10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

SECURITIES EXCHANGE ACT OF 1934

For the quarter ended	Commission File Number
March 31, 2016	0-16093

CONMED CORPORATION

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

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

(315) 797-8375

(Registrant's telephone number, including area code)

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

Yes ý   No o

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

Yes ý   No 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 "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one).

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

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

Yes o No ý

The number of shares outstanding of registrant's common stock, as of April 28, 2016 is 27,751,474 shares.

CONMED CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2016

PART I FINANCIAL INFORMATION
Item Number		Page
Item 1.	Financial Statements (unaudited)
	– Consolidated Condensed Statements of Comprehensive Income (Loss) for the three months ended March 31, 2016 and 2015	1
	– Consolidated Condensed Balance Sheets as of March 31, 2016 and December 31, 2015	2
	– Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2016 and 2015	3
	– Notes to Consolidated Condensed Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 6.	Exhibits	24
Signatures		25

PART I                      FINANCIAL INFORMATION

Item 1.

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands except per share amounts)

	Three Months Ended
	March 31,
	2016			2015
Net sales	$	181,201		$	177,940
Cost of sales	83,461			85,658
Gross profit	97,740			92,282
Selling and administrative expense	85,943			74,786
Research and development expense	8,258			6,542
Operating expenses	94,201			81,328
Income from operations	3,539			10,954
Other expense	2,942			—
Interest expense	3,830			1,460
Income (loss) before income taxes	(3,233		)	9,494
Provision (benefit) for income taxes	(968		)	3,182
Net income (loss)	$	(2,265	)	$	6,312
Comprehensive income (loss)	$	787		$	(3,715	)
Per share data:
Net income
Basic	$	(0.08	)	$	0.23
Diluted	(0.08		)	0.23
Dividends per share of common stock	$	0.20		$	0.20
Weighted average common shares
Basic	27,721			27,573
Diluted	27,721			27,820

 See notes to consolidated condensed financial statements.

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CONMED CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

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

	March 31, 2016			December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	19,894		$	72,504
Accounts receivable, net	134,412			133,863
Inventories	185,108			166,894
Prepaid expenses and other current assets	28,520			20,076
Total current assets	367,934			393,337
Property, plant and equipment, net	126,827			125,452
Goodwill	398,387			260,651
Other intangible assets, net	434,196			308,171
Other assets	15,439			14,089
Total assets	$	1,342,783		$	1,101,700
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	10,089		$	1,339
Accounts payable	29,030			34,720
Accrued compensation and benefits	27,580			31,823
Other current liabilities	36,459			51,836
Total current liabilities	103,158			119,718
Long-term debt	511,598			269,471
Deferred income taxes	119,433			103,379
Other long-term liabilities	26,305			24,059
Total liabilities	760,494			516,627
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $ .01 per share;
authorized 500,000 shares; none outstanding	—			—
Common stock, par value $ .01 per share;
100,000,000 shares authorized; 31,299,194 shares
issued in 2016 and 2015, respectively	313			313
Paid-in capital	325,886			324,915
Retained earnings	406,695			414,506
Accumulated other comprehensive loss	(50,842		)	(53,894		)
Less: 3,556,032 and 3,590,409 shares of common stock
in treasury, at cost in 2016 and 2015, respectively	(99,763		)	(100,767		)
Total shareholders’ equity	582,289			585,073
Total liabilities and shareholders’ equity	$	1,342,783		$	1,101,700

 See notes to consolidated condensed financial statements.

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CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Three Months Ended
	March 31,
	2016			2015
Cash flows from operating activities:
Net income (loss)	$	(2,265	)	$	6,312
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation	4,986			4,633
Amortization	8,272			5,537
Stock-based compensation	2,489			1,856
Deferred income taxes	(2,942		)	1,253
Loss on early extinguishment of debt	254			—
Increase (decrease) in cash flows
from changes in assets and liabilities, net of acquired assets:
Accounts receivable	11,428			(3,805		)
Inventories	(10,720		)	(1,155		)
Accounts payable	(11,109		)	3,733
Accrued compensation and benefits	(7,519		)	(4,485		)
Other assets	(7,662		)	2,917
Other liabilities	(2,492		)	(1,987		)
	(15,015		)	8,497
Net cash provided by (used in) operating activities	(17,280		)	14,809
Cash flows from investing activities:
Purchases of property, plant and equipment	(2,789		)	(4,061		)
Payments related to business acquisitions, net of cash acquired	(256,424		)	(853		)
Net cash used in investing activities	(259,213		)	(4,914		)
Cash flows from financing activities:
Payments on senior credit agreement	(2,188		)	—
Proceeds from senior credit agreement	253,005			17,000
Payments related to distribution agreement	(16,667		)	(16,667		)
Payments related to debt issuance costs	(5,556		)	—
Dividends paid on common stock	(5,542		)	(5,510		)
Other, net	110			543
Net cash provided by (used in) financing activities	223,162			(4,634		)
Effect of exchange rate changes on cash and cash equivalents	721			(5,864		)
Net decrease in cash and cash equivalents	(52,610		)	(603		)
Cash and cash equivalents at beginning of period	72,504			66,332
Cash and cash equivalents at end of period	$	19,894		$	65,729
Non-cash financing activities:
Dividends payable	$	5,546		$	5,516

See notes to consolidated condensed financial statements.

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CONMED CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, in thousands except per share amounts)

Note 1 – Operations

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

Note 2 - Interim Financial Information

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. Results for the period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

The consolidated condensed financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2015 included in our Annual Report on Form 10-K.

Note 3 – Comprehensive Income (Loss)

Comprehensive income (loss) consists of the following:

	Three Months Ended March 31,
	2016			2015
Net income (loss)	$	(2,265	)	$	6,312
Other comprehensive income (loss):
Pension liability, net of income tax (income tax expense of $257 and $300 for the three months ended March 31, 2016 and 2015, respectively)	438			512
Cash flow hedging gain (loss), net of income tax (income tax expense (benefit) of ($1,299) and $1,150 for the three months ended March 31, 2016 and 2015, respectively)	(2,217		)	1,962
Foreign currency translation adjustment	4,831			(12,501		)
Comprehensive income (loss)	$	787		$	(3,715	)

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Accumulated other comprehensive loss consists of the following:

	Cash Flow Hedging Gain (Loss)			Pension Liability			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2015	$	1,201		$	(25,982	)	$	(29,113	)	$	(53,894	)
Other comprehensive income (loss) before reclassifications, net of tax	(1,891		)	—			4,831			2,940
Amounts reclassified from accumulated other comprehensive income (loss) before taxa	(517		)	695			—			178
Income tax provision (benefit)	191			(257		)	—			(66		)
Net current-period other comprehensive income (loss)	(2,217		)	438			4,831			3,052
Balance, March 31, 2016	$	(1,016	)	$	(25,544	)	$	(24,282	)	$	(50,842	)

	Cash Flow Hedging Gain (Loss)			Pension Liability			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2014	$	3,276		$	(30,760	)	$	(12,338	)	$	(39,822	)
Other comprehensive income (loss) before reclassifications, net of tax	275			—			(12,501		)	(12,226		)
Amounts reclassified from accumulated other comprehensive income before taxa	2,676			812			—			3,488
Income tax provision (benefit)	(989		)	(300		)	—			(1,289		)
Net current-period other comprehensive income (loss)	1,962			512			(12,501		)	(10,027		)
Balance, March 31, 2015	$	5,238		$	(30,248	)	$	(24,839	)	$	(49,849	)

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

Note 4 – Fair Value of Financial Instruments

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

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

Foreign Currency Forward Contracts. We hedge 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

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cost of sales when the forecasted transaction occurs.  The notional contract amounts for forward contracts outstanding at March 31, 2016 which have been accounted for as cash flow hedges totaled $101.8 million. Net realized gains recognized for forward contracts accounted for as cash flow hedges approximated $0.5 million and $2.7 million for the three months endedMarch 31, 2016 and 2015, 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 $1.0 million at March 31, 2016. It is expected these unrealized losses will be recognized in the consolidated condensed statement of comprehensive income in 2016 and 2017.

We also enter into forward contracts to exchange foreign currencies for United States dollars in order to hedge our currency transaction exposures on intercompany receivables denominated in foreign currencies.  These forward contracts settle each month at month-end, at which time we enter into new forward contracts.  We have not designated these forward contracts as hedges and have not applied hedge accounting to them.  The notional contract amounts for forward contracts outstanding at March 31, 2016 which have not been designated as hedges totaled $21.3 million. Net realized gains and losses recognized in connection with those forward contracts not accounted for as hedges approximated $(0.3) million and $0.6 million for the three months endedMarch 31, 2016 and 2015, respectively, offsetting gains and losses on our intercompany receivables of $0.4 million and $(0.7) million for the three months endedMarch 31, 2016 and 2015, respectively. These gains and losses have been recorded in selling and administrative expense in the consolidated condensed statements of comprehensive income.

We record these forward foreign exchange contracts at fair value; the following tables summarize the fair value for forward foreign exchange contracts outstanding at March 31, 2016 and December 31, 2015:

March 31, 2016	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	$	930	Other current liabilities	$	(2,541	)	$	(1,611	)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	7		Other current liabilities	(26		)	(19		)
Total derivatives		$	937		$	(2,567	)	$	(1,630	)

December 31, 2015	Asset Balance Sheet Location	Fair Value		Liabilities Balance Sheet Location	Fair Value			Net  Fair Value
Derivatives designated as hedged instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	$	2,931	Prepaid expenses and other current assets	$	(1,026	)	$	1,905
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	4		Prepaid expenses and other current assets	(38		)	(34		)
Total derivatives		$	2,935		$	(1,064	)	$	1,871

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Our forward foreign exchange contracts are subject to a master netting agreement and qualify for netting in the consolidated balance sheets. Accordingly, at March 31, 2016 and December 31, 2015, we have recorded the net fair value of $1.6 million in other current liabilities and $1.9 million in prepaid expenses and other current assets, respectively.

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

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

Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of March 31, 2016 consist of forward foreign exchange contracts and contingent liabilities associated with the EndoDynamix, Inc. acquisition. 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 EndoDynamix, Inc. acquisition involves the potential for the payment of future contingent consideration upon the achievement of certain product development milestones and revenue based payments. Contingent consideration is recorded at the estimated fair value of the contingent milestone and revenue based payments on the acquisition date. The fair value of the contingent consideration is remeasured at the estimated fair value at each reporting period with the change in fair value recognized as income or expense within selling and administrative expenses in the consolidated condensed statements of comprehensive income. We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements.

The carrying amounts reported in our consolidated condensed balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term debt approximate fair value.  

Note 5 - Inventories

Inventories consist of the following:

	March 31, 2016		December 31, 2015
Raw materials	$	50,533	$	47,681
Work-in-process	15,211		13,922
Finished goods	119,364		105,291
Total	$	185,108	$	166,894

Note 6 – Earnings Per Share

Basic earnings per share (“basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding resulting from employee stock options, restricted stock units, performance share units and stock appreciation rights ("SARs") during the period. The following table sets forth the computation of basic and diluted earnings per share for the three months endedMarch 31, 2016 and 2015:

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	Three Months Ended March 31,
	2016			2015
Net income (loss)	$	(2,265	)	$	6,312
Basic – weighted average shares outstanding	27,721			27,573
Effect of dilutive potential securities	—			247
Diluted – weighted average shares outstanding	27,721			27,820
Net income (loss)
Basic (per share)	$	(0.08	)	$	0.23
Diluted (per share)	(0.08		)	0.23

The shares used in the calculation of diluted EPS exclude options and SARs to purchase shares where the exercise price was greater than the average market price of common shares for the period and the effect of the inclusion would be anti-dilutive. Such shares were not material in the three months endedMarch 31, 2015. As the Company was in a net loss position at March 31, 2016, there were no anti-dilutive shares.

