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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 4, 2005
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CRYOLIFE, INC.
(Exact name of registrant as specified in its charter)
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FLORIDA 1-13165 59-2417093
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1655 ROBERTS BOULEVARD, N.W., KENNESAW, GEORGIA 30144
(Address of principal executive office) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 419-3355
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The information provided pursuant to this Item 12 is to be considered "filed"
under the Securities Exchange Act of 1934 ("Exchange Act") and incorporated by
reference into those filings of CryoLife, Inc. ("CryoLife") that provide for the
incorporation of all reports and documents filed by CryoLife under the Exchange
Act.
On August 4, 2005, CryoLife issued a press release announcing its results for
the quarter ended June 30, 2005. CryoLife hereby incorporates by reference
herein the information set forth in its Press Release dated August 4, 2005, a
copy of which is attached hereto as Exhibit 99.1. Except as otherwise provided
in the press release, the press release speaks only as of the date of such press
release and such press release shall not create any implication that the affairs
of CryoLife have continued unchanged since such date.
Except for the historical information contained in this report, the statements
made by CryoLife are forward-looking statements that involve risks and
uncertainties. All such statements are subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995. CryoLife's future financial
performance could differ significantly from the expectations of management and
from results expressed or implied in the Press Releases. For further information
on other risk factors, please refer to the "Risk Factors" contained in
CryoLife's Form 10-K for the year ended December 31, 2004, CryoLife's Form S-3
(Registration No. 333-121406), as filed with the Securities and Exchange
Commission ("SEC") and any subsequent SEC filings. CryoLife disclaims any
obligation or duty to update or modify these forward-looking statements.
Included in Exhibit 99.1, as attached, is the following non-GAAP financial
measure:
o Adjusted net loss excluding a charge for settlement of the shareholder
class action lawsuit and a non-cash charge for the change in the value
of the derivative related to the Company's 6% convertible preferred
stock*
* Adjusted net loss excluding a charge for settlement of the shareholder
class action lawsuit and a non-cash charge for the change in the value
of the derivative related to the Company's 6% convertible preferred
stock is presented and deemed useful by management in order to present
the Company's 2005 results as more readily comparable to its 2004
results. The Company's 2004 numbers do not include charges
attributable to the settlement of the shareholder class action lawsuit
nor non-cash charges for the change in the value of the derivative
related to the Company's 6% convertible preferred stock.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
(b) Pro Forma Financial Information.
(c) Exhibits.
Exhibit Number Description
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99.1 Press Release dated August 4, 2005
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
CryoLife, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CRYOLIFE, INC.
Date: August 4, 2005 By: /s/ D. Ashley Lee
-----------------------------------
Name: D. Ashley Lee
Title: Executive Vice President, Chief
Operating Officer and Chief Financial
Officer
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EXHIBIT INDEX
Exhibit Number Description
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99.1 Press Release dated August 4, 2005
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EXHIBIT 99.1
[COMPANY LOGO]
FOR IMMEDIATE RELEASE
CONTACT: JOSEPH T. SCHEPERS
VICE PRESIDENT, CORPORATE COMMUNICATIONS
(770) 419-3355
CRYOLIFE'S SECOND QUARTER 2005 REVENUES INCREASED 12%
OVER SECOND QUARTER 2004
STRONG GROWTH IN INTERNATIONAL BIOGLUE SALES AND ORTHOPAEDIC TISSUE PROCESSING
REVENUES IN SECOND QUARTER OF 2005 COMPARED TO SECOND QUARTER OF 2004
ATLANTA... (AUGUST 4, 2005)... CRYOLIFE, INC. (NYSE: CRY), a biomaterials and
biosurgical device company, announced today that second quarter revenues of 2005
increased 12% to $17.2 million compared to $15.3 million in the second quarter
of 2004. The net loss in the second quarter of 2005 was $14.4 million or $0.61
per fully diluted common share. Excluding an $11.8 million ($0.49 per common
share) charge for settlement of the shareholder class action lawsuit and a
$902,000 ($0.04 per common share) non-cash charge for the change in the value of
the derivative related to the Company's 6% convertible preferred stock, the
adjusted net loss for the second quarter of 2005 was $1.7 million or $0.08 per
fully diluted common share. The net loss in the second quarter of 2004 was $3.4
million or $0.14 per fully diluted common share.
