispute	—		1,555		3,206
Pension settlement expense	—		—		1,443
Costs associated with purchase of a business	—		1,194		—
Other expense	$	1,092	$	9,950	$	13,399

XML

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data (Unaudited)

— Selected Quarterly Financial Data (Unaudited)

Selected quarterly financial data for 2012 and 2013 are as follows:

	Three Months Ended
	March		June		September		December
2012
Net sales	$	194,316	$	189,695	$	181,885	$	201,244
Gross profit	100,911		99,732		97,913		107,287
Net income	9,968		10,296		9,320		10,897
EPS:
Basic	.36		.36		.33		.38
Diluted	.35		.36		.32		.38

	Three Months Ended
	March		June		September		December
2013
Net sales	$	187,014	$	192,993	$	179,255	$	203,442
Gross profit	102,682		102,916		95,424		111,395
Net income	10,492		9,533		5,687		10,227
EPS:
Basic	.37		.35		.21		.37
Diluted	.37		.34		.20		.36

Items Included In Selected Quarterly Financial Data:

2012

First Quarter

During the first quarter of 2012, we incurred $1.5 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico.  These costs were charged to cost of goods sold – see Note 15.

During the first quarter of 2012, we recorded a charge of $0.3 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the first quarter of 2012, we incurred $0.7 million in costs associated with the purchase of the Company's former distributor for the Nordic region of Europe - see Note 11.

During the first quarter of 2012, we recorded a charge of $1.0 million to other expense related to legal costs associated with a contractual dispute with a former distributor - see Note 11.

Second Quarter

During the second quarter of 2012, we incurred $1.2 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico and consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities. These costs were charged to cost of goods sold – see Note 15.

During the second quarter of 2012, we recorded a charge of $1.2 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the second quarter of 2012, we recorded a charge of $0.5 million to other expense related to legal costs associated with a contractual dispute with a former distributor - see Note 11.

Third Quarter

During the third quarter of 2012, we incurred $1.8 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico and consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the third quarter of 2012, we recorded a charge of $1.9 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the third quarter of 2012, we recorded a charge of $0.7 million to other expense related to the acquisition of Viking Systems, Inc. - see Notes 11 and 16.

Fourth Quarter

During the fourth quarter of 2012, we incurred $2.5 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico and consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the fourth quarter of 2012, we recorded a charge of $3.1 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the fourth quarter of 2012, we recorded a charge of $0.5 million to other expense related to the acquisition of Viking Systems, Inc. - see Notes 11 and 16.

2013

First Quarter

During the first quarter of 2013, we incurred $1.6 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico, consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities and consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico manufacturing facilities. These costs were charged to cost of goods sold – see Note 15.

During the first quarter of 2013, we recorded a charge of $1.6 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the first quarter of 2013, we recorded a charge of $0.2 million to other expense related to legal costs associated with a patent infringement claim - see Note 10 and Note 11.

During the first quarter of 2013, we recorded a $0.3 million loss on the early extinguishment of debt related to write-off of unamortized deferred financing costs under the then existing senior credit agreement - see Note 5.

Second Quarter

During the second quarter of 2013, we incurred $1.6 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico, consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities and consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the second quarter of 2013, we recorded a charge of $1.6 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the second quarter of 2013, we recorded a charge of $0.5 million to other expense related to legal costs associated with a patent infringement claim - see Note 10 and Note 11.

Third Quarter

During the third quarter of 2013, we incurred $1.1 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico, consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities and consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the third quarter of 2013, the Company discontinued a patient monitoring product offering and incurred $2.1 million in costs which were charged to cost of goods sold - see Note 15.

During the third quarter of 2013, we recorded a charge of $3.1 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the third quarter of 2013, we recorded a charge of $1.5 million to other expense related to legal costs associated with a patent infringement claim - see Note 10 and Note 11.

Fourth Quarter

During the fourth quarter of 2013, we incurred $2.1 million in costs associated with the moving of additional product lines to our manufacturing facility in Chihuahua, Mexico, consolidation of our Finland operations into our Largo, Florida and Utica, New York manufacturing facilities and consolidation of our Westborough, Massachusetts operations into our Largo, Florida and Chihuahua, Mexico manufacturing facilities.  These costs were charged to cost of goods sold – see Note 15.

During the fourth quarter of 2013, we recorded a charge of $2.4 million to other expense related to consolidating certain administrative functions - see Note 11 and Note 15.

During the fourth quarter of 2013, we recorded a charge of $1.0 million to other expense related to legal costs associated with a patent infringement claim - see Note 10 and Note 11.

During the fourth quarter of 2013, we recorded a $1.4 million pension settlement expense to other expense - see Note 9 and Note 11.

XML

Employee Benefit Plans (Other Changes in Plan Assets and Benefit Obligations) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]
Current year actuarial gain	$ 13,673,000
Settlement loss/amortization of actuarial loss	4,502,000
Total recognized in other comprehensive loss	18,175,000
Estimated portion of net actuarial loss in accumulated other comprehensive loss	$ 1,700,000

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net income	$ 35,939	$ 40,481	$ 752
Adjustments to reconcile net income to net cash provided by operating acitivites:
Depreciation	18,653	18,635	18,519
Amortization of debt discount	0	0	3,903
Amortization, all other	29,214	27,981	20,265
Stock-based compensation	5,593	5,653	5,240
Deferred income taxes	7,218	12,946	(13,098)
Income tax benefit of stock option exercises	1,097	1,052	1,197
Excess tax benefit from stock option exercises	(1,518)	(1,206)	(1,363)
Loss on early extinguishment of debt	263	0	0
Impairment of goodwill	0	0	60,302
Increase (decrease) in cash flows from changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	(798)	1,687	8,464
Inventories	(1,817)	3,810	(7,850)
Accounts payable	4,223	259	2,649
Income taxes	(1,098)	(6,497)	4,838
Accrued compensation and benefits	(71)	767	1,673
Other assets	(5,222)	(1,210)	(4,243)
Other liabilities	(10,727)	(9,159)	1,745
Total operating	45,010	54,718	102,241
Net cash provided by operating activities	80,949	95,199	102,993
Cash flows from investing activities:
Payments related to business acquisitions and distribution agreements, net of cash acquired	0	(86,253)	(4,191)
Proceeds from sale of property	0	1,836	0
Purchases of property, plant and equipment	(18,445)	(21,532)	(17,552)
Net cash used in investing activities	(18,445)	(105,949)	(21,743)
Cash flows from financing activities:
Net proceeds from common stock issued under employee plans	17,264	10,165	6,117
Repurchase of common stock	(50,556)	(3,923)	(15,021)
Excess tax benefit from stock option exercises	1,518	1,206	1,363
Payments on senior credit agreement	0	(53,588)	(1,350)
Proceeds of senior credit agreement	55,000	73,000	58,000
Payments related to distribution agreement	(34,000)	0	0
Payments on mortgage notes	(1,050)	(969)	(894)
Payments on senior subordinated notes	(227)	(100)	(111,766)
Payments related to issuance of debt	(1,725)	0	0
Dividends paid on common stock	(16,696)	(12,862)	0
Other, net	(824)	(1,576)	(3,148)
Net cash provided by (used in) financing activities	(31,296)	11,353	(66,699)
Effect of exchange rate changes on cash and cash equivalents	(485)	(2,931)	(920)
Net increase (decrease) in cash and cash equivalents	30,723	(2,328)	13,631
Cash and cash equivalents at beginning of year	23,720	26,048	12,417
Cash and cash equivalents at end of year	54,443	23,720	26,048
Non-cash financing activities:
Dividends payable	5,545	4,256	0
Cash paid during the year for:
Interest	5,143	5,038	5,797
Income taxes	$ 6,837	$ 10,953	$ 4,760

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Allowance for doubtful accounts	$ 1,384	$ 1,203
Preferred stock, par value (per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (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	3,718,332	2,925,801

XML

Legal Matters and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Legal Matters and Contingencies

Legal Matters and Contingencies

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. We establish reserves sufficient to cover probable losses associated with 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.