Note 7 – Goodwill and Other Intangible Assets

The changes in the net carrying amount of goodwill for the three months ended March 31, 2016 are as follows:

Balance as of December 31, 2015	$	260,651
Goodwill resulting from business acquisitions	136,358
Foreign currency translation	1,378
Balance as of March 31, 2016	$	398,387

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.  During the three months endedMarch 31, 2016, the Company acquired SurgiQuest, Inc. ("SurgiQuest") as further described in Note 14. Goodwill resulting from the acquisition amounted to $136.4 million and acquired intangible assets including customer and distributor relationships, developed technology and trademarks and tradenames amounted to $130.8 million.

Other intangible assets consist of the following:

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	March 31, 2016					December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer and distributor relationships	$	213,338	$	(67,110	)	$	136,871	$	(64,423	)
Promotional, marketing and distribution rights	149,376		(25,500		)	149,376		(24,000		)
Patents and other intangible assets	71,642		(43,384		)	66,688		(42,885		)
Developed technology	49,600		(310		)	—		—
Unamortized intangible assets:
Trademarks and tradenames	86,544		—			86,544		—
	$	570,500	$	(136,304	)	$	439,479	$	(131,308	)

Customer and distributor relationships, trademarks and tradenames, developed technology and 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 6, 2016, January 5, 2015 and January 3, 2014, we paid equal installments of $16.7 million and on January 3, 2013, we paid $34.0 million of the additional consideration.

Amortization expense related to intangible assets which are subject to amortization totaled $5.0 million and $3.2 million in the three months endedMarch 31, 2016 and 2015, respectively, and 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 condensed statements of comprehensive income. The weighted average amortization period for intangible assets which are amortized is 25 years. Customer and distributor relationships are being amortized over a weighted average life of 29 years. SurgiQuest customer and distributor relationships are being amortized over a weighted average life of 22 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 13 years.  Included in patents and other intangible assets at March 31, 2016 is an in-process research and development asset related to the EndoDynamix, Inc. acquisition that is not currently amortized. Developed technology is being amortized over a weighted average life of 17 years.

The estimated intangible asset amortization expense remaining for the year ending December 31, 2016 and 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
Remaining, 2016	$	10,699	$	4,500	$	15,199
2017	15,422		6,000		21,422
2018	15,740		6,000		21,740
2019	15,600		6,000		21,600
2020	15,265		6,000		21,265
2021	14,010		6,000		20,010

Note 8 – Guarantees

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

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

	2016			2015
Balance as of January 1,	$	2,509		$	2,286
Provision for warranties	833			951
Claims made	(841		)	(873		)
Balance as of March 31,	$	2,501		$	2,364

Note 9 – Pension Plan

Net periodic pension cost consists of the following: 

	Three Months Ended March 31,
	2016			2015
Service cost	$	113		$	67
Interest cost on projected benefit obligation	719			888
Expected return on plan assets	(1,297		)	(1,469		)
Net amortization and deferral	695			812
Net periodic pension cost	$	230		$	298

We do not expect to make any pension contributions during 2016.

Note 10 – Acquisition, Restructuring and Other Expense

Acquisition, restructuring and other expense consists of the following:

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	Three Months Ended March 31,
	2016		2015
Restructuring costs included in cost of sales	$	864	$	2,329
Restructuring costs	$	2,791	$	6,180
Business acquisition costs	9,045		—
Acquisition, restructuring and other expense included in selling and administrative expense	$	11,836	$	6,180
Debt refinancing costs included in other expense	$	2,942	$	—

During the three months endedMarch 31, 2016, we incurred $9.0 million in costs associated with the January 4, 2016 acquisition of SurgiQuest, Inc. as further described in Note 14. These costs include investment banking fees, consulting fees, legal fees and integration related costs.

During the three months endedMarch 31, 2016, we incurred a $2.7 million charge related to an agreement between the Company and JP Morgan Chase Bank, N.A. and recorded a loss on the early extinguishment of debt of $0.3 million in conjunction with the fifth amended and restated senior credit agreement as further described in Note 15.

During 2016 and 2015, we continued our operational restructuring plan. The consolidation of our Centennial, Colorado manufacturing operations into other existing CONMED manufacturing facilities is substantially complete. We incurred $0.9 million and $2.3 million in costs associated with the operational restructuring during the three months endedMarch 31, 2016 and 2015, respectively. These costs were charged to cost of sales and include severance and other charges associated with the consolidation.

In conjunction with the consolidation of our Centennial, Colorado manufacturing operations, the facility is currently held for sale and classified in prepaids and other current assets in the consolidated condensed balance sheet. The net book value of this facility at March 31, 2016 was $3.1 million.

During 2016 and 2015, we restructured certain selling and administrative functions and incurred severance and other related costs in the amount of $2.8 million and $6.2 million for the three months endedMarch 31, 2016 and 2015, respectively.

We have recorded an accrual in current and other long term liabilities of $3.9 million at March 31, 2016 mainly related to severance costs associated with the restructuring. Below is a rollforward of the costs incurred and cash expenditures associated with these activities during the three months endedMarch 31, 2016 and 2015:

	2016			2015
Balance as of January 1,	$	7,175		$	8,254
Expenses incurred	3,655			8,509
Payments made	(6,955		)	(7,885		)
Balance at March 31,	$	3,875		$	8,878

Note 11 — Business Segments

We are accounting and reporting for our business as a single operating segment entity engaged in the development, manufacturing and sale on a global basis of surgical devices and related equipment. Our chief operating decision maker (the CEO)

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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.

Our product lines consist of orthopedic surgery, general surgery and surgical visualization. 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 imaging systems for use in minimally invasive orthopedic and general surgery procedures including 2DHD and 3DHD vision technologies. These product lines' net sales are as follows:

	Three Months Ended March 31,
	2016		2015
Orthopedic surgery	$	93,441	$	98,597
General surgery	75,902		66,062
Surgical visualization	11,858		13,281
Consolidated net sales	$	181,201	$	177,940

Note 12 – Legal Proceedings

From time to time, we are subject to claims alleging product liability, patent infringement or other claims incurred in the ordinary course of business. These may involve our United States or foreign operations, or sales by foreign distributors. Likewise, from time to time, the Company may receive an information request or subpoena from a government agency such as the Securities and Exchange Commission, Department of Justice, 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 information requests or 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 any such pending 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 financial 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.

During the third quarter of 2013, the U.S. Food and Drug Administration ("FDA") inspected our Centennial, Colorado manufacturing facility and issued a Form 483 with observations on September 20, 2013. We 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 undertook corrective actions. During the fourth quarter of 2014, the FDA again inspected our Centennial, Colorado manufacturing facility and, on November 18, 2014, issued a Form 483 with eight observations, three of

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which the FDA characterized as repeat observations. On December 10, 2014, we responded to the Form 483 observations. We have received some additional questions from the FDA and have responded to these questions on April 25, 2015.  The remediation costs to date have not been material, although there can be no assurance that responding to the Form 483 observations or 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 that could be material.

Note 13 – New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 by one year. This ASU is effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted as of January 1, 2017. We plan to adopt this ASU on January 1, 2018. The new standard will become effective beginning with the first quarter of 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating both the impact of adopting this new guidance on the consolidated financial statements and the method of adoption.

In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory". An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. This ASU is effective for annual periods beginning after December 15, 2016. The Company does not believe this new guidance will have a material impact on the consolidated financial statements.

In August 2015, the FASB issued ASU No. 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements". This ASU was issued to clarify the guidance included in ASU 2015-03 "Simplifying the Presentation of Debt Issuance Costs", which requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, ASU 2015-15 was issued to clarify that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2016 and it did not have a material impact on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments". This ASU simplifies the accounting for changes in measurement period adjustments associated with a business combination. It requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. This ASU is effective for annual periods beginning after December 15, 2015. The Company adopted this guidance as of January 1, 2016 and it did not have a material impact on our consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17 "Income Taxes (ASC 740): Balance Sheet Classification of Deferred Taxes". This ASU requires all deferred income tax assets and liabilities be presented as non-current in classified balance sheets. This can be applied prospectively or retrospectively and must disclose the reason for the change in accounting principle, the application applied and if applied retrospectively, include quantitative information about the effects of the change on prior periods. This standard is effective for annual and interim periods beginning after December 15, 2016. The Company retrospectively implemented this new guidance in the first quarter of 2016. The below table summarizes the adjustments made to conform prior period classification with the new guidance:

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	December 31, 2015
	As Filed			Reclass			As Adjusted
Current deferred income tax assets	$	14,150		(14,150		)	—
Long-term deferred income tax assets	1,332			2,906			4,238
Long-term deferred income tax liabilities	(114,623		)	11,244			(103,379		)
	$	(99,141	)	$	—		$	(99,141	)

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU requires all tax effects to run through the statement of operations, where historically tax benefits in excess of compensation cost ran through equity. It also allows employers' to withhold the maximum amount of individual tax withholdings without resulting in liability accounting. Finally, the ASU allows companies to make an accounting policy election regarding the impact of forfeitures on expense related to share based awards. This new guidance is effective for periods beginning after December 15, 2016, however early adoption is permitted. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

Note 14 - Business Acquisition

On January 4, 2016, we acquired all of the stock of SurgiQuest, Inc. ("SurgiQuest") for $257.7 million in cash (based on an aggregate purchase price of $265 million as adjusted pursuant to the merger agreement governing the acquisition). SurgiQuest develops, manufactures and markets the AirSeal^® System, the first integrated access management technology for use in laparoscopic and robotic procedures. This proprietary and differentiated access system is complementary to our current advanced surgical offering. The acquisition was funded through a combination of cash on hand and long-term borrowings.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the SurgiQuest acquisition. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated condensed financial statements were prepared. Accordingly, the allocation of purchase price is preliminary and therefore subject to adjustment in future periods.

Cash	$	1,305
Other current assets	16,681
Current assets	17,986
Property, plant & equipment	3,332
Goodwill	136,358
Customer and distributor relationships	76,420
Developed technology	49,600
Trademarks & tradenames	4,780
Other non-current assets	302
Total assets acquired	$	288,778
Current liabilities assumed	10,586
Deferred income taxes	20,009
Other long-term liabilities	454
Total liabilities assumed	31,049
Net assets acquired	$	257,729

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The goodwill recorded as part of the acquisition primarily represents revenue synergies, as well as operating efficiencies and cost savings. Goodwill deductible for tax purposes is $11.5 million. The weighted amortization period for intangibles acquired is 20 years. Customer and distributor relationships, developed technology and trademarks and tradenames are being amortized over a weighted average life of 22, 17 and 23 years, respectively.

The unaudited pro forma information for the quarters ended March 31, 2016 and 2015, assuming SurgiQuest occurred as of January 1, 2015 are presented below. This information has been prepared for comparative purposes only and does not purport to be indicative of the results of operations which actually would have resulted had the SurgiQuest acquisition occurred on the dates indicated, or which may result in the future.

	Three Months Ended March 31,
	2016		2015
Net sales	$	181,201	$	187,324
Net income (loss)	6,323		(6,856		)

These pro forma results include certain adjustments, primarily due to increases in amortization expense due to fair value adjustments of intangible assets, increases in interest expense due to additional borrowings incurred to finance the acquisition, and acquisition related costs including transaction costs such as legal, accounting, valuation and other professional services as well as integration costs such as severance and retention.