Revenues for the first six months of 2005 increased 15% to $34.9 million
compared to $30.4 million in the first six months of 2004. The net loss for the
first six months of 2005 was $15.7 million or $0.68 per fully diluted common
share. Excluding an $11.8 million ($0.50 per common share) charge for settlement
of the shareholder class action lawsuit and a $784,000 ($0.03 per common share)
non-cash charge for the change in the value of the derivative related to the
Company's 6% convertible preferred stock, the adjusted net loss for the first
half of 2005 was $3.2 million or $0.15 per fully diluted common share. The net
loss for the first six months of 2004 was $10.4 million or $0.46 per fully
diluted common share.
Steven G. Anderson, President and CEO of CryoLife, Inc. stated, "In the
second quarter, our international sales increased 21% compared to the second
quarter of 2004 and we are pursuing additional growth opportunities around the
world. The Company is increasing its efforts to continue to develop and
introduce new products outside the U.S. New marketing and sales initiatives are
planned in South America, India, China and Russia."
In the second quarter of 2005, BioGlue(R) sales increased 7% to $9.6
million compared to $9.0 million in the second quarter of 2004. U.S. BioGlue
sales were $7.1 million in the second quarter of 2005 compared to $7.0 million
for the same period of 2004. International BioGlue sales were $2.5 million in
the second quarter of 2005 compared to $2.0 million for the same period of 2004.
5
Tissue processing revenues increased 21% to $7.4 million in the second
quarter of 2005 compared to $6.1 million in the second quarter of 2004. Cardiac
tissue processing revenues were $3.5 million in the second quarter of 2005
compared to $2.8 million in the second quarter of 2004. Vascular tissue
processing revenues were $2.7 million in the second quarter of 2005 compared to
$2.6 million in the second quarter of 2004. Orthopaedic tissue processing
revenues were $1.1 million in the second quarter of 2005 compared to $574,000 in
the second quarter of 2004.
Total product and tissue processing gross margins in the second quarter of 2005
were 53% compared to 38% in second quarter of 2004. The tissue processing gross
margins were 17% in the second quarter of 2005 compared to a negative 25% in the
second quarter of 2004.
General, administrative, and marketing expenses were $21.6 million in the second
quarter of 2005 compared to $9.7 million in the same period of 2004. General,
administrative, and marketing expenses in the second quarter of 2005 were
negatively affected by the $11.8 million charge for settlement of the
shareholder class action lawsuit. R&D expenses were approximately $900,000 in
the second quarters of 2005 and 2004.
In the third quarter of 2005, total tissue processing and product revenues are
expected to be $17.0 to $18.6 million. BioGlue revenues are expected to be $9.4
to $10.0 million and tissue processing revenues are expected to be $7.3 to $8.3
million in the third quarter of 2005. Bioprosthetic cardiovascular and vascular
device revenues are expected to be approximately $300,000 in the third quarter
of 2005.
The Company expects tissue processing and product revenues to increase to $70.0
to $73.0 million for the full year 2005. The Company expects BioGlue revenues to
be $39.0 to $40.0 million and tissue processing revenues to be $30.0 to $32.0
million for the full year 2005. Bioprosthetic cardiovascular and vascular device
revenues are expected to be approximately $1.0 million in 2005.
The Company expects general, administrative, and marketing expenses to be $10.0
to $11.0 million in the third quarter of 2005, and $52.0 to $54.0 million for
the full year of 2005. The Company expects research and development expenses to
be approximately $1.0 million in the third quarter of 2005 and $4.0 to $5.0
million for the full year 2005.