During the third quarter of 2013, the FDA inspected our Centennial, CO manufacturing facility and issued a Form 483 with observations on September 20, 2013. The Company subsequently submitted responses to the Observations, and the FDA issued a Warning Letter on January 30, 2014 relating to the inspection and the responses to the Form 483 Observations. Accordingly, we are undertaking corrective actions that may involve additional costs for the Company. These remediation costs are not expected to be material, however there can be no assurance that the actions undertaken by the Company will ensure that the Company will not undertake recalls, voluntary or otherwise, nor can there be any assurance that a future inspection by the FDA will not result in an additional Form 483 or warning letter, or other regulatory actions which may include consent decrees or fines.

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Feb. 19, 2014	Jun. 30, 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-K
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		27,206,496
Entity Public Float			$ 861,668,334
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

XML

Other Expense

12 Months Ended

Dec. 31, 2013

Other Income and Expenses [Abstract]

Other Expense

Other Expense

Other expense for the year ended December 31, consists of the following:

	2011		2012		2013
Administrative consolidation costs	$	792	$	6,497	$	8,750
Costs associated with purchase of a distributor	300		704		—
Costs associated with legal arbitration and patent dispute	—		1,555		3,206
Pension settlement expense	—		—		1,443
Costs associated with purchase of a business	—		1,194		—
Other expense	$	1,092	$	9,950	$	13,399

During 2011, 2012 and 2013, we consolidated certain administrative functions and incurred $0.8 million, $6.5 million and $8.8 million respectively, in related costs consisting principally of severance charges and the write-off of certain patents.

During 2011, we purchased the Company's former distributor for the Nordic region of Europe. We incurred $0.3 million and $0.7 million in 2011 and 2012, respectively, in charges associated with this purchase.

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. We incurred costs totaling $1.6 million.

During 2013, we incurred $3.2 million in legal costs associated with a patent infringement claim as further described in Note 10.

During 2013, we had a higher level of lump sum withdrawals from pension plan participants. This resulted in an acceleration of the recognition of a portion of our projected benefit obligation and we therefore recorded a pension settlement expense of $1.4 million. Refer to Note 9 for details.

During 2012, we acquired Viking Systems Inc. as further described in Note 16. We incurred a total of $1.2 million in costs associated with the purchase.

XML

Selected Quarterly Financial Data (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Quarterly Financial Information Disclosure [Abstract]
Net sales	$ 203,442	$ 179,255	$ 192,993	$ 187,014	$ 201,244	$ 181,885	$ 189,695	$ 194,316	$ 762,704	$ 767,140	$ 725,077
Gross profit	111,395	95,424	102,916	102,682	107,287	97,913	99,732	100,911	412,417	405,843	374,934
Net income (loss)	$ 10,227	$ 5,687	$ 9,533	$ 10,492	$ 10,897	$ 9,320	$ 10,296	$ 9,968	$ 35,939	$ 40,481	$ 752
EPS:
Basic (per share)	$ 0.37	$ 0.21	$ 0.35	$ 0.37	$ 0.38	$ 0.33	$ 0.36	$ 0.36	$ 1.30	$ 1.43	$ 0.03
Diluted (per share)	$ 0.36	$ 0.20	$ 0.34	$ 0.37	$ 0.38	$ 0.32	$ 0.36	$ 0.35	$ 1.28	$ 1.41	$ 0.03

XML

Consolidated Statements of Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net sales	$ 762,704	$ 767,140	$ 725,077
Cost of sales	350,287	361,297	350,143
Gross profit	412,417	405,843	374,934
Selling and administrative expense	310,730	302,469	276,615
Research and development expense	25,831	28,214	28,651
Impairment of goodwill	0	0	60,302
Medical device excise tax	5,949	0	0
Other expense	13,399	9,950	1,092
Total operating expenses	355,909	340,633	366,660
Income from operations	56,508	65,210	8,274
Loss on early extinguishment of debt	263	0	0
Amortization of debt discount	0	0	3,903
Interest expense	5,613	5,730	6,676
Income (loss) before income taxes	50,632	59,480	(2,305)
Provision (benefit) for income taxes	14,693	18,999	(3,057)
Net income	35,939	40,481	752
Earnings per share:
Basic (per share)	$ 1.30	$ 1.43	$ 0.03
Diluted (per share)	$ 1.28	$ 1.41	$ 0.03
Dividends per share of common stock	$ 0.65	$ 0.60	$ 0.00
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(1,193)	1,995	(1,937)
Pension liability	18,175	1,387	(20,250)
Cash flow hedging gain (loss)	(404)	(6,507)	6,690
Other comprehensive income (loss), before tax	52,517	37,356	(14,745)
Provision (benefit) for income taxes related to items of other comprehensive income	6,569	(1,892)	(5,010)
Comprehensive income (loss)	$ 45,948	$ 39,248	$ (9,735)

XML

Long Term Debt

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Long-term Debt

— Long Term Debt

Long-term debt consists of the following at December 31,:

	2012		2013
Revolving line of credit	$	153,000	$	208,000
2.50% convertible senior subordinated notes	227		—
Mortgage notes	8,625		7,575
Total long-term debt	161,852		215,575
Less:  Current portion	1,050		1,140
	$	160,802	$	214,435

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. In connection with the refinancing, we recorded a $0.3 million loss on the early extinguishment of debt related to write-off of unamortized deferred financing costs under the then existing senior credit agreement. There were $208.0 million in borrowings outstanding on the revolving credit facility as of December 31, 2013.  Our available borrowings on the revolving credit facility at December 31, 2013 were $134.2 million with approximately $7.8 million of the facility set aside for outstanding letters of credit.  As described in Note 4, we entered into a distribution and development agreement with Musculoskeletal Transplant Foundation (“MTF”) on January 3, 2012 and used cash on hand and available borrowings under our revolving credit facility to fund the up front payment of $63.0 million and contingent payment made on January 3, 2013 of $34.0 million.

Interest rates on the amended and restated senior credit agreement are at LIBOR plus 1.625% (1.795% at December 31, 2013) or an alternative base rate.  For those borrowings where we elect 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 0.625%.

The amended and restated senior credit agreement is collateralized by substantially all of our personal 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 (the most restrictive of which is the senior leverage ratio), and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions.  We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.

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 $7.6 million at December 31, 2013.  The mortgage note is collateralized by the Largo, Florida property and facilities.

     The scheduled maturities of long-term debt outstanding at December 31, 2013 are as follows:

2014	$	1,140
2015	1,234
2016	1,339
2017	1,452
2018	209,574
Thereafter	836

XML

Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

– Goodwill and Other Intangible Assets

The changes in the net carrying amount of goodwill for the years ended December 31, are as follows:

	2012			2013
Balance as of January 1,	$	234,815		$	248,502
Goodwill resulting from business acquisitions	13,702			—
Foreign currency translation	(15		)	(74		)
Balance as of December 31,	$	248,502		$	248,428

During 2013, we finalized the allocation of purchase price related to our 2012 acquisition of Viking Systems, Inc.. We recorded a deferred tax asset of $8.3 million relating to the acquired net operating losses, which resulted in a corresponding reduction to goodwill. This is reflected in the 2012 amounts above. 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.

During the fourth quarter of 2011 we performed our annual goodwill impairment testing. We estimated the fair value of our legacy CONMED Patient Care reporting unit (refer to Note 8 for discussion regarding the change in operating segments) utilizing both a market-based approach and an income approach. Under the income approach, we utilized a discounted cash flow valuation methodology and measured the goodwill impairment in accordance with ASC 350. The first step of the impairment test determined the carrying value exceeded fair value and therefore we proceeded to Step 2. Under Step 2, we calculated the amount of impairment loss by measuring the amount the carrying value of goodwill exceeded the implied fair value of the goodwill. We determined the goodwill of our legacy CONMED Patient Care reporting unit was impaired as a result of lower future earnings due to pricing pressures in a number of our product lines and consequently we recorded a goodwill impairment charge of $60.3 million to reduce the carrying amount of the unit's goodwill to its implied fair value.