Acquisition related costs included in the determination of pro forma net income for the three months ended March 31, 2015 totaled $9.0 million and are included in selling and administrative expenses on the consolidated condensed statement of comprehensive income (loss). Such amounts are excluded from the determination of pro forma net income for the three months endedMarch 31, 2016.

Net sales associated with SurgiQuest of $12.7 million have been recorded in the consolidated condensed statement of comprehensive income (loss) for the three months endedMarch 31, 2016. It is impracticable to determine the earnings recorded in the consolidated condensed statement of comprehensive income (loss) for the three months endedMarch 31, 2016 as these amounts are not separately measured.

Note 15 - Amended and Restated Senior Credit Agreement

On January 4, 2016 we entered into an amended and restated senior credit agreement (the "fifth amended and restated senior credit agreement") consisting of: (a) a $175.0 million term loan facility and (b) a $525.0 million revolving credit facility both expiring on January 4, 2021. The term loan is payable in quarterly installments increasing over the term of the facility. Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement and to finance the acquisition of SurgiQuest. Initially, the interest rates are at LIBOR plus a base rate or a Eurocurrency rate plus an applicable margin. The applicable margin for base rate loans is 1.00% and for Eurocurrency rate loans is 2.00% (2.43% at March 31, 2016). In conjunction with this agreement, we incurred charges included in other expense in the statements of comprehensive income (loss) related to an agreement between the Company and JP Morgan Chase Bank, N.A. totaling $2.7 million and recorded a loss on the early extinguishment of debt of $0.3 million.

There were $172.8 million in borrowings outstanding on the term loan as of March 31, 2016. There were $344.4 million in borrowings outstanding under the revolving credit facility as of March 31, 2016. Our available borrowings on the revolving credit facility at March 31, 2016 were $175.5 million with approximately $5.1 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 amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and restrictions as of March 31, 2016. We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.

The scheduled maturities of long-term debt outstanding at March 31, 2016 are as follows:

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April 1, 2016 - March 31, 2017	$	10,089
April 1, 2017 - March 31, 2018	11,296
April 1, 2018 - March 31, 2019	15,792
April 1, 2019 - March 31, 2020	18,336
April 1, 2020 - March 31, 2021	466,920

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

Forward-Looking Statements

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

Forward-Looking Statements are not Guarantees of Future Performance

Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that may cause our actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include those identified under “Risk Factors” in our Annual Report on Form 10-K for the year-ended December 31, 2015 and the following, among others:

• general economic and business conditions;

• changes in foreign exchange and interest rates;

• cyclical customer purchasing patterns due to budgetary and other constraints;

• changes in customer preferences;

• competition;

• changes in technology;

• the introduction and acceptance of new products;

• the ability to evaluate, finance and integrate acquired businesses, products and companies;

• changes in business strategy;

• the availability and cost of materials;

• the possibility that United States or foreign regulatory and/or administrative agencies may initiate enforcement actions against us or our distributors;

• future levels of indebtedness and capital spending;

• quality of our management and business abilities and the judgment of our personnel;

• the availability, terms and deployment of capital;

• the risk of litigation, especially patent litigation, as well as the cost associated with patent and other litigation;

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

• compliance with and changes in regulatory requirements.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below and “Risk Factors” and “Business” in our Annual Report on Form 10-K for the year-ended December 31, 2015 for a further discussion of these factors. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

Overview

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

Our product lines consist of orthopedic surgery, general surgery and surgical visualization. Orthopedic surgery consists of sports medicine instrumentation and small bone, large bone and specialty powered surgical instruments and service fees related

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to the promotion and marketing of sports medicine allograft tissue. General surgery consists of a complete line of endo-mechanical instruments 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 imaging systems for use in minimally invasive orthopedic and general surgery procedures including 2DHD and 3DHD vision technologies. These product lines as a percentage of consolidated net sales are as follows:

	Three Months Ended March 31,
	2016		2015
Orthopedic surgery	51.6	%	55.4	%
General surgery	41.9	%	37.1	%
Surgical visualization	6.5	%	7.5	%
Consolidated net sales	100.0	%	100.0	%

A significant amount of our products are used in surgical procedures with approximately 80% of our revenues derived from the sale of single-use 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 47% during the three months endedMarch 31, 2016.

Business Environment

2015 was a year of continued change and transformation for CONMED Corporation. During the year, we filled the remaining executive positions in a now entirely revamped leadership team. We also aligned our marketing product strategy road map with our research and development resource allocation to re-invigorate our organic product pipeline, while leveraging our restored business development function to actively pursue additional acquisitions. As discussed more fully in our Annual Report on Form 10-K, we had three acquisitions over the course of the year.

On January 4, 2016, we acquired SurgiQuest, Inc. ("SurgiQuest") for $257.7 million in cash (based on an aggregate purchase price of $265 million as adjusted pursuant to the merger agreement governing the acquisition). SurgiQuest develops, manufactures and markets the AirSeal^® System, the first integrated access management technology for use in laparoscopic and robotic procedures. This proprietary and differentiated access system is complementary to our current advanced surgical offering. We expect this access system to generate approximately $55 to $60 million in revenue in 2016.

We plan to continue to restructure both operations and administrative functions as necessary throughout the organization. We have successfully completed our restructuring plans over the past few years, however, we cannot be certain further activities, will be completed in the estimated time period or that planned cost savings will be achieved.

Finally, 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. As discussed in Note 12 to the consolidated condensed financial statements, we have an outstanding warning letter issued by the FDA related to an inspection of our Centennial, Colorado facility.

Critical Accounting Policies

Preparation of our financial statements requires us to make estimates and assumptions which affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year-ended December 31, 2015 describes the significant accounting policies used in preparation of the Consolidated Financial Statements. On an ongoing basis, we evaluate the critical accounting policies used to prepare our consolidated financial statements, including, but not limited to, those related to:

• revenue recognition;

• inventory valuation;

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• goodwill and intangible assets;

• pension plan;

• stock-based compensation costs; and

• income taxes.

There have been no material changes in these aforementioned critical accounting policies.

Consolidated Results of Operations

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

	Three Months Ended March 31,
	2016		2015
Net sales	100.0	%	100.0	%
Cost of sales	46.1		48.1
Gross profit	53.9		51.9
Selling and administrative expense	47.4		42.0
Research and development expense	4.6		3.7
Income from operations	1.9		6.2
Other expense	1.6		—
Interest expense	2.1		0.8
Income (loss) before income taxes	(1.8	)	5.4
Provision (benefit) for income taxes	(0.5	)	1.8
Net income (loss)	(1.3	)%	3.6	%

Sales

Sales for the three months endedMarch 31, 2016 were $181.2 million, an increase of $3.3 million (1.8%) compared to sales of $177.9 million in the three months endedMarch 31, 2015 mainly due to the SurgiQuest acquisition. Excluding SurgiQuest, total sales decreased $9.4 million (-5.3%) to $168.5 million. In constant currency, excluding the effects of the hedging program, sales increased 5.0%. Sales of capital equipment decreased $1.5 million (-4.0%) to $36.3 million in the three months endedMarch 31, 2016 from $37.8 million in the three months endedMarch 31, 2015; sales of single-use products increased $4.8 million (3.4%) to $144.9 million in the three months endedMarch 31, 2016 from $140.1 million in the three months endedMarch 31, 2015.  On a constant currency basis, excluding the effects of our hedging program, sales of capital equipment decreased 1.1% and single-use products increased 6.7%.

• Orthopedic surgery sales decreased $5.2 million (-5.2%) to $93.4 million in the three months endedMarch 31, 2016 from $98.6 million in the three months endedMarch 31, 2015 due primarily to the impact of unfavorable foreign currency exchange rates.  In constant currency, excluding the effects of the hedging program, sales decreased 1.2% as a result of reduced sales of capital equipment outside of the United States.

• General surgery sales increased $9.8 million (14.9%) in the three months endedMarch 31, 2016 to $75.9 million from $66.1 million in the three months endedMarch 31, 2015. In constant currency, excluding the effects of the hedging program, sales increased 16.7%. Excluding SurgiQuest, sales decreased 4.3% due primarily to the impact of unfavorable foreign currency exchange rates and lower sales of our electrosurgical generators. 

• Surgical visualization sales decreased $1.3 million (-10.7%) in the three months endedMarch 31, 2016 to $11.9 million from $13.2 million in the three months endedMarch 31, 2015 mainly due to lower sales in our 3DHD video systems.  In constant currency, excluding the effects of the hedging program, sales decreased 7.7%.

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Cost of Sales

Cost of sales decreased to $83.5 million in the three months endedMarch 31, 2016 as compared to $85.7 million in the three months endedMarch 31, 2015.  Gross profit margins increased 2.0 percentage points to 53.9% in the three months endedMarch 31, 2016 as compared to 51.9% in the three months endedMarch 31, 2015.  The increase in gross profit margins of 2.0 percentage points is mainly a result of the impact of favorable production variances (3.5 percentage points) offset by unfavorable foreign currency exchange rates on sales (1.5 percentage points).

Selling and Administrative Expense

Selling and administrative expense increased to $85.9 million in the three months endedMarch 31, 2016 as compared to $74.8 million in the three months endedMarch 31, 2015. Selling and administrative expense as a percentage of net sales increased to 47.4% in the three months endedMarch 31, 2016 as compared to 42.0% in the three months endedMarch 31, 2015. The factors affecting the $11.1 million increase in selling and administrative expenses in the three months ended March 31, 2016 compared to the three months ended March 31, 2015 included (1) $9.0 million in investment banking fees, consulting fees, legal fees and integration related costs associated with the acquisition of SurgiQuest as further described in Note 10 and Note 14 to the consolidated condensed financial statements (2) incremental on-going sales and marketing expenses primarily to support the SurgiQuest acquisition offset by (3) a $3.4 million decrease in severance and other related costs ($2.8 million in the three months ended March 31, 2016 compared to $6.2 million in the three months ended March 31, 2015) from the restructuring of certain of our sales, marketing and administrative functions.

Research and Development Expense

Research and development expense increased to $8.3 million in the three months endedMarch 31, 2016 as compared to $6.5 million in the three months endedMarch 31, 2015.  As a percentage of net sales, research and development expense increased 0.9 percentage points in the three months endedMarch 31, 2016 to 4.6% as compared to 3.7% in the same period a year ago as we incurred higher project and regulatory related costs.

Other Expense

Other expense in the three months endedMarch 31, 2016 related to costs associated with our fifth amended and restated senior credit agreement entered into on January 4, 2016 as further described in Note 15 to consolidated condensed financial statements. These costs include a $2.7 million charge related to an agreement between the Company and JP Morgan Chase Bank, N.A. and a loss on the early extinguishment of debt of $0.3 million.

Interest Expense

Interest expense increased to $3.8 million in the three months endedMarch 31, 2016 from $1.5 million in the three months endedMarch 31, 2015 due to the additional borrowings and higher interest rates under the fifth amended and restated senior credit agreement as further described in Note 15 to the consolidated condensed financial statements.  The weighted average interest rates on our borrowings increased to 2.91% in the three months endedMarch 31, 2016 as compared to 2.20% in the three months endedMarch 31, 2015.  

