UTICA, N.Y. - CONMED has announced financial results for the fourth quarter and year-ended December 31, 2008.

For the fourth quarter ended December 31, 2008, sales were $179.2 million compared to $189.6 million in the same quarter of 2007. GAAP diluted earnings per share were $0.36 compared to $0.41 in the fourth quarter of 2007. Non-GAAP diluted earnings per share equaled $0.34 compared to non-GAAP diluted earnings per share of $0.44 in the 2007 fourth quarter. As discussed below under “Use of Non-GAAP Financial Measures,” the Company presents various non-GAAP financial measures in this release.

Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP. Please refer to the attached reconciliation between GAAP and non-GAAP financial measures. Sales for the year-ended December 31, 2008 were $742.2 million, an increase of 6.9% compared to 2007.

GAAP diluted earnings per share in 2008 grew to $1.52 compared to $1.43 in the prior year. On a non-GAAP basis, diluted earnings per share were $1.54, a 12.4% increase compared to $1.37 in 2007.

“As we discussed in our January 5, 2009 press release, CONMED’s financial results in the fourth quarter of 2008 were adversely impacted by exceptionally rapid changes in foreign currency exchange rates and cash conservation measures of hospital customers that led to reduced sales of the Company’s capital equipment products. We are encouraged by the fourth quarter’s 8.4% constant currency growth of our single-use surgical and patient care products, a rate of growth in excess of the full year’s constant currency growth for these products. Historically, approximately 75% of the Company’s sales are derived from the sale of single-use medical devices,” commented Mr. Joseph J. Corasanti, President and Chief Executive Officer.

International sales in the fourth quarter of 2008 were $77.0 million compared to $82.4 million in the fourth quarter of 2007. Unfavorable fourth quarter currency exchange rates caused sales to be reduced by $10.7 million compared to exchange rates in the fourth quarter of 2007. On a constant currency basis, international sales experienced growth of 6.4% in the fourth quarter. Sales outside the United States for the full year of 2008 were $328.8 million, growing 13.4% overall. Approximately $2.0 million of the increase in sales for the full year was attributable to foreign currency exchange resulting in constant currency growth of 12.7% on international sales compared to 2007.

For the 2008 year, international sales grew to 44.3% of the Company’s total sales compared to 41.7% of sales in 2007. CONMED’s liquidity and cash flow remain strong. During the fourth quarter of 2008, the Company repurchased and retired $25 million face value of its 2.5% Convertible Notes at a discount of approximately 20%. The repurchase was funded by CONMED’s own cash resources. The transaction resulted in a pre-tax gain to the financial statements of approximately $4.4 million. Including the discount on the bond repurchase, the Company reduced its debt during 2008 approximately $23.5 million. The Company’s debt to total book capitalization ratio declined to 27.3% at December 31, 2008 compared to 30.6% at December 31, 2007. CONMED’s cash provided by operating activities was 41% greater than the Company’s net income in 2008, evidencing the Company’s favorable cash flow. In January 2008, the Company completed the purchase of the Italian distributor of CONMED’s products for a purchase price of approximately $21.8 million.

In connection with the acquisition, in the first quarter of 2008, the Company recorded a $1.0 million fair value adjustment to inventory acquired as a result of the acquisition; the inventory was subsequently sold in the first quarter of 2008. Over the past year and one-half, as previously disclosed, the Company has embarked on a number of initiatives to improve manufacturing efficiency, including the use of lean manufacturing techniques.

Further, the Company has developed an operational restructuring plan to be carried out over the next nine months that includes: Start-up and operation of a 208,000 square foot manufacturing facility in Chihuahua, Mexico. Closure of two of the Company’s manufacturing facilities in the Utica, New York area, as well as the current El Paso and Juarez facilities, with the related operations being transferred to either our headquarters location in Utica or to the new facility in Chihuahua. Centralization of certain of the Company’s distribution activities in a new North American distribution center located in Atlanta, Georgia.

During the execution of this plan, the Company will incur certain charges, including severance costs associated with the release of approximately 150-200 positions Company-wide, and the cost of restructuring and relocation activities. In connection therewith, the Company incurred charges of $3.3 million in the fourth quarter of 2008 and $4.1 million for the entire 2008 year.