ARNALL
GOLDEN GREGORY LLP
171
17TH
STREET NW
SUITE
2100
ATLANTA,
GEORGIA 30363-1031
Direct
phone: 404.873.8688
Direct
fax: 404.873.8689
E-mail:
joseph.alley@agg.com
www.agg.com
December
20, 2006
VIA
FACSIMILE AND EDGAR
Ms.
Cecilia D. Blye
Chief,
Office of Global Security Risk
Division
of Corporation Finance
U.S.
Securities and Exchange Commission
100
F
Street, NE
Washington,
D.C. 20549
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Re:
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CryoLife,
Inc.
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|
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Form
10-K for the year ended December 31, 2005
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||
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File
No. 1-13165
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Dear
Ms.
Blye:
On
behalf
of CryoLife, Inc. (“CryoLife” or the “Company”), we transmit for filing
CryoLife’s responses to the staff’s letter of comment dated November 29, 2006.
For your convenience, the comments contained in that letter are reprinted below
in italics.
CryoLife’s
responses are as follows:
Form
10-K for the Year Ended December 31, 2005
General
1. We
note that on your website you list International BioGlue Distributors, including
distributors in Iran (with a note that you are no currently shipping there)
and
Syria. Your 10-K does not include any information regarding contacts with these
countries. In light of the fact that Iran and Syria have been identified by
the
U.S. State Department as state sponsors of terrorism, and are subject to U.S.
economic sanctions, please describe for us the extent and nature of your past,
current, and anticipated contacts with those countries, whether through
distributors or other direct or indirect arrangements. Discuss the materiality
to you of such contacts, individually and in the aggregate; and whether those
contacts, individually or in the aggregate, constitute a material investment
risk for your security holders.
Response:
For
the
convenience of the staff, the response to this comment has been combined with
the response to Comment No. 2 below.
Ms.
Cecilia D. Blye
December
20, 2006
Page
2
2. Your
materiality analysis should address materiality in quantitative terms, including
the approximate dollar amount of any revenues, assets and liabilities associated
with Iran and Syria. Please also address materiality in terms of qualitative
factors that a reasonable investor would deem important in making an investment
decision, including the potential impact of corporate activities upon a
company’s reputation and share value.
We
note, for example, that Arizona and Louisiana have adopted legislation that
requires their state retirement systems to prepare reports regarding state
pension fund assets invested in, and/or permits divestment of state pension
fund
assets from, companies that do business with U.S.-designated state sponsors
of
terrorism. Pennsylvania’s General Assembly has passed a resolution mandating
assessment and reporting of state pension fund assets invested in companies
that
do business with certain U.S.-designated state sponsors of terrorism. The
Missouri Investment Trust has established an equity fund for the investment
of
certain state-held monies that screens out stocks of companies that do business
with U.S.-designated state sponsors of terrorism. Your materiality analysis
should address the potential impact of the investor sentiment evidenced by
such
actions directed toward companies that operate in Iran and
Syria.
Response:
Over
the
past six years, the Company has had a relatively small amount of sales of
BioGlue®
in
Iran,
and of two product lines, BioGlue®
and the
CryoLife-Ross®
pulmonary
heart valve, in Syria. The Ross heart valve was only sold in Syria in 2001
and
2002 during that period. The Company discontinued all sales in Iran in 2004.
As
sales to Iran ceased in 2004, the Company has now removed Iran from the list
of
International BioGlue®
Distributors
on the Company’s website. Company sales in Iran and Syria for the last six years
are set forth below:
|
Year
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Iran
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Syria
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Total
Company Revenue
(rounded)
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|||
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2006*
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0
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$
43,916
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Not
yet reported
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|||
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2005
|
0
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$
71,275
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$
69,282,000
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|||
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2004
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$
7,696
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$
36,233
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$
62,384,000
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|||
|
2003
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0
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$
9,358
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$
59,532,000
|
|||
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2002
|
0
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$
63,199
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$
77,795,000
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|||
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2001
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$
7,815
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$
27,605
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$
87,671,000
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*
estimated
As
is
apparent from the sales figures provided above, the Company does not consider
its operations in these countries material to the Company’s operations, either
on an aggregate or product-level basis. Further, given that total sales in
such
countries accounted for approximately one-tenth of one percent (0.1%) of total
Company revenue for the period ended December 31, 2005, and are not expected
to
exceed that percentage for 2006, the Company does not believe such de minimis
amounts, individually or in the aggregate, constitute a material investment
risk
for the Company’s security holders.
In
2005,
the Company’s BioGlue®
product
line was classified as EAR99 by the United States Department of Commerce Bureau
of Industry and Security. Products designated as EAR99 may be shipped “no
license required,” unless the exporter knows or is informed that the items will
be used for certain malevolent purposes or for prohibited destinations.
BioGlue®
sales
are conducted in Syria exclusively pursuant to a letter agreement between
CryoLife Europa, Ltd., a wholly owned subsidiary of the Company, and a Syrian
distributor.
Ms.
Cecilia D. Blye
December
20, 2006
Page 3
As noted above, the quantitative level of contact with Iran and Syria has been
de minimis in both absolute dollar amounts and relative to the Company’s total
revenue. Sales in Iran have ceased, and sales in Syria are expected to continue
to be de minimis. Qualitatively, the products sold by the Company in those
countries are medical devices intended to improve the health of patients and,
as
such, are humanitarian in nature. Additionally, to the Company’s knowledge, the
Company has not received any inquiries or expressions of concern from investors
regarding transactions in such countries. For all of these reasons, we do not
believe that the conduct described above should influence or affect decisions
of
CryoLife investors.
CryoLife
acknowledges that:
| · |
it
is responsible for the adequacy and accuracy of the disclosure in
the
filings;
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| · |
staff
comments or changes to disclosure in response to staff comments do
not
foreclose the Commission from taking any action with respect to the
filings;
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| · |
it
may not assert staff comments as a defense in any proceeding initiated
by
the Commission or any person under the federal securities laws of
the
United States; and
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| · |
the
Division of Enforcement has access to all information provided by
CryoLife
to the staff in its review of CryoLife’s filings or in response to staff
comments on CryoLife’s filings.
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If
you
have any questions, please do not hesitate to contact me at (404)
873-8688.
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Very
truly yours,
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ARNALL
GOLDEN GREGORY LLP
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| /s/ B. Joseph Alley, Jr. | |
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B.
Joseph Alley, Jr.
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cc:
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Peggy
Fisher, Division of Corporation Finance
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Brian
Cascio, Division of Corporation Finance
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Jack
Guggenheim, Division of Corporation Finance
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Steven
G. Anderson, CryoLife, Inc.
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