Provision for Income Taxes

Income tax benefit has been recorded at an effective tax rate of 29.9% for the three months endedMarch 31, 2016 compared to income tax expense recorded at an effective tax rate of 33.5% in the three months endedMarch 31, 2015. The income tax benefit resulted from the pre-tax net loss generated in the three months endedMarch 31, 2016 as compared to the pre-tax net income generated in the three months endedMarch 31, 2015.  The decrease in the effective rate was mainly due to a higher proportion of earnings in foreign jurisdictions where the tax rates are lower than the statutory federal rate and benefits recorded during the three months endedMarch 31, 2016 for the federal research credit, which was not legislatively enacted during the three months endedMarch 31, 2015. These benefits were offset by tax expense related to nondeductible SurgiQuest acquisition costs recorded in the three months endedMarch 31, 2016.  A reconciliation of the United States statutory income tax rate to our effective tax rate is included in our Annual Report on Form 10-K for the year ended December 31, 2015, under 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

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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. 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.

Operating cash flows

Our net working capital position was $264.8 million at March 31, 2016.  Net cash provided by (used in) operating activities was $(17.3) million and $14.8 million in the three months endedMarch 31, 2016 and 2015, respectively, generated on net income (loss) of $(2.3) million and $6.3 million for the three months endedMarch 31, 2016 and 2015, respectively.

The decrease in cash flows from operating activities for the three months endedMarch 31, 2016 compared to March 31, 2015 is mainly related to lower net income in the period due to costs associated with the SurgiQuest acquisition and related financing costs, as discussed above.  In addition, other significant changes in working capital which impacted cash flow in the three months endedMarch 31, 2016 included the following: 

• A reduction in accounts receivable reflecting strong collections on fourth quarter 2015 sales;

• An increase in inventories during the three months endedMarch 31, 2016 compared with year-end related to SurgiQuest finished goods and field inventories to support the acquisition integration and anticipated sales growth, and increases associated with anticipated new products launching in 2016. 

• A decrease in accounts payable due partially to a post-acquisition pay down of acquired SurgiQuest accounts payable to facilitate the consolidation of SurgiQuest systems. 

• A reduction in accrued compensation and benefits driven primarily by payment of incentive compensation accrued at December 31, 2015.

• An increase in other assets due primarily as a result of the reclassification of certain cash balances to restricted cash in conjunction with the SurgiQuest acquisition;  restricted cash will be paid out over the balance of the year to former employees of SurgiQuest.

Investing cash flows

Net cash used in investing activities in the three months endedMarch 31, 2016 consisted of a $256.4 million payment for the SurgiQuest acquisition and capital expenditures. Capital expenditures were $2.8 million and $4.1 million in the three months endedMarch 31, 2016 and 2015, respectively, and are expected to approximate $16.0 million in 2016.

Financing cash flows

Financing activities in the first three months of 2016 provided cash of $223.2 million compared to a use of $4.6 million in the same period a year ago. During 2016, we had borrowings of $253.0 million under our amended and restated senior credit agreement compared to $17.0 million in 2015. These sources were offset by payments related to the issuance of debt of $5.6 million in 2016 and a $2.2 million payment on our term loan under the amended and restated senior credit agreement.

As described in Note 15 to the consolidated condensed financial statements, on January 4, 2016, we entered into a fifth amended and restated senior credit agreement (the "amended and restated senior credit agreement") consisting of: (a) a $175.0 million term loan facility and (b) a $525.0 million revolving credit facility both expiring on January 4, 2021. The term loan is payable in quarterly installments increasing over the term of the facility. Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement and to finance the acquisition of SurgiQuest. Initial interest rates are at LIBOR plus a base rate or a Eurocurrency rate plus an applicable margin (2.43% at March 31, 2016). The applicable margin for base rate loans is 1.00% and for Eurocurrency rate loans is 2.00%.

There were $172.8 million in borrowings outstanding on the term loan as of March 31, 2016. There were $344.4 million in borrowings outstanding under the revolving credit facility as of March 31, 2016. Our available borrowings on the revolving

21

credit facility at March 31, 2016 were $175.5 million with approximately $5.1 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 amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and restrictions as of March 31, 2016. 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 $5.2 million at March 31, 2016. 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 March 31, 2016, we have repurchased a total of 6.1 million shares of common stock aggregating $162.6 million under this authorization and have $37.4 million remaining available for share repurchases. We have not purchased any shares of common stock under the share repurchase program during 2016. 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 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.

Restructuring

During 2016 and 2015, we continued our operational restructuring plan. The consolidation of our Centennial, Colorado manufacturing operations into other existing CONMED manufacturing facilities is substantially complete. We incurred $0.9 million and $2.3 million in costs associated with the operational restructuring during the three months endedMarch 31, 2016 and 2015, respectively. These costs were charged to cost of sales and include severance and other charges associated with the consolidation.

During 2016 and 2015, we restructured certain sales, marketing and administrative functions and incurred severance and other related costs in the amount of $2.8 million and $6.2 million for the three months endedMarch 31, 2016 and 2015, respectively. These costs were charged to selling and administrative expense.

We have recorded an accrual in current and other long term liabilities of $3.9 million at March 31, 2016 mainly related to severance associated with the restructuring. 

We plan to continue to restructure both operations and administrative functions as necessary throughout the organization, however this plan is currently being evaluated and therefore we cannot estimate the costs.  When this plan is finalized it will result in additional charges, including employee termination costs and other exit costs that will be charged to cost of sales and selling and administrative expense. 

During the three months endedMarch 31, 2016, we had approximately $1.0 million in net savings in cost of sales from the Centennial consolidation principally as a result of lower employee costs.

See Note 10 to the Consolidated Condensed Financial Statements for further discussions regarding restructuring.

22

Contractual Obligations

On January 4, 2016 we entered into a fifth amended and restated senior credit agreement consisting of: (a) a $175.0 million term loan facility and (b) a $525.0 million revolving credit facility both expiring on January 4, 2021. As a result, the below is a summary of our long-term debt obligations for the next five years as of March 31, 2016:

		Payments Due by Period
	Total	Less than 1 Year	1-3 Years	3-5 Years
Long-term debt	522,433	10,089	27,088	485,256

New accounting pronouncements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in our primary market risk exposures or in how these exposures are managed during the three months ended March 31, 2016.  Reference is made to Item 7A. of our Annual Report on Form 10-K for the year ended December 31, 2015 for a description of Qualitative and Quantitative Disclosures About Market Risk.

Item 4.  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) and 15d-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) and 15d-15(f) under the Securities Exchange Act of 1934) occurred during the quarter ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Reference is made to Item 3 of the Company’s Annual Report on Form 10-K for the year-ended December 31, 2015 and to Note 12 of the Notes to Consolidated Condensed Financial Statements included in Part I of this Report for a description of certain legal matters.

23

Item 6. Exhibits

Exhibit No.	Description of Exhibit
31.1	Certification of Curt R. Hartman pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Luke A. Pomilio pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Curt R. Hartman and Luke A. Pomilio pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from CONMED Corporation's Quarterly Report on Form 10-Q for the three months ended March 31, 2016 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015, (ii) the Consolidated Condensed Balance Sheets at March 31, 2016 and December 31, 2015, (iii) Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2016 and 2015, and (iv) Notes to Consolidated Condensed Financial Statements for the three months ended March 31, 2016.  In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

24

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/ Luke A. Pomilio

Luke A. Pomilio

Executive Vice President, Finance and

Chief Financial Officer

Date:  

May 2, 2016

25

Exhibit Index

		Sequential Page
Exhibit		Number
31.1	Certification of Curt R. Hartman pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	E-1
31.2	Certification of Luke A. Pomilio pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	E-2
32.1	Certifications of Curt R. Hartman and Luke A. Pomilio pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	E-3
101	The following materials from CONMED Corporation’s Quarterly Report on Form 10-Q for the three months ended March 31, 2016 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015, (ii) the Consolidated Condensed Balance Sheets at March 31, 2016 and December 31, 2015, (iii) Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2016 and 2015, and (iv) Notes to Consolidated Condensed Financial Statements for the three months ended March 31, 2016. In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

26

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Curt R. Hartman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CONMED Corporation;

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

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

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

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 2, 2016

/s/ Curt R. Hartman

Curt R. Hartman

President & Chief Executive Officer

E-1

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Luke A. Pomilio, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CONMED Corporation;

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

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

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

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 2, 2016

/s/ Luke A. Pomilio

Luke A. Pomilio

Executive Vice President, Finance and

Chief Financial Officer

E-2

EX-32.1

Exhibit 32.1

CERTIFICATIONS

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (the “Form 10-Q”) of the Corporation fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date:	May 2, 2016	/s/ Curt R. Hartman
		Curt R. Hartman
		President & Chief Executive Officer
Date:	May 2, 2016	/s/ Luke A. Pomilio
		Luke A. Pomilio
		Executive Vice President, Finance and
		Chief Financial Officer

E-3

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 28, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	CONMED CORP
Entity Central Index Key	0000816956
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		27,751,474

XML

Consolidated Condensed Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Net sales	$ 181,201	$ 177,940
Cost of sales	83,461	85,658
Gross profit	97,740	92,282
Selling and administrative expense	85,943	74,786
Research and development expense	8,258	6,542
Total operating expenses	94,201	81,328
Income from operations	3,539	10,954
Other expense	2,942	0
Interest expense	3,830	1,460
Income (loss) before income taxes	(3,233)	9,494
Provision (benefit) for income taxes	(968)	3,182
Net income (loss)	(2,265)	6,312
Comprehensive income (loss)	$ 787	$ (3,715)
Per share data:
Basic (in dollars per share)	$ (0.08)	$ 0.23
Diluted (in dollars per share)	(0.08)	0.23
Dividends per share of common stock (in dollars per share)	$ 0.20	$ 0.20
Weighted average common shares:
Basic (shares)	27,721	27,573
Diluted (shares)	27,721	27,820

XML

Consolidated Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
ASSETS
Cash and cash equivalents	$ 19,894	$ 72,504
Accounts receivable, net	134,412	133,863
Inventories	185,108	166,894
Prepaid expenses and other current assets	28,520	20,076
Total current assets	367,934	393,337
Property, plant and equipment, net	126,827	125,452
Goodwill	398,387	260,651
Other intangible assets, net	434,196	308,171
Other assets	15,439	14,089
Total assets	1,342,783	1,101,700
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt	10,089	1,339
Accounts payable	29,030	34,720
Accrued compensation and benefits	27,580	31,823
Other current liabilities	36,459	51,836
Total current liabilities	103,158	119,718
Long-term debt	511,598	269,471
Deferred income taxes	119,433	103,379
Other long-term liabilities	26,305	24,059
Total liabilities	$ 760,494	$ 516,627
Commitments and contingencies
Preferred stock, par value $.01 per share; authorized 500,000 shares; none outstanding	$ 0	$ 0
Common stock, par value $.01 per share; 100,000,000 shares authorized; 31,299,194 shares issued in 2016 and 2015, respectively	313	313
Paid-in capital	325,886	324,915
Retained earnings	406,695	414,506
Accumulated other comprehensive loss	(50,842)	(53,894)
Less: 3,556,032 and 3,590,409 shares of common stock in treasury, at cost in 2016 and 2015, respectively	(99,763)	(100,767)
Total shareholders' equity	582,289	585,073
Total liabilities and shareholders' equity	$ 1,342,783	$ 1,101,700

XML

Consolidated Condensed Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Preferred stock, par value (dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares outstanding	0	0
Common stock, par value (dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	31,299,194	31,299,194
Treasury stock, shares	3,556,032	3,590,409

XML

Consolidated Condensed Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from operating activities:
Net income (loss)	$ (2,265)	$ 6,312
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	4,986	4,633
Amortization	8,272	5,537
Stock-based compensation	2,489	1,856
Deferred income taxes	(2,942)	1,253
Loss on early extinguishment of debt	254	0
Increase (decrease) in cash flows from changes in assets and liabilities, net of acquired assets:
Accounts receivable	11,428	(3,805)
Inventories	(10,720)	(1,155)
Accounts payable	(11,109)	3,733
Accrued compensation and benefits	(7,519)	(4,485)
Other assets	(7,662)	2,917
Other liabilities	(2,492)	(1,987)
Total operating	(15,015)	8,497
Net cash provided by (used in) operating activities	(17,280)	14,809
Cash flows from investing activities:
Purchases of property, plant and equipment	(2,789)	(4,061)
Payments related to business acquisitions, net of cash acquired	(256,424)	(853)
Net cash used in investing activities	(259,213)	(4,914)
Cash flows from financing activities:
Payments on senior credit agreement	(2,188)	0
Proceeds from senior credit agreement	253,005	17,000
Payments related to distribution agreement	(16,667)	(16,667)
Payments related to debt issuance costs	(5,556)	0
Dividends paid on common stock	(5,542)	(5,510)
Other, net	110	543
Net cash provided by (used in) financing activities	223,162	(4,634)
Effect of exchange rate changes on cash and cash equivalents	721	(5,864)
Net decrease in cash and cash equivalents	(52,610)	(603)
Cash and cash equivalents at beginning of period	72,504	66,332
Cash and cash equivalents at end of period	19,894	65,729
Non-cash financing activities:
Dividends payable	$ 5,546	$ 5,516

XML

Operations

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Operations

Operations

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

XML

Interim Financial Information

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim financial information

Interim Financial Information

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. Results for the period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

The consolidated condensed financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2015 included in our Annual Report on Form 10-K.