Total accumulated impairment losses aggregated $106,991 at December 31, 2012 and 2013, respectively.

Other intangible assets consist of the following:

	December 31, 2012					December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer relationships	$	135,690	$	(50,083	)	$	135,690	$	(54,982	)
Promotional, marketing & distribution rights	149,376		(6,000		)	149,376		(12,000		)
Patents and other intangible assets	56,212		(37,554		)	53,903		(39,091		)
Unamortized intangible assets:
Trademarks and tradenames	86,544		—			86,544		—
	$	427,822	$	(93,637	)	$	425,513	$	(106,073	)

Customer relationships, trademarks, tradenames, patents and other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. Promotional, marketing and distribution rights represent intangible assets created under our Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”).

On January 3, 2012, the Company entered into the JDDA with MTF to obtain MTF's worldwide promotion rights with respect to allograft tissues within the field of sports medicine and related products. 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 for tissue. On January 3, 2013 and January 3, 2014, we paid $34.0 million and $16.7 million, respectively, 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. The $50.0 million related to the remaining contingent obligation as of December 31, 2013 is accrued in other current and other long term liabilities as we believe it is probable MTF will meet the supply targets.

Trademarks and tradenames were recognized principally in connection with the 1997 acquisition of Linvatec Corporation.  We continue to market products, release new product and product extensions and maintain and promote these trademarks and tradenames in the marketplace through legal registration and such methods as advertising, medical education and trade shows.  It is our belief that these trademarks and tradenames will generate cash flow for an indefinite period of time.  Therefore, our trademarks and tradenames intangible assets are not amortized.

Amortization expense related to intangible assets which are subject to amortization is included as a reduction of revenue (for amortization related to our promotional, marketing and distribution rights) and in selling and administrative expense (for all other intangible assets) in the consolidated statements of comprehensive income. The weighted average amortization period for intangible assets which are amortized is 27 years.  Customer relationships are being amortized over a weighted average life of 33 years.  Promotional, marketing and distribution rights are being amortized over a weighted average life of 25 years. Patents and other intangible assets are being amortized over a weighted average life of 15 years. Amortization expense for the year ending December 31, 2013 and estimated amortization expense related to intangible assets for each of the five succeeding years is as follows:

	Amortization included in expense		Amortization recorded as a reduction of revenue		Total
2013	$	7,721	$	6,000	$	13,721
2014	7,031		6,000		$	13,031
2015	6,642		6,000		$	12,642
2016	6,539		6,000		$	12,539
2017	6,527		6,000		$	12,527
2018	6,470		6,000		$	12,470

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Business Acqusition

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Business Acquisition

Business Acquisition

On September 24, 2012, we purchased Viking Systems, Inc. ("Viking acquisition") for approximately $22.5 million in cash. Viking Systems, Inc. developed, manufactured and marketed visualization solutions for minimally invasive surgeries.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the Viking acquisition.

Cash	$	390
Accounts receivable	1,349
Inventory	2,562
Prepaid expenses and other current assets	151
Deferred income taxes	7,492
Property, plant & equipment, net	117
Customer relationships	1,725
Patents	1,100
Goodwill	13,702
Total assets acquired	28,588
Accounts payable	1,324
Other liabilities	4,736
Total liabilities assumed	6,060
Net assets acquired	$	22,528

The goodwill recorded as part of the acquisition is primarily a result of planned synergies. The goodwill is not deductible for tax purposes.

The weighted average amortization period for intangible assets acquired is 9 years. Patents are being amortized over a weighted average life of 9 years. Customer relationships are being amortized over a weighted average life of 10 years.

The unaudited pro forma statements of operations for the years ended December 31, 2011 and 2012, assuming the Viking acquisition occurred as of January 1, 2011 are presented below. These pro forma statements of operations have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the Viking acquisition occurred on the dates indicated, or which may result in the future.

	2011			2012
Net sales	$	735,857		$	774,239
Net income	(2,176		)	38,018
Earnings per share:
Basic	$	(0.08	)	$	1.34
Diluted	(0.08		)	1.33

Net sales of $3.4 million and a pre-tax loss of $1.5 million have been recorded in the consolidated statement of comprehensive income for the year ended December 31, 2012 related to the Viking acquisition.

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Guarantees

12 Months Ended

Dec. 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 year ended December 31, are as follows:

	2011			2012			2013
Balance as of January 1,	$	3,363		$	3,618		$	3,636
Provision for warranties	4,344			4,163			3,061
Claims made	(4,089		)	(4,145		)	(4,275		)
Balance as of December 31,	$	3,618		$	3,636		$	2,422

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Business Segments and Geographic Areas

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Business Segments and Geographic Areas

Business Segments and Geographic Areas

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 and service fees related to the promotion and marketing of sports medicine allograft tissue. 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 minimally invasive orthopedic and general surgery. These product lines' net sales are as follows:

	2011		2012		2013
Orthopedic surgery	$	371,245	$	413,891	$	410,171
General surgery	287,350		286,606		286,747
Surgical visualization	66,482		66,643		65,786
Consolidated net sales	$	725,077	$	767,140	$	762,704

Net sales information for geographic areas consists of the following:

	2011		2012		2013
United States	$	364,588	$	382,256	$	375,473
Canada	65,794		73,746		73,457
United Kingdom	32,106		31,653		28,471
Japan	34,178		33,997		36,705
Australia	40,122		40,835		38,752
All other countries	188,289		204,653		209,846
Total	$	725,077	$	767,140	$	762,704

Sales are attributed to countries based on the location of the customer. There were no significant investments in long-lived assets located outside the United States at December 31, 2012 and 2013.  No single customer represented over 10% of our consolidated net sales for the years ended December 31, 2011, 2012 and 2013.

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Shareholders' Equity (Details) (USD $)	12 Months Ended
	Dec. 31, 2013 plans	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred stock, shares authorized	500,000	500,000
Preferred stock, par value (per share)	$ 0.01	$ 0.01
Share authorized under repurchase program	$ 200,000,000
Total stock repurchased under plan, shares	5,700,000
Total stock repurchased under plan, value	145,700,000
Remaining authorized repurchase amount	54,300,000
Number of share repurchased	1,600,000	100,000	700,000
Repurchase of treasury stock	50,556,000	3,923,000	15,021,000
Number of shares reserved for share-based compensation plans	7,000,000
Number of share-based compensation plans	3
Number of shares available for grant	1,100,000
Vesting term	5 years
Stock-based compensation	5,593,000	5,653,000	5,240,000
Tax benefit from stock-based compensation	2,100,000	2,100,000	1,900,000
Proceeds from stock options exercised	$ 16,700,000	$ 9,600,000	$ 5,600,000
Stock Options and Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration from date of grant	10 years

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Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision (benefit) for income taxes for the years ended December 31, 2011, 2012 and 2013 consists of the following:

	2011			2012		2013
Current tax expense (benefit):
Federal	$	3,021		$	503	$	(2,274	)
State	1,596			374		502
Foreign	5,424			5,176		9,247
	10,041			6,053		7,475
Deferred income tax expense (benefit)	(13,098		)	12,946		7,218
Provision (benefit) for income taxes	$	(3,057	)	$	18,999	$	14,693

A reconciliation between income taxes computed at the statutory federal rate and the provision for income taxes for the years ended December 31, 2011, 2012 and 2013 follows:

	2011		2012		2013
Tax provision (benefit) at statutory rate based
on income before income taxes	(35.0	)%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	22.7		1.5		1.8
Stock-based compensation	(1.6	)	(0.2	)	(0.5	)
Foreign income taxes	1.4		(4.0	)	(3.1	)
Impact of repatriation of foreign earnings	(57.5	)	—		—
Research & development credit	(32.3	)	—		(2.8	)
Settlement of taxing authority examinations	(6.5	)	(0.8	)	(2.0	)
European permanent deduction	—		—		(2.4	)
Non deductible/non-taxable items	(13.3	)	1.3		2.9
Other, net	(10.5	)	(0.9	)	0.1
	(132.6	)%	31.9	%	29.0	%

The tax effects of the significant temporary differences which comprise the deferred income tax assets and liabilities at December 31, 2012 and 2013 are as follows:

	2012			2013
Assets:
Inventory	$	4,370		$	3,445
Net operating losses	7,716			6,450
Capitalized research and development	2,730			2,286
Deferred compensation	2,905			3,025
Accounts receivable	2,759			2,642
Employee benefits	5,725			5,601
Accrued pension	8,081			(173		)
Research and development credit	3,378			5,027
Other	4,335			4,365
Foreign tax credit	—			332
	41,999			33,000
Liabilities:
Goodwill and intangible assets	111,770			114,075
Depreciation	13,070			13,486
State taxes	2,992			3,914
Contingent interest	378			339
	128,210			131,814
Net liability	$	(86,211	)	$	(98,814	)

Income (loss) before income taxes consists of the following U.S. and foreign income:

	2011			2012		2013
U.S. income (loss)	$	(20,521	)	$	33,121	$	20,106
Foreign income	18,216			26,359		30,526
Total income (loss)	$	(2,305	)	$	59,480	$	50,632

The amount of Federal net operating loss carryforward is $18.4 million and begins to expire in 2025. The amount of Federal Research and Development credit carryforward available is $5.0 million.  These credits begin to expire in 2027.  The amount of Foreign Tax Credit Carryforward is $0.3 million and begins to expire in 2022.

Deferred tax amounts include approximately $3.3 million of future tax benefits associated with state tax credits which have an indefinite carryforward period.

As a result of the contingent interest deferred tax liability realized upon the convertible notes repurchase during the fourth quarter of 2011, the Company reevaluated our unremitted foreign earnings and tax credit carryforwards. Based upon this assessment, we repatriated $16.2 million of foreign earnings to the United States. The Company recorded a net tax benefit of $1.3 million in 2011 to recognize the tax liabilities and related foreign tax credit benefits associated with the repatriation. It is our intention to permanently reinvest the remaining amount of unremitted foreign earnings.

U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. The amount of such temporary differences totaled $80.1 million as of December 31, 2013. It is not practicable given the complexities of the hypothetical foreign tax credit calculation to determine the tax liability on this temporary difference.

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 2012.

We recognize tax liabilities in accordance with the provisions for accounting for uncertainty in income taxes. Such guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The following table summarizes the activity related to our unrecognized tax benefits for the years ending December 31,:

	2011			2012			2013
Balance as of January 1,	$	1,330		$	2,343		$	1,587
Increases for positions taken in prior periods	283			30			70
Increases for positions taken in current periods	789			1,129			1,132
Decreases in unrecorded tax positions related to settlement with the taxing authorities	—			(1,857		)	(1,010		)
Decreases in unrecorded tax positions related to lapse of statute of limitations	(59		)	(58		)	(90		)
Balance as of December 31,	$	2,343		$	1,587		$	1,689

If the total unrecognized tax benefits of $1.7 million at December 31, 2013 were recognized, it would reduce our annual effective tax rate.  The amount of interest accrued in 2013 related to these unrecognized tax benefits was not material and is included in the provision for income taxes in the consolidated statements of comprehensive income.  It is reasonably possible that the amount of unrecognized tax benefits, each of which are individually insignificant, could change in the next 12 months as a result of the anticipated completion of taxing authority examinations and lapse of statute of limitations.  The range of change in unrecognized tax benefits is estimated between $0.0 million and $1.2 million.

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Shareholders' Equity

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

Our shareholders have authorized 500,000 shares of preferred stock, par value $.01 per share, which may be issued in one or more series by the Board of Directors without further action by the shareholders. As of December 31, 2012 and 2013, no preferred stock had been issued.

Our Board of Directors has authorized a $200.0 million share repurchase program. Through December 31, 2013, we have repurchased a total of 5.7 million shares of common stock aggregating $145.7 million under this authorization and have $54.3 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.  During 2013, we repurchased 1.6 million shares for an aggregate cost of $50.6 million.  During 2012, we repurchased 0.1 million shares for an aggregated cost of $3.9 million. During 2011, we repurchased 0.7 million shares for an aggregate cost of $15.0 million.

We have reserved 7.0 million shares of common stock for issuance to employees and directors under three shareholder-approved share-based compensation plans (the "Plans") of which approximately 1.1 million shares remain available for grant at December 31, 2013.  The exercise price on all outstanding options and stock appreciation rights (“SARs”) is equal to the quoted fair market value of the stock at the date of grant.  Restricted stock units (“RSUs”) and performance stock units (“PSUs”) are valued at the market value of the underlying stock on the date of grant.  Stock options, SARs, RSUs and PSUs are non-transferable other than on death and generally become exercisable over a five year period from date of grant.  Stock options and SARs expire ten years from date of grant.  SARs are only settled in shares of the Company’s stock.  The issuance of shares pursuant to the exercise of stock options and SARs and vesting of RSUs and PSUs are from the Company’s treasury stock.

Total pre-tax stock-based compensation expense recognized in the consolidated statements of comprehensive income was $5.2 million, $5.7 million and $5.6 million for the years ended December 31, 2011, 2012 and 2013, respectively.  This amount is included in selling and administrative expenses on the consolidated statements of comprehensive income.  Tax related benefits of $1.9 million, $2.1 million and $2.1 million were also recognized for the years ended December 31, 2011, 2012 and 2013, respectively.  Cash received from the exercise of stock options was $5.6 million, $9.6 million and $16.7 million for the years ended December 31, 2011, 2012 and 2013, respectively, and is reflected in cash flows from financing activities in the consolidated statements of cash flows.

The Company uses the Black-Scholes option pricing model to estimate the fair value of options and SARs at the date of grant. Use of a valuation model requires management to make certain assumptions with respect to select model inputs. Expected volatilities are based upon historical volatility of the Company’s stock over a period equal to the expected life of each option and SAR grant. The risk free interest rate is based on the option and SAR grant date for a traded U.S. Treasury bond with a maturity date closest to the expected life. The expected annual dividend yield is based on the Company's anticipated cash dividend payouts. The expected life represents the period of time that the options and SARs are expected to be outstanding based on a study of historical data of option holder exercise and termination behavior.

The following table illustrates the assumptions used in estimating fair value in the years ended December 31, 2011, 2012 and 2013.

	2011			2012			2013
Fair value of options & SARs	$	10.43		$	7.38		$	9.77
Expected stock price volatility	35.52		%	35.84		%	35.88		%
Risk-free interest rate	1.59		%	0.62		%	1.04		%
Expected annual dividend yield	—		%	2.00		%	1.79		%
Expected life of options & SARs (years)	6.3			6.4			6.3

The following table illustrates the stock option and SAR activity for the year ended December 31, 2013.

	Number of Shares (in 000’s)		Weighted- Average Exercise Price
Outstanding at December 31, 2012	1,769		$	25.35
Granted	164		$	32.94
Forfeited	(9	)	$	25.96
Exercised	(794	)	$	26.62
Outstanding at December 31, 2013	1,130		$	25.55
Exercisable at December 31, 2013	659		$	24.40

The weighted average remaining contractual term for stock options and SARs outstanding and exercisable at December 31, 2013 was 6.0 years and 4.5 years, respectively.  The aggregate intrinsic value of stock options and SARs outstanding and exercisable at December 31, 2013 was $19.2 million and $11.9 million, respectively.  The aggregate intrinsic value of stock options and SARs exercised during the years ended December 31, 2011, 2012 and 2013 was $2.0 million, $3.3 million and $4.7 million, respectively.

