UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
|
FORM
8-K
|
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 3, 2006
_______________________
CRYOLIFE,
INC.
(Exact
name of registrant as specified in its charter)
_________________________
|
Florida
|
1-13165
|
59-2417093
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File Number)
|
(IRS
Employer
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
_____________________________________________________________
(Former
name or former address, if changed since last report)
_________________________
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):
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
Section
2 Financial
Information
Item
2.02 Results
of Operations and Financial Condition.
The
information provided pursuant to this Item 2.02 is to be considered “filed”
under the Securities and 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
3, 2006, CryoLife issued a press release announcing its financial results for
the quarter ended June 30, 2006. CryoLife hereby incorporates by reference
herein the information set forth in the press release dated August 3, 2006,
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 its date and shall
not
create any implication that the affairs of CryoLife have continued unchanged
since that 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 release. Please refer to
the last paragraph of the press release for further discussion about
forward-looking statements. For further information on risk factors, please
refer to “Risk Factors” contained in CryoLife’s Form 10-K for the year ended
December 31, 2005, 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.
Section
9 Financial
Statements and Exhibits.
Item
9.01(c) Exhibits.
(a)
Financial Statements.
Not
applicable.
(b)
Pro
Forma Financial Information.
Not
applicable.
(c)
Shell
Company Transactions.
Not
applicable.
(d)
Exhibits.
|
Exhibit
Number
|
Description
|
|
99.1*
|
Press
release dated August 3, 2006
|
*
This
exhibit is filed, not furnished.
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 3, 2006
|
By:
/s/
D. Ashley Lee
|
|
Name:
D. Ashley Lee
|
|
|
Title:
Executive Vice President, Chief
|
|
|
Operating Officer and Chief
|
|
|
Financial Officer
|
|
3
Exhibit
99.1
FOR
IMMEDIATE RELEASE
Media
Contacts:
|
D.
Ashley Lee
|
Katie
Brazel
|
|
Executive
Vice President, Chief Financial Officer and
|
Fleishman
Hillard
|
|
Chief
Operating Officer
|
Phone:
404-739-0150
|
|
Phone:
770-419-3355
|
CryoLife
Reports Profitable Second Quarter
Company
posts second quarter net income of $217,000
Company
raises full year 2006 revenue guidance to between $80 - $82
million
ATLANTA,
GA… (August 3, 2006)… CryoLife, Inc. (NYSE: CRY),
a
biomaterials and biosurgical device company, announced today that revenues
for
the second quarter of 2006 increased 21 percent to $20.8 million compared to
$17.2 million in the second quarter of 2005. Net income in the second quarter
of
2006 was $217,000, or $0.00 per basic and fully diluted common share, compared
to a net loss of $14.4 million, or $0.61 per basic and fully diluted common
share in the second quarter of 2005.
The
second quarter of 2006 included a $403,000 charge related to stock based
compensation and an $800,000 gain related to the adjustment of reserves for
product liability losses. The second quarter of 2005 included an $11.8 million
charge for the settlement of the shareholder class action lawsuit, an $800,000
benefit related to the adjustment of reserves for product liability losses,
and
a $902,000 charge for the change in the value of the derivative related to
the
Company’s preferred stock.
Revenues
for the first half of 2006 increased 15 percent to $40.2 million compared to
$34.9 million in the first half of 2005. The net loss in the first half of
2006
was $1.6 million, or $0.08 per basic and fully diluted common share, compared
to
a net loss of $15.7 million, or $0.68 per basic and fully diluted common share
in the first half of 2005.
-
more
-
4
The
first
half of 2006 included a $647,000 charge related to stock based compensation
and
a $670,000 gain related to the adjustment of reserves for product liability
losses. The first half of 2005 included an $11.8 million charge for the
settlement of the shareholder class action lawsuit, a $1.1 million benefit
related to the adjustment of reserves for product liability and other legal
losses, and a $784,000 charge for the change in the value of the derivative
related to the Company’s preferred stock.
Steven
G.
Anderson, President and CEO of CryoLife, Inc., stated, “We are extremely pleased
to have posted a profit during the second quarter. We are well positioned to
see
continued year-over-year top line growth and sustained profitability in
2007.”
BioGlue
revenues were $10.3 million for the second quarter of 2006 compared to $9.6
million in the second quarter of 2005, an increase of 8 percent. U.S. BioGlue
revenues were $7.5 million and $7.1 million in the second quarter of 2006 and
2005, respectively. International BioGlue revenues were $2.8 million and $2.5
million in the second quarter of 2006 and 2005, respectively.
BioGlue
revenues were $20.1 million for the first half of 2006 compared to $19.4 million
in the first half of 2005, an increase of 3 percent. U.S. BioGlue revenues
were
$14.9 million and $14.8 million in the first half of 2006 and 2005,
respectively. International BioGlue revenues were $5.2 million and $4.6 million
in the first half of 2006 and 2005, respectively.