XML

Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2016

Comprehensive Income (Loss) [Abstract]

Comprehensive Income

Comprehensive Income (Loss)

Comprehensive income (loss) consists of the following:

	Three Months Ended March 31,
	2016			2015
Net income (loss)	$	(2,265	)	$	6,312
Other comprehensive income (loss):
Pension liability, net of income tax (income tax expense of $257 and $300 for the three months ended March 31, 2016 and 2015, respectively)	438			512
Cash flow hedging gain (loss), net of income tax (income tax expense (benefit) of ($1,299) and $1,150 for the three months ended March 31, 2016 and 2015, respectively)	(2,217		)	1,962
Foreign currency translation adjustment	4,831			(12,501		)
Comprehensive income (loss)	$	787		$	(3,715	)

Accumulated other comprehensive loss consists of the following:

	Cash Flow Hedging Gain (Loss)			Pension Liability			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2015	$	1,201		$	(25,982	)	$	(29,113	)	$	(53,894	)
Other comprehensive income (loss) before reclassifications, net of tax	(1,891		)	—			4,831			2,940
Amounts reclassified from accumulated other comprehensive income (loss) before taxa	(517		)	695			—			178
Income tax provision (benefit)	191			(257		)	—			(66		)
Net current-period other comprehensive income (loss)	(2,217		)	438			4,831			3,052
Balance, March 31, 2016	$	(1,016	)	$	(25,544	)	$	(24,282	)	$	(50,842	)

	Cash Flow Hedging Gain (Loss)			Pension Liability			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2014	$	3,276		$	(30,760	)	$	(12,338	)	$	(39,822	)
Other comprehensive income (loss) before reclassifications, net of tax	275			—			(12,501		)	(12,226		)
Amounts reclassified from accumulated other comprehensive income before taxa	2,676			812			—			3,488
Income tax provision (benefit)	(989		)	(300		)	—			(1,289		)
Net current-period other comprehensive income (loss)	1,962			512			(12,501		)	(10,027		)
Balance, March 31, 2015	$	5,238		$	(30,248	)	$	(24,839	)	$	(49,849	)

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

XML

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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

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

Foreign Currency Forward Contracts. We hedge 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 March 31, 2016 which have been accounted for as cash flow hedges totaled $101.8 million. Net realized gains recognized for forward contracts accounted for as cash flow hedges approximated $0.5 million and $2.7 million for the three months endedMarch 31, 2016 and 2015, 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 $1.0 million at March 31, 2016. It is expected these unrealized losses will be recognized in the consolidated condensed statement of comprehensive income in 2016 and 2017.

We also enter into forward contracts to exchange foreign currencies for United States dollars in order to hedge our currency transaction exposures on intercompany receivables denominated in foreign currencies.  These forward contracts settle each month at month-end, at which time we enter into new forward contracts.  We have not designated these forward contracts as hedges and have not applied hedge accounting to them.  The notional contract amounts for forward contracts outstanding at March 31, 2016 which have not been designated as hedges totaled $21.3 million. Net realized gains and losses recognized in connection with those forward contracts not accounted for as hedges approximated $(0.3) million and $0.6 million for the three months endedMarch 31, 2016 and 2015, respectively, offsetting gains and losses on our intercompany receivables of $0.4 million and $(0.7) million for the three months endedMarch 31, 2016 and 2015, respectively. These gains and losses have been recorded in selling and administrative expense in the consolidated condensed statements of comprehensive income.

We record these forward foreign exchange contracts at fair value; the following tables summarize the fair value for forward foreign exchange contracts outstanding at March 31, 2016 and December 31, 2015:

March 31, 2016	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	$	930	Other current liabilities	$	(2,541	)	$	(1,611	)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	7		Other current liabilities	(26		)	(19		)
Total derivatives		$	937		$	(2,567	)	$	(1,630	)

December 31, 2015	Asset Balance Sheet Location	Fair Value		Liabilities Balance Sheet Location	Fair Value			Net  Fair Value
Derivatives designated as hedged instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	$	2,931	Prepaid expenses and other current assets	$	(1,026	)	$	1,905
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	4		Prepaid expenses and other current assets	(38		)	(34		)
Total derivatives		$	2,935		$	(1,064	)	$	1,871

Our forward foreign exchange contracts are subject to a master netting agreement and qualify for netting in the consolidated balance sheets. Accordingly, at March 31, 2016 and December 31, 2015, we have recorded the net fair value of $1.6 million in other current liabilities and $1.9 million in prepaid expenses and other current assets, respectively.

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

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

Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of March 31, 2016 consist of forward foreign exchange contracts and contingent liabilities associated with the EndoDynamix, Inc. acquisition. 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 EndoDynamix, Inc. acquisition involves the potential for the payment of future contingent consideration upon the achievement of certain product development milestones and revenue based payments. Contingent consideration is recorded at the estimated fair value of the contingent milestone and revenue based payments on the acquisition date. The fair value of the contingent consideration is remeasured at the estimated fair value at each reporting period with the change in fair value recognized as income or expense within selling and administrative expenses in the consolidated condensed statements of comprehensive income. We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements.

The carrying amounts reported in our consolidated condensed balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term debt approximate fair value.

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Inventories

3 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following:

	March 31, 2016		December 31, 2015
Raw materials	$	50,533	$	47,681
Work-in-process	15,211		13,922
Finished goods	119,364		105,291
Total	$	185,108	$	166,894

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Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share (“basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding resulting from employee stock options, restricted stock units, performance share units and stock appreciation rights ("SARs") during the period. The following table sets forth the computation of basic and diluted earnings per share for the three months endedMarch 31, 2016 and 2015:

	Three Months Ended March 31,
	2016			2015
Net income (loss)	$	(2,265	)	$	6,312
Basic – weighted average shares outstanding	27,721			27,573
Effect of dilutive potential securities	—			247
Diluted – weighted average shares outstanding	27,721			27,820
Net income (loss)
Basic (per share)	$	(0.08	)	$	0.23
Diluted (per share)	(0.08		)	0.23

The shares used in the calculation of diluted EPS exclude options and SARs to purchase shares where the exercise price was greater than the average market price of common shares for the period and the effect of the inclusion would be anti-dilutive. Such shares were not material in the three months endedMarch 31, 2015. As the Company was in a net loss position at March 31, 2016, there were no anti-dilutive shares.

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2016

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 three months ended March 31, 2016 are as follows:

Balance as of December 31, 2015	$	260,651
Goodwill resulting from business acquisitions	136,358
Foreign currency translation	1,378
Balance as of March 31, 2016	$	398,387

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.  During the three months endedMarch 31, 2016, the Company acquired SurgiQuest, Inc. ("SurgiQuest") as further described in Note 14. Goodwill resulting from the acquisition amounted to $136.4 million and acquired intangible assets including customer and distributor relationships, developed technology and trademarks and tradenames amounted to $130.8 million.

Other intangible assets consist of the following:

	March 31, 2016					December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer and distributor relationships	$	213,338	$	(67,110	)	$	136,871	$	(64,423	)
Promotional, marketing and distribution rights	149,376		(25,500		)	149,376		(24,000		)
Patents and other intangible assets	71,642		(43,384		)	66,688		(42,885		)
Developed technology	49,600		(310		)	—		—
Unamortized intangible assets:
Trademarks and tradenames	86,544		—			86,544		—
	$	570,500	$	(136,304	)	$	439,479	$	(131,308	)

Customer and distributor relationships, trademarks and tradenames, developed technology and 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 6, 2016, January 5, 2015 and January 3, 2014, we paid equal installments of $16.7 million and on January 3, 2013, we paid $34.0 million of the additional consideration.

Amortization expense related to intangible assets which are subject to amortization totaled $5.0 million and $3.2 million in the three months endedMarch 31, 2016 and 2015, respectively, and 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 condensed statements of comprehensive income. The weighted average amortization period for intangible assets which are amortized is 25 years. Customer and distributor relationships are being amortized over a weighted average life of 29 years. SurgiQuest customer and distributor relationships are being amortized over a weighted average life of 22 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 13 years.  Included in patents and other intangible assets at March 31, 2016 is an in-process research and development asset related to the EndoDynamix, Inc. acquisition that is not currently amortized. Developed technology is being amortized over a weighted average life of 17 years.

The estimated intangible asset amortization expense remaining for the year ending December 31, 2016 and for each of the five succeeding years is as follows:

	Amortization included in expense		Amortization recorded as a reduction of revenue		Total
Remaining, 2016	$	10,699	$	4,500	$	15,199
2017	15,422		6,000		21,422
2018	15,740		6,000		21,740
2019	15,600		6,000		21,600
2020	15,265		6,000		21,265
2021	14,010		6,000		20,010

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Guarantees

3 Months Ended

Mar. 31, 2016

Guarantees [Abstract]

Guarantees

Guarantees

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

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

	2016			2015
Balance as of January 1,	$	2,509		$	2,286
Provision for warranties	833			951
Claims made	(841		)	(873		)
Balance as of March 31,	$	2,501		$	2,364

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Pension Plan

3 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Pension Plan

Pension Plan

Net periodic pension cost consists of the following: 

	Three Months Ended March 31,
	2016			2015
Service cost	$	113		$	67
Interest cost on projected benefit obligation	719			888
Expected return on plan assets	(1,297		)	(1,469		)
Net amortization and deferral	695			812
Net periodic pension cost	$	230		$	298

We do not expect to make any pension contributions during 2016.

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Acquisition, Restructuring and Other Expense

3 Months Ended

Mar. 31, 2016

Acquisition, Restructuring and Other Expense [Abstract]

Acquisition, Restructuring and Other Expense [Text Block]

Acquisition, Restructuring and Other Expense

Acquisition, restructuring and other expense consists of the following:

	Three Months Ended March 31,
	2016		2015
Restructuring costs included in cost of sales	$	864	$	2,329
Restructuring costs	$	2,791	$	6,180
Business acquisition costs	9,045		—
Acquisition, restructuring and other expense included in selling and administrative expense	$	11,836	$	6,180
Debt refinancing costs included in other expense	$	2,942	$	—

During the three months endedMarch 31, 2016, we incurred $9.0 million in costs associated with the January 4, 2016 acquisition of SurgiQuest, Inc. as further described in Note 14. These costs include investment banking fees, consulting fees, legal fees and integration related costs.