As of June 30, 2005, the Company had approximately $22.1 million in cash, cash
equivalents, and marketable securities. The Company expects to pay approximately
6
$8.0 million, net of insurance proceeds, in the third or fourth quarter of 2005
for the settlement of the shareholder class action lawsuit.
THE COMPANY WILL HOLD A TELECONFERENCE CALL AND LIVE WEB CAST AT 11:15 A.M.
EASTERN TIME, AUGUST 4, 2005, TO DISCUSS SECOND QUARTER 2005 FINANCIAL RESULTS
FOLLOWED BY A QUESTION AND ANSWER SESSION HOSTED BY STEVEN G. ANDERSON,
PRESIDENT AND CHIEF EXECUTIVE OFFICER.
TO LISTEN TO THE LIVE TELECONFERENCE PLEASE DIAL 973-935-2981 A FEW MINUTES
PRIOR TO 11:15 A.M. NO IDENTIFICATION NUMBER IS REQUIRED. A REPLAY OF THE
TELECONFERENCE WILL BE AVAILABLE AUGUST 4, 2005, THROUGH AUGUST 9, 2005, AND CAN
BE ACCESSED BY CALLING (TOLL FREE) 877-519-4471 OR 973-341-3080. THE
IDENTIFICATION NUMBER FOR THE REPLAY IS 6291248.
THE LIVE WEB CAST CAN BE ACCESSED BY GOING TO THE INVESTOR RELATIONS
SECTION OF THE CRYOLIFE WEB SITE AT WWW.CRYOLIFE.COM.
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ABOUT CRYOLIFE, INC.
Founded in 1984, CryoLife, Inc. is a leader in the processing and distribution
of implantable living human tissues for use in cardiovascular and vascular
surgeries throughout the United States and Canada. The Company's BioGlue(R)
Surgical Adhesive is FDA approved as an adjunct to sutures and staples for use
in adult patients in open surgical repair of large vessels and is CE marked in
the European Community and approved in Canada for use in soft tissue repair and
approved in Australia for use in vascular and pulmonary sealing and repair.
Statements made in this press release that look forward in time or that express
management's beliefs, expectations or hopes are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These future events may not occur as and when expected, if at all, and, together
with the Company's business, are subject to various risks and uncertainties.
These risks and uncertainties include that the Company's increased efforts to
develop and introduce new products outside the U.S. may be unsuccessful, that
2005 revenues and expenses may not meet its expectations, the possibility that
the FDA could impose additional restrictions on the Company's operations,
require a recall, or prevent the Company from processing and distributing
tissues or manufacturing and distributing other products, that the protein
hydrogel products under development may not be commercially feasible, that the
Company may not have sufficient borrowing or other capital availability to fund
its business, that pending litigation cannot be settled on terms acceptable to
the Company, that the Company may not have sufficient resources to pay punitive
damages (which are not covered by insurance) or other liabilities in excess of
available insurance, the possibility of severe decreases in the Company's
revenues and working capital, that to the extent the Company does not have
sufficient resources to pay the claims against it, it may be forced to cease
operations or seek protection under applicable bankruptcy laws, changes in laws
and regulations applicable to CryoLife and other risk factors detailed in
CryoLife's Securities and Exchange Commission filings, including CryoLife's Form
10-K filing for the year ended December 31, 2004, its registration statement on
Form S-3 (Reg. No. 333-121406) and the Company's other SEC filings. The Company
does not undertake to update its forward-looking statements.
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CRYOLIFE, INC.