Tissue
processing revenues in the second quarter of 2006 increased 38 percent to $10.2
million compared to $7.4 million in the second quarter of 2005. Tissue
processing revenues in the first half of 2006 increased 31 percent to $19.5
million compared to $14.9 million in the first half of 2005. Tissue processing
revenues increased primarily due to an increase in tissue procurement and an
improvement in processing yields, which resulted in an increased number of
allografts available for distribution.
Total
product and tissue processing gross margins were 56 percent in the second
quarter of 2006 compared to 53 percent in the second quarter of 2005. Total
product and tissue processing gross margins were 56 percent in the first half
of
2006 compared to 54 percent in the first half of 2005. Tissue processing gross
margins in the second quarter of 2006 were 31 percent compared to 17 percent
in
the second quarter of 2005. Tissue processing gross margins in the first half
of
2006 were 29 percent compared to 20 percent in the first half of 2005. Tissue
processing gross margins improved in 2006 compared to 2005, primarily as a
result of price increases and improved tissue processing yields.
General,
administrative, and marketing expenses in the second quarter of 2006 were $10.2
million compared to $21.6 million in the second quarter of 2005. General,
administrative, and marketing expenses in the second quarter of 2006 included
a
$403,000 charge for stock based compensation and an $800,000 benefit related
to
the adjustment of reserves for product liability losses. General,
administrative, and marketing expenses in the second quarter of 2005 included
an
$11.8 million charge for the settlement of the shareholder class action lawsuit
and an $800,000 benefit related to the adjustment of reserves for product
liability losses.
5
General,
administrative, and marketing expenses in the first half of 2006 were $21.6
million compared to $31.6 million in the first half of 2005. General,
administrative, and marketing expenses for the first half of 2006 included
a
$647,000 charge for stock based compensation and a $670,000 gain related to
the
adjustment of reserves for product liability losses. General, administrative,
and marketing for the first half of 2005 included an $11.8 million charge for
the settlement of the shareholder class action lawsuit and a $1.1 million
benefit related to the adjustment of reserves for product liability and other
legal losses.
Research
and development expenses were $837,000 and $929,000 in the second quarters
of
2006 and 2005, respectively. Research and development expenses were $1.7 million
and $1.9 million in the first half of 2006 and 2005, respectively.
As
of
June 30, 2006, the Company had $8.3 million in cash, cash equivalents,
marketable securities (at market), and restricted securities.
2006
Guidance
The
Company now expects revenues for the full year of 2006 to increase to between
$80.0 and $82.0 million, up from its previous range of revenue guidance of
between $76.0 million and $80.0 million. The Company expects BioGlue revenues
to
be $39.0 to $40.0 million, and tissue processing revenues to be $40.0 to $41.0
million for the full year 2006. Bioprosthetic, cardiovascular and vascular
device revenues are expected to be approximately $1.0 million in
2006.
Webcast
and Conference Call Information
The
Company will hold a teleconference call and live webcast at 11:15 a.m. Eastern
Time, August 3, 2006, to discuss second quarter 2006 financial results, followed
by a question and answer session hosted by Mr. Anderson.
To
listen
to the live teleconference please dial 201-689-8349 a few minutes prior to
11:15
a.m. A replay of the teleconference will be available August 3 - 11 and can
be
accessed by calling (toll free) 877-660-6853 or 201-612-7415. The account number
for the replay is 244 and the conference number is 207894.
The
live
webcast and replay can be accessed by going to the Investor Relations section
of
the CryoLife web site at www.cryolife.com
and
selecting the heading Webcasts & Presentations.
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, vascular, and
orthopaedic surgeries throughout the United States and Canada. The Company's
BioGlue®
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.
The
Company also distributes the CryoLife-O'Brien®
stentless porcine heart valve and the SG Model 100 vascular graft, which are
CE
marked for distribution within the European Community.
6
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 statements include those regarding 2007 profitability and 2006 anticipated
revenues and continued growth. 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 efforts to continue to increase revenue may not be effective, since
their effectiveness is subject to such factors as competitive pressures and
tissue availability, that the Company's efforts to develop and introduce new
products outside the U.S. may be unsuccessful, that the Company's efforts to
improve procurement and tissue processing yields may not continue to prove
effective, 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 products and services under development, including BioDisc,
may
not be commercially feasible, the Company’s SynerGraft products may not receive
FDA approval when anticipated or at all, 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 decreases in the Company's working capital if cash flow
does
not improve, 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, efforts by existing stockholders or others to gain
influence or control over CryoLife may divert management’s attention from the
Company’s operational recovery or otherwise be detrimental to the interests of
the other stockholders, existing or other potential litigation initiated by
stockholders or others; possible litigation by CryoLife if stockholders or
others make proposals or statements which CryoLife does not believe to be fair
or accurate or in the best interests of its other shareholders 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, 2005,
its
most recent Form 10-Q, and the Company's other SEC filings.
The
Company does not undertake to update its forward-looking
statements.
7
CRYOLIFE,
INC.