During the three months endedMarch 31, 2016, we incurred a $2.7 million charge related to an agreement between the Company and JP Morgan Chase Bank, N.A. and recorded a loss on the early extinguishment of debt of $0.3 million in conjunction with the fifth amended and restated senior credit agreement as further described in Note 15.

During 2016 and 2015, we continued our operational restructuring plan. The consolidation of our Centennial, Colorado manufacturing operations into other existing CONMED manufacturing facilities is substantially complete. We incurred $0.9 million and $2.3 million in costs associated with the operational restructuring during the three months endedMarch 31, 2016 and 2015, respectively. These costs were charged to cost of sales and include severance and other charges associated with the consolidation.

In conjunction with the consolidation of our Centennial, Colorado manufacturing operations, the facility is currently held for sale and classified in prepaids and other current assets in the consolidated condensed balance sheet. The net book value of this facility at March 31, 2016 was $3.1 million.

During 2016 and 2015, we restructured certain selling and administrative functions and incurred severance and other related costs in the amount of $2.8 million and $6.2 million for the three months endedMarch 31, 2016 and 2015, respectively.

We have recorded an accrual in current and other long term liabilities of $3.9 million at March 31, 2016 mainly related to severance costs associated with the restructuring. Below is a rollforward of the costs incurred and cash expenditures associated with these activities during the three months endedMarch 31, 2016 and 2015:

	2016			2015
Balance as of January 1,	$	7,175		$	8,254
Expenses incurred	3,655			8,509
Payments made	(6,955		)	(7,885		)
Balance at March 31,	$	3,875		$	8,878

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Business Segments

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Business Segments

Business Segments

We are accounting and reporting for our business as a single operating segment entity engaged in the development, manufacturing and sale on a global basis of surgical devices and related equipment. 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.

Our product lines consist of orthopedic surgery, general surgery and surgical visualization. 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 imaging systems for use in minimally invasive orthopedic and general surgery procedures including 2DHD and 3DHD vision technologies. These product lines' net sales are as follows:

	Three Months Ended March 31,
	2016		2015
Orthopedic surgery	$	93,441	$	98,597
General surgery	75,902		66,062
Surgical visualization	11,858		13,281
Consolidated net sales	$	181,201	$	177,940

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Legal Proceedings

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

Legal Proceedings

From time to time, we are subject to claims alleging product liability, patent infringement or other claims incurred in the ordinary course of business. These may involve our United States or foreign operations, or sales by foreign distributors. Likewise, from time to time, the Company may receive an information request or subpoena from a government agency such as the Securities and Exchange Commission, Department of Justice, 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 information requests or 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 any such pending 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 financial 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.

During the third quarter of 2013, the U.S. Food and Drug Administration ("FDA") inspected our Centennial, Colorado manufacturing facility and issued a Form 483 with observations on September 20, 2013. We 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 undertook corrective actions. During the fourth quarter of 2014, the FDA again inspected our Centennial, Colorado manufacturing facility and, on November 18, 2014, issued a Form 483 with eight observations, three of which the FDA characterized as repeat observations. On December 10, 2014, we responded to the Form 483 observations. We have received some additional questions from the FDA and have responded to these questions on April 25, 2015.  The remediation costs to date have not been material, although there can be no assurance that responding to the Form 483 observations or 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 that could be material.

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements

New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 by one year. This ASU is effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted as of January 1, 2017. We plan to adopt this ASU on January 1, 2018. The new standard will become effective beginning with the first quarter of 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating both the impact of adopting this new guidance on the consolidated financial statements and the method of adoption.

In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory". An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. This ASU is effective for annual periods beginning after December 15, 2016. The Company does not believe this new guidance will have a material impact on the consolidated financial statements.

In August 2015, the FASB issued ASU No. 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements". This ASU was issued to clarify the guidance included in ASU 2015-03 "Simplifying the Presentation of Debt Issuance Costs", which requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, ASU 2015-15 was issued to clarify that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2016 and it did not have a material impact on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments". This ASU simplifies the accounting for changes in measurement period adjustments associated with a business combination. It requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. This ASU is effective for annual periods beginning after December 15, 2015. The Company adopted this guidance as of January 1, 2016 and it did not have a material impact on our consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17 "Income Taxes (ASC 740): Balance Sheet Classification of Deferred Taxes". This ASU requires all deferred income tax assets and liabilities be presented as non-current in classified balance sheets. This can be applied prospectively or retrospectively and must disclose the reason for the change in accounting principle, the application applied and if applied retrospectively, include quantitative information about the effects of the change on prior periods. This standard is effective for annual and interim periods beginning after December 15, 2016. The Company retrospectively implemented this new guidance in the first quarter of 2016. The below table summarizes the adjustments made to conform prior period classification with the new guidance:

	December 31, 2015
	As Filed			Reclass			As Adjusted
Current deferred income tax assets	$	14,150		(14,150		)	—
Long-term deferred income tax assets	1,332			2,906			4,238
Long-term deferred income tax liabilities	(114,623		)	11,244			(103,379		)
	$	(99,141	)	$	—		$	(99,141	)

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU requires all tax effects to run through the statement of operations, where historically tax benefits in excess of compensation cost ran through equity. It also allows employers' to withhold the maximum amount of individual tax withholdings without resulting in liability accounting. Finally, the ASU allows companies to make an accounting policy election regarding the impact of forfeitures on expense related to share based awards. This new guidance is effective for periods beginning after December 15, 2016, however early adoption is permitted. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

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Business Acquisition

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Business Acquisition

Business Acquisition

On January 4, 2016, we acquired all of the stock of SurgiQuest, Inc. ("SurgiQuest") for $257.7 million in cash (based on an aggregate purchase price of $265 million as adjusted pursuant to the merger agreement governing the acquisition). SurgiQuest develops, manufactures and markets the AirSeal^® System, the first integrated access management technology for use in laparoscopic and robotic procedures. This proprietary and differentiated access system is complementary to our current advanced surgical offering. The acquisition was funded through a combination of cash on hand and long-term borrowings.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the SurgiQuest acquisition. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated condensed financial statements were prepared. Accordingly, the allocation of purchase price is preliminary and therefore subject to adjustment in future periods.

Cash	$	1,305
Other current assets	16,681
Current assets	17,986
Property, plant & equipment	3,332
Goodwill	136,358
Customer and distributor relationships	76,420
Developed technology	49,600
Trademarks & tradenames	4,780
Other non-current assets	302
Total assets acquired	$	288,778
Current liabilities assumed	10,586
Deferred income taxes	20,009
Other long-term liabilities	454
Total liabilities assumed	31,049
Net assets acquired	$	257,729

The goodwill recorded as part of the acquisition primarily represents revenue synergies, as well as operating efficiencies and cost savings. Goodwill deductible for tax purposes is $11.5 million. The weighted amortization period for intangibles acquired is 20 years. Customer and distributor relationships, developed technology and trademarks and tradenames are being amortized over a weighted average life of 22, 17 and 23 years, respectively.

The unaudited pro forma information for the quarters ended March 31, 2016 and 2015, assuming SurgiQuest occurred as of January 1, 2015 are presented below. This information has been prepared for comparative purposes only and does not purport to be indicative of the results of operations which actually would have resulted had the SurgiQuest acquisition occurred on the dates indicated, or which may result in the future.

	Three Months Ended March 31,
	2016		2015
Net sales	$	181,201	$	187,324
Net income (loss)	6,323		(6,856		)

These pro forma results include certain adjustments, primarily due to increases in amortization expense due to fair value adjustments of intangible assets, increases in interest expense due to additional borrowings incurred to finance the acquisition, and acquisition related costs including transaction costs such as legal, accounting, valuation and other professional services as well as integration costs such as severance and retention.

Acquisition related costs included in the determination of pro forma net income for the three months ended March 31, 2015 totaled $9.0 million and are included in selling and administrative expenses on the consolidated condensed statement of comprehensive income (loss). Such amounts are excluded from the determination of pro forma net income for the three months endedMarch 31, 2016.

Net sales associated with SurgiQuest of $12.7 million have been recorded in the consolidated condensed statement of comprehensive income (loss) for the three months endedMarch 31, 2016. It is impracticable to determine the earnings recorded in the consolidated condensed statement of comprehensive income (loss) for the three months endedMarch 31, 2016 as these amounts are not separately measured.

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Amended and Restated Senior Credit Agreement

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Amended and Restated Senior Credit Agreement

Amended and Restated Senior Credit Agreement

On January 4, 2016 we entered into an amended and restated senior credit agreement (the "fifth amended and restated senior credit agreement") consisting of: (a) a $175.0 million term loan facility and (b) a $525.0 million revolving credit facility both expiring on January 4, 2021. The term loan is payable in quarterly installments increasing over the term of the facility. Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement and to finance the acquisition of SurgiQuest. Initially, the interest rates are at LIBOR plus a base rate or a Eurocurrency rate plus an applicable margin. The applicable margin for base rate loans is 1.00% and for Eurocurrency rate loans is 2.00% (2.43% at March 31, 2016). In conjunction with this agreement, we incurred charges included in other expense in the statements of comprehensive income (loss) related to an agreement between the Company and JP Morgan Chase Bank, N.A. totaling $2.7 million and recorded a loss on the early extinguishment of debt of $0.3 million.

There were $172.8 million in borrowings outstanding on the term loan as of March 31, 2016. There were $344.4 million in borrowings outstanding under the revolving credit facility as of March 31, 2016. Our available borrowings on the revolving credit facility at March 31, 2016 were $175.5 million with approximately $5.1 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 amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and restrictions as of March 31, 2016. We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.