The following table illustrates the RSU and PSU activity for the year ended December 31, 2013.  

	Number of Shares (in 000’s)		Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2012	521		$	24.25
Granted	211		$	33.02
Vested	(168	)	$	23.76
Forfeited	(88	)	$	30.55
Outstanding at December 31, 2013	476		$	27.14

The weighted average fair value of awards of RSUs and PSUs granted in the years ended December 31, 2011, 2012 and 2013 was $27.48, $26.18 and $33.02, respectively.

The total fair value of shares vested was $3.6 million, $4.4 million and $7.1 million for the years ended December 31, 2011, 2012 and 2013, respectively.

As of December 31, 2013, there was $13.1 million of total unrecognized compensation cost related to nonvested stock options, SARs, RSUs and PSUs granted under the Plan which is expected to be recognized over a weighted average period of 3.4 years.

We offer to our employees a shareholder-approved Employee Stock Purchase Plan (the “Employee Plan”), under which we have reserved 1.0 million shares of common stock for issuance to our employees.  The Employee Plan provides employees with the opportunity to invest from 1% to 10% of their annual salary to purchase shares of CONMED common stock through the exercise of stock options granted by the Company at a purchase price equal to 95% of the fair market value of the common stock on the exercise date.  During 2013, we issued approximately 18,000 shares of common stock under the Employee Plan.  No stock-based compensation expense has been recognized in the accompanying consolidated financial statements as a result of common stock issuances under the Employee Plan.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

We sponsor an employee savings plan (“401(k) plan”) covering substantially all of our Untied States based employees. We also sponsor a defined benefit pension plan (the “pension plan”) that was frozen in 2009. It covered substantially all our United States based employees at the time it was frozen.

Total employer contributions to the 401(k) plan were $6.3 million, $6.7 million and $7.3 million during the years ended December 31, 2011, 2012 and 2013, respectively.

We use a December 31, measurement date for our pension plan.  Gains and losses are amortized on a straight-line basis over the average remaining service period of active participants.  The following table provides a reconciliation of the projected benefit obligation, plan assets and funded status of the pension plan at December 31,:

	2012			2013
Accumulated Benefit Obligation	$	85,363		$	75,946
Change in benefit obligation
Projected benefit obligation at beginning of year	$	82,289		$	85,363
Service cost	277			253
Interest cost	3,429			3,315
Actuarial (gain) loss	2,790			(8,082		)
Benefits paid	(1,059		)	(1,250		)
Settlement	(2,363		)	(3,653		)
Projected benefit obligation at end of year	$	85,363		$	75,946
Change in plan assets
Fair value of plan assets at beginning of year	$	51,822		$	62,763
Actual gain on plan assets	5,866			11,082
Employer contributions	8,497			7,500
Benefits paid	(1,059		)	(1,250		)
Settlement	(2,363		)	(3,653		)
Fair value of plan assets at end of year	$	62,763		$	76,442
Funded status	$	(22,600	)	$	496

Amounts recognized in the consolidated balance sheets consist of the following at December 31,:

	2012			2013
Other assets/(Other long-term liabilities)	$	(22,600	)	$	496
Accumulated other comprehensive loss	(48,176		)	(30,001		)

The following actuarial assumptions were used to determine our accumulated and projected benefit obligations as of December 31,:

	2012		2013
Discount rate	3.90	%	4.75	%
Expected return on plan assets	8.00	%	8.00	%

Accumulated other comprehensive loss for the years ended December 31, 2012 and 2013 consists of net actuarial losses of $48,176 and $30,001, respectively, not yet recognized in net periodic pension cost (before income taxes).

Other changes in plan assets and benefit obligations recognized in other comprehensive income in 2013 are as follows:

Current year actuarial gain	$	13,673
Settlement loss/amortization of actuarial loss	4,502
Total recognized in other comprehensive loss	$	18,175

The estimated portion of net actuarial loss in accumulated other comprehensive loss that is expected to be recognized as a component of net periodic pension cost in 2014 is $1.7 million.

Net periodic pension cost for the years ended December 31, consists of the following:

	2011			2012			2013
Service cost	$	281		$	277		$	253
Interest cost on projected benefit obligation	3,519			3,429			3,315
Return on plan assets	(4,378		)	(4,566		)	(5,491		)
Amortization of loss	1,578			2,876			3,059
Settlement expense	—			—			1,443
Net periodic pension cost	$	1,000		$	2,016		$	2,579

The following actuarial assumptions were used to determine our net periodic pension benefit cost for the years ended December 31,:

	2011		2012		2013
Discount rate	5.41	%	4.30	%	3.90	%
Expected return on plan assets	8.00	%	8.00	%	8.00	%

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.

Asset management objectives include maintaining an adequate level of diversification to reduce interest rate and market risk and providing adequate liquidity to meet immediate and future benefit payment requirements.

The allocation of pension plan assets by category is as follows at December 31,:

	Percentage of Pension Plan Assets				Target Allocation
	2012		2013		2013
Equity securities	76	%	79	%	75	%
Debt securities	24		21		25
Total	100	%	100	%	100	%

As of December 31, 2013, the Plan held 27,562 shares of our common stock, which had a fair value of $1.2 million.  We believe that our long-term asset allocation on average will approximate the targeted allocation. We regularly review our actual asset allocation and periodically rebalance the pension plan’s investments to our targeted allocation when deemed appropriate.

The following table sets forth the fair value of Plan assets as of December 31,:

	2012		2013
Common Stock	$	25,124	$	31,412
Money Market Fund	5,209		7,018
Mutual Funds	22,810		28,726
Fixed Income Securities	9,620		9,286
Total Assets at Fair Value	$	62,763	$	76,442

FASB guidance, defines fair value, establishes a framework for measuring fair value and related disclosure requirements. 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.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2012 and 2013:

Common Stock:	Common stock is valued at the closing price reported on the common stock’s respective stock exchange and is classified within level 1 of the valuation hierarchy.
Money Market Fund:	These investments are public investment vehicles valued using $1 for the Net Asset Value (NAV). The money market fund is classified within level 2 of the valuation hierarchy.
Mutual Funds:	These investments are public investment vehicles valued using the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market and is classified within level 1 of the valuation hierarchy.
Fixed Income Securities:	Valued at the closing price reported on the active market on which the individual securities are traded and are classified within level 1 of the valuation hierarchy.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair value as of December 31, 2012 and December 31, 2013:

December 31, 2012	Level 1		Level 2		Total
Common Stock	$	25,124	$	—	$	25,124
Money Market Fund	—		5,209		5,209
Mutual Funds	22,810		—		22,810
Fixed Income Securities	9,620		—		9,620
	$	57,554	$	5,209	$	62,763

December 31, 2013	Level 1		Level 2		Total
Common Stock	$	31,412	$	—	$	31,412
Money Market Fund	—		7,018		7,018
Mutual Funds	28,726		—		28,726
Fixed Income Securities	9,286		—		9,286
	$	69,424	$	7,018	$	76,442

We do not expect to make any contributions to our pension plan for the 2014 Plan year.

The following table summarizes the benefits expected to be paid by our pension plan in each of the next five years and in aggregate for the following five years. The expected benefit payments are estimated based on the same assumptions used to measure the Company’s projected benefit obligation at December 31, 2013 and reflect the impact of expected future employee service.