Unaudited
Financial Highlights
(In
thousands, except share data)
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Revenues:
|
|||||||||||||
|
Products
|
$
|
10,569
|
$
|
9,846
|
$
|
20,621
|
$
|
19,973
|
|||||
|
Human
tissue preservation services
|
10,181
|
7,352
|
19,520
|
14,890
|
|||||||||
|
Research
grants
|
4
|
--
|
62
|
--
|
|||||||||
|
Total
revenues
|
20,754
|
17,198
|
40,203
|
34,863
|
|||||||||
|
Costs
and expenses:
|
|||||||||||||
|
Products
|
2,082
|
2,079
|
4,005
|
4,195
|
|||||||||
|
Human
tissue preservation services
|
7,034
|
6,070
|
13,797
|
11,969
|
|||||||||
|
General,
administrative, and marketing
|
10,245
|
21,585
|
21,557
|
31,641
|
|||||||||
|
Research
and development
|
837
|
929
|
1,746
|
1,850
|
|||||||||
|
Interest
expense
|
188
|
88
|
335
|
143
|
|||||||||
|
Interest
income
|
(103
|
)
|
(167
|
)
|
(210
|
)
|
(242
|
)
|
|||||
|
Change
in valuation of derivative
|
11
|
902
|
67
|
784
|
|||||||||
|
Other
expense, net
|
357
|
45
|
344
|
175
|
|||||||||
|
Total
costs and expenses
|
20,651
|
31,531
|
41,641
|
50,515
|
|||||||||
|
Earnings
(loss) before income taxes
|
103
|
(14,333
|
)
|
(1,438
|
)
|
(15,652
|
)
|
||||||
|
Income
tax (benefit) expense
|
(114
|
)
|
46
|
125
|
84
|
||||||||
|
Net
Income (loss)
|
$
|
217
|
$
|
(14,379
|
)
|
$
|
(1,563
|
)
|
$
|
(15,736
|
)
|
||
|
Effect
of preferred stock
|
(244
|
)
|
(244
|
)
|
(487
|
)
|
(290
|
)
|
|||||
|
Net
loss applicable to common shares
|
$
|
(27
|
)
|
$
|
(14,623
|
)
|
$
|
(2,050
|
)
|
$
|
(16,026
|
)
|
|
|
Loss
per common share:
|
|||||||||||||
|
Basic
|
$
|
0.00
|
$
|
(0.61
|
)
|
$
|
(0.08
|
)
|
$
|
(0.68
|
)
|
||
|
Diluted
|
$
|
0.00
|
$
|
(0.61
|
)
|
$
|
(0.08
|
)
|
$
|
(0.68
|
)
|
||
|
Weighted
average common shares outstanding:
|
|||||||||||||
|
Basic
|
24,807
|
23,905
|
24,783
|
23,676
|
|||||||||
|
Diluted
|
24,807
|
23,905
|
24,783
|
23,676
|
|||||||||
|
Revenues
from:
|
|||||||||||||
|
BioGlue
|
$
|
10,333
|
$
|
9,552
|
$
|
20,090
|
$
|
19,423
|
|||||
|
Bioprosthetic
devices
|
236
|
294
|
531
|
550
|
|||||||||
|
Total
products
|
10,569
|
9,846
|
20,621
|
19,973
|
|||||||||
|
Cardiovascular
|
3,788
|
3,518
|
7,361
|
7,268
|
|||||||||
|
Vascular
|
4,554
|
2,740
|
8,598
|
5,456
|
|||||||||
|
Orthopaedic
|
1,839
|
1,094
|
3,561
|
2,166
|
|||||||||
|
Total
preservation services
|
10,181
|
7,352
|
19,520
|
14,890
|
|||||||||
|
Other
|
4
|
--
|
62
|
--
|
|||||||||
|
Total
revenues
|
$
|
20,754
|
$
|
17,198
|
$
|
40,203
|
$
|
34,863
|
|||||
|
Domestic
revenues
|
$
|
17,558
|
$
|
14,393
|
$
|
34,200
|
$
|
29,584
|
|||||
|
International
revenues
|
3,196
|
2,805
|
6,003
|
5,279
|
|||||||||
|
Total
revenues
|
$
|
20,754
|
$
|
17,198
|
$
|
40,203
|
$
|
34,863
|
|||||
8
CRYOLIFE,
INC.
Financial
Highlights
(In
thousands)
|
June
30,
|
December
31,
|
||||||
|
2006
|
2005
|
||||||
|
(Unaudited)
|
|||||||
|
Cash
and cash equivalents, marketable securities,
|
$
|
8,341
|
$
|
12,159
|
|||
|
at market, and restricted securities
|
|||||||
|
Trade
receivables, net
|
11,881
|
10,153
|
|||||
|
Other
receivables
|
1,665
|
1,934
|
|||||
|
Deferred
preservation costs, net
|
17,383
|
13,959
|
|||||
|
Inventories
|
4,763
|
4,609
|
|||||
|
Total
assets
|
77,463
|
76,809
|
|||||
|
Shareholders’
equity
|
49,432
|
50,621
|
|||||
For
additional information about the company, visit CryoLife’s Web
site:
http://www.cryolife.com
END
9