The scheduled maturities of long-term debt outstanding at March 31, 2016 are as follows:

April 1, 2016 - March 31, 2017	$	10,089
April 1, 2017 - March 31, 2018	11,296
April 1, 2018 - March 31, 2019	15,792
April 1, 2019 - March 31, 2020	18,336
April 1, 2020 - March 31, 2021	466,920

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Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2016

Comprehensive Income (Loss) [Abstract]

Schedule of Comprehensive Income

Comprehensive income (loss) consists of the following:

	Three Months Ended March 31,
	2016			2015
Net income (loss)	$	(2,265	)	$	6,312
Other comprehensive income (loss):
Pension liability, net of income tax (income tax expense of $257 and $300 for the three months ended March 31, 2016 and 2015, respectively)	438			512
Cash flow hedging gain (loss), net of income tax (income tax expense (benefit) of ($1,299) and $1,150 for the three months ended March 31, 2016 and 2015, respectively)	(2,217		)	1,962
Foreign currency translation adjustment	4,831			(12,501		)
Comprehensive income (loss)	$	787		$	(3,715	)

Schedule of Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following:

	Cash Flow Hedging Gain (Loss)			Pension Liability			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2015	$	1,201		$	(25,982	)	$	(29,113	)	$	(53,894	)
Other comprehensive income (loss) before reclassifications, net of tax	(1,891		)	—			4,831			2,940
Amounts reclassified from accumulated other comprehensive income (loss) before taxa	(517		)	695			—			178
Income tax provision (benefit)	191			(257		)	—			(66		)
Net current-period other comprehensive income (loss)	(2,217		)	438			4,831			3,052
Balance, March 31, 2016	$	(1,016	)	$	(25,544	)	$	(24,282	)	$	(50,842	)

	Cash Flow Hedging Gain (Loss)			Pension Liability			Cumulative Translation Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2014	$	3,276		$	(30,760	)	$	(12,338	)	$	(39,822	)
Other comprehensive income (loss) before reclassifications, net of tax	275			—			(12,501		)	(12,226		)
Amounts reclassified from accumulated other comprehensive income before taxa	2,676			812			—			3,488
Income tax provision (benefit)	(989		)	(300		)	—			(1,289		)
Net current-period other comprehensive income (loss)	1,962			512			(12,501		)	(10,027		)
Balance, March 31, 2015	$	5,238		$	(30,248	)	$	(24,839	)	$	(49,849	)

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

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Schedule of Fair Value for Forward Foreign Exchange Contracts

We record these forward foreign exchange contracts at fair value; the following tables summarize the fair value for forward foreign exchange contracts outstanding at March 31, 2016 and December 31, 2015:

March 31, 2016	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	$	930	Other current liabilities	$	(2,541	)	$	(1,611	)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	7		Other current liabilities	(26		)	(19		)
Total derivatives		$	937		$	(2,567	)	$	(1,630	)

December 31, 2015	Asset Balance Sheet Location	Fair Value		Liabilities Balance Sheet Location	Fair Value			Net  Fair Value
Derivatives designated as hedged instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	$	2,931	Prepaid expenses and other current assets	$	(1,026	)	$	1,905
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	4		Prepaid expenses and other current assets	(38		)	(34		)
Total derivatives		$	2,935		$	(1,064	)	$	1,871

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Inventories (Tables)

3 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

Schedule of inventory

Inventories consist of the following:

	March 31, 2016		December 31, 2015
Raw materials	$	50,533	$	47,681
Work-in-process	15,211		13,922
Finished goods	119,364		105,291
Total	$	185,108	$	166,894

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Schedule of calculation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share for the three months endedMarch 31, 2016 and 2015:

	Three Months Ended March 31,
	2016			2015
Net income (loss)	$	(2,265	)	$	6,312
Basic – weighted average shares outstanding	27,721			27,573
Effect of dilutive potential securities	—			247
Diluted – weighted average shares outstanding	27,721			27,820
Net income (loss)
Basic (per share)	$	(0.08	)	$	0.23
Diluted (per share)	(0.08		)	0.23

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the net carrying amount of goodwill for the three months ended March 31, 2016 are as follows:

Balance as of December 31, 2015	$	260,651
Goodwill resulting from business acquisitions	136,358
Foreign currency translation	1,378
Balance as of March 31, 2016	$	398,387

Schedule of Finite-Lived and Indefinite-Lived Intangible Assets

Other intangible assets consist of the following:

	March 31, 2016					December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer and distributor relationships	$	213,338	$	(67,110	)	$	136,871	$	(64,423	)
Promotional, marketing and distribution rights	149,376		(25,500		)	149,376		(24,000		)
Patents and other intangible assets	71,642		(43,384		)	66,688		(42,885		)
Developed technology	49,600		(310		)	—		—
Unamortized intangible assets:
Trademarks and tradenames	86,544		—			86,544		—
	$	570,500	$	(136,304	)	$	439,479	$	(131,308	)

Schedule of Estimated Amortization Expense

The estimated intangible asset amortization expense remaining for the year ending December 31, 2016 and for each of the five succeeding years is as follows:

	Amortization included in expense		Amortization recorded as a reduction of revenue		Total
Remaining, 2016	$	10,699	$	4,500	$	15,199
2017	15,422		6,000		21,422
2018	15,740		6,000		21,740
2019	15,600		6,000		21,600
2020	15,265		6,000		21,265
2021	14,010		6,000		20,010

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Guarantees (Tables)

3 Months Ended

Mar. 31, 2016

Guarantees [Abstract]

Changes in the carrying amount of service and product warranties

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

	2016			2015
Balance as of January 1,	$	2,509		$	2,286
Provision for warranties	833			951
Claims made	(841		)	(873		)
Balance as of March 31,	$	2,501		$	2,364

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Pension Plan (Tables)

3 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Schedule of net benefit cost

Net periodic pension cost consists of the following: 

	Three Months Ended March 31,
	2016			2015
Service cost	$	113		$	67
Interest cost on projected benefit obligation	719			888
Expected return on plan assets	(1,297		)	(1,469		)
Net amortization and deferral	695			812
Net periodic pension cost	$	230		$	298

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Acquisition, Restructuring and Other Expense (Tables)

3 Months Ended

Mar. 31, 2016

Acquisition, Restructuring and Other Expense [Abstract]

Schedule of Acquisition, Restructuring and Other Expense [Table Text Block]

Acquisition, restructuring and other expense consists of the following:

	Three Months Ended March 31,
	2016		2015
Restructuring costs included in cost of sales	$	864	$	2,329
Restructuring costs	$	2,791	$	6,180
Business acquisition costs	9,045		—
Acquisition, restructuring and other expense included in selling and administrative expense	$	11,836	$	6,180
Debt refinancing costs included in other expense	$	2,942	$	—

Schedule of Restructuring Accrual

Below is a rollforward of the costs incurred and cash expenditures associated with these activities during the three months endedMarch 31, 2016 and 2015:

	2016			2015
Balance as of January 1,	$	7,175		$	8,254
Expenses incurred	3,655			8,509
Payments made	(6,955		)	(7,885		)
Balance at March 31,	$	3,875		$	8,878

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Business Segments (Tables)

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Schedule of net sales information by product line

These product lines' net sales are as follows:

	Three Months Ended March 31,
	2016		2015
Orthopedic surgery	$	93,441	$	98,597
General surgery	75,902		66,062
Surgical visualization	11,858		13,281
Consolidated net sales	$	181,201	$	177,940

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New Accounting Pronouncements New Accounting Pronouncements (Tables)

3 Months Ended

Mar. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The below table summarizes the adjustments made to conform prior period classification with the new guidance:

	December 31, 2015
	As Filed			Reclass			As Adjusted
Current deferred income tax assets	$	14,150		(14,150		)	—
Long-term deferred income tax assets	1,332			2,906			4,238
Long-term deferred income tax liabilities	(114,623		)	11,244			(103,379		)
	$	(99,141	)	$	—		$	(99,141	)

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Business Acquisition Business Acquisition (Tables)

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the SurgiQuest acquisition. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated condensed financial statements were prepared. Accordingly, the allocation of purchase price is preliminary and therefore subject to adjustment in future periods.

Cash	$	1,305
Other current assets	16,681
Current assets	17,986
Property, plant & equipment	3,332
Goodwill	136,358
Customer and distributor relationships	76,420
Developed technology	49,600
Trademarks & tradenames	4,780
Other non-current assets	302
Total assets acquired	$	288,778
Current liabilities assumed	10,586
Deferred income taxes	20,009
Other long-term liabilities	454
Total liabilities assumed	31,049
Net assets acquired	$	257,729

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended March 31,
	2016		2015
Net sales	$	181,201	$	187,324
Net income (loss)	6,323		(6,856		)

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Amended and Restated Senior Credit Agreement Amended and Restated Senior Credit Agreement (Tables)

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt [Table Text Block]

April 1, 2016 - March 31, 2017	$	10,089
April 1, 2017 - March 31, 2018	11,296
April 1, 2018 - March 31, 2019	15,792
April 1, 2019 - March 31, 2020	18,336
April 1, 2020 - March 31, 2021	466,920

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Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Comprehensive Income (Loss) [Abstract]
Net income (loss)	$ (2,265)	$ 6,312
Pension liability, net of income tax	438	512
Pension liability, tax	257	300
Cash flow hedging gain (loss), net of income tax	(2,217)	1,962
Cash flow hedging gain (loss), tax	(1,299)	1,150
Foreign currency translation adjustment	4,831	(12,501)
Comprehensive income (loss)	$ 787	$ (3,715)

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Comprehensive Income (Loss) (Accumulated Other Comprehensive income (loss)) (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive income (loss)		$ (53,894)
Income tax (benefit)		968	$ (3,182)
Accumulated other comprehensive income (loss)		(50,842)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive income (loss)		(53,894)	(39,822)
Other comprehensive income (loss) before reclassifications		2,940	(12,226)
Amounts reclassified from other accumulated comprehensive income (loss) before tax	[1]	178	3,488
Income tax (benefit)		(66)	(1,289)
Net current-period other comprehensive income (loss)		3,052	(10,027)
Accumulated other comprehensive income (loss)		(50,842)	(49,849)
Cash Flow Hedging Gain (Loss) [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive income (loss)		1,201	3,276
Other comprehensive income (loss) before reclassifications		(1,891)	275
Amounts reclassified from other accumulated comprehensive income (loss) before tax	[1]	(517)	2,676
Income tax (benefit)		191	(989)
Net current-period other comprehensive income (loss)		(2,217)	1,962
Accumulated other comprehensive income (loss)		(1,016)	5,238
Pension Liability [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive income (loss)		(25,982)	(30,760)
Other comprehensive income (loss) before reclassifications		0	0
Amounts reclassified from other accumulated comprehensive income (loss) before tax	[1]	695	812
Income tax (benefit)		(257)	(300)
Net current-period other comprehensive income (loss)		438	512
Accumulated other comprehensive income (loss)		(25,544)	(30,248)
Cumulative Translation Adjustment [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Accumulated other comprehensive income (loss)		(29,113)	(12,338)
Other comprehensive income (loss) before reclassifications		4,831	(12,501)
Amounts reclassified from other accumulated comprehensive income (loss) before tax	[1]	0	0
Income tax (benefit)		0	0
Net current-period other comprehensive income (loss)		4,831	(12,501)
Accumulated other comprehensive income (loss)		$ (24,282)	$ (24,839)

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

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Fair Value of Financial Instruments (Foreign Currency Forward Contracts) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Derivative [Line Items]
Gains (losses) on intercompany receivables	$ 400	$ (700)
Derivative Assets and Liabilities at Fair Value [Abstract]
Fair value, assets	937		$ 2,935
Fair value, liabilities	(2,567)		(1,064)
Derivative Assets (Liabilities), at Fair Value, Net	(1,630)		1,871
Foreign Currency Forward Contracts [Member]
Derivative [Line Items]
Forward contracts not designated as hedging instruments net realized gains (losses)	(300)	600
Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member]
Derivative Assets and Liabilities at Fair Value [Abstract]
Fair value, assets			2,931
Fair value, liabilities			(1,026)
Derivative Assets (Liabilities), at Fair Value, Net			1,905
Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Other Current Liabilities [Member]
Derivative Assets and Liabilities at Fair Value [Abstract]
Fair value, assets	930
Fair value, liabilities	(2,541)
Derivative Assets (Liabilities), at Fair Value, Net	(1,611)
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member]
Derivative [Line Items]
Notional amount of cash flow hedges	21,300
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member]
Derivative Assets and Liabilities at Fair Value [Abstract]
Fair value, assets			4
Fair value, liabilities			(38)
Derivative Assets (Liabilities), at Fair Value, Net			$ (34)
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Other Current Liabilities [Member]
Derivative Assets and Liabilities at Fair Value [Abstract]
Fair value, assets	7
Fair value, liabilities	(26)
Derivative Assets (Liabilities), at Fair Value, Net	(19)
Cash Flow Hedging [Member] | Foreign Currency Forward Contracts [Member]
Derivative [Line Items]
Notional amount of cash flow hedges	101,800
Cash flow hedges realized gains	500	$ 2,700
Unrealized gains on cash flow hedges in accumulated other comprehensive income (loss) expected to be recognized in the next fiscal year	$ (1,000)