2014		$5,332
2015	3,140
2016	3,100
2017	3,351
2018	3,973
2019-2023	23,943

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Employee Benefit Plans (Defined Contribution Plan) (Details) (401K [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
401K [Member]
Schedule of Defined Contribution Plan [Line Items]
Employer contributions	$ 7.3	$ 6.7	$ 6.3

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Employee Benefit Plans (Amounts Recognized in Balance Sheet) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]
Other assets/(Other long-term liabilities)	$ 496	$ (22,600)
Accumulated other comprehensive loss	$ (30,001)	$ (48,176)

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Business Segments and Geographic Areas (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013 Customers Segments	Dec. 31, 2012 Customers	Dec. 31, 2011 Customers
Segment Reporting Information [Line Items]
Number of discontinued operating segments									5
Net sales	$ 203,442	$ 179,255	$ 192,993	$ 187,014	$ 201,244	$ 181,885	$ 189,695	$ 194,316	$ 762,704	$ 767,140	$ 725,077
Number of customer representing over 10% of consolidated net sales									0	0	0
United States
Segment Reporting Information [Line Items]
Net sales									375,473	382,256	364,588
Canada
Segment Reporting Information [Line Items]
Net sales									73,457	73,746	65,794
United Kingdom
Segment Reporting Information [Line Items]
Net sales									28,471	31,653	32,106
Japan
Segment Reporting Information [Line Items]
Net sales									36,705	33,997	34,178
Australia
Segment Reporting Information [Line Items]
Net sales									38,752	40,835	40,122
All other countires
Segment Reporting Information [Line Items]
Net sales									209,846	204,653	188,289
Orthopedic Surgery [Member]
Segment Reporting Information [Line Items]
Net sales									410,171	413,891	371,245
General Surgery [Member]
Segment Reporting Information [Line Items]
Net sales									286,747	286,606	287,350
Surgical Visualization [Member]
Segment Reporting Information [Line Items]
Net sales									$ 65,786	$ 66,643	$ 66,482

XML

Business Segments and Geographic Areas (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Schedule of net sales information by product line and reportable segment

These product lines' net sales are as follows:

	2011		2012		2013
Orthopedic surgery	$	371,245	$	413,891	$	410,171
General surgery	287,350		286,606		286,747
Surgical visualization	66,482		66,643		65,786
Consolidated net sales	$	725,077	$	767,140	$	762,704

Schedule of net sales information for geographic areas

Net sales information for geographic areas consists of the following:

	2011		2012		2013
United States	$	364,588	$	382,256	$	375,473
Canada	65,794		73,746		73,457
United Kingdom	32,106		31,653		28,471
Japan	34,178		33,997		36,705
Australia	40,122		40,835		38,752
All other countries	188,289		204,653		209,846
Total	$	725,077	$	767,140	$	762,704

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Long Term Debt (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Total long-term debt	$ 215,575	$ 161,852
Current portion of long-term debt	1,140	1,050
Long-term debt	214,435	160,802
Revolving Line of Credit [Member]
Debt Instrument [Line Items]
Total long-term debt	208,000	153,000
Convertible Subordinated Debt [Member]
Debt Instrument [Line Items]
Total long-term debt	0	227
Mortgages Notes [Member]
Debt Instrument [Line Items]
Total long-term debt	$ 7,575	$ 8,625

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New Accounting Pronouncements

12 Months Ended

Dec. 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.

In July 2013, the FASB issued ASU No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU is intended to provide guidance and reduce diversity in practice in the presentation of an unrecognized tax benefit when a tax loss or credit carryforward exists. The provisions of this ASU are effective for periods beginning after December 15, 2013 and must be applied prospectively for unrecognized tax benefits that exist at the effective date. Early adoption is permitted. We early adopted this guidance. There are no material effects on, or changes to, our financial statements or disclosures as a result of this ASU.

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Operations and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of consolidation

Principles of consolidation

The consolidated financial statements include the accounts of CONMED Corporation and its controlled subsidiaries.  All significant intercompany accounts and transactions have been eliminated.

Use of estimates

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments which affect the reported amounts of assets, liabilities, related disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, rebates and sales allowances, inventory allowances, purchased in-process research and development, pension benefits, goodwill and intangible assets, contingencies and other accruals.  We base our estimates on historical experience and on various other assumptions which are believed to be reasonable under the circumstances.  Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates.  Estimates and assumptions are reviewed periodically, and the effect of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Cash and cash equivalents

Cash and cash equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Inventories

Inventories

Inventories are valued at the lower of cost or market.  Cost is determined on the FIFO (first-in, first-out) method of accounting.

We write-off excess and obsolete inventory resulting from the inability to sell our products at prices in excess of current carrying costs.  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. 

Property, plant and equipment

Property, plant and equipment

Property, plant and equipment are stated at cost and depreciated using the straight-line method over the following estimated useful lives:

Building and improvements	12 to 40 years
Leasehold improvements	Shorter of life of asset or life of lease
Machinery and equipment	2 to 15 years

Goodwill and other intangible assets

Goodwill and other 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 reporting our business as a single operating segment, and goodwill as a single reporting unit. Changes in our structure are further discussed in Note 8 to the Consolidated Financial Statements. Customer relationships, trademarks, tradenames, patents, and other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. Promotional, marketing and distribution rights represent intangible assets created under our Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”).  We have accumulated goodwill of $248.4 million and other intangible assets of $319.4 million as of December 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 business. 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 2013, we completed our goodwill impairment testing with data as of October 1, 2013. We performed a Step 1 impairment test in accordance with ASC 350 utilizing the market capitalization approach to determine whether the fair value of a reporting unit is less than its carrying amount. Based upon our assessment, we believe the fair value continues to exceed carrying value by 99%.

During 2011, we estimated the fair value of the legacy CONMED Patient Care reporting unit (refer to Note 8 for discussion regarding the change in operating segments) utilizing both a market-based approach and an income approach. Under the income approach, we utilized a discounted cash flow valuation methodology and measured the goodwill impairment in accordance with ASC 350. The first step of the impairment test determined the carrying value exceeded fair value and therefore we proceeded to Step 2. Under Step 2, we calculated the amount of impairment loss by measuring the amount the carrying value of goodwill exceeded the implied fair value of the goodwill. We determined the goodwill of our legacy CONMED Patient Care reporting unit was impaired as a result of lower future earnings due to pricing pressures in a number of our product lines and consequently we recorded a goodwill impairment charge of $60.3 million to reduce the carrying amount of the reporting unit's goodwill to its implied fair value.

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 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 useful life 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 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.

Other long-lived assets

Other long-lived assets

We review asset carrying amounts for impairment (consisting of intangible assets subject to amortization and property, plant and equipment) whenever events or circumstances indicate that such carrying amounts may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value to its current fair value.

Translation of foreign currency financial statements

Translation of foreign currency financial statements

Assets and liabilities of foreign subsidiaries have been translated into United States dollars at the applicable rates of exchange in effect at the end of the period reported. Revenues and expenses have been translated at the applicable weighted average rates of exchange in effect during the period reported. Translation adjustments are reflected in accumulated other comprehensive loss. Transaction gains and losses are included in net income.

Foreign exchange and hedging activity

Foreign exchange and hedging activity

We manage our foreign currency transaction risks through the use of forward contracts to hedge forecasted cash flows associated with foreign currency transaction exposures. 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 reclassified into earnings as a component of sales or cost of sales when the forecasted transaction occurs.

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. We record these forward contracts at fair value with resulting gains and losses included in selling and administrative expense in the consolidated statements of comprehensive income.

Income taxes

Income taxes

Deferred income tax assets and liabilities are based on the difference between the financial statement and tax basis of assets and liabilities and operating loss and tax credit carryforwards as measured by the enacted tax rates that are anticipated to be in effect in the respective jurisdictions when these differences reverse. The deferred income tax provision generally represents the net change in the assets and liabilities for deferred income taxes. A valuation allowance is established when it is necessary to reduce deferred income tax assets to amounts for which realization is likely. In assessing the need for a valuation allowance, we estimate future taxable income, considering the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards. Valuation allowances related to deferred tax assets may be impacted by changes to tax laws, changes to statutory tax rates and ongoing and future taxable income levels.

