CONMED CORPORATION 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-endedDecember 31, 2019 and the following, among others: •general economic and business conditions; •compliance with and changes in regulatory requirements; •COVID-19 global pandemic poses significant risks to our business, financial condition and results of operations, which may be heightened if the pandemic, and various government responses to it, continue for an extended period of time; •environmental compliance risks, including lack of availability of sterilization with Ethylene Oxide ("EtO") or other compliance costs associated with the use of EtO; •the possibility thatUnited States or foreign regulatory and/or administrative agencies may initiate enforcement actions against us or our distributors; •competition; •changes in customer preferences; •changes in technology; •the introduction and acceptance of new products; •the availability and cost of materials; •cyclical customer purchasing patterns due to budgetary and other constraints; •quality of our management and business abilities and the judgment of our personnel; •the availability, terms and deployment of capital; •future levels of indebtedness and capital spending; •changes in foreign exchange and interest rates; •the ability to evaluate, finance and integrate acquired businesses, products and companies; •changes in business strategy; •the risk of an information security breach, including a cybersecurity breach; •the risk of a lack of allograft tissues due to reduced donations of such tissues or due to tissues not meeting the appropriate high standards for screening and/or processing of such tissues; •the ability to defend and enforce intellectual property, including the risks related to theft or compromise of intellectual property in connection with our international operations; •the risk of patent, product and other litigation, as well as the cost associated with such litigation; and •trade protection measures, tariffs and other border taxes, and import or export licensing requirements. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" below and "Risk Factors" and "Business" in our Annual Report on Form 10-K for the year-endedDecember 31, 2019 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. 23
-------------------------------------------------------------------------------- Table of Contents OverviewCONMED 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, thoracic surgery and gastroenterology. Our product lines consist of orthopedic surgery and general surgery. Orthopedic surgery consists of sports medicine instrumentation and small bone, large bone and specialty powered surgical instruments as well as, imaging systems for use in minimally invasive surgery procedures including 2DHD and 3DHD vision technologies 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. These product lines as a percentage of consolidated net sales are as follows: Six Months Ended Three Months Ended June 30, June 30, 2020 2019 2020 2019 Orthopedic surgery 38 % 49 % 43 % 50 % General surgery 62 % 51 % 57 % 50 % Consolidated net sales 100 % 100 % 100 % 100 % A significant amount of our products are used in surgical procedures with approximately 82% of our revenues derived from the sale of single-use products. Our capital equipment offerings also facilitate the ongoing sale of related single-use products and accessories, thus providing us with a recurring revenue stream. We manufacture substantially all of our products in facilities located inthe United States andMexico . We market our products both domestically and internationally directly to customers and through distributors. International sales approximated 45% and 46% during the six months endedJune 30, 2020 and 2019, respectively. Business Environment Our business has been significantly impacted by the emergence of the COVID-19 virus, with the Company experiencing significant sales declines for the three and six months endedJune 30, 2020 , first in theAsia Pacific geography and later inthe United States ,Europe and elsewhere as lockdown measures were implemented and hospitals and surgery centers postponed many non-urgent surgical procedures in order to minimize the risk of infection. In compliance with various governmental orders, beginning in March we restricted access to our main facilities to only essential personnel required to be onsite while maintaining production and distribution. We expect to continue to experience materially lower sales for as long as the COVID-19 pandemic lasts, or resurgence thereof, and deferral of surgeries continues, which we anticipate will last at least through the remainder of 2020. See additional discussion in Note 10 and Note 17 to the consolidated condensed financial statements, as well as in Liquidity and Capital Resources below.
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-endedDecember 31, 2019 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:
•goodwill and intangible assets.
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