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Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 50,533	$ 47,681
Work-in-process	15,211	13,922
Finished goods	119,364	105,291
Total inventory	$ 185,108	$ 166,894

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Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Earnings Per Share [Abstract]
Net income (loss)	$ (2,265)	$ 6,312
Basic-weighted average shares outstanding	27,721	27,573
Effect of dilutive potential securities	0	247
Diluted- weighted average shares outstanding	27,721	27,820
Basic (in dollars per share)	$ (0.08)	$ 0.23
Diluted (in dollars per share)	$ (0.08)	$ 0.23

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Goodwill and Other Intangible Assets (Goodwill) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 260,651
Goodwill resulting from business acquisitions	136,358
Foreign currency translation	1,378
Ending balance	$ 398,387

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Goodwill and Other Intangible Assets (Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Intangible assets, Gross carrying amount	$ 570,500	$ 439,479
Intangible assets, Accumulated amortization	(136,304)	(131,308)
Future amortization expense [Abstract]
Remaining, 2016	15,199
2017	21,422
2018	21,740
2019	21,600
2020	21,265
2021	20,010
Expense [Member]
Future amortization expense [Abstract]
Remaining, 2016	10,699
2017	15,422
2018	15,740
2019	15,600
2020	15,265
2021	14,010
Reduction of Revenue [Member]
Future amortization expense [Abstract]
Remaining, 2016	4,500
2017	6,000
2018	6,000
2019	6,000
2020	6,000
2021	6,000
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 and Distributor Relationships [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Amortized intangible assets, Gross carrying amount	213,338	136,871
Intangible assets, Accumulated amortization	(67,110)	(64,423)
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	(25,500)	(24,000)
Patents and Other Intangible Assets [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Amortized intangible assets, Gross carrying amount	71,642	66,688
Intangible assets, Accumulated amortization	(43,384)	(42,885)
Technology-Based Intangible Assets [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Amortized intangible assets, Gross carrying amount	49,600	0
Intangible assets, Accumulated amortization	(310)	$ 0
SurgiQuestInc [Member]
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 130,800

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Goodwill and Other Intangible Assets (Other Intangible Assets) (Details) - USD ($) $ in Millions							3 Months Ended
	Jan. 06, 2016	Jan. 04, 2016	Jan. 05, 2015	Jan. 03, 2014	Jan. 03, 2013	Jan. 03, 2012	Mar. 31, 2016	Mar. 31, 2015
Other Intangible Assets [Line Items]
Up-front payment						$ 63.0
Additional contingent cash payment						$ 84.0
Contingent payment period (in years)						4 years
Amortization expense							$ 5.0	$ 3.2
Weighted average amortization period (in years)							25 years
Promotional, Marketing and Distribution Rights [Member]
Other Intangible Assets [Line Items]
Weighted average amortization period (in years)							25 years
Customer and Distributor Relationships [Member]
Other Intangible Assets [Line Items]
Weighted average amortization period (in years)							29 years
Patents and Other Intangible Assets [Member]
Other Intangible Assets [Line Items]
Weighted average amortization period (in years)							13 years
Technology-Based Intangible Assets [Member]
Other Intangible Assets [Line Items]
Weighted average amortization period (in years)							17 years
After One Year of Meeting Supply Target [Member]
Other Intangible Assets [Line Items]
Conditional payment, amount paid					$ 34.0
After Two Year of Meeting Supply Target [Member]
Other Intangible Assets [Line Items]
Conditional payment, amount paid				$ 16.7
After Year Three of Meeting Supply Target [Member]
Other Intangible Assets [Line Items]
Conditional payment, amount paid			$ 16.7
After Year Four of Meeting Supply Target [Member]
Other Intangible Assets [Line Items]
Conditional payment, amount paid	$ 16.7
SurgiQuestInc [Member]
Other Intangible Assets [Line Items]
Weighted average amortization period (in years)		20 years
SurgiQuestInc [Member] | Customer and Distributor Relationships [Member]
Other Intangible Assets [Line Items]
Weighted average amortization period (in years)		22 years
SurgiQuestInc [Member] | Technology-Based Intangible Assets [Member]
Other Intangible Assets [Line Items]
Weighted average amortization period (in years)		17 years

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Guarantees (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Guarantees [Abstract]
Standard warranty period (in years)	1 year
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning balance	$ 2,509	$ 2,286
Provision for warranties	833	951
Claims made	(841)	(873)
Ending balance	$ 2,501	$ 2,364

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Pension Plan (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Compensation and Retirement Disclosure [Abstract]
Service cost	$ 113	$ 67
Interest cost on projected benefit obligation	719	888
Expected return on plan assets	(1,297)	(1,469)
Net amortization and deferral	695	812
Net periodic pension cost	$ 230	$ 298

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Acquisition, Restructuring and Other Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015	Dec. 31, 2014
Acquisition, Restructuring and Other Expense [Line Items]
Restructuring costs	$ 3,655	$ 8,509
Debt refinancing costs included in other expense	2,942	0
Debt Instrument, Financing Costs Expensed	2,700
Loss on early extinguishment of debt	254	0
Assets held-for-sale	3,100
Restructuring reserve	3,875	8,878	$ 7,175	$ 8,254
Cost of Sales [Member] | Facility Consolidation Costs [Member]
Acquisition, Restructuring and Other Expense [Line Items]
Restructuring costs	864	2,329
Selling and Administrative Expenses [Member]
Acquisition, Restructuring and Other Expense [Line Items]
Acquisition, restructuring and other expense included in selling and administrative expense	11,836	6,180
Selling and Administrative Expenses [Member] | Administrative Restructuring [Member]
Acquisition, Restructuring and Other Expense [Line Items]
Restructuring costs	2,791	6,180
Other Expense [Member]
Acquisition, Restructuring and Other Expense [Line Items]
Debt refinancing costs included in other expense	2,942	0
SurgiQuestInc [Member] | Selling and Administrative Expenses [Member]
Acquisition, Restructuring and Other Expense [Line Items]
Business acquisition costs	$ 9,045	$ 0

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Acquisition, Restructuring and Other Expense (Restructuring Accrual) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Restructuring accrual
Restructuring accrual, beginning balance	$ 7,175	$ 8,254
Expenses incurred	3,655	8,509
Payments made	(6,955)	(7,885)
Restructuring accrual, ending balance	$ 3,875	$ 8,878

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Business Segments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Segment Reporting Information [Line Items]
Net sales	$ 181,201	$ 177,940
Orthopedic Surgery [Member]
Segment Reporting Information [Line Items]
Net sales	93,441	98,597
General Surgery [Member]
Segment Reporting Information [Line Items]
Net sales	75,902	66,062
Surgical Visualization [Member]
Segment Reporting Information [Line Items]
Net sales	$ 11,858	$ 13,281

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Legal Proceedings (Details) $ in Millions	Mar. 31, 2016 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Product liability insurance, amount per incident	$ 25
Product liability insurance, aggregate annual amount	$ 25

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New Accounting Pronouncements New Accounting Pronouncements (Details) $ in Thousands	Dec. 31, 2015 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Current deferred income tax assets	$ 0
Long-term deferred income tax assets	4,238
Long-term deferred income tax liabilities	(103,379)
Deferred Tax Liabilities, Net	(99,141)
Previous Accounting Guidance [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Current deferred income tax assets	14,150
Long-term deferred income tax assets	1,332
Long-term deferred income tax liabilities	(114,623)
Deferred Tax Liabilities, Net	(99,141)
Adjustments for New Accounting Pronouncement [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Current deferred income tax assets	(14,150)
Long-term deferred income tax assets	2,906
Long-term deferred income tax liabilities	11,244
Deferred Tax Liabilities, Net	$ 0

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Business Acquisition Business Acquisition (Details) - USD ($) $ in Thousands		3 Months Ended
	Jan. 04, 2016	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Business Acquisition [Line Items]
Weighted average amortization period (in years)		25 years
Net sales		$ 181,201	$ 177,940
Assets Acquired [Abstract]
Goodwill		$ 398,387		$ 260,651
Customer and Distributor Relationships [Member]
Business Acquisition [Line Items]
Weighted average amortization period (in years)		29 years
Technology-Based Intangible Assets [Member]
Business Acquisition [Line Items]
Weighted average amortization period (in years)		17 years
SurgiQuestInc [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 257,729
Payments to acquire business	265,000
Tax deductible goodwill	$ 11,500
Weighted average amortization period (in years)	20 years
Net sales		$ 12,700
Assets Acquired [Abstract]
Cash	$ 1,305
Other current assets	16,681
Current assets	17,986
Property, plant & equipment	3,332
Goodwill	136,358
Other non-current assets	302
Total assets acquired	288,778
Liabilities Assumed [Abstract]
Current liabilities assumed	10,586
Deferred income taxes	20,009
Other long-term liabilities	454
Total liabilities assumed	31,049
Net assets acquired	$ 257,729
Pro Forma Information [Abstract]
Net sales		181,201	187,324
Net income (loss)		6,323	(6,856)
SurgiQuestInc [Member] | Selling and Administrative Expenses [Member]
Business Acquisition [Line Items]
Business acquisition costs		$ 9,045	$ 0
SurgiQuestInc [Member] | Customer and Distributor Relationships [Member]
Business Acquisition [Line Items]
Weighted average amortization period (in years)	22 years
Assets Acquired [Abstract]
Finite-lived intangible assets	$ 76,420
SurgiQuestInc [Member] | Technology-Based Intangible Assets [Member]
Business Acquisition [Line Items]
Weighted average amortization period (in years)	17 years
Assets Acquired [Abstract]
Finite-lived intangible assets	$ 49,600
SurgiQuestInc [Member] | Trademarks and Tradenames [Member]
Business Acquisition [Line Items]
Weighted average amortization period (in years)	23 years
Assets Acquired [Abstract]
Finite-lived intangible assets	$ 4,780

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Amended and Restated Senior Credit Agreement (Details) - USD ($)		3 Months Ended
	Jan. 04, 2016	Mar. 31, 2016	Mar. 31, 2015
Debt Instrument [Line Items]
Effective interest rate (percentage)		2.43%
Debt Instrument, Financing Costs Expensed		$ 2,700,000
Loss on early extinguishment of debt		254,000	$ 0
Remaining borrowing capacity		175,500,000
Letters of Credit Outstanding, Amount		5,100,000
Maturities of Long-term Debt [Abstract]
April 1, 2016 - March 31, 2017		10,089,000
April 1, 2017 - March 31, 2018		11,296,000
April 1, 2018 - March 31, 2019		15,792,000
April 1, 2019 - March 31, 2020		18,336,000
April 1, 2020 - March 31, 2021		466,920,000
Amended and Restated Senior Credit Agreement [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Variable rate (percentage)	1.00%
Amended and Restated Senior Credit Agreement [Member] | Eurodollar [Member]
Debt Instrument [Line Items]
Variable rate (percentage)	2.00%
Loans Payable [Member]
Debt Instrument [Line Items]
Long-term Debt		172,800,000
Loans Payable [Member] | Amended and Restated Senior Credit Agreement [Member]
Debt Instrument [Line Items]
Face amount	$ 175,000,000
Line of Credit [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 344,400,000
Line of Credit [Member] | Amended and Restated Senior Credit Agreement [Member]
Debt Instrument [Line Items]
Borrowing capacity	$ 525,000,000