Deferred income taxes are not provided on the unremitted earnings of subsidiaries outside of the United States when it is expected that these earnings are permanently reinvested. Such earnings may become taxable upon a repatriation of assets from a subsidiary or the sale or liquidation of a subsidiary. Deferred income taxes are provided when the Company no longer considers subsidiary earnings to be permanently invested, such as in situations where the Company’s subsidiaries plan to make future dividend distributions.

Revenue recognition

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 and collectability is reasonably assured.

• We place certain of our capital equipment with customers on a loaned basis in return for commitments to purchase related single-use products over time periods generally ranging from one to three years.  In these circumstances, no revenue is recognized upon capital equipment shipment as the equipment is loaned and subject to return if certain minimum single-use purchases are not met.  Revenue is recognized upon the sale and shipment of the related single-use products.  The cost of the equipment is amortized over its estimated useful life.

• We recognize revenues related to the promotion and marketing of sports medicine allograft tissue in accordance with the contractual terms of our agreement with Musculoskeletal Transplant Foundation (“MTF”) on a net basis as our role is limited to that of an agent earning a commission or fee. MTF records revenue when the tissue is shipped to the customer. Our services are completed at this time and net revenues for the “Service Fee” for our promotional and marketing efforts are then recognized based on a percentage of the net amounts billed by MTF to its customers. The timing of revenue recognition is determined through review of the net billings made by MTF each month. Our net commission Service Fee is based on the contractual terms of our agreement and is currently 50%. This percentage can vary over the term of the agreement but is contractually determinable. Our Service Fee revenues are recorded net of amortization of the acquired assets, which are being expensed over the expected useful life of 25 years.

• Product returns are only accepted at the discretion of the Company and in accordance with our “Returned Goods Policy”.  Historically the level of product returns has not been significant.  We accrue for sales returns, rebates and allowances based upon an analysis of historical customer returns and credits, rebates, discounts and current market conditions.

• Our terms of sale to customers generally do not include any obligations to perform future services.  Limited warranties are provided for capital equipment sales and provisions for warranty are provided at the time of product sale based upon an analysis of historical data.

• Amounts billed to customers related to shipping and handling have been included in net sales.  Shipping and handling costs included in selling and administrative expense were $13.0 million, $12.8 million and $12.6 million for 2011, 2012 and 2013, respectively.

• We sell to a diversified base of customers around the world and, therefore, believe there is no material concentration of credit risk.

• We assess the risk of loss on accounts receivable and adjust the allowance for doubtful accounts based on this risk assessment.  Historically, losses on accounts receivable have not been material.  Management believes that the allowance for doubtful accounts of $1.4 million at December 31, 2013 is adequate to provide for probable losses resulting from accounts receivable.

Earnings per share

Earnings and dividends 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.

Stock-based compensation

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.

We issue shares under our stock based compensation plans out of treasury stock whereby treasury stock is reduced by the weighted average cost of such treasury stock.  To the extent there is a difference between the cost of the treasury stock and the exercise price of shares issued under stock based compensation plans, we record gains to paid in capital;  losses are recorded to paid in capital to the extent any gain was previously recorded, otherwise the loss is recorded to retained earnings.

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Goodwill and Other Intangible Assets (Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Intangible assets, gross carrying amount	$ 425,513	$ 427,822
Intangible assets, accumulated amortization	(106,073)	(93,637)
Weighted average amortization period (in years)	27 years
Future amortization expense [Abstract]
2013	13,721
2014	13,031
2015	12,642
2016	12,539
2017	12,527
2018	12,470
Trademarks and Tradenames [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Unamortized intangible assets, gross carrying amount	86,544	86,544
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	(54,982)	(50,083)
Weighted average amortization period (in years)	33 years
Promotional, Marketing and Distribution Rights [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Amortized intangible assets, gross carrying amount	149,376	149,376
Intangible assets, accumulated amortization	(12,000)	(6,000)
Weighted average amortization period (in years)	25 years
Patents and Other Intangible Assets [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Amortized intangible assets, gross carrying amount	53,903	56,212
Intangible assets, accumulated amortization	(39,091)	(37,554)
Weighted average amortization period (in years)	15 years
Expense [Member]
Future amortization expense [Abstract]
2013	7,721
2014	7,031
2015	6,642
2016	6,539
2017	6,527
2018	6,470
Reduction of Revenue [Member]
Future amortization expense [Abstract]
2013	6,000
2014	6,000
2015	6,000
2016	6,000
2017	6,000
2018	$ 6,000

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Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Schedule of Selected Quarterly Financial Data

Selected quarterly financial data for 2012 and 2013 are as follows:

	Three Months Ended
	March		June		September		December
2012
Net sales	$	194,316	$	189,695	$	181,885	$	201,244
Gross profit	100,911		99,732		97,913		107,287
Net income	9,968		10,296		9,320		10,897
EPS:
Basic	.36		.36		.33		.38
Diluted	.35		.36		.32		.38

	Three Months Ended
	March		June		September		December
2013
Net sales	$	187,014	$	192,993	$	179,255	$	203,442
Gross profit	102,682		102,916		95,424		111,395
Net income	10,492		9,533		5,687		10,227
EPS:
Basic	.37		.35		.21		.37
Diluted	.37		.34		.20		.36

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Consolidated Statements of Shareholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock [Member]	Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]
Balance at Dec. 31, 2010	$ 586,563	$ 313	$ 319,406	$ 354,020	$ (15,861)	$ (71,315)
Balance (shares) at Dec. 31, 2010		31,299
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued under employee plans	4,827		(3,849)	(333)		9,009
Repurchase of treasury stock	(15,021)					(15,021)
Tax benefit arising from common stock issued under employee plans	1,197		1,197
Stock-based compensation	5,240		5,240
Comprehensive income (loss):
Foreign currency translation adjustments					(1,937)
Pension liability (net of income tax expense/benefit)					(12,768)
Cash flow hedging gain (loss) (net of income tax expense/benefit)					4,218
Net income	752			752
Comprehensive income (loss)	(9,735)
Balance at Dec. 31, 2011	573,071	313	321,994	354,439	(26,348)	(77,327)
Balance (shares) at Dec. 31, 2011		31,299
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued under employee plans	8,910		(4,377)			13,287
Repurchase of treasury stock	(3,923)					(3,923)
Tax benefit arising from common stock issued under employee plans	1,052		1,052
Stock-based compensation	5,653		5,653
Dividends on common stock	(17,013)			(17,013)
Comprehensive income (loss):
Foreign currency translation adjustments					1,995
Pension liability (net of income tax expense/benefit)					875
Cash flow hedging gain (loss) (net of income tax expense/benefit)					(4,103)
Net income	40,481			40,481
Comprehensive income (loss)	39,248
Balance at Dec. 31, 2012	606,998	313	324,322	377,907	(27,581)	(67,963)
Balance (shares) at Dec. 31, 2012		31,299
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued under employee plans	15,196		(4,576)			19,772
Repurchase of treasury stock	(50,556)					(50,556)
Tax benefit arising from common stock issued under employee plans	1,097		1,097
Stock-based compensation	5,593		5,593
Dividends on common stock	(17,957)			(17,957)
Comprehensive income (loss):
Foreign currency translation adjustments					(1,193)
Pension liability (net of income tax expense/benefit)					11,457
Cash flow hedging gain (loss) (net of income tax expense/benefit)					(255)
Net income	35,939			35,939
Comprehensive income (loss)	45,948
Balance at Dec. 31, 2013	$ 606,319	$ 313	$ 326,436	$ 395,889	$ (17,572)	$ (98,747)
Balance (shares) at Dec. 31, 2013		31,299

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment consist of the following at December 31,:

	2012			2013
Land	$	4,243		$	4,243
Building and improvements	92,775			95,397
Machinery and equipment	176,102			180,064
Construction in progress	5,508			8,750
	278,628			288,454
Less:  Accumulated depreciation	(139,587		)	(149,469		)
	$	139,041		$	138,985

We lease various manufacturing facilities, office facilities and equipment under operating leases.  Rental expense on these operating leases was approximately $6,221, $6,416, and $6,713 for the years ended December 31, 2011, 2012 and 2013, respectively. The aggregate future minimum lease commitments for operating leases at December 31, 2013 are as follows:

2014	$	6,723
2015	5,782
2016	4,144
2017	3,492
2018	3,382
Thereafter	5,006

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Income Taxes (Tax Credit Carryforwards) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2013 Federal NOL [Member]	Dec. 31, 2013 Federal [Member] Research and Development Credit [Member]	Dec. 31, 2013 Foreign Tax Authority [Member]	Dec. 31, 2013 State and Local Jurisdiction [Member]
Tax Credit Carryforward [Line Items]
Tax credit carryforward		$ 18,400,000	$ 5,000,000	$ 300,000	$ 3,300,000
Repatriated foreign earnings	16,200,000
Net tax expense (benefit) from tax liabilities and credits related to foreign earnings remittances	$ (1,300,000)

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Schedule II - Valuation and Qualifying Accounts (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Allowance for Bad Debts [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	$ 1,203	$ 1,183	$ 1,066
Charged to costs and expenses	421	530	3,935
Charged to other accounts	0	0	0
Deductions	(240)	(510)	(3,818)
Balance at end of period	1,384	1,203	1,183
Sales Returns and Allowance [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	3,609	4,097	3,980
Charged to costs and expenses	398	317	291
Charged to other accounts	0	0	0
Deductions	(909)	(805)	(174)
Balance at end of period	3,098	3,609	4,097
Deferred Tax Asset Valuation Allowance [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	0	0	226
Charged to costs and expenses	0	0	0
Charged to other accounts	0	0	0
Deductions	0	0	(226)
Balance at end of period	$ 0	$ 0	$ 0

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Employee Benefit Plans (Net Periodic Pension Cost) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Compensation and Retirement Disclosure [Abstract]
Service cost		$ 253	$ 277	$ 281
Interest cost		3,315	3,429	3,519
Return on plan assets		(5,491)	(4,566)	(4,378)
Amortization of loss		3,059	2,876	1,578
Settlement expense	1,400	1,443	0	0
Net periodic pension cost		$ 2,579	$ 2,016	$ 1,000

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Operations and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of property plant and equipment useful life

Property, plant and equipment are stated at cost and depreciated using the straight-line method over the following estimated useful lives:

Building and improvements	12 to 40 years
Leasehold improvements	Shorter of life of asset or life of lease
Machinery and equipment	2 to 15 years

Schedule of calculation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share at December 31, 2011, 2012 and 2013, respectively: 

	2011		2012		2013
Net income	$	752	$	40,481	$	35,939
Basic-weighted average shares outstanding	28,246		28,301		27,722
Effect of dilutive potential securities	387		352		392
Diluted-weighted average shares outstanding	28,633		28,653		28,114
Basic EPS	$	0.03	$	1.43	$	1.30
Diluted EPS	$	0.03	$	1.41	$	1.28

Schedule of accumulated other comprehensive loss

Accumulated other comprehensive loss consists of the following:

	Cash Flow Hedging Gain (Loss)a			Pension Liabilitya			Cumulative Translation Adjustments			Accumulated Other Comprehensive Loss
Balance, December 31, 2012	$	(1,130	)	$	(30,375	)	$	3,924		$	(27,581	)
Other comprehensive income
before reclassifications	(158		)	8,618			(1,193		)	7,267
Amounts reclassified from accumulated other comprehensive income before taxb	(153		)	4,502			—			4,349
Tax expense (benefit)	56			(1,663		)	—			(1,607		)
Total amounts reclassified from other accumulated comprehensive income	(97		)	2,839			—			2,742
Net current-period other comprehensive income	(255		)	11,457			(1,193		)	10,009
Balance, December 31, 2013	$	(1,385	)	$	(18,918	)	$	2,731		$	(17,572	)

(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 or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 13 and Note 9, respectively, for further details.

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Other Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended						12 Months Ended			3 Months Ended	12 Months Ended			3 Months Ended		12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Mar. 31, 2012 Distributor [Member]	Dec. 31, 2013 Distributor [Member]	Dec. 31, 2012 Distributor [Member]	Dec. 31, 2011 Distributor [Member]	Dec. 31, 2012 Business [Member]	Sep. 30, 2012 Business [Member]	Dec. 31, 2013 Business [Member]	Dec. 31, 2012 Business [Member]	Dec. 31, 2011 Business [Member]
Other Expense [Line Items]
Administrative consolidation costs							$ 8,750	$ 6,497	$ 792
Costs associated with purchase										700	0	704	300	500	700	0	1,194	0
Costs associated with legal arbitration and patent dispute	1,000	1,500	500	200	500	1,000	3,206	1,555	0
Pension settlement expense	1,400						1,443	0	0
Other expense							$ 13,399	$ 9,950	$ 1,092

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Fair Value Measurement (Tables)

12 Months Ended

Dec. 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 table summarizes the fair value for forward foreign exchange contracts outstanding at December 31, 2012 and December 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

December 31, 2013	Asset Balance Sheet Location	Fair Value			Liabilities Balance Sheet Location	Fair Value		Net  Fair Value
Derivatives designated as hedged instruments:
Foreign exchange contracts	Other current liabilities	$	(975	)	Other current liabilities	$	3,172	$	2,197
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	(52		)	Other current liabilities	78		26
Total derivatives		$	(1,027	)		$	3,250	$	2,223

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Fair Value Measurement

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurement

Fair Value Measurement

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 forecasted intercompany sales 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 December 31, 2013 which have been accounted for as cash flow hedges totaled $132.4 million.  Net realized gains (losses) recognized for forward contracts accounted for as cash flow hedges approximated -$4.7 million, $3.8 million and $0.2 million for the years ended December 31, 2011, 2012, and 2013, respectively.  Net unrealized losses on forward contracts outstanding which have been accounted for as cash flow hedges and which have been included in other comprehensive income totaled $1.4 million at December 31, 2013.  It is expected these unrealized losses will be recognized in the consolidated statement of comprehensive income in 2014 and 2015.

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 December 31, 2013 which have not been designated as hedges totaled $42.0 million.  Net realized gains (losses) recognized in connection with those forward contracts not accounted for as hedges approximated $0.0 million, -$2.1 million and -$0.3 million for the years ended December 31, 2011, 2012, and 2013, respectively, offsetting gains (losses) on our intercompany receivables of -$0.3 million, $0.8 million and -$0.8 million for the years ended December 31, 2011, 2012, and 2013, respectively.  These gains and losses have been recorded in selling and administrative expense in the consolidated statements of comprehensive income.

We record these forward foreign exchange contracts at fair value; the following table summarizes the fair value for forward foreign exchange contracts outstanding at December 31, 2012 and December 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

December 31, 2013	Asset Balance Sheet Location	Fair Value			Liabilities Balance Sheet Location	Fair Value		Net  Fair Value
Derivatives designated as hedged instruments:
Foreign exchange contracts	Other current liabilities	$	(975	)	Other current liabilities	$	3,172	$	2,197
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	(52		)	Other current liabilities	78		26
Total derivatives		$	(1,027	)		$	3,250	$	2,223

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 December 31, 2013 we have recorded the net fair value of $1.9 million and $2.2 million, respectively, in other current liabilities.

Fair Value Disclosure. FASB guidance defines fair value, 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.

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 December 31, 2013 consist of forward foreign exchange contracts. The Company values its forward foreign exchange contracts using quoted prices for similar assets. The most significant assumption is quoted currency rates. 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 approximate fair value.