Unaudited Financial Highlights
(In thousands, except share data)
Three Months Ended Six Months Ended
June 30, June 30,
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2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenues:
Products $ 9,846 $ 9,203 $ 19,973 $ 18,062
Human tissue preservation services 7,352 6054 14,890 12,279
Research grants - 57 - 59
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Total revenues 17,198 15,314 34,863 30,400
Costs and expenses:
Products 2,079 1,894 4,195 3,841
Human tissue preservation services 6,070 7,543 11,969 16,646
General, administrative, and marketing 21,585 9,693 31,641 19,841
Research and development 929 891 1,850 1,812
Interest expense 88 59 143 102
Interest income (167) (64) (242) (130)
Change in valuation of derivative 902 - 784 -
Other expense, net 45 21 175 37
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Total costs and expenses 31,531 20,037 50,515 42,149
Loss before income taxes (14,333) (4,723) (15,652) (11,749)
Income tax expense (benefit) 46 (1,371) 84 (1,371)
----------- ------------ ----------- ------------
Net loss $ (14,379) $ (3,352) $ (15,736) $ (10,378)
============ ============ ============ ============
Effect of preferred stock (244) - (290) -
------------ ----------- ------------ -----------
Net loss applicable to common shares $ (14,623) $ (3,352) $ (16,026) $ (10,378)
============ ============ ============ ============
Loss per common share:
Basic $ (0.61) $ (0.14) $ (0.68) $ (0.46)
=========== =========== =========== ===========
Diluted $ (0.61) $ (0.14) $ (0.68) $ (0.46)
=========== =========== =========== ===========
Weighted average common shares outstanding:
Basic 23,905 23,252 23,676 22,747
=========== =========== =========== ===========
Diluted 23,905 23,252 23,676 22,747
=========== =========== =========== ===========
Revenues from:
BioGlue $ 9,552 $ 8,962 $ 19,423 $ 17,605
Cardiovascular 3,518 2,831 7,268 6,261
Vascular 2,740 2,649 5,456 5,135
Orthopaedic 1,094 574 2,166 883
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Total preservation services 7,352 6,054 14,890 12,279
----------- ----------- ----------- -----------
Bioprosthetic devices 294 241 550 455
Other - 57 - 61
----------- ----------- ----------- -----------
Total revenues $ 17,198 $ 15,314 $ 34,863 $ 30,400
=========== =========== =========== ===========-
Domestic revenues $ 14,394 $ 12,987 $ 29,584 $ 25,981
International revenues 2,805 2,327 5,279 4,419
----------- ----------- ----------- -----------
Total revenues $ 17,198 $ 15,314 $ 34,863 $ 30,400
=========== =========== =========== ===========
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CRYOLIFE, INC.
Unaudited Reconciliation of Adjusted Net Loss
(In thousands, except share data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net loss - as reported $ (14,379) $ (3,352) $ (15,736) $ (10,378)
Add back adjustments to net loss:
Settlement of class action lawsuit 11,750 - 11,750 -
Change in valuation of derivative 902 - 784 -
----------- ----------- ----------- -----------
Adjusted net loss $ (1,727) $ (3,352) $ (3,202) $ (10,378)
Effect of preferred stock (244) - (290) -
------------ ---------- ------------ -----------
Adjusted net loss applicable to common shares $ (1,971) $ (3,352) $ (3,492) $ (10,378)
============ ============ ============ ============
Adjusted loss per common share:
Basic $ (0.08) $ (0.14) $ (0.15) $ (0.46)
=========== =========== =========== ===========
Diluted $ (0.08) $ (0.14) $ (0.15) $ (0.46)
=========== =========== =========== ===========
Weighted average common shares outstanding:
Basic 23,905 23,252 23,676 22,747
=========== =========== =========== ===========
Diluted 23,905 23,252 23,676 22,747
=========== =========== =========== ===========
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CRYOLIFE, INC.
Financial Highlights
(In thousands)
Unaudited Audited
June 30, Dec. 31,
2005 2004
------------ -----------
Cash and cash equivalents, marketable securities, $ 22,123 $ 9,232
at market, and restricted securities
Trade receivables, net 10,550 8,293
Other receivables 18,069 3,957
Deferred preservation costs, net 10,425 8,822
Inventories 4,267 4,767
Total assets 103,368 73,261
Shareholders' equity 52,568 